What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-03-06 · 206 added, 252 removed, 1959 unchanged (19% of the section changed)

15 unchanged sentences

Based on that assessment, we believe that, as of December 31, 2024, our internal control over financial reporting is effective based on those criteria.

FORVIS, LLP has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, as stated in their report dated March 6, 2024.

FORVIS, LLP has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, as stated in their report dated February 28, 2025.

/s/ William F.

5 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of financial condition of Waterstone Financial, Inc.

and Subsidiaries (“Company”) as of December 31, 2023, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 6, 2024, expressed an unqualified opinion thereon.

We have audited the accompanying consolidated statements of financial condition of Waterstone Financial, Inc.

and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for the years ended December 31, 2024 and 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2025, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matters communicated below are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Credit Losses on Loans

As described in Notes 1 and 3 to the financial statements, the Company’s loan portfolio and the associated allowance for credit losses (“ACL”) were $1.66 billion and $18.55 million as of December 31, 2023, respectively.

As described in Notes 1 and 3 to the consolidated financial statements, the Company’s loan portfolio and the associated allowance for credit losses (“ACL”) were $1.68 billion and $18.25 million as of December 31, 2024, respectively.

The ACL considers historical loss rates, qualitative reserves and reasonable and supportable forecast adjustments.

6 unchanged sentences

Evaluated the design and tested the operating effectiveness of key controls relating to the Company’s ACL, including controls over:

Management’s process for identification, basis for development and related adjustments, including reasonableness of the qualitative factor components of the ALL

Management’s process for identification, basis for development and related adjustments, including reasonableness of the qualitative factor components of the ACL

Management’s review of reliability and accuracy of data used to calculate and estimate each component of the ACL, including accuracy of the qualitative calculation

3 unchanged sentences

Evaluated the mathematical accuracy of the ACL, including the mathematical application of the qualitative adjustments on the loan segments.

/s/ Forvis Mazars, LLP

We have served as the Company’s auditor since 2023.

Kansas City, Missouri

March 6, 2024

February 28, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

We have audited Waterstone Financial, Inc.

and Subsidiaries’ (“Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework:

and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

(2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2023 and for the year ended December 31, 2023, and our report dated March 6, 2024, expressed an unqualified opinion on those financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2024 and 2023, and for the years ended December 31, 2024 and 2023, and our report dated February 28, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

15 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Forvis Mazars, LLP

Kansas City, Missouri

March 6, 2024

February 28, 2025

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of financial condition of Waterstone Financial, Inc.

and Subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows of Waterstone Financial, Inc.

and Subsidiaries (the Company) for the year ended December 31, 2022, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company’s management is responsible for these financial statements.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provides a reasonable basis for our opinions.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ CliftonLarsonAllen LLP

53 unchanged sentences

Preferred stock (par value $ 0.01 per share) Authorized - 50,000,000 shares in 2024 and 2023, no shares issued

Common stock (par value $.

01 per share) Authorized - 100,000,000 shares at December 31, 2023 and at December 31, 2022, Issued and Outstanding - 20,314,786 at December 31, 2023 and 22,174,225 at December 31, 2022

Common stock (par value $ .01 per share) Authorized - 100,000,000 shares at December 31, 2024 and at December 31, 2023, Issued and Outstanding - 19,343,251 at December 31, 2024 and 20,314,786 at December 31, 2023

Additional paid-in capital

75 unchanged sentences

18,589 20,196 22,010

(1) The Company adopted ASU 2016-13 as of January 1, 2022.

The prior year amounts presented are calculated under the prior accounting standard.

See accompanying notes to consolidated financial statements

6 unchanged sentences

$ 18,688 $ 9,375 $ 19,487

Other comprehensive income (loss), net of tax:

Net unrealized holding gain (loss) arising during the period, net of tax (expense) benefit of ($ 1,584 ), $ 6,868 ,and $ 1,294 , respectively

Other comprehensive (loss) income, net of tax:

Net unrealized holding (loss) gain arising during the period, net of tax benefit (expense) of $ 279 , ($ 1,584 ),and $ 6,868 , respectively

( 994 ) 1,684 ( 18,341 )

Total other comprehensive income (loss)

Total other comprehensive (loss) income

( 994 ) 1,684 ( 18,341 )

8 unchanged sentences

Shareholders'

Income (Loss)

(In Thousands)

