Core Points - Michael Hansen has announced his retirement as a Director of Waterstone Financial, Inc. and its subsidiary WaterStone Bank SSB [1] - Hansen has been a director since 2003 and has served as chair of the Audit Committee, as well as being a member of the Board Executive Committee and Nominating and Corporate Governance Committee [2] - During the transition, Hansen will sell shares of Company stock as part of his retirement and estate planning [3] - Patrick Lawton, Chairman of the Company, expressed gratitude for Hansen's 22 years of service and leadership [3] Company Overview - Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank, established in 1921 [4] - WaterStone Bank offers a range of personal and business banking products and operates 14 branch locations in southeastern Wisconsin [4] - WaterStone Bank is also the parent company of WaterStone Mortgage Corporation, a national lender licensed in 48 states [4] - The Company emphasizes innovation, integrity, and community service to support financial and homeownership goals of customers nationwide [5]

Loan Portfolio and Composition - As of December 31, 2024, Waterstone Bank's loan portfolio composition included 30.71% one- to four-family residential loans, 44.12% multi-family residential loans, and 18.65% commercial real estate loans[36]. - The total loan portfolio at December 31, 2024, was $1.68 billion, with a net loan amount of $1.66 billion after accounting for an allowance for credit losses of $18.25 million[36]. - One- to four-family residential mortgage loans totaled $516.1 million, representing 30.7% of total loans as of December 31, 2024[39]. - Multi-family loans amounted to $741.4 million, accounting for 44.1% of total loans at the same date[42]. - Home equity loans and lines of credit reached $13.2 million, or 0.8% of total loans outstanding as of December 31, 2024[45]. - Construction and land loans totaled $61.4 million, representing 3.7% of total loans[46]. - Commercial real estate loans were $313.5 million, making up 18.7% of total loans as of December 31, 2024[50]. - The average outstanding one- to four-family first mortgage loan balance was approximately $302,000[41]. - The average outstanding multi-family mortgage loan balance was approximately $1.6 million[43]. - The average outstanding commercial loan was $467,000 as of December 31, 2024[54]. Mortgage Banking Operations - Waterstone Financial's mortgage banking subsidiary, Waterstone Mortgage Corporation, originated $2.13 billion in mortgage loans held for sale during the year ended December 31, 2024[22]. - The company originated $2.15 billion in mortgage loans held for sale during the year ended December 31, 2024, an increase of $26.6 million, or 1.3%, from the previous year[94]. - Total mortgage banking noninterest income increased by $5.8 million, or 7.4%, to $84.3 million during the year ended December 31, 2024[94]. - The gross margin on loans originated and sold increased by 0.2% for the year ended December 31, 2024, compared to the previous year[94]. - The mix of loan types trended towards more conventional loans, comprising 63.8% of all loan originations during the year ended December 31, 2024[95]. Asset Quality and Credit Losses - Total non-accrual loans increased by $857,000 to $5.7 million as of December 31, 2024, compared to $4.8 million as of December 31, 2023[67]. - The ratio of non-accrual loans to total loans receivable was 0.34% at December 31, 2024, up from 0.29% at December 31, 2023[67]. - Total nonperforming assets rose to $6.2 million as of December 31, 2024, compared to $5.1 million as of December 31, 2023[64]. - Loans past due less than 90 days increased by $4.3 million during the year ended December 31, 2024, totaling $11.1 million[77]. - Total loans past due increased by $3.9 million, or 34.4%, to $15.1 million at December 31, 2024, from $11.3 million at December 31, 2023[77]. - The outstanding principal balance of the five largest non-accrual loans totaled $2.6 million, representing 45.9% of total non-accrual loans as of December 31, 2024[69]. - The allowance for credit losses - loans decreased by $302,000 to $18.2 million at December 31, 2024, from $18.5 million at December 31, 2023[85]. - Net recoveries totaled $40,000 for the year ended December 31, 2024, compared to net charge-offs of $135,000 for the year ended December 31, 2023[86]. Deposits and Funding - Total deposits increased by $169.3 million, or 14.2%, from December 31, 2023 to December 31, 2024, driven by a $175.3 million increase in certificates of deposit[114]. - Certificates of deposit comprised 66.6% of total customer deposits as of December 31, 2024, with a weighted average cost of 4.42%[111]. - The company had $905.5 million in certificates of deposit as of December 31, 2024, compared to $730.3 million as of December 31, 2023[113]. - As of December 31, 2024, total deposits amounted to $1,266,337,000, with a year-over-year growth of 3.20% compared to $1,209,617,000 in 2023[117]. - The balance of uninsured deposits of $250,000 or more