Executive Summary

EPS of $0.43 was the highest since Q4 2021, driven by improved cost of funds, NIM expansion, and mortgage banking profitability; consolidated net income rose to $7.7M from $5.7M YoY and $3.0M QoQ .
Net interest margin expanded to 2.60% (+13 bps QoQ, +59 bps YoY) as loan yields increased and funding costs declined; community banking NII rose $2.4M YoY to $13.6M .
Mortgage Banking returned to profitability: $1.5M net income vs a $1.6M loss in Q1, with $588.8M originations (seasonal lift) and normalized professional fees after a legal settlement last quarter .
Capital returns remained a catalyst: 508k shares repurchased ($6.5M at $12.80/share), boosting book value by ~$0.14; a $0.15 dividend was maintained and declared for payment on Aug 1, 2025 .
Consensus estimates were unavailable via S&P Global for Q2 2025, limiting beat/miss analysis; investors should focus on NIM trajectory, asset quality stability, and mortgage margin resilience .

What Went Well and What Went Wrong

What Went Well

Community Banking fundamentals strengthened: NII +21.4% YoY to $13.6M; NIM +59 bps YoY to 2.60% on better loan yields and lower deposit/borrowing costs .
Mortgage Banking shifted to profitability with $1.5M net income, $588.8M originations (91.7% purchase); professional fees normalized following last quarter’s final legal settlement .
Shareholder returns supported book value accretion: 508k shares repurchased at $12.80/share, adding ~$0.14 to BVPS; BVPS rose to $18.19 from $17.53 at year-end .
CEO quote underscores operating leverage: “highest quarterly earnings per share since the quarter ended December 31, 2021… continued improvement in our cost of funds… strong asset quality… Mortgage Banking segment recorded pre-tax income” .

What Went Wrong

Asset quality metrics ticked up: nonperforming assets/total assets rose to 0.37% (0.35% in Q1; 0.25% YoY); past due loans increased slightly QoQ to 0.69% (0.67% in Q1) .
Mortgage gross margin compressed to 3.84% (3.98% in Q1; 3.93% YoY) and originations were down 7.1% YoY; mortgage noninterest income fell $2.4M YoY to $22.6M .
Community Banking provision dynamics: small negative provision for funded loans (-$125k), but provision for unfunded commitments increased $106k due to higher approved-but-not-closed loans, highlighting forward exposure .

Financial Results

Consolidated Key Metrics (YoY and QoQ)

Metric	Q2 2024	Q1 2025	Q2 2025
Diluted EPS ($)	$0.31	$0.17	$0.43
Net Income ($MM)	$5.712	$3.036	$7.727
Net Interest Income ($MM)	$10.679	$12.576	$13.708
Total Noninterest Income ($MM)	$26.497	$17.097	$24.329
Total Revenue ($MM)	$37.176	$29.673	$38.037
Net Interest Margin (%)	2.01%	2.47%	2.60%
ROA (annualized, %)	1.02%	0.57%	1.39%
ROE (annualized, %)	6.84%	3.61%	9.04%
Dividends per Share ($)	$0.15	$0.15	$0.15

Note: Total Revenue equals Net Interest Income + Total Noninterest Income; figures derived from filings .

Segment Breakdown

Segment Metric	Q2 2024	Q1 2025	Q2 2025
Community Banking – Net Interest Income ($MM)	$11.234	$12.403	$13.640
Community Banking – Noninterest Expense ($MM)	$7.937	$8.204	$7.725
Community Banking – Net Income ($MM)	$4.349	$4.638	$6.220
Community Banking – Efficiency Ratio (%)	62.37%	59.66%	50.40%
Mortgage Banking – Loan Originations ($MM)	$634.109	$387.729	$588.838
Mortgage Banking – Gross Margin on Loans Sold (%)	3.93%	3.98%	3.84%
Mortgage Banking – Noninterest Expense ($MM)	$22.478	$18.136	$20.687
Mortgage Banking – Net (Loss) Income ($MM)	$1.313	$(1.625)	$1.468

KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Past Due Loans / Total Loans (%)	0.76%	0.67%	0.69%
Nonperforming Assets / Total Assets (%)	0.25%	0.35%	0.37%
Nonaccrual Loans / Total Loans (%)	0.33%	0.45%	0.49%
ACL – Loans / Loans Receivable (%)	1.10%	1.08%	1.07%
Book Value per Share ($)	N.A.	$17.70	$18.19
Shares Repurchased (000s)	N.A.	237	508
Dividend per Share ($)	$0.15	$0.15	$0.15

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per common share	Q3 2025 payment (declared)	$0.15/share (historical run-rate)	$0.15/share, payable Aug 1, 2025	Maintained
Share repurchase activity	Q2 2025	N.A.	508k shares repurchased at $12.80/share; $6.5M including excise tax	Active program

No formal quantitative revenue/margin/tax guidance was provided in the Q2 2025 materials .