6 unchanged sentences

Total comprehensive income

- - - - - - 1,146

Adoption of new accounting pronouncement (See Note 1)

- - - ( 1,392 ) - - ( 1,392 )

ESOP shares committed to be released to Plan participants

12 unchanged sentences

- $ - $ - $ 9,375 $ - $ - $ 9,375

Other comprehensive loss:

Other comprehensive income:

- - - - - 1,684 1,684

1 unchanged sentence

- - - - - - 11,059

Adoption of new accounting pronouncement (See Note 1)

- - - ( 1,392 ) - - ( 1,392 )

ESOP shares committed to be released to Plan participants

12 unchanged sentences

- $ - $ - $ 18,688 $ - $ - $ 18,688

Other comprehensive income:

Other comprehensive loss:

- - - - - ( 994 ) ( 994 )

22 unchanged sentences

$ 18,688 $ 9,375 $ 19,487

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Provision (credit) for credit losses

2 unchanged sentences

2,474 3,301 4,033

Impairment of Mortgage Servicing Rights

(Recovery) impairment of mortgage servicing rights

( 320 ) 320 -

Deferred taxes

10 unchanged sentences

Gain on death benefit on bank owned life insurance

(Increase) decrease in accrued interest receivable

( 266 ) - ( 340 )

Increase in cash surrender value of life insurance

Increase in accrued interest receivable

( 432 ) ( 1,696 ) ( 1,712 )

Decrease (increase) in derivative assets

Increase in cash surrender value of life insurance

( 1,969 ) ( 1,710 ) ( 1,738 )

Increase (decrease) in accrued interest on deposits and borrowings

(Increase) decrease in derivative assets

( 1,094 ) 4,467 ( 10,897 )

Decrease (increase) in prepaid tax expense

Increase in accrued interest on deposits and borrowings

727 1,255 399

Legal settlement

Decrease in prepaid tax expense

1,425 1,557 1,068

1 unchanged sentence

213 ( 5,431 ) 16,260

Net gain related to real estate owned

Gain on sale of mortgage servicing rights

( 152 ) ( 583 ) -

Change in other assets and other liabilities, net

Decrease (increase) in other assets

2,971 ( 1,181 ) 3,345

Net cash (used in) provided by operating activities

Decrease in other liabilities

( 3,564 ) ( 1,533 ) ( 3,395 )

Net cash provided by (used in) operating activities

48,063 ( 27,577 ) 206,665

Investing activities:

Net (increase) decrease in loans receivable

Net increase in loans receivable

( 16,692 ) ( 154,171 ) ( 303,874 )

18 unchanged sentences

2,110 3,530 -

Sales of real estate owned

Death benefit from bank owned life insurance

Net cash (used in) provided by investing activities

662 474 1,183

Net cash used in by investing activities

( 23,963 ) ( 159,224 ) ( 335,742 )

Financing activities:

Net (decrease) increase in deposits

Net increase (decrease) in deposits

169,273 ( 8,388 ) ( 34,374 )

13 unchanged sentences

( 14,915 ) ( 26,032 ) ( 47,830 )

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

( 20,760 ) 176,580 ( 201,003 )

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

3,340 ( 10,221 ) ( 330,080 )

5 unchanged sentences

Cash paid during the period for:

Income tax payments

Income tax (refunds) payments

$ ( 881 ) $ 1,169 $ 4,090

4 unchanged sentences

2,994 3,164 4,511

(1) The Company adopted ASU 2016-13 as of January 1, 2022.

The prior year amounts presented are calculated under the prior accounting standard.

See accompanying notes to consolidated financial statements

105 unchanged sentences

The ACL is adjusted through the provision for credit losses to the amount of amortized cost basis not expected to be collected at the balance sheet date.

The Company made an accounting policy election to exclude accrued interest from the amortized cost basis of loans and the related measurement of the ACL.

Accrued interest is reported as part of prepaid expenses and other assets on the consolidated balance sheets.

The measurement of expected credit losses encompasses information about historical events, current conditions and reasonable and supportable forecasts.

83 unchanged sentences

Under Maryland law, shares repurchased are constituted as authorized but unissued.

The Company reduced the common stock at par value and to the extent the cost acquired exceeds par value, it is recorded through additional paid-in capital on the consolidated statements of financial condition and consolidated statements of changes in shareholders’ equity.

