In my experience, oily woods, like teak, mahogany, and the Malaysian hardwoods like Epe are the least likely to be affected by water intrusion, because their cells are already full of oil.
Redwood and cedar are used for exterior woodwork on houses because they, too, have some kind of oils in them, but not as much, so they are water-resistant and rot-resistant, but not waterproof or rotproof.
I was able to make a wood lure that was very water resistant out of vertical grain douglas fir by using only oil-based sealers, paints, and topcoats for the entire finishing process.
It was a one piece lure, so there were very few vulnerable spots for water to enter, and those were well sealed by the glue that I used to lock in the line tie and hook hangers.
I could never keep water out of jointed wooden lures.
Paint schemes that fail due to water intrusion first show bubbling and delamination.
Eventually, the wood swells, and then shrinks and cracks as it dries.
Wood's cells are shaped like honey combs, with flat sided walls. When wood absorbs water, the walls of the cells are stretched and belly out, forcing them away from the adjacent cells. When the wood dries, the cell walls collapse inward instead of just staying flat, and that's why wood shrinks and cracks once it's been soaked and then dried out.
Kiln drying is a slow process of removing water from wood without collapsing the cell walls. Because it's done slowly, the cell walls retain their flat geometric shape without collapsing.
If it's done too fast, you get what's called case hardening, and the wood cracks. Even properly dried wood may still crack at the ends of the board, unless the end grain is sealed first with some kind of waxy sealer, because end grain has been opened by the act of cutting the board to length.
Short story long, water swollen lures are ugly, and no one wants to show them off! Hahaha