Shares of Waterstone Financial, Inc. WSBF have gained 5% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares to the S&P 500 index’s 2.9% growth over the same time frame. Over the past month, the stock has gained 0.9% compared with the S&P 500’s 3.1% growth, suggesting that investor sentiment has been more positive on a relative basis in response to the latest results.
For the third quarter of 2025, Waterstone Financial reported net income of 45 cents per share, marking a substantial 73.1% increase from 26 cents per share in the same period a year ago.
Net interest income grew to $14.7 million from $11.5 million, reflecting a 28% year-over-year gain.
The company reported net income of $7.9 million, which soared 67.6% from $4.7 million in the same period a year ago.
Waterstone Financial, Inc. Price, Consensus and EPS Surprise
Waterstone Financial, Inc. price-consensus-eps-surprise-chart | Waterstone Financial, Inc. Quote
Other Key Business Metrics
Waterstone’s return on average assets (ROAA) increased to 1.4% in the third quarter of 2025 from 0.8% a year earlier. Similarly, return on average equity (ROAE) rose to 9.1% from 5.6% in the prior-year quarter. Book value per share increased to $18.65 as of Sept. 30, 2025, from $17.53 at year-end 2024.
Asset quality metrics continued to reflect sound underwriting practices. Nonperforming assets as a percentage of total assets increased slightly to 0.27% from 0.25% in the year-ago period. Past due loans as a percentage of total loans dropped to 0.5% from 0.6% a year earlier.
Segment-Level Insights
Community Banking
The Community Banking segment posted pre-tax income of $8.4 million, a 49.4% increase from $5.6 million in the third quarter of 2024. Net interest income in this segment rose 19.3% year over year to $14.6 million, largely driven by improved yields on loans and a lower cost of funds. The net interest margin expanded to 2.76% from 2.13% in the same period last year.
The segment recorded a negative provision for credit losses on funded loans of $0.1 million, reflecting continued credit strength. Efficiency improved notably, with the segment’s efficiency ratio decreasing to 48.9% from 60.4% in the prior-year quarter. Average core retail deposits rose 5.2% to $1.3 billion, primarily due to growth in money market and certificate of deposit balances.
Mortgage Banking
Mortgage Banking generated pre-tax income of $1.3 million, up from a modest $0.1 million from the prior-year quarter. Despite a 3.5% decline in loan originations to $539.4 million, improved gross margins on loans sold (3.9% vs. 3.8%) and reduced compensation costs (down 1.3% to $15.7 million) helped boost profitability. Non-interest income in this segment declined slightly to $21 million from $21.4 million.
Management Commentary
CEO William Bruss attributed the strong quarterly results to an enhanced net interest margin and ongoing strength in asset quality. He noted that both the Community and Mortgage Banking segments contributed to the year-over-year improvement in earnings. The increase in book value per share was credited to robust earnings, share repurchases, and favorable valuation adjustments in the investment portfolio.
Factors Influencing Results
The company’s positive net income growth was driven by multiple factors: higher interest income on loans, margin expansion, and controlled operating expenses. A lower cost of borrowings and deposits enhanced the net interest margin. Additionally, the release of credit loss provisions and steady asset quality metrics underscored prudent risk management.
Mortgage operations benefited from tighter expense management and slightly higher loan sale margins, despite a modest drop in origination volumes. In contrast, the community banking arm saw strength in deposit growth and interest income.
Other Developments
During the quarter, Waterstone repurchased approximately 270,000 shares at a cost of $3.8 million. This buyback activity contributed to the 61-cent increase in book value per share.
The company declared a quarterly dividend of 15 cents per share.
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Waterstone Financial, Inc. (WSBF) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).