increased to $327.2 million in 2024 from $287.9 million in 2023[117]. Capital and Regulatory Compliance - WaterStone Bank's capital to assets ratio was 15.68% as of December 31, 2024, significantly above the minimum requirement of 6%[145]. - The common equity Tier 1 capital ratio was 19.21%, indicating strong capital adequacy compared to the required minimum of 4.5%[156]. - The Tier 1 leverage ratio stood at 15.55%, well above the minimum requirement of 4.0%[156]. - WaterStone Bank's total risk-based capital ratio was 20.29%, exceeding the minimum requirement of 8.0%[156]. - WaterStone Bank is classified as "well capitalized" under federal regulations, meeting all capital requirements[156]. - The Federal Deposit Insurance Corporation insures deposits up to $250,000 per depositor per account ownership category[140]. - WaterStone Bank's assessment rates for deposit insurance range from 2.5 to 32 basis points based on total assets less tangible capital[141]. - WaterStone Bank is required to hold $20.3 million in capital stock of the Federal Home Loan Bank of Chicago as of December 31, 2024[172]. Regulatory Environment - Waterstone Financial is subject to comprehensive regulation by the Wisconsin Department of Financial Institutions and the FDIC[21]. - Waterstone Financial operates in a highly regulated environment, subject to supervision by various bank regulatory agencies[200]. - Federal regulations require annual on-site examinations for depository institutions, with exceptions for well-capitalized institutions with assets under $3 billion[168]. - The Federal Reserve Board's regulations require holding companies to act as a source of strength to their subsidiary depository institutions during financial stress[180]. - Waterstone Financial is subject to limitations on dividend payments if stockholders' equity would fall below the liquidation account amount[182]. Employee and Corporate Culture - The company had 600 full-time equivalent employees as of December 31, 2024, with a focus on creating a culture that attracts and retains top talent[120]. - The company offers comprehensive compensation and benefits packages, including a 401k Plan and Employee Stock Ownership Plan, to attract and retain key talent[121].

Core Viewpoint - Waterstone Financial, Inc. reported a significant turnaround in financial performance for the quarter ended December 31, 2024, achieving a net income of $5.2 million compared to a net loss of $40,000 in the same quarter of the previous year, indicating a strong recovery and growth trajectory for the company [1][3]. Financial Performance - Net income for the quarter was $5.2 million, or $0.28 per diluted share, compared to a net loss of $40,000, or less than $0.01 per diluted share, for the quarter ended December 31, 2023 [1]. - For the year ended December 31, 2024, net income per diluted share was $1.01, up from $0.46 in 2023 [1]. - Pre-tax income increased by $1.4 million, or 26.0%, to $6.7 million for the quarter ended December 31, 2024, compared to $5.3 million for the same quarter in 2023 [3]. - Net interest income rose to $12.9 million, a $830,000 increase, or 6.9%, from $12.1 million in the prior year [3]. Asset Quality and Loan Performance - The consolidated return on average assets was 0.94% for the quarter ended December 31, 2024, compared to (0.01)% for the same quarter in 2023 [3]. - Nonperforming assets as a percentage of total assets was 0.28% at December 31, 2024, compared to 0.23% at December 31, 2023 [3]. - Past due loans as a percentage of total loans increased to 0.95% at December 31, 2024, from 0.68% at December 31, 2023 [3][18]. Shareholder Returns and Capital Management - Dividends declared during the quarter totaled $0.15 per common share [3]. - The company repurchased approximately 194,000 shares at a cost of $2.8 million, or $14.43 per share [3]. - Book value per share increased to $17.53 at December 31, 2024, from $16.94 at December 31, 2023 [3]. Community Banking Segment - The Community Banking segment reported a consolidated net income of $5.2 million for the quarter ended December 31, 2024, compared to a net loss of $40,000 for the same quarter in 2023 [3]. - Average loans held for investment totaled $1.68 billion, an increase of $21.5 million, or 1.3%, compared to $1.66 billion for the quarter ended December 31, 2023 [3]. - The efficiency ratio improved to 51.54% for the quarter ended December 31, 2024, compared to 63.26% for the same quarter in 2023 [8][22]. Mortgage Banking Segment - The Mortgage Banking segment achieved a pre-tax loss of $625,000 for the quarter ended December 31, 2024, a significant improvement from a $6.0 million pre-tax loss in the same quarter of 2023 [8]. - Loan originations increased by $12.3 million, or 2.7%, to $470.7 million during the quarter ended December 31, 2024, compared to $458.4 million in the prior year [8]. - Mortgage banking non-interest income rose by $1.4 million, or 8.9%, to $17.5 million for the quarter ended December 31, 2024, compared to $16.0 million in the previous year [8].

