Waterstone Financial, Inc. (WSBF) | Investment Case

1. Company Snapshot

1.a. Company Description

Waterstone Financial, Inc.operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States.It operates in two segments, Community Banking and Mortgage Banking.

The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts.It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services.The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market.

The company also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities.It operates 14 full-service banking offices, 1 drive-through office, and 14 automated teller machines located in Milwaukee, Washington, and Waukesha Counties, Wisconsin.The company was formerly known as Wauwatosa Holdings, Inc.

and changed its name to Waterstone Financial, Inc.in August 2008.Waterstone Financial, Inc.

was founded in 1921 and is based in Wauwatosa, Wisconsin.

Show Full description

1.b. Last Insights on WSBF

Waterstone Financial's recent performance was driven by a 73% year-over-year surge in Q3 earnings, fueled by higher loan yields, margin expansion, and steady asset quality. The company's successful turnaround is evident in its banking and mortgage segments returning to growth and profitability. A recent rating upgrade reflects the rebound in mortgage operations and margin expansion. Additionally, the company's disciplined expense management and improved asset quality have driven a sharp rebound in earnings. A quarterly cash dividend of $0.15 per common share was also declared.

1.c. Company Highlights

Last Price	16.16
Change Percentage	0.09%
Open	16.21
Previous Close	16.14
Market Cap ( Millions)	298
Volume	14730
Year High	16.75
Year Low	11.61
M A 50	15.34
M A 200	14.01

FCF Yield	14.79%
Dividend Yield	3.71%
ROE	6.99%
Debt / Equity	135.76%
Net Debt / EBIDTA	1331.64%
Price To Book	0.84
Price Earnings Ratio	12.14
Price To FCF	6.76
Price To sales	2.23
EV / EBITDA	22.79

2. Transcript Summary

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3. NewsRoom

Waterstone Financial (NASDAQ:WSBF) Stock Crosses Above 200-Day Moving Average – Time to Sell?

Nov -19

Source: defenseworld.net

The Phoenix Of Port Washington: Waterstone Financial's Sustainable Turnaround

Nov -04

Source: seekingalpha.com

WSBF's Q3 Earnings Soar 73% Y/Y on Higher Loan Yield, Stock up 5%

Oct -29

Source: zacks.com

Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Nine Months Ended September 30, 2025

Oct -23

Source: globenewswire.com

WSBF Upgraded to Outperform Amid Strong Mortgage Unit, Margin Expansion

Oct -07

Source: zacks.com

Waterstone Financial Declares Regular Quarterly Cash Dividend

Sep -23

Source: globenewswire.com

Waterstone Financial's Q2 Earnings Up Y/Y on Community Bank Gains

Jul -28

Source: zacks.com

Waterstone Financial Boosts Q2 Profits

Jul -25

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.07%)

6. Segments

Mortgage Banking

Expected Growth: 8.5%

Waterstone Financial, Inc.'s 8.5% growth in Mortgage Banking is driven by increasing demand for mortgage loans, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation, improved operational efficiency, and competitive pricing have contributed to its growth. Furthermore, the low interest rate environment and government-backed loan programs have also supported the segment's growth.

Community Banking

Expected Growth: 7.5%

Strong loan growth driven by expansion in commercial and residential lending, coupled with strategic branch acquisitions, has contributed to Waterstone Financial's 7.5% community banking growth. Additionally, the company's focus on relationship-based banking, digital transformation, and cost control measures have enhanced operational efficiency, further supporting growth.

Holding Company and Other

Expected Growth: 6.5%

Waterstone Financial, Inc.'s Holding Company and Other segment growth of 6.5% is driven by strategic investments, efficient capital allocation, and a strong balance sheet. Additionally, the company's diversified revenue streams, cost savings initiatives, and favorable regulatory environment contribute to its growth momentum.

7. Detailed Products

Mortgage Banking

Waterstone Financial, Inc. originates, sells, and services residential mortgage loans through its mortgage banking segment.

MSR Asset Management

The company's MSR asset management segment involves the management of mortgage servicing rights, which are the rights to service mortgage loans.

Loan Servicing

Waterstone Financial, Inc. provides loan servicing for mortgage loans, including billing, payment processing, and customer service.

8. Waterstone Financial, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Waterstone Financial, Inc. is medium due to the presence of alternative financial institutions and online lending platforms.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of multiple financial institutions and online lending platforms, giving customers the power to negotiate interest rates and terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's strong financial position and ability to negotiate favorable terms with suppliers.

Threat Of New Entrants

The threat of new entrants is medium due to the presence of regulatory barriers and the need for significant capital investment to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of multiple financial institutions and online lending platforms, leading to intense competition for customers.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	63.98%
Debt Cost	4.48%
Equity Weight	36.02%
Equity Cost	6.98%
WACC	5.38%
Leverage	177.60%

11. Quality Control: Waterstone Financial, Inc. passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Waterstone Financial

A-Score: 6.4/10

Value: 6.3

Growth: 4.6

Quality: 4.1

Yield: 9.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

Fidelity D&D Bancorp

A-Score: 6.2/10

Value: 8.2

Growth: 6.0

Quality: 7.5

Yield: 7.0

Momentum: 3.0

Volatility: 5.7

1-Year Total Return ->

Great Southern Bancorp

A-Score: 6.2/10

Value: 6.5

Growth: 4.4

Quality: 6.0

Yield: 6.0

Momentum: 6.5

Volatility: 7.7

1-Year Total Return ->

TC Bancshares

A-Score: 5.7/10

Value: 5.5

Growth: 6.3

Quality: 5.6

Yield: 0.0

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

Equity Bancshares

A-Score: 5.5/10

Value: 6.1

Growth: 6.6

Quality: 5.8

Yield: 3.0

Momentum: 4.0

Volatility: 7.3

1-Year Total Return ->

Bridgewater Bancshares

A-Score: 5.4/10

Value: 6.9

Growth: 6.4

Quality: 5.1

Yield: 0.0

Momentum: 7.5

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-6.16%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.38%

Waterstone Financial, Inc. - US94188P1012

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WSBF

1.c. Company Highlights

Weak Momentum

Higher Yield

Lower Growth

Revenues Beats

Stable Momentum

Average Quality

Average Yield

Earnings Miss

Revenues Miss

Fairly Valued

Lower Quality

Medium Volatility

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.07%)

6. Segments

Mortgage Banking

Expected Growth: 8.5%

Community Banking

Expected Growth: 7.5%

Holding Company and Other

Expected Growth: 6.5%

7. Detailed Products

Mortgage Banking

MSR Asset Management

Loan Servicing

8. Waterstone Financial, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Waterstone Financial, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

16.15$

Current Price

16.16$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA