Waterstone Financial, Inc. Earnings Per Share Disclosure
| 16) | Earnings Per Share |
Earnings per share are computed using the two-class method. Basic earnings per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding adjusted for the dilutive effect of all potential common shares.
There were 173,000, 203,000, and 197,000 antidilutive shares of common stock (where the exercise price exceeds the average price of common stock for the period) for the years ended December 31, 2025, 2024, and 2023, respectively.
Presented below are the calculations for basic and diluted earnings per share:
| For the year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| (In Thousands, except for per share amounts) | ||||||||||||
| Net income | $ | 26,402 | $ | 18,688 | $ | 9,375 | ||||||
| Weighted average shares outstanding | 17,837 | 18,556 | 20,158 | |||||||||
| Effect of dilutive potential common shares | 30 | 33 | 38 | |||||||||
| Diluted weighted average shares outstanding | $ | 17,867 | $ | 18,589 | $ | 20,196 | ||||||
| Basic income per share | $ | 1.48 | $ | 1.01 | $ | 0.47 | ||||||
| Diluted income per share | $ | 1.48 | $ | 1.01 | $ | 0.46 | ||||||
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.