Financial Performance - Consolidated net income for the quarter ended December 31, 2024, was $5.2 million, compared to a net loss of $40,000 for the same quarter in 2023[1] - Net income for Q4 2024 was $5,210,000, compared to a loss of $40,000 in Q4 2023, indicating a significant turnaround[11] - The company reported a basic earnings per share of $0.28 for Q4 2024, compared to $(0.00) in Q4 2023[11] - Net income for December 2024 was $5,288 thousand, reflecting a 12.4% increase from $4,705 thousand in September 2024[18] Asset and Deposit Growth - Total assets as of December 31, 2024, were $2,209,608,000, slightly down from $2,213,389,000 in 2023[13] - Total deposits increased to $1,359,897,000 in 2024, up from $1,190,624,000 in 2023, representing a growth of 14.2%[13] - Average loans held for investment increased by $21.5 million, or 1.3%, to $1.68 billion compared to the same quarter in 2023[4] - Loan originations increased by $12.3 million, or 2.7%, to $470.7 million for the quarter ended December 31, 2024[6] Income and Expense Analysis - Net interest income rose by $830,000, or 6.9%, to $12.9 million for the quarter ended December 31, 2024[4] - Total interest income for Q4 2024 was $29,052,000, an increase of 8.5% from $26,694,000 in Q4 2023[11] - Noninterest income for Q4 2024 reached $19,005,000, up 12.6% from $16,876,000 in Q4 2023[11] - Total noninterest expenses decreased to $25,267,000 in Q4 2024 from $29,662,000 in Q4 2023, a reduction of 14.8%[11] Efficiency and Ratios - Return on average assets improved to 0.94% for the quarter ended December 31, 2024, from (0.01)% in the prior year[4] - The efficiency ratio improved to 51.54% for the quarter ended December 31, 2024, from 63.26% in the prior year[6] - The efficiency ratio for the quarter-to-date (non-GAAP) improved to 51.54% in December 2024 from 60.35% in September 2024[18] Shareholder Returns and Stock Activity - Dividends declared during the quarter totaled $0.15 per common share[4] - The company repurchased approximately 194,000 shares at a cost of $2.8 million, or $14.43 per share[4] Credit Quality - Nonperforming assets as a percentage of total assets was 0.28% at December 31, 2024, compared to 0.23% at December 31, 2023[4] - The allowance for credit losses on loans was 1.09% of loans receivable as of December 31, 2024, compared to 1.11% in 2023[15] - The provision for credit losses was $331 thousand in December 2024, compared to a credit of $(302) thousand in September 2024[18] Other Financial Metrics - Book value per share increased to $17.53 in 2024 from $16.94 in 2023, reflecting a growth of 3.5%[13] - Total interest-earning assets decreased to $2,112,753 thousand in December 2024 from $2,156,118 thousand in September 2024, a decline of 2.02%[16] - Net interest income after provision for credit losses for the twelve months ended December 31, 2024, was $46,336,000, compared to $49,559,000 in 2023, reflecting a decrease of 4.5%[11] - Total noninterest income rose to $1,595 thousand in December 2024, a 30% increase compared to $1,227 thousand in September 2024[18] - Noninterest expenses decreased to $7,463 thousand in December 2024, down from $8,133 thousand in September 2024, a reduction of 8.2%[18] - The gross margin on loans sold was 3.74% in December 2024, slightly down from 3.83% in September 2024[20] - The average yield on total interest-earning assets increased to 5.46% in December 2024 from 5.39% in September 2024[16]

Financial Performance - Net income for the community banking segment was $4.7 million for Q3 2024, up from $4.5 million in Q3 2023, reflecting a 4.4% increase[174]. - Earnings per share increased to $0.26 in Q3 2024 from $0.16 in Q3 2023, reflecting a significant improvement in profitability[180]. - Annualized return on average assets improved to 0.83% in Q3 2024 from 0.58% in Q3 2023, indicating better asset utilization[180]. - Annualized return on average equity increased to 5.55% in Q3 2024 from 3.63% in Q3 2023, showcasing enhanced shareholder value[180]. - Net income for the nine months ended September 30, 2024, was $11.7 million, down from $14.6 million in the same period of 2023[201]. Income and Expenses - Net interest income decreased by $181,000 to $12.3 million in Q3 2024 compared to $12.4 million in Q3 2023, primarily due to a $3.4 million increase in interest expense on deposits and borrowings[174]. - Total compensation and employee benefits decreased by $1.3 million, or 7.3%, to $15.9 million in Q3 2024 compared to $17.2 million in Q3 2023, driven by reduced headcount[179]. - Total noninterest expenses decreased by $1.5 million, or 4.9%, to $28.6 million compared to $30.0 million in the prior year[197]. - Compensation, payroll taxes, and other employee benefits expense decreased by $2.6 million, or 5.3%, to $47.6 million for the nine months ended September 30, 2024[207]. Mortgage Banking - The mortgage banking segment reported a net loss of $50,000 in Q3 2024, an improvement from a net loss of $1.4 million in Q3 2023[177]. - Mortgage loan originations decreased by $38.8 million, or 6.5%, to $558.7 million in Q3 2024 compared to $597.6 million in Q3 2023[177]. - Total mortgage banking noninterest income decreased by $66,000, or 0.3%, to $21.4 million in Q3 2024 compared to $21.5 million in Q3 2023[177]. - Mortgage banking income increased due to a rise in gross margin on loans originated and sold, which increased by 5.9% despite a decrease in loan origination volumes[194]. - The company originated $1.68 billion in mortgage loans during the nine months ended September 30, 2024, a 0.9% increase from $1.66 billion in the prior year[204]. - Mortgage banking income rose by $6.3 million, or 10.6%, to $66.2 million during the nine months ended September 30, 2024, compared to $59.9 million in the prior year[222]. Interest Income and Expense - Interest income on loans increased by $2.8 million, or 11.6%, to $26.6 million, driven by a 39 basis point increase in average yield and a $60.9 million, or 3.7%, increase in average loans held for investment[189]. - Interest expense on time deposits rose by $2.7 million, or 44.1%, to $9.0 million, primarily due to a 111 basis point increase in average cost of time deposits[189]. - Interest expense on time deposits rose by $10.8 million, or 76.5%, to $25.0 million, primarily due to a 163 basis point increase in average cost[216]. - Interest expense on borrowings increased by $5.1 million, or 30.5%, to $21.6 million due to a 53 basis point increase in the cost of borrowings[216]. Asset and Liability Management - Total assets increased by $30.9 million, or 1.4%, to $2.24 billion at September 30, 2024, from $2.21 billion at December 31, 2023[227]. - Total deposits increased by $73.2 million to $1.26 billion at September 30, 2024, driven by a $73.9 million increase in time deposits[234]. - Loans receivable held for investment increased by $31.2 million to $1.70 billion at September 30, 2024, primarily due to increases in multi-family, construction, and commercial real estate loans[230]. - Average balance of borrowings increased by $15.8 million to $600.6 million during the three months ended September 30, 2024[189]. Credit Quality - The provision for credit losses was negative $377,000 for the three months ended September 30, 2024, compared to a provision of $445,000 for the same period in 2023[191]. - The allowance for credit losses decreased to $18.2 million at September 30, 2024, with a negative provision of $439,000 for the nine months ended September 30, 2024[232]. - Total non-accrual loans increased by $560,000, or 11.6%, to $5.4 million as of September 30, 2024, compared to $4.8 million as of December 31, 2023[244]. - The ratio of non-accrual loans to total loans receivable was 0.32% at September 30, 2024, up from 0.29% at December 31, 2023[244]. - Total loans past due decreased by $628,000, or 5.6%, to $10.6 million at September 30, 2024, from $11.3 million at December 31, 2023[248]. Regulatory and Compliance - The company exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of September 30, 2024[269]. - The effective income tax rate increased to 19.7% for the three months ended September 30, 2024, compared to 13.3% in the same period of 2023[199]. - Income tax expense totaled $4.3 million for the nine months ended September 30, 2024, with an effective tax rate of 24.3%, compared to 19.0% in the prior year[226]. - There have been no changes in the Company's internal control over financial reporting during the fiscal quarter[279]. - The Company has not identified any material effects on its internal control over financial reporting[279]. Cash Flow and Liquidity - Primary uses of cash included $1.66 billion in funding loans held for sale and $145.0 million for payoffs of long-term borrowings during the nine months ended September 30, 2024[258]. - Primary sources of cash included $1.74 billion in proceeds from the sale of loans held for sale and $150.0 million in long-term borrowings during the nine months ended September 30, 2024[259]. - As of September 30, 2024, the company had $41.4 million in cash and cash equivalents, down from $62.3 million in 2023[262]. - The company had $325.3 million in uninsured deposits from approximately 1,354 customers as of September 30, 2024[264]. Shareholder Actions - Shareholders' equity decreased by $2.1 million to $342.0 million at September 30, 2024, primarily due to dividends declared and stock repurchases[238]. - The company authorized a stock repurchase program for 2,000,000 shares, with approximately 1.9 million shares remaining as of September 30, 2024[268]. Interest Rate Risk Management - At September 30, 2024, a 100 basis point increase in interest rates is projected to decrease net interest income by 7.08%[275]. - The company has implemented strategies to manage interest rate risk, including emphasizing variable rate loans and shortening the expected average life of the investment portfolio[272].

