Welcome to the Annual Meeting of Shareholders of Waterstone Financial, Inc., which I will refer to as the company. Given the continued complications presented by the COVID-19 virus, the annual meeting is being conducted virtually by webcast and audio conference. This annual meeting will please come to order. My name is Douglas Gordon, Chief Executive Officer of the company and WaterStone Bank. Participating with me at the meeting are Mark Gerke, Chief Financial Officer and Executive Vice President of the company and WaterStone Bank, and Bill Bruss, President and Secretary of the company and WaterStone Bank, who will also act as Secretary of the annual meeting. I'd also like to welcome the other directors of the company in attendance at the annual meeting. Patrick Lawton, our Chairman, Ellen Bartel, Thomas Dalum, Michael Hansen, Kristine Rappé, Stephen Schmidt and Derek Tyus.
We have made available on the virtual meeting site the agenda and the rules of conduct of the meeting. If you would like to discuss a matter not on the agenda, I encourage you to contact an officer or director of the company after the meeting. We provided an opportunity to shareholders to submit questions in advance of the annual meeting, and questions will be addressed by management prior to adjournment. Although we will take a vote on the matters to be considered at the annual meeting in a few moments, any registered shareholder wishing to vote their proxy may do so electronically during the meeting. If you've already voted your proxy or proxies, you need not vote again unless you wish to make a change.
The board of directors has previously appointed Denise Mihaljevic to act as the inspector at the annual meeting and any adjournments and to count and examine all voting. The inspector's report will be attached to the minutes of the annual meeting. Secretary has delivered to the inspector a list of the shareholders of the company entitled to vote at the annual meeting, arranged in alphabetical order as of the close of business on March 23rd, 2022, the record date for voting. The secretary informs me that the records of the company show that there are 24,197,131 outstanding votes entitled to be cast at this annual meeting, of which 12,098,566 represent a majority.
We have previously received confirmation that the notice regarding the availability of proxy materials for the shareholder meeting was mailed on or about April 7, 2022, to each shareholder of record as of the close of business on the record date. Copies of the affidavit of distribution, with documents attached, will be attached to the minutes of this annual meeting. Secretary has previously delivered to the inspector the list of shareholders and all proxies which have been received. Secretary informs me that substantially more than a majority of total outstanding votes entitled to be cast at the annual meeting are present in person or by proxy. The inspector is making an exact count and will submit a formal report on the number of shares present or represented during the course of the annual meeting.
A quorum is declared present subject to the confirmation of that fact by the inspector in her report. The business to be acted upon at the annual meeting, as stated in the notice of annual meeting, is as follows. One, the election of two directors of the company. Two, ratification of the company's selection of CliftonLarsonAllen LLP as its independent registered public accounting firm. Three, an advisory non-binding resolution to ratify the approval of executive compensation described in the company's Proxy Statement. In order to save time at this meeting, we propose to arrange the proceedings so that a vote will not be taken until all items have been moved and seconded. Again, registered shareholders who are attending the annual meeting by webcast do have the opportunity to vote their shares during the meeting. If you've already voted by proxy, you need not vote during the meeting.
The first item of business to be voted upon is the election of two directors of the company. The directors to be elected are to serve for a three-year term and until their respective successors have been elected and qualified. The board of directors has nominated to serve as directors Ellen Bartel and Kristine Rappé, each of whom are currently members of the board of directors. The nominees are prepared to serve if elected. Before we continue, I'd like to note that Director Thom Dalum has decided to retire and not stand for re-election to the board of directors. WaterStone Bank has had the benefit of Tom's wisdom and experience for over 42 years.
We thank Th om for his dedicated service to the company as a director and as chair of the Compensation Committee, and we wish him all the best. The chair will now entertain a motion that the proposal to elect the directors be adopted.
I so move.
Is there a second?
I second the motion.
The second item to be acted on is the ratification of the company's selection of CliftonLarsonAllen LLP as its independent registered public accounting firm for 2022. The chair will now entertain a motion to ratify CliftonLarsonAllen LLP as the company's registered independent public accounting firm.