The Company reduces the common stock at par value and to the extent the cost acquired exceeds par value, it is recorded through additional paid-in capital on the consolidated statements of financial condition and consolidated statements of changes in shareholders’ equity.

Revenue Recognition

6 unchanged sentences

Payments for these activities are generally received at the time the performance obligations are satisfied.

Wealth management fee income - this represents monthly fees due from wealth management customers as consideration for managing the customers' assets.

Wealth management investment management and similar fiduciary activities.

These fees are typically paid to the Company on a monthly basis and recognized as the performance obligation is satisfied each month.

Other non-interest income includes items such as bank owned life insurance income, dividends on FHLB stock and other general operating income, none of which are subject to the requirements of ASC 606.

3 unchanged sentences

Accounting Standards Adopted in 2024

The Company adopted "Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures" under ASU 2023 - 07 on January 1, 2024, and applied the standard's provisions.

The impact expands segment disclosure requirements for public entities to require disclosure of significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s key metrics.

ASU 2023 - 07 became effective for our annual financial statements in 2024 and will be effective for interim periods within fiscal years in 2025.

Accounting Standards Adopted in 2023

The Company adopted "Troubled Debt Restructurings and Vintage Disclosures" under ASC Topic 326 on January 1, 2023, and applied the standard's provisions.

51 unchanged sentences

54,304 980 ( 2,285 ) 52,999

Other securities

$ 227,716 $ 1,197 $ ( 24,006 ) $ 204,907

1 unchanged sentence

Fannie Mae, Freddie Mac or Ginnie Mae.

At December 31, 2023 , $ 128.1 million of the Company’s mortgage related securities were pledged as collateral to secure funding from the Federal Reserve Bank's new borrowing facility.

At December 31, 2024 , $ 114,000 of the Company's mortgage related securities were pledged as collateral to secure mortgage banking related activities.

8 unchanged sentences

Due after one year through five years

10,890 10,907

Due after five years through ten years

69 unchanged sentences

While the real estate collateralizing these loans is primarily residential in nature, it ranges from owner-occupied single family homes to large apartment complexes.

Qualifying loans receivable totaling $ 1.25 billion were pledged as collateral against $ 464.0 million and $ 976.7 million were pledged as collateral against $ 385.7 million in outstanding Federal Home Loan Bank of Chicago advances under a blanket security agreement at December 31, 2023 and December 31, 2022 , respectively.

Certain of the Company's executive officers, directors, employees, and their related interests have loans with the Bank.

These loans to related parties are summarized below:

(In Thousands)

Balance at beginning of year

$ 2,847 $ 2,456

( 165 ) ( 342 )

Balance at end of year

$ 3,319 $ 2,847

Qualifying loans receivable totaling $ 1.23 billion were pledged as collateral against $ 443.6 million and $ 1.25 billion were pledged as collateral against $ 464.0 million in outstanding Federal Home Loan Bank of Chicago advances under a blanket security agreement at December 31, 2024 and December 31, 2023 , respectively.

An analysis of past due loans receivable as of December 31, 2024 and 2023 follows:

40 unchanged sentences

Includes $ 522,000 and $ 193,000 for December 31, 2024 and 2023 , respectively, which are on non-accrual status.

Includes $ 11,000 and $- for December 31, 2023 and 2022 , respectively, which are on non-accrual status.

Includes $ 1.1 million and $ 11,000 for December 31, 2024 and 2023 , respectively, which are on non-accrual status.

Includes $ 28,000 and $ 171,000 for December 31, 2024 and 2023 , respectively, which are on non-accrual status.

50 unchanged sentences

$ 4,743 $ 7,975 $ 174 $ 1,352 $ 3,199 $ 47 $ 267 $ 17,757

Adoption of CECL

$ 88 $ 100 $ 58 $ 886 $ ( 640 ) $ 7 $ ( 69 ) $ 430

Provision (credt) for loan losses

Provision (credit) for credit losses - loans

$ 2,259 $ ( 665 ) $ 33 $ ( 372 ) $ ( 641 ) $ 46 $ 267 $ 927

6 unchanged sentences

3,963 5,398 89 1,386 4,482 33 427 15,778

Provision (credit) for loan losses

Adoption of CECL (1)

$ 88 $ 100 $ 58 $ 886 $ ( 640 ) $ 7 $ ( 69 ) $ 430

Provision (credt) for loan losses

918 1,750 9 ( 923 ) ( 656 ) 23 ( 91 ) 1,030

( 304 ) - - - - ( 16 ) - ( 320 )

78 727 18 3 13 - - 839

Balance at end of period

50 unchanged sentences

$ ( 168 ) $ 656 $ 968

( 1 ) The Company adopted ASU 2016 - 13 as of January 1, 2022.

