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Waterstone Financial, Inc. (WSBF)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 net income was $7.9M and diluted EPS was $0.45, up 73% YoY and modestly above Q2’s $0.43, driven by a 16 bps sequential and 63 bps YoY expansion in net interest margin (NIM) to 2.76% .
  • Asset quality improved: nonperforming assets fell to 0.27% of total assets (vs. 0.37% in Q2 and 0.25% in Q3 2024), and past-due loans to total loans dropped to 0.50% (vs. 0.69% in Q2) .
  • Mortgage Banking posted a second straight quarter of profitability (pre-tax income $1.3M), with gross margin on loans sold at 3.87% and origination mix 90.1% purchase; operating discipline continued to support segment results .
  • Capital return remains a lever: WSBF repurchased ~270K shares at $14.15 per share ($3.8M) and declared a $0.15 dividend; book value per share rose $0.61 QoQ to $18.65, supported by earnings and securities valuation improvements .
  • No formal financial guidance or earnings call transcript was found for Q3 2025; consensus estimates from S&P Global were unavailable for EPS and revenue, limiting “beat/miss” comparisons (see Estimates Context) . Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and lower funding costs drove earnings outperformance; NIM rose to 2.76% (+16 bps QoQ, +63 bps YoY), aided by higher loan yields and decreases in borrowing and deposit costs .
  • Asset quality remained strong, enabling an ACL release; nonperforming assets/total assets improved to 0.27% and past-due loans declined to 0.50%, supporting reserve releases .
  • Mortgage Banking delivered back-to-back profitable quarters; gross margin on loans sold of 3.87% and continued cost discipline led to $1.3M pre-tax income despite softer originations .
    • “We sustained our improved 2025 performance… due primarily to improved net interest margin and continued strong asset quality metrics” — CEO William Bruss .

What Went Wrong

  • Mortgage originations fell 3.5% YoY to $539.4M; mortgage noninterest income decreased 1.9% YoY to $21.0M despite margin improvement, reflecting industry volume pressures .
  • The mortgage efficiency ratio remained elevated at 93.66% (though improved QoQ), highlighting ongoing operating leverage constraints in the segment .
  • Revenue was slightly down sequentially (S&P Global standardized “Revenue” actuals: $37.31M in Q3 vs. $38.05M in Q2), reflecting a smaller top-line contribution from mortgage volumes. Values retrieved from S&P Global.

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)*$34.45$30.23$38.05$37.31
Diluted EPS ($USD)$0.26 $0.17 $0.43 $0.45
Net Interest Margin % (QTD)2.13% 2.47% 2.60% 2.76%
Return on Avg Assets % (QTD)0.83% 0.57% 1.39% 1.42%
Return on Avg Equity % (QTD)5.55% 3.61% 9.04% 9.14%

Values retrieved from S&P Global.*

Community Banking segment

Metric ($USD Millions)Q3 2024Q2 2025Q3 2025
Net Interest Income$12.250 $13.640 $14.617
Total Noninterest Income$1.227 $1.686 $1.359
Total Noninterest Expense$8.133 $7.725 $7.818
Pre-tax Income$5.646 $7.620 $8.434

Mortgage Banking segment

MetricQ3 2024Q2 2025Q3 2025
Total Noninterest Income ($USD Millions)$21.386 $22.643 $20.985
Total Noninterest Expense ($USD Millions)$20.557 $20.687 $19.751
Pre-tax Income ($USD Millions)$0.144 $1.999 $1.330
Loan Originations ($USD Millions)$558.729 $588.838 $539.404
Gross Margin on Loans Sold (%)3.83% 3.84% 3.87%

Guidance Changes

Management provided no formal financial guidance for revenue, margins, OpEx, OI&E, tax rate, or segment-specific targets in Q3 2025 .

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per common shareQuarterly$0.15 $0.15 Maintained

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was found; themes are drawn from press releases across Q1–Q3 2025.

