Winchester Bancorp Inc(WSBK) - 2026 Q1 - Quarterly Results

Company Announcement & Financial Highlights Winchester Bancorp, Inc. reported a net income of $962 thousand, or $0.11 per common share, for Q3 2025, a significant increase from the prior quarter's net loss First Quarter 2025 Financial Results Q3 2025 saw Winchester Bancorp, Inc. achieve a net income of $962 thousand, reversing the prior quarter's loss primarily due to a one-time charitable contribution Net Income and EPS Comparison (QoQ) | Metric | Q3 2025 | Q2 2025 | | :----------------------- | :------- | :-------- | | Net Income (thousands) | $962 | ($920) | | EPS (per common share) | $0.11 | ($0.10) | - Net income increased by $1.9 million compared to the prior quarter[2] - The net loss during the quarter ended June 30, 2025, was driven by a $2.3 million contribution to the Winchester Savings Bank Charitable Foundation[2] CEO Commentary CEO John A. Carroll emphasized strong loan and deposit growth, exceeding $1 billion in total assets, and strategic initiatives like a new municipal deposit channel - Loan growth was strong at $42.0 million[3] - Deposit growth was strong at $37.2 million[3] - Total assets reached over $1 billion[3] - Management launched a new deposit channel focusing on municipal deposits to contribute to strong deposit growth for the remainder of the fiscal year[3] Financial Performance Analysis This section analyzes key financial performance metrics, including net interest income, credit loss provisions, non-interest income, non-interest expenses, and net income trends Net Interest Income Net interest income and margin significantly increased quarter-over-quarter and year-over-year, driven by higher loan balances and improved investment security yields Net Interest Income and Margin Trends | Metric | Q3 2025 (thousands) | Q2 2025 (thousands) | Q3 2024 (thousands) | Change QoQ | Change YoY | | :------------------ | :------------------ | :------------------ | :------------------ | :---------- | :---------- | | Net Interest Income | $5,741 | $5,348 | $3,768 | +$393 (7.3%)| +$1,973 (52.4%)| | Net Interest Margin | 2.49% | 2.38% | 1.84% | +9 bps | +65 bps | - The increase in interest income was primarily attributable to the increase in the average balance of loans and higher yields on investment securities as a result of new purchases and additional restructuring of the existing investment portfolio[12] - The decrease in interest expense was attributable to the decrease in average rates on interest-bearing deposit accounts[12] Provision for Credit Loss Provision for credit loss decreased by $1 million quarter-over-quarter, primarily due to a methodology change and reserve releases from lower off-balance sheet commitments Provision for Credit Losses | Metric | Q3 2025 (thousands) | Q2 2025 (thousands) | Change QoQ | | :------------------------ | :------------------ | :------------------ | :----------- | | Provision (benefit) for credit losses | ($320) | $687 | ($1,007) (-146.6%)| - The decrease was partially due to the change in the loan loss methodology from the Federal Reserve developed Scaled CECL Allowance for Credit Losses Estimator (SCALE) method to the Discounted Cash Flow (DCF) model[7] - A release of reserves occurred due to lower off-balance sheet commitments and changes to reserves for individually assessed loans[7] - Due to the change in methodology, provision for credit losses on loans increased by $561 thousand, while provision for credit losses on off-balance sheet commitments decreased by $718 thousand, representing a net change of $158 thousand[12] Non-Interest Income Non-interest income significantly decreased due to a $317 thousand loss on the sale of available-for-sale securities as management restructured the portfolio for higher yields Non-Interest Income Trends | Metric | Q3 2025 (thousands) | Q2 2025 (thousands) | Q3 2024 (thousands) | Change QoQ | Change YoY | | :----------------- | :------------------ | :------------------ | :------------------ | :----------- | :----------- | | Total Non-Interest Income | $52 | $606 | $501 | ($554) (-91.4%)| ($449) (-89.6%)| | Loss on AFS Securities, net | ($317) | — | — | ($317) (100.0%)| ($317) (100.0%)| - The decrease was due to a $317 thousand loss on sale of available-for-sale securities as management restructured part of the portfolio to take advantage of higher yielding investments[8] Non-Interest Expense Non-interest expense decreased quarter-over-quarter, primarily due to the absence of a $2.3 million charitable contribution from the prior quarter Non-Interest Expense Trends | Metric | Q3 2025 (thousands) | Q2 2025 (thousands) | Q3 2024 (thousands) | Change QoQ | Change YoY | | :------------------ | :------------------ | :------------------ | :------------------ | :------------ | :----------- | | Total Non-Interest Expenses | $4,795 | $6,753 | $3,937 | ($1,958) (-29.0%)| +$858 (21.8%)| - Prior