The 2021 amounts presented are calculated under the prior accounting standard.

Collateral Dependent Loans :

1 unchanged sentence

For collateral dependent loans, expected credit losses are based on the estimated fair value of the collateral at the balance sheet date, with consideration for estimated selling costs if satisfaction of the loan depends on the sale of the collateral.

The following tables present collateral dependent loans by portfolio segment and collateral type, including those loans with and without a related allowance allocation.

A summary of the allowance for loan loss for loans evaluated individually and collectively for impairment by collateral class as of the year ended December 31, 2023 follows:

One- to Four- Family

Construction and Land

Commercial Real Estate

December 31, 2023

The following tables present collateral dependent loans by portfolio segment and collateral type, including those loans with and without a related allowance allocation as of the year ended December 31, 2024 and December 31, 2023 follows:

(In Thousands)

Allowance related to collateral dependent loans

$ - $ - $ - $ - $ - $ - $ - $ -

Allowance related to pooled loans

6,886 7,318 211 983 2,561 56 534 18,549

Allowance at end of period

$ 6,886 $ 7,318 $ 211 $ 983 $ 2,561 $ 56 $ 534 $ 18,549

Collateral dependent loans

$ 2,209 $ - $ 90 $ - $ 5,493 $ - $ 1,536 $ 9,328

548,981 707,566 13,138 53,371 295,399 848 35,584 1,654,887

Total gross loans

$ 551,190 $ 707,566 $ 13,228 $ 53,371 $ 300,892 $ 848 $ 37,120 $ 1,664,215

The Company's procedures dictate that an updated valuation must be obtained with respect to underlying collateral at the time a loan is deemed impaired.

Updated valuations may also be obtained upon transfer from loans receivable to real estate owned based upon the age of the prior appraisal, changes in market conditions or known changes to the physical condition of the property.

Estimated fair values are reduced to account for sales commissions, broker fees, unpaid property taxes and additional selling expenses to arrive at an estimated net realizable value.

The adjustment factor is based upon the Company's actual experience with respect to sales of real estate owned over the prior two years.

In situations in which the Company is placing reliance on an appraisal that is more than one year old, an additional adjustment factor is applied to account for downward market pressure since the date of appraisal.

The additional adjustment factor is based upon relevant sales data available for our general operating market as well as company-specific historical net realizable values as compared to the most recent appraisal prior to disposition.

With respect to multi-family income-producing real estate, appraisals are reviewed and estimated collateral values are adjusted by updating significant appraisal assumptions to reflect current real estate market conditions.

Significant assumptions reviewed and updated include the capitalization rate, rental income and operating expenses.

These adjusted assumptions are based upon recent appraisals received on similar properties as well as on actual experience related to real estate owned and currently under Company management.

A summary of the allowance for loan loss for loans evaluated individually and collectively for impairment by collateral class as of the year ended December 31, 2022 follows:

Residential real estate:

One- to four-family

1 unchanged sentence

Commercial real estate

December 31, 2022

(In Thousands)

Allowance related to loans individually evaluated for impairment

$ - $ - $ - $ - $ - $ - $ - $ -

Allowance related to loans collectively evaluated for impairment

4,743 7,975 174 1,352 3,199 47 267 17,757

Balance at end of period

$ 4,743 $ 7,975 $ 174 $ 1,352 $ 3,199 $ 47 $ 267 $ 17,757

Loans individually evaluated for impairment

$ 2,584 $ - $ 40 $ - $ 5,455 $ - $ - $ 8,079

Loans collectively evaluated for impairment

466,983 677,981 11,415 62,494 257,518 774 24,934 1,502,099

Total gross loans

$ 469,567 $ 677,981 $ 11,455 $ 62,494 $ 262,973 $ 774 $ 24,934 $ 1,510,178

Commercial loans

Total loans receivable

The Company's procedures dictate that an updated valuation must be obtained with respect to underlying collateral at the time a loan is deemed impaired.

