WSBF

Waterstone is a Wisconsin savings-institution holding company with two segments the MD&A spells out clearly: a community bank that produces most of the net interest income, and Waterstone Mortgage, which originates residential loans 'primarily for sale in the secondary market' and drives the bulk of noninterest income and expense. That mortgage engine is the reason the earnings line is so violent: net income swung from $70.8M in the 2021 refi boom to $9.38M in 2023, then recovered to $18.7M (FY2024) and $26.4M (FY2025, +41.3%). FY2025 diluted EPS of $1.48 (+46.5%) outran net income because the share count fell 5% on $16.2M of buybacks — real per-share value creation, but it flatters the growth optics.

Quality is the sticking point. ROE is just 7.6%, below a normal ~10% cost of equity for a bank, and with equity of $349M against 18.4M shares, book value is ~$19/share — so at $20.60 the stock trades near 1.1x book and 13.9x FY2025 EPS. That is a full, not cheap, multiple for a lender earning sub-cost-of-equity returns on cyclically recovering (not peak) profits. Operating cash flow fell 49.7% to $24.2M, though for a mortgage originator that line is noisy from loans-held-for-sale timing rather than a clear deterioration.