Financial Performance - Waterstone Financial, Inc. reported net income of $4.7 million, or $0.26 per diluted share, for Q3 2024, compared to $3.3 million, or $0.16 per diluted share, for Q3 2023[1]. - Net income for the quarter was $4,728,000, representing a 45.4% increase compared to $3,253,000 in the prior year[9]. - Net income for Q3 2024 was $4,728,000, down from $5,712,000 in Q2 2024, representing a decrease of 17.2%[11]. - Basic earnings per share increased to $0.26 from $0.16, a growth of 62.5% year-over-year[9]. - The net income for the Community Banking segment was $4,705,000 for September 30, 2024, an increase from $4,539,000 for the same period last year, reflecting a growth of 3.7%[13]. Asset and Loan Growth - Average loans held for investment increased by $60.9 million, or 3.7%, to $1.69 billion for Q3 2024 compared to $1.63 billion in Q3 2023[3]. - Loans receivable increased to $1,695,403,000 from $1,664,215,000, reflecting a growth of 1.9%[10]. - Average loans receivable and held for sale increased to $1,870,627,000 in Q3 2024 from $1,859,608,000 in Q2 2024, reflecting a growth of 0.92%[12]. - Loan originations in the Mortgage Banking segment decreased by $38.8 million, or 6.5%, to $558.7 million for Q3 2024 compared to $597.6 million in Q3 2023[5]. - Loan originations in the Mortgage Banking segment totaled $558,729,000 for September 30, 2024, a decrease from $634,109,000 for the previous quarter, indicating a decline of 11.9%[14]. Deposit Growth - Average deposits (excluding escrow accounts) rose by $47.9 million, or 4.0%, to $1.25 billion for Q3 2024 compared to $1.20 billion in Q3 2023[4]. - Total deposits rose to $1,263,841,000, compared to $1,190,624,000 at the end of 2023, marking a 6.1% increase[10]. Income and Expense Analysis - Total interest income for the quarter ended September 30, 2024, was $29,191,000, an increase of 10.9% from $26,377,000 for the same period in 2023[9]. - Noninterest income for the quarter was $22,552,000, slightly up from $22,230,000 in the same quarter last year[9]. - Total noninterest expenses decreased to $28,560,000 from $30,021,000, a reduction of 4.9%[9]. - Total noninterest income decreased to $22,552,000 in Q3 2024 from $26,497,000 in Q2 2024, indicating a decline of 14.8%[11]. Efficiency Ratios - The efficiency ratio for Q3 2024 was 60.35%, compared to 54.43% for Q3 2023, indicating a decline in operational efficiency[4]. - The efficiency ratio for the Community Banking segment improved to 60.35% for the quarter ended September 30, 2024, down from 62.37% for the previous quarter, indicating enhanced operational efficiency[13]. - The efficiency ratio for the Mortgage Banking segment was 99.67% for the quarter ended September 30, 2024, compared to 91.64% for the previous quarter, indicating a decline in efficiency[14]. Credit Quality - Nonperforming assets as a percentage of total assets remained stable at 0.25% for Q3 2024, unchanged from Q2 2024, but up from 0.20% in Q3 2023[2]. - The allowance for credit losses on loans was $18,198,000, down from $18,549,000, indicating improved credit quality[10]. - The allowance for credit losses to loans receivable was 1.07% as of September 30, 2024, compared to 1.10% in Q2 2024[11]. - Provision for credit losses in the Community Banking segment was $(302,000) for September 30, 2024, compared to $(550,000) for the same period last year, showing an improvement in credit quality[13]. Segment Performance - The Community Banking segment achieved pre-tax income of $5.6 million for Q3 2024, a slight decrease of $14,000, or 0.2%, from Q3 2023[3]. - Mortgage Banking segment pre-tax income improved to $144,000 for Q3 2024, compared to a pre-tax loss of $2.1 million in Q3 2023[5]. - Community Banking segment reported net interest income of $12,250,000 for September 30, 2024, an increase from $12,056,000 for September 30, 2023, representing a growth of 1.6% year-over-year[13]. - Total noninterest income in the Community Banking segment was $1,227,000 for September 30, 2024, compared to $894,000 for the same period last year, reflecting a significant increase of 37.2%[13]. - Total noninterest income in the Mortgage Banking segment was $21,386,000 for September 30, 2024, an increase from $16,028,000 for the same period last year, marking a growth of 33.5%[14].