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3)Trend
Net Interest Margin trajectoryQ1: NIM 2.47% (+32 bps YoY); Q2: 2.60% (+13 bps QoQ); drivers: higher loan yields, lower funding costs NIM 2.76%, up +16 bps QoQ, +63 bps YoY; tailwinds: loan yields, lower deposit and borrowing costs Improving
Core deposits & brokered CDsQ1: core retail deposits +7.4% YoY; brokered CDs $84.1M at quarter-end ; Q2: core retail deposits +7.5% YoY; brokered CDs avg $72.5M Q3: avg core retail deposits +5.2% YoY; brokered CDs avg $61.8M Stable mix; lower brokered usage
Asset qualityQ1: NPA/Assets 0.35%, PD/Loans 0.67% ; Q2: NPA 0.37%, PD 0.69% Q3: NPA 0.27%, PD 0.50%; ACL release supported Improving
Mortgage originations & marginsQ1: originations $387.7M; margin 3.98%; legal fees elevated ; Q2: originations $588.8M; margin 3.84%; profitability restored Q3: originations $539.4M; margin 3.87%; second consecutive profitable quarter Mixed volumes, steady margins
Expenses/efficiencyQ1 Community efficiency 59.66% ; Q2 50.40% Q3 48.94% Community; Mortgage 93.66% Community improving; Mortgage elevated

Management Commentary

  • “We sustained our improved 2025 performance… due primarily to improved net interest margin and continued strong asset quality metrics.” — William Bruss, CEO .
  • “With improved earnings in both our Community and Mortgage Banking segments, consolidated earnings totaled $0.45 per diluted share… The Community Banking segment achieved growth in net interest income… due to continued growth in yield on our loans held for investment, as well as a reduction of our cost of funds.” — William Bruss .
  • “We added $0.61 to book value per share during the quarter through strong earnings, an active share repurchase program, and improving valuations on our investment security portfolio, prior to declaring a quarterly dividend of $0.15 per share.” — William Bruss .
  • Prior quarters context: “We are pleased… highest quarterly EPS since Q4 2021… strong asset quality… Mortgage Banking pre-tax income as seasonal volumes expanded… professional fees normalized following legal settlement.” — Q2 release .
  • “Community Banking… net interest margin increased 32 bps YoY; Mortgage Banking pre-tax loss reflects market-wide decrease in loan origination volumes and elevated legal expense.” — Q1 release .

Q&A Highlights

No Q3 2025 earnings call transcript or Q&A was found in the document set; no additional clarifications beyond the press release were available .

Estimates Context

Consensus estimates from S&P Global were unavailable for WSBF Q3 2025 EPS and revenue; therefore beat/miss comparisons are not possible. Actuals below reflect S&P Global standardized reported values where available.

MetricPeriodS&P Global ConsensusActual# of Estimates
Primary EPS Consensus MeanQ3 2025N/A*$0.45 N/A*
Revenue Consensus MeanQ3 2025N/A*$37.31M*N/A*

Values retrieved from S&P Global.*

KPIs

MetricQ1 2025Q2 2025Q3 2025
Past Due Loans / Total Loans (%)0.67% 0.69% 0.50%
Nonperforming Assets / Total Assets (%)0.35% 0.37% 0.27%
Book Value per Share ($)$17.70 $18.19 $18.65
Dividend per Share ($)$0.15 $0.15 $0.15
Shares Repurchased (000s)237 508 270
Repurchase Cost ($M)$3.2 $6.5 $3.8
Average Repurchase Price ($)$13.37 $12.80 $14.15

Guidance Changes

No formal quantitative guidance was issued; dividend maintained at $0.15 per share .

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per Share ($)Quarterly$0.15 $0.15 Maintained

Earnings Call Themes & Trends

See table above; without a transcript, narrative trends are inferred from press releases.

Key Takeaways for Investors

  • Earnings momentum continued with EPS at $0.45 and ROAE at 9.14%, supported by NIM expansion and lower funding costs .
  • Community Banking efficiency improved to 48.94% while maintaining strong asset quality; ACL releases reflect low loss experience and improved risk factors .
  • Mortgage Banking is profitable for a second quarter; margins are resilient (3.87%) even as originations softened YoY, indicating effective pricing and cost control .
  • Capital deployment via buybacks and dividends lifted book value per share by $0.61 QoQ to $18.65; ongoing repurchases may continue to support per-share metrics .
  • Deposit mix remains stable with core retail deposits growth and reduced reliance on brokered CDs QoQ, aiding cost of funds .
  • Absent formal guidance and with limited sell-side coverage, trading narratives likely center on continued NIM improvement, asset quality strength, and capital returns; watch mortgage volume trajectory and deposit pricing trends for sustainability .
  • No transcript/Q&A available; monitor future filings for additional color on outlook, tax rate, and segment-specific initiatives .