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- Waterstone Financial reported 2Q earnings.
- In line with my expectations, the bank easily beat last quarter's earnings but that still isn't saying much.
- Until the bank is freed from its heavy debt load, earnings will continue to look weak compared to the majority of its peers.
- Waterstone Financial's recent conversion will help fill the loan to deposit gap, but long-term liabilities are still draining earnings.
- Profits will grow when interest expenses fall, but the bank still has a lot of nonperforming assets to resolve.
- On top of problem assets, the bank's recent earnings still show the company relying on a heavy dose of mortgage fees that continue to decline.