Company Overview - Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank, established in 1921, offering a full suite of personal and business banking products [2] - WaterStone Bank operates branches in various locations across Wisconsin, including Wauwatosa, Brookfield, and Milwaukee [2] - Waterstone Mortgage, a subsidiary of WaterStone Bank, has the capability to lend in 48 states [2] Dividend Declaration - On September 24, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.15 per common share [1] - The dividend is scheduled to be payable on November 1, 2024, to shareholders of record as of the close of business on October 8, 2024 [1]

Financial Performance - Net income for the community banking segment decreased to $4.3 million for Q2 2024, down from $5.2 million in Q2 2023, representing a decline of 17.3%[147] - Net interest income for the community banking segment fell by $2.0 million to $11.2 million in Q2 2024, compared to $13.2 million in Q2 2023, a decrease of 15.2%[147] - The mortgage banking segment reported a net income of $1.3 million for Q2 2024, a turnaround from a net loss of $1.2 million in Q2 2023[150] - Net income for the community banking segment totaled $7.0 million for the six months ended June 30, 2024, down from $10.0 million for the same period in 2023[172] - Net interest income decreased by $4.7 million, or 17.6%, to $21.8 million for the six months ended June 30, 2024, compared to $26.5 million for the same period in 2023[186] Mortgage Banking - Mortgage loan originations increased by $10.8 million, or 1.7%, to $634.1 million in Q2 2024 from $623.3 million in Q2 2023[150] - Total mortgage banking noninterest income rose by $2.0 million, or 8.9%, to $25.1 million in Q2 2024 compared to $23.0 million in Q2 2023[150] - The company originated $1.12 billion in mortgage loans held for sale during the six months ended June 30, 2024, representing an increase of $53.2 million, or 5.0%, from the prior year[175] - Total mortgage banking noninterest income increased by $4.4 million, or 10.8%, to $45.4 million for the six months ended June 30, 2024, compared to $41.0 million for the same period in 2023[175] - Mortgage banking income rose by $2.92 million, or 13.3%, to $24.84 million for the three months ended June 30, 2024, compared to $21.91 million for the same period in 2023[166] - Mortgage banking income rose by $6.2 million, or 16.1%, to $44.9 million for the six months ended June 30, 2024, compared to $38.7 million for the same period in 2023[192] Interest Income and Expenses - Interest income on loans increased by $3.5 million, or 15.6%, to $25.6 million, driven by a 49 basis point increase in average yield and a $81.6 million, or 5.1%, increase in average loans held for investment[160] - Interest expense on time deposits rose by $3.5 million, or 71.1%, to $8.3 million, attributed to a 161 basis point increase in average cost of time deposits[160] - Interest expense on time deposits increased by $8.1 million, or 102.0%, to $16.0 million, primarily due to a 192 basis point increase in average cost[187] - Interest expense on borrowings increased by $2.0 million, or 35.7%, to $7.6 million due to an 84 basis point increase in the cost of borrowings[160] Credit Losses and Provisions - The community banking segment experienced a negative provision for credit losses of $279,000 in Q2 2024, compared to a provision of $158,000 in Q2 2023[148] - There was a negative provision for credit losses of $225,000 for the three months ended June 30, 2024, compared to a $186,000 provision for credit losses for the same period in 2023[162] - The provision for credit losses was a negative $158,000 for the six months ended June 30, 2024, compared to a $646,000 provision for credit losses for the same period in 2023[189] - The allowance for credit losses decreased to $18.4 million at June 30, 2024, with a negative provision of $146,000 for the six months ended June 30, 2024[203] Noninterest Income and Expenses - Total noninterest income increased by $3.0 million, or 12.6%, to $26.5 million during the three months ended June 30, 2024, compared to $23.5 million in the same period of 2023[164] - Total noninterest income increased by $5.7 million, or 13.5%, to $47.7 million during the six months ended June 30, 2024, compared to $42.1 million for the same period in 2023[191] - Total noninterest expenses decreased by $663,000, or 2.1%, to $30.26 million for the three months ended June 30, 2024, compared to $30.92 million for the same period in 2023[168] - Total noninterest expenses decreased by $2.2 million, or 3.7%, to $57.8 million for the six months ended June 30, 2024, compared to $60.0 million for the same period in 2023[195] Assets and Liabilities - Total assets increased by $76.2 million, or 3.4%, to $2.29 billion at June 30, 2024, from $2.21 billion at December 31, 2023[199] - Total liabilities increased to $1,877,402 thousand as of June 30, 2024, compared to $1,737,124 thousand as of June 30, 2023[182] - The average balance of borrowings increased by $115.8 million to $612.7 million during the six months ended June 30, 2024[187] - Total deposits increased by $33.3 million to $1.22 billion at June 30, 2024, driven by a $36.3 million increase in time deposits[204] Shareholders' Equity - Shareholders' equity decreased by $9.1 million to $334.9 million at June 30, 2024, primarily due to dividends declared and stock repurchases[206] - The company has a stock repurchase program authorized for 2,000,000 shares, with approximately 1.9 million shares remaining as of June 30, 2024[230] Regulatory and Compliance - The company is considered "well capitalized" under regulatory guidelines as of June 30, 2024[231] - There have been no changes in the Company's internal control over financial reporting during the fiscal quarter[239] - The Company has not identified any material effects on its internal control over financial reporting[239] - Legal proceedings and contingent liabilities are detailed in Part I, Item 1, Note 8[240] Market and Economic Conditions - A 100 basis point increase in interest rates is projected to decrease net interest income by 7.08% over the next 12 months, while a decrease of 100 basis points is expected to increase net interest income by 7.86%[235]

Financial Performance - Consolidated net income for the quarter ended June 30, 2024, was $5.7 million, an increase of 42.5% from $4.0 million for the same quarter in 2023[2] - Net income for the quarter ended June 30, 2024, was $5.712 million, up from $4.007 million in the same quarter of 2023, representing a growth of 42.5%[17] - Net income for June 30, 2024, was $4,349,000, up from $2,640,000 for March 31, 2024, indicating a significant increase of 64.7%[20] - Net income for June 30, 2024, was $1,313 thousand, a significant increase from $298 thousand for March 31, 2024[28] Asset and Deposit Growth - Average deposits increased by $35.7 million, or 3.0%, to $1.22 billion for the quarter ended June 30, 2024, compared to $1.18 billion for the same quarter in 2023[3] - Total assets reached $2.289 billion as of June 30, 2024, compared to $2.213 billion as of June 30, 2023, marking an increase of 3.4%[18] Loan Performance - Loan originations rose by $10.8 million, or 1.7%, to $634.1 million during the quarter ended June 30, 2024, compared to $623.3 million for the same quarter in 2023[4] - Average loans held for investment increased by $81.6 million, or 5.1%, to $1.67 billion for the quarter ended June 30, 2024, compared to $1.59 billion for the same quarter in 2023[13] - Past due loans in the Community Banking Segment rose to $9.3 million at June 30, 2024, compared to $5.7 million at June 30, 2023[13] - Loan originations reached $634,109 thousand for June 30, 2024, up from $485,109 thousand for March 31, 2024, indicating a growth of 30.6%[28] Income and Expense Analysis - Net interest income fell by $2.0 million, or 15.1%, to $11.2 million for the quarter ended June 30, 2024, down from $13.2 million in the same quarter of 2023[13] - Total interest income increased to $28.020 million for the quarter ended June 30, 2024, from $24.247 million in the same quarter of 2023, representing a growth of 11.5%[17] - Net interest income after provision for credit losses was $10.904 million for the quarter ended June 30, 2024, compared to $12.489 million for the same quarter in 2023, a decrease of 12.7%[17] - Total noninterest income increased to $26.497 million for the quarter ended June 30, 2024, from $23.525 million in the same quarter of 2023, reflecting a growth of 8.4%[17] - Total noninterest expenses were $7,937,000 for June 30, 2024, a decrease from $8,204,000 for March 31, 2024, showing a reduction of 3.3%[20] - Total noninterest income increased to $25,081 thousand for June 30, 2024, from $20,328 thousand for March 31, 2024, representing a growth of 23.3%[28] - Total noninterest expenses increased to $22,478 thousand for June 30, 2024, from $19,456 thousand for March 31, 2024, reflecting a rise of 10.4%[28] Efficiency and Ratios - Return on average assets improved to 1.02% for the quarter ended June 30, 2024, compared to 0.74% for the same quarter in 2023[2] - The efficiency ratio was 62.37% for the quarter ended June 30, 2024, compared to 55.81% for the same quarter in 2023[3] - The efficiency ratio for the quarter-to-date (QTD) was 62.37%, an improvement from 65.17% for the previous quarter[20] - Return on average equity (QTD) was 6.84% for June 30, 2024, up from 3.56% for March 31, 2024[26] - The net interest margin (QTD) was 2.01% for June 30, 2024, slightly down from 2.15% for March 31, 2024[26] Shareholder Returns - The company maintained a robust share repurchase program, repurchasing approximately 481,000 shares at a cost of $5.8 million, or $11.99 per share, which was accretive to book value per share by $0.13[2] - Book value per share increased to $17.20 at June 30, 2024, from $16.94 at December 31, 2023[2]