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available after searching; themes below reflect press releases and filings.

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Interest rate environment / NIM	NIM rose to 2.42% (+29 bps QoQ) on higher loan yields and lower borrowing costs	NIM increased to 2.47% (+32 bps YoY), cost of deposits/borrowings eased	NIM expanded to 2.60% (+13 bps QoQ; +59 bps YoY) as yields rose and funding costs fell	Improving
Asset quality	Nonperforming assets 0.28%; past due loans 0.95%	NPA 0.35%; past due 0.67%	NPA 0.37%; past due 0.69%	Slightly worsening (levels still low)
Mortgage banking volume/margins	Originations $470.7M; margin 3.74%	Originations $387.7M; margin 3.98%; legal fees elevated (settlement)	Originations $588.8M; margin 3.84%; fees normalized; segment profitable	Seasonal recovery; margins slightly softer
Deposits/core funding	Core deposits +$65.8M YoY; brokered CDs $94.3M	Avg core retail deposits $1.28B (+7.4% YoY); brokered CDs $84.1M	Avg core retail deposits $1.31B (+7.5% YoY); brokered CDs avg $72.5M	Improving mix/cost
Legal/regulatory	N/A	Final legal settlement drove elevated professional fees	Fees normalized post-settlement	Resolved

Management Commentary

CEO William Bruss: “We are pleased with our performance during the quarter, which resulted in our highest quarterly earnings per share since the quarter ended December 31, 2021… The Community Banking segment achieved $2.4 million of growth in net interest income… continued improvement in our cost of funds… strong asset quality… Mortgage Banking segment recorded pre-tax income as seasonal loan origination volumes expanded… On a consolidated level, we continued to add to book value per share through strong earnings and an active share repurchase program.”
Community Banking: NIM expansion was “primarily driven by an increase in weighted average yield on loans… and decreases in the cost of borrowings and weighted average cost of deposits” .
Mortgage Banking: Professional fees “normalized following the finalization of our legal settlement during the prior quarter”; originations were 91.7% purchase .

Q&A Highlights

An earnings call transcript for Q2 2025 was not available after searching the document catalog; no Q&A details could be reviewed [ListDocuments (earnings-call-transcript) returned none].

Estimates Context

Consensus estimates via S&P Global were unavailable for Q2 2025 EPS and revenue; as a result, beat/miss analysis versus Street is not possible at this time. Actual diluted EPS was $0.43 and total revenue was ~$38.0M (NII + noninterest), both per company filings .
Note: S&P Global consensus data was queried but not present for WSBF’s Q2 2025; where shown, values are from S&P Global.*

Metric	Actual Q2 2025	Consensus (S&P Global)	Surprise
Diluted EPS ($)	$0.43	N.A.*	N.A.
Total Revenue ($MM)	$38.037	N.A.*	N.A.

*Values retrieved from S&P Global where available; consensus for WSBF Q2 2025 was unavailable.

Key Takeaways for Investors

Earnings quality improved: NIM expansion and lower funding costs are driving core profitability; watch for continued deposit mix/cost optimization as a lever to sustain margins .
Mortgage Banking’s return to profitability, with seasonal volume recovery and normalized fees, reduces consolidated earnings volatility; monitor gross margins amid rate-sensitive secondary market dynamics .
Asset quality remains solid but slightly softer at the margin (NPA/past-due ratios up modestly); continued negative/favorable provisions point to benign charge-offs—key for valuation multiples on community banks .
Capital return is a clear catalyst: buybacks (508k in Q2) and the $0.15 dividend support BVPS accretion and total shareholder yield; consider that tangible book growth plus payout may underpin stock support into H2 .
With Street consensus limited, near-term trading likely keys off internal trends (NIM trajectory, mortgage profitability, asset quality); beats/misses vs. expectations may be less relevant than sequential momentum .
Watch brokered CD usage and borrowings as funding levers; the decline in brokered CDs and borrowing costs supports NIM but could reverse if rates or competition shift .
Ongoing board refresh and governance updates (new directors) may foreshadow strategic initiatives or operational improvements—incrementally positive for longer-term execution .

Waterstone Financial, Inc. (WSBF)·Q2 2025 Earnings Summary