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The CARES Act, signed into law at the end of March 2020, allowed for a temporary delay in the adoption of accounting guidance under Accounting Standards Codification Topic 326, “Financial Instruments – Credit Losses (“CECL”) until the earlier of December 31, 2020 or the 60th day after the end of the COVID-19 national emergency.  During the quarter ended March 31, 2020, pursuant to the CARES Act and guidance from the Securities and Exchange Commission (“SEC”) and Financial Accounting Standards Board (“FASB”), we elected to delay adoption of CECL.  On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law.  Among other provisions, this Act extended the temporary delay on the adoption of CECL until January 1, 2022.  We have elected to continue to delay adoption of CECL.  As a result, our financial statements for the quarter and year ended December 31, 2020 include an allowance for loan losses that was prepared under the existing incurred loss methodology.

About Waterstone Financial, Inc.

Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank. WaterStone Bank was established in 1921 and offers a full suite of personal and business banking products. The Bank has branches in Wauwatosa/State St, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield/Loomis Rd, Milwaukee/Oklahoma Ave, Oak Creek/27th St, Oak Creek/Howell Ave, Oconomowoc/Lake Country, Pewaukee, Waukesha, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 48 states. For more information about WaterStone Bank, go to http://www.wsbonline.com.

Forward-Looking Statements

This press release contains statements or information that may constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as “may,” “expects,” “anticipates,” “estimates” or “believes.”  Any such statements are based upon current expectations that involve a number of risks and uncertainties and are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements.  Factors that might cause such a difference include changes in interest rates; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies, including significant disruption to financial market and other economic activity caused by the outbreak of COVID-19; and other factors, including risk factors referenced in Item 1A. Risk Factors in Waterstone’s most recent Annual Report on Form 10-K and as may be described from time to time in Waterstone’s subsequent SEC filings, which factors are incorporated herein by reference.  Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only Waterstone’s belief as of the date of this press release.

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
		For The Three Months Ended March 31,
		2021				2020
		(In Thousands, except per share amounts)
Interest income:
Loans		$	16,603			$	17,687
Mortgage-related securities			491				702
Debt securities, federal funds sold and short-term investments			875				1,063
Total interest income			17,969				19,452
Interest expense:
Deposits			1,517				4,318
Borrowings			2,500				2,608
Total interest expense			4,017				6,926
Net interest income			13,952				12,526
Provision for loan losses			(1,070	)			785
Net interest income after provision for loan losses			15,022				11,741
Noninterest income:
Service charges on loans and deposits			690				481
Increase in cash surrender value of life insurance			301				353
Mortgage banking income			54,391				30,406
Other			817				224
Total noninterest income			56,199				31,464
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			34,123				24,401
Occupancy, office furniture, and equipment			2,565				2,741
Advertising			824				900
Data processing			971				1,006
Communications			331				338
Professional fees			(315	)			1,832
Real estate owned			(12	)			11
Loan processing expense			1,335				1,076
Other			3,178				2,903
Total noninterest expenses			43,000				35,208
Income before income taxes			28,221				7,997
Income tax expense			6,877				1,928
Net income		$	21,344			$	6,069
Income per share:
Basic		$	0.90			$	0.24
Diluted		$	0.89			$	0.24
Weighted average shares outstanding:
Basic			23,735				25,405
Diluted			23,950				25,612