quarter expense included a $2.3 million contribution to the Winchester Savings Bank Charitable Foundation[9] - Excluding the charitable foundation contribution, non-interest expense increased $322 thousand from the prior quarter[9] - Audit, legal, and data processing fees increased during the quarter, offset by decreases in employee benefits due to lower expenses related to the pension plan[9] Net Income (Loss) The company reported a net income of $962 thousand for the quarter, a significant improvement from prior quarter and prior year losses Net Income (Loss) Summary | Metric | Q3 2025 (thousands) | Q2 2025 (thousands) | Q3 2024 (thousands) | | :---------------- | :------------------ | :------------------ | :------------------ | | Net Income (Loss) | $962 | ($920) | ($632) | - Income before income taxes was $1,318 thousand, a significant turnaround from a loss of $1,486 thousand in the prior quarter[20] Balance Sheet Overview This section provides an overview of Winchester Bancorp, Inc.'s balance sheet, detailing changes in assets, liabilities, and equity Total Assets Total assets reached $1,005,212 thousand as of September 30, 2025, representing a 5.9% increase from the prior quarter Total Assets (QoQ) | Metric | Sept 30, 2025 (thousands) | June 30, 2025 (thousands) | Change QoQ | | :----------- | :------------------------ | :------------------------ | :-------------- | | Total Assets | $1,005,212 | $949,378 | +$55,834 (5.9%) | Key Asset Changes The company saw asset growth in cash, net loans (driven by construction and commercial real estate), and investment securities due to strategic purchases Key Asset Changes (QoQ) | Asset Category | Sept 30, 2025 (thousands) | June 30, 2025 (thousands) | Change QoQ | | :---------------------- | :------------------------ | :------------------------ | :-------------- | | Cash & Cash Equivalents | $57,717 | $55,244 | +$2,473 (4.5%) | | Net Loans | $793,184 | $751,220 | +$41,964 (5.6%) | | Investment Securities | $115,355 | $104,510 | +$10,845 (10.4%)| - Main drivers of new loan growth were construction ($15.5 million increase) and commercial real estate loans ($13.4 million increase); multi-family and residential real estate portfolios also increased $7.1 million and $5.7 million, respectively[5] - Investment securities increased due to purchases of U.S. treasuries and government agency securities[5] Key Liability & Equity Changes Strong deposit growth, particularly from municipal customers, and increased FHLB borrowings contributed to overall liability changes, while stockholders' equity grew Key Liability & Equity Changes (QoQ) | Category | Sept 30, 2025 (thousands) | June 30, 2025 (thousands) | Change QoQ | | :------------------- | :------------------------ | :------------------------ | :-------------- | | Total Deposits | $716,423 | $679,182 | +$37,241 (5.5%) | | FHLB Borrowings | $164,000 | $147,000 | +$17,000 (11.6%)| | Stockholders' Equity | $116,992 | $115,352 | +$1,640 (1.4%) | - The increase in deposits was a result of growth of $38.9 million in municipal customer deposits, leading to a $48.8 million increase in money market accounts[5] - Certificate of deposit and savings accounts decreased by $8.5 million and $4.6 million, respectively, while demand deposit accounts increased by $1.5 million[5] - The increase in stockholders' equity was driven by net income of $962 thousand and a decrease in other comprehensive loss of $614 thousand[5] Asset Quality This section assesses the company's asset quality, focusing on the allowance for credit losses, non-performing assets, and net charge-offs Allowance for Credit Losses Asset quality remains strong, with the allowance for credit losses on loans increasing slightly in absolute terms but stable as a percentage of total gross loans Allowance for Credit Losses | Metric | Sept 30, 2025 (thousands) | June 30, 2025 (thousands) | | :-------------------- | :------------------------ | :------------------------ | | ACL | $4,356 | $4,151 | | ACL/Total Gross Loans | 0.55% | 0.55% | Non-Performing Assets and Net Charge-offs Total non-performing assets decreased slightly quarter-over-quarter, while the company recorded net charge-offs for the current quarter Non-Performing Assets and Net Charge-offs | Metric | Sept 30, 2025 (thousands) | June 30, 2025 (thousands) | | :-------------------------- | :------------------------ | :------------------------ | | Total Non-Performing Assets | $1,900 (0.24% of total assets) | $2,200 (0.23% of total assets) | | Net Charge-offs | $270 | $0 | - Net charge-offs of $270 thousand were recorded for the quarter ended September 30, 2025, compared to no charge-offs for the quarter ended June 30, 2025[13] About Winchester Bancorp, Inc. Winchester Bancorp, Inc. is the mid-tier holding company for Winchester Savings Bank, a community-oriented financial institution focused on serving local individuals and small businesses - Winchester Bancorp, Inc. is a mid-tier holding company of Winchester Savings Bank and is the majority owned subsidiary of Winchester Bancorp, MHC[11] - Winchester Savings Bank's mission is to operate and grow a profitable community-oriented financial institution that is dedicated to meeting the banking needs of individuals and small businesses in the communities in which it operates[11] Forward-Looking Statements This section provides a standard disclaimer for forward-looking statements, highlighting inherent uncertainties and factors that could cause actual results to differ materially - Forward-looking statements are identified by words such as 'estimate,' 'project,' 'believe,' 'intend,' 'anticipate,' 'assume,' 'plan,' 'seek,' 'expect,' 'will,' 'may,' 'should,' 'indicate,' 'would,' 'contemplate,' 'continue,' 'target' and words of similar meaning[14] - These statements are based on current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the company's control[14] - Key factors that could cause actual results to differ materially include increased competitive pressures, demand for loan products, deposit flows, changes in the interest rate environment, the effects of inflation, general economic conditions, monetary and fiscal policies, changes in portfolio quality, liquidity, asset quality, legislative/regulatory changes, and operational/security system failures[14] - Winchester Bancorp, Inc. undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release[15] Unaudited Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, average balances, yields, and selected financial highlights Consolidated Balance Sheets This section presents the unaudited consolidated balance sheets for Winchester Bancorp, Inc. as of September 30, 2025, and June 30, 2025 Consolidated Balance Sheets (Selected Items) | Item | Sept 30, 2025 (thousands) | June 30, 2025 (thousands) | | :-------------------------------- | :------------------------ | :------------------------ | | Total cash and cash equivalents | $57,717 | $55,244 | | Loans, net | $793,184 | $751,220 | | Total assets | $1,005,212 | $949,378 | | Non-interest-bearing deposits | $63,577 | $55,696 | | Interest-bearing deposits | $652,846 | $623,486 | | Federal Home Loan Bank advances | $164,000 | $147,000 | | Total liabilities | $888,220 | $834,026 | | Total stockholders' equity | $116,992 | $115,352 | Consolidated Statements of Operations This section provides unaudited consolidated statements of operations for the three months ended September 30, 2025, June 30, 2025, and September 30, 2024 Consolidated Statements of Operations (Selected Items) | Item | Q3 2025 (thousands) | Q2 2025 (thousands) | Q3 2024 (thousands) | | :-------------------------------- | :------------------ | :------------------ | :------------------ | | Total interest and dividend income | $11,937 | $11,361 | $10,231 | | Total interest expense | $6,196 | $6,013 | $6,463 | | Net interest income | $5,741 | $5,348 | $3,768 | | Provision (benefit) for credit losses | ($320) | $687 | $1,162 | | Total non-interest income | $52 | $606 | $501 | | Total non-interest expenses | $4,795 | $6,753 | $3,937 | | Income (loss) before income taxes | $1,318 | ($1,486) | ($830) | | Net income (loss) | $962 | ($920) | ($632) | Average Balances and Yields This section presents unaudited average balances, interest earned/paid, and annualized yields/rates for interest-earning assets and interest-bearing liabilities Average Balances and Yields (Selected Items) | Item | Q3 2025 Avg Balance (thousands) | Q3 2025 Avg Yield/Rate | Q2 2025 Avg Balance (thousands) | Q2 2025 Avg Yield/Rate | | :-------------------------------- | :------------------------------ | :--------------------- | :------------------------------ | :--------------------- | | Loans | $775,015 | 5.37% | $750,159 | 5.22% | | Securities | $109,870 | 4.05% | $92,553 | 3.73% | | Total interest-earning assets | $921,436 | 5.18% | $898,636 | 5.06% | | Total interest-bearing deposits | $629,541 | 2.97% | $611,811 | 2.93% | | Total interest-bearing liabilities | $770,835 | 3.22% | $758,800 | 3.17% | | Net interest margin | | 2.49% | | 2.38% | Selected Financial Highlights This section summarizes key financial performance indicators and balance sheet metrics, including earnings, per share data, profitability, and asset quality ratios Selected Financial Highlights (Key Ratios) | Metric | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | | Return on average assets (1) | 0.40% | (0.39)% | (0.30)% | | Return on average stockholders' equity (1) | 3.32% | (4.44)% | (3.17)% | | Net interest margin (1) | 2.49% | 2.38% | 1.84% | | Cost of deposits (1) | 2.97% | 2.93% | 3.41% | | Efficiency ratio | 82.77% | 113.37% | 92.22% | | Stockholders' equity/total assets | 11.64% | 12.15% | 9.19% | | ACL/Total loans | 0.55% | 0.55% | 0.47% | | ACL/Total nonperforming loans (NPLs) | 224.67% | 187.57% | 204.94% |