Financial Performance - Net income for the community banking segment decreased to $2.6 million for Q1 2024, down from $4.8 million in Q1 2023, reflecting a decline of 45.8%[161] - Net interest income for the community banking segment fell by $2.4 million to $11.6 million in Q1 2024, compared to $14.0 million in Q1 2023, a decrease of 17.1%[161] - The mortgage banking segment reported a net income of $298,000 for Q1 2024, a significant recovery from a net loss of $2.7 million in Q1 2023[164] - Total noninterest income increased by $2.7 million, or 14.5%, to $21.2 million, primarily due to a rise in mortgage banking income[179] - Mortgage banking income grew by $3.3 million, or 19.7%, to $20.1 million, resulting from a $62.0 million increase in total loan origination volume, which rose by 14.9%[180] Interest Income and Expense - Interest income on loans increased by $4.6 million, or 23.1%, to $24.5 million, driven by a 59 basis point increase in average yield and an 8.7% increase in average loans held for investment[176] - Interest expense on deposits and borrowings increased by $7.6 million in Q1 2024 due to rising interest rates, impacting net interest income[161] - Net interest income decreased by $2.7 million, or 19.3%, to $11.1 million for the three months ended March 31, 2024, compared to $13.8 million for the same period in 2023, primarily due to increased cost of funds from rising interest rates[175] - Interest expense on time deposits rose by $4.6 million, or 150.8%, to $7.7 million, attributed to a 227 basis point increase in average cost and a $91.0 million increase in average balance[176] - The net interest margin on a fully tax equivalent basis was 2.16% for the three months ended March 31, 2024, compared to 2.90% for the same period in 2023[175] Asset Quality - The provision for credit losses was $105,000 in Q1 2024, down from $388,000 in Q1 2023, indicating improved credit quality[162] - The provision for credit losses was $67,000 for the three months ended March 31, 2024, a decrease from $460,000 for the same period in 2023[177] - Total nonperforming assets increased slightly to $5.078 million at March 31, 2024, from $5.062 million at March 31, 2023[198] - The allowance for credit losses remained at $18.5 million at March 31, 2024, with a negative provision of $3,000 for the quarter[189] - Past due loans decreased by $604,000, or 5.4%, to $10.6 million at March 31, 2024, from $11.3 million at December 31, 2023[208] Balance Sheet Highlights - Total assets increased to $2.19 billion as of March 31, 2024, compared to $2.05 billion as of March 31, 2023[175] - Cash and cash equivalents rose by $9.3 million, or 25.5%, to $45.7 million at March 31, 2024, compared to $36.4 million at December 31, 2023[184] - Total deposits increased by $9.3 million to $1.20 billion at March 31, 2024, primarily due to a $17.0 million increase in time deposits[191] - Total borrowings increased by $23.1 million, or 3.8%, to $634.2 million at March 31, 2024[192] - Shareholders' equity decreased by $6.1 million to $338.0 million at March 31, 2024, primarily due to dividends declared and stock repurchases[195] Regulatory and Capital Management - As of March 31, 2024, WaterStone Bank exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines[230] - The Company had approximately $293.5 million of uninsured deposits for approximately 1,243 customers as of March 31, 2024[225] - The Company authorized a 2,000,000 share stock repurchase program in the second quarter of 2023, with approximately 403,000 shares remaining as of March 31, 2024[229] Interest Rate Risk Management - A 100 basis point instantaneous increase in interest rates is projected to decrease forecast net interest income over the next 12 months by 7.08%, while a 100 basis point decrease in rates is expected to increase net interest income by 7.86%[239] - WaterStone Bank emphasizes variable rate loans and has implemented strategies to manage interest rate risk, including reducing the expected average life of the investment portfolio[235] - Management regularly monitors interest rate risk to minimize exposure of earnings and capital to changes in interest rates[236] - The Asset/Liability Committee meets at least weekly to review asset/liability policies and interest rate risk position, which are evaluated quarterly[234] Internal Controls and Procedures - The company’s disclosure controls and procedures have been evaluated and deemed effective by the CEO and CFO as of the end of the reporting period[240] - There have been no changes in the company's internal control over financial reporting that materially affected its effectiveness during the fiscal quarter[241]