I so move.
Is there a second?
I second the motion.
The third item to be acted on is the ratification of our executive compensation as described in the Proxy Statement. The chair will now entertain a motion to ratify our executive compensation.
I so move.
Second?
I second the motion.
The vote will now be taken on proposals one, two, and three. Will anyone who wishes to vote electronically do so now? If you've already voted your proxy or proxies, you do not need to vote now unless you wish to make a change. I will now pause for two minutes to allow an opportunity for electronic voting. Two minutes have passed, and I declare the voting closed on proposals one through three. As we go into our slides, presentation, and affairs of the company, on slide seven, we show our consolidated annual performance for the last five years. We have historically run somewhere in the $40 million-$50 million range in 2017 through 2019 in pre-tax profits.
In 2020 and 2021, we've had just exceptional years as our mortgage banking has performed exceptionally well, during the pandemic with the refinance craze that was going on. Pre-tax incomes jumped from that $40 million-$50 million up to between $108 million in 2020 and $92 million in 2021. We'll get into the particulars of how that's happened. As we go to the next slide, we show it by operating segment. Start with the community bank. You can see in 2017-2019, we ran somewhere in the $30 million pre-tax range, in the community bank. In 2020, it was only $26 million, but that's because we had put in over $5 million in our allowance for loan losses as we anticipated problems related to the pandemic.
None of those problems ever surfaced, which was fortunate, and it led to 2021, where a record community banking profit, pre-tax profit of $36 million. The mortgage company just went off the charts. Historically, they've run in the $15 million range. Below that in 2018, but that included a settlement of a large lawsuit. 2020, they go from the $15 million to $82 million in pre-tax and followed it up with $56 million in 2021. On the next slide, we show how we compare with our return on assets compared to the Wisconsin-based institutions, the median of all of our peers. As you can see, even in years 2017 through 2019, we exceeded the peer group by a significant amount.
In 2020 and 2021, we're almost 3x the return on assets as they run in the 1.20% range, and we're running in the 3.20%-3.77% range. Numbers that are just completely off the charts as a result of the success of our mortgage banking operation. On the next slide, we show the community bank efficiency ratio. This is a ratio that shows our expenses divided by our income. We show it versus our peers. Our peers run 60%-65% over the term in the efficiency ratio, and we consistently run under 50%. Despite record profits and what we've seen, we've continued to have excellent, strong culture for cost controls, which allows us to be a low-cost provider.
We've been able to grow loan portfolios with lower prices and also we do have a higher cost of funds than what our peers do. As a result, we keep the cost low and can make the profits and exceed our peers despite, you know, the higher cost of funds. On the next slide is our net interest margin. Historically, in 2017 and 2018, we were running over 3% in our net interest margin. We dipped in 2019, and we've kind of leveled out in 2020 at 2.67%-2.68%. You know, that's predominantly because of the zero interest rate environment that the Fed has put through with their easing and loose and bullish monetary policy.
We would expect as interest rates increase and the Fed tightens, that margin will get back to more normalized levels. On the next page shows the dividends we've declared. We've given back to shareholders pretty significantly, especially in relationship to our stock price. For three years, 2017-2019, we paid $0.98 a share, paid $1.36 in 2020. We declared $1.80 in 2021. $0.50 of that was paid in February of 2022, so it was really $1.30. So we've gone from roughly $1 to $1.30 on a stock price that's ranged anywhere from $16-$22. So the returns have been in excess of 6% on a dividend yield, which I think is very attractive in especially regarding the interest rate market that we're in.
We've also done significant buybacks over that timeframe, so we continue to enhance our shareholder value through dividends and stock buybacks. On the next slide, shows our loan and deposit growth. I'll discuss deposits first. You can see each year we've been able to grow deposits. 2020 was an exceptional year. I think it was an exceptional year for the whole banking industry as the government was providing a lot of surplus funds to individuals and businesses, which a good majority of it wasn't needed. As a result, they've left it in liquidity. We also saw deposits grow, but we also saw our business lines of credit decline as the businesses used the government money to pay down our loans.
