WAUWATOSA, Wis., Jan. 28, 2025 (GLOBE NEWSWIRE) -- 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.
- 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.
- 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.
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. Gerke
Chief Financial Officer
414-459-4012
| WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||||||||||||||
| For The Three Months Ended
December 31, | For The Twelve Months Ended December 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 SUBSIDIARIES
CONSOLIDATED 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 |
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