Waterstone Financial's mortgage banking income rebounded from the first quarter's just above breakeven numbers, helped by a $114 million increase in originations.

"The mortgage banking segment achieved solid growth in loan origination volumes compared to the prior year, but this growth was offset by softer sales margins," William Bruss, CEO of Waterstone Financial, said in a press release.

Waterstone Mortgage reported net income of $1.17 million with pretax income of $1.6 million, while its gross margin was 360 basis points during the second quarter.

This compared with $11,000 of net income and $22,000 of pretax income in the first quarter and one year ago net income of $1.47 million and gross income of just under $2 million. The mortgage banking segment has been profitable for five consecutive quarters.

The gain-on-sale was 365 basis points one quarter ago and 384 basis points for the second quarter of 2025.

BTIG, for the independent mortgage bankers it covers, is expecting a 4 basis point quarter-to-quarter gain in GOS, analyst Doug Harter noted in his comments on the residential real estate finance results at Chase earlier this month. Chase's GOS was 45 basis points lower versus the first quarter.

Jeff McGuiness, president and CEO of Waterstone Mortgage, has said the business is an independent mortgage banker which happens to be a fully owned asset of a bank.

But origination volume of $621.8 million in a period where mortgage rates shot up from their end of February lows compared with $508.3 million in the first quarter and $588.8 million in last year's second quarter.

The mix shifted in the quarter-to-quarter comparison, with purchase making up 88.6% in the most recent period, versus 73.9% three months earlier. In the second quarter of 2025, the purchase share was 91.7%.

Waterstone Financial earned $8.46 million in the second quarter, versus almost $6 million in the first quarter and $7.73 in the second quarter of 2025. Besides the mortgage company, it is the parent of WaterStone Bank.