In 2021, we had less of deposit growth, but that was more by design, because we didn't have the loan growth that was needed to support with deposit growth. Loan growth has been our Achilles heel in the last few years. We had good growth in 2017 and 2018. We were pretty flat in 2019 and 2020. As we get into those 0% interest rate environments, we have a lot of one to four family real estate loans that are on adjustable rate mortgages. We had a number of those refinance into the secondary market on 30-year fixed rate mortgages because the fixed rate mortgages got so competitive, even relative to what our ARM rates were. We had significant
We had a lot of originations during that time in our commercial real estate and business banking, but it wasn't enough to offset the prepayments that we were seeing in our single family. With interest rates rising, I think you can see in our first quarter results, a lot of those prepayments are starting to stop. If we can keep the originations up, you know, we hope to reverse this trend and get some loan growth because it's necessary, especially considering the capital position that we have. On the next slide, we start getting into the metrics of our loan portfolio and the quality of the loan portfolio. We're in the blue line, and we've had actual recoveries over the last four years. Very minimal charge-offs. The portfolio has really performed very well, even outperformed the peers.
Even though our peers are down to virtually zero charge-offs, we've actually been recovering from previous charge-offs and not having any charge-offs that would offset that. That's been a significant contributor to the community banking income. On the next slide shows the overall portfolios versus our peers. It's our non-performing assets to our total assets, and we've dropped down to 0.27 in 2020 and 0.26% in 2021. We're getting to levels that are very difficult to improve on. Our peer group is coming down from 1%. They're down to 0.42%, still above us, but you can see the economy has done well and portfolios have improved.
Now with the recent rise in interest rates and uncertainty in the economy, we're still very confident that our portfolio will outperform our peers. Part of our problem in our loan growth and negative loan growth is we have not changed our credit culture in any way. We have not eased in any way in terms of what we've historically done in terms of our credit analysis and approvals. I think it'll bode well for us going forward, despite the fact that we've lost some loan growth as a result. On the next slide, we start to get into Waterstone Mortgage and what contributed to their successful two years that they've had. You can see in 2017 through 2019, volumes were somewhere in the $2.5 billion-$3 billion range.
They jumped to $4.4 billion and $4.2 billion in 2020 and 2021. A significant increase in volume, and that combined with the next slide. I'm sorry, the next slide is really the model that we have. Next slide is the percentage of business that we do that's purchase business, where they actually use the money to purchase a home rather than refinance an existing mortgage. We've had that model since the beginning. We attract loan officers that have realtor relations and also builder relations because it's a much more stable business, that the purchase business is, whereas the refi business is almost totally dependent on interest rate swings. We don't want to have.
We'll take advantage of the interest rate swings as additional business like we did in 2020 and 2021, but going forward, we want to continue to have a very viable business based on purchase relationships. You can see we've run in 2017-2019 in the 80%-90% range of our business was purchased. The market was 62%-73%. Even during the refinance craze, we did not stop utilizing our model and emphasizing our model. We had higher rates for refinance business that contributed to better margins, but we also would close our purchase businesses first and refinance businesses second.
We put a highest priority on origination and closings to purchase over our refi, and we still maintain 61% in 2020 and 68% in 2021, whereas the market was 41%-46% of mortgage banking operations. I think it's even more prevalent in the fact that from 2020 to 2021, we increased our purchase business from 61% to 68%, while the market actually dropped theirs from 46% to 41%. Although the market is contracting at this point in time as interest rates are rising, we should be able to still outperform the market as the purchase business will not drop as quickly as the refi business. On the next slide, this is also the contributing factor to what the profitability of the mortgage company has been.
