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

Company Release - 1/28/2026 4:15 PM ET 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]