We saw where we jumped from $3 billion to $4.4 billion in origination. You combine that with taking margins from 4.5% up to 5.25%, and on that type of volume, and that's where your earnings start jumping from $15 million to $80 million and $60 million. Now, in 2021, the margins are starting to come down as the refinance business was starting to come down. The phenomena that you get when the market's contracting like it is now, the refinance, there's a number of players that enter the market because of the supply of refinance that's out there. When the market turns and the refinance is gone, it takes them a while to reduce the supply in the market.
While they're reducing supply to keep the business going and keep the loan officers happy, they cut prices and margins get cut completely. So you not only have much like we had an increase in volume and an increase in our margins, the phenomena now is a decrease in volumes and a decrease in margins. That should happen, I don't know for how long, generally for a couple quarters until it starts to stabilize and the excess supply is out of the marketplace. On the next slide, shows that in last year we donated over $700,000 to over 240 local nonprofits and schools. In addition, our employees, and we have only about 170 at a community banking level, donated over 600 hours of their time to nonprofits and schools.
We're a community bank, and we feel it's extremely important to give back to the communities we serve. These nonprofits and schools all make our community stronger, and it's hard to be a strong community bank if you don't have a strong community. The next slide shows some of the partners that we've had over the years. You can see our three pillars of giving, our primary giving pillars are veterans and military, education, and children and families in need. We do a lot within the community to get that exposure and help our community nonprofits and schools, as they are tremendous contributors to our community and those pillars that we represent. On the last slide, it's a slide we saw last year. We had new branches that we added in 2019 and 2020, three of them.
They fill in very nice in our platform, giving our customers convenience in our efforts to increase our checking accounts and transaction accounts. All of our branches, we have 14 at this point in time, all of them are within 30 minutes of our corporate headquarters. Again, I think that's great for being a community bank in those three counties that we serve and really providing convenience to our customers, combined with the idea that we have a customer service center with actual human beings that answer the phone and actually operate as a branch in terms of their service and can provide us almost all of the duties that someone in a branch can provide.
Two years ago, we added a pretty robust platform for digital banking, which gives our consumers and our business internet and mobile banking that's pretty much state-of-the-art. We have a lot of platforms to provide various services and products to our customers in order to have them have the convenience of banking with us. As I look, there were not any questions that were submitted, so we will move on. We will now turn to the results of the voting and the items of business. The inspector has completed her count, and the secretary will now read the certificate and report of the inspector of election.
Good morning. The inspector of election has reported as follows. I hereby certify the following. One, Ellen Bartel and Kristine Rappé, the nominees to serve on the board of directors of Waterstone Financial, Inc, have each received the majority of the votes cast at the annual meeting and are hereby elected as directors to Waterstone Financial. Two, the appointment of CliftonLarsonAllen LLP as Waterstone Financial, Inc's independent registered accounting firm has been ratified by a majority of the votes cast at the annual meeting. Three, the non-binding advisory vote regarding ratification of the company's executive compensation as set forth in the April 7th, 2022 Proxy Statement, received a majority of votes in favor of ratification.
Four, at all times during this meeting, more than a majority of the shares outstanding and entitled to vote at the annual meeting were represented in person or by proxy, and consequently, a quorum has been in attendance for the entirety of the annual meeting. Signed, Denise Mihaljevic, Inspector of Election.
The report confirms that a quorum is and has been in attendance at the annual meeting for all purposes. The report also shows that with respect to the first item of business, a majority of the votes have been cast in favor of the election of Ellen Bartel and Kristine Rappé as directors. With respect to the second item of business, a majority of the votes have been cast in favor of the company's selection of CliftonLarsonAllen LLP as the company's registered independent public accounting firm. With respect to the third item of business, a majority of the votes have been cast in favor of the ratification of our executive compensation. The certificate and report of Inspector of Election has been accepted and approved and will be attached to the minutes of the annual meeting.
There being no further business to come before the annual meeting, a motion to adjourn is in order.
I move that the annual meeting be adjourned.
Is there a second?
I second the motion.
Those in favor signify by saying "Aye.
Aye. Aye.
Those opposed say no. The motion is carried. The annual meeting is adjourned. I'd like to thank everyone for their attendance and support. Thank you.