3 unchanged sentences

The additional adjustment factor is based upon relevant sales data available for the Company's general operating market as well as company-specific historical net realizable values as compared to the most recent appraisal prior to disposition.

107 unchanged sentences

$ 457,414 $ 461,197 $ 255,554 $ 189,398 $ 86,529 $ 189,667 $ 24,456 $ 1,664,215

The following presents data on restructurings of financing receivables whose borrowers are experiencing financial difficulty:

As of December 31, 2023

(Dollars in Thousands)

One- to four-family

$ - - $ 543 2 $ 543 2

Gross charge-offs

168 0 0 0 0 0 37 205

The following presents data on troubled debt restructurings:

The following presents data on restructurings of financing receivables whose borrowers are experiencing financial difficulty:

As of December 31, 2023

6 unchanged sentences

In no instances have the restructured terms included a reduction of outstanding principal balance.

At December 31, 2023 , $ 543,000 in loans had been modified in financing receivables whose borrowers are experiencing financial difficulty, all of which were included in the non-accrual total.

All loans that have been modified in a financing receivable whose borrowers are experiencing financial difficulty are considered to be impaired.

14 unchanged sentences

$ 543 2 $ - - $ 543 2

The following presents troubled debt restructurings by concession type:

As of December 31, 2022

Performing in accordance with modified terms

(Dollars in Thousands)

Interest reduction and principal forebearance

$ 399 2 $ - - $ 399 2

Interest reduction

18 1 - - 18 1

Principal forebearance

519 1 - - 519 1

$ 936 4 $ - - $ 936 4

There were no restructuring of financing receivables whose borrowers are experiencing financial difficulty during the year ended December 31, 2024 .

There was one restructuring for $ 528,000 of financing receivables whose borrowers are experiencing financial difficulty during the year ended December 31, 2023 .

There was one loan modified as a troubled debt restructuring with a total balance of $ 63,000 during the year ended December 31, 2022.

There were no restructurings of financing receivables whose borrowers are experiencing financial difficulty within the past twelve months of which there was a default during the years ended December 31, 2024 and 2023 .

12 unchanged sentences

0.26 % 0.22 %

Residential one - to four -family mortgage loans that were in the process of foreclosure were $ 250,000 and $ 795,000 at December 31, 2023 and December 31, 2022 , respectively.

Residential one - to four -family mortgage loans that were in the process of foreclosure were $ 1.9 million and $ 250,000 at December 31, 2024 and December 31, 2023 , respectively.

Office Properties and Equipment

12 unchanged sentences

Mortgage Servicing Rights

The following table presents the activity related to the Company’s mortgage servicing rights included in prepaid and other assets on the consolidated statement of financial condition:

The following table presents the activity related to the Company’s mortgage servicing rights included in prepaid expenses and other assets on the consolidated statement of financial condition:

Year ended December 31,

3 unchanged sentences

( 291 ) ( 319 )

( 1,958 ) ( 2,767 )

Mortgage servicing rights at end of the year

Valuation allowance during the year

Valuation allowance recovered during the year

Mortgage servicing rights at the end of the year, net

$ 732 $ 1,811

During the year ended December 31, 2023 , on a consolidated basis, $ 2.02 billion in residential loans were originated for sale, which excludes the loans originated from Waterstone Mortgage Corporation and purchased by WaterStone Bank.

During the same period, sales of loans held for sale totaled $ 1.99 billion, generating mortgage banking income of $ 75.7 million.

The unpaid principal balance of loans serviced for others was $ 83.4 million and $ 238.7 million at December 31, 2024 and December 31, 2023 respectively.

Loans serviced for others are not reflected in the consolidated statements of financial condition.

The fair value of mortgage servicing rights was $ 2.2 million at December 31, 2023 and $ 5.0 million at December 31, 2022 .

During the year ended December 31, 2023 , the Company sold mortgage servicing rights related to $ 318.4 billion in loans serviced for third parties which had a book value of $ 2.9 million.

The fair value of mortgage servicing rights was $ 807,000 at December 31, 2024 and $ 2.2 million at December 31, 2023 .

During the year ended December 31, 2024 , the Company sold mortgage servicing rights related to $ 233.0 million in loans serviced for third parties which had a book value of $ 2.0 million.

The sale generated $ 2.1 million in net proceeds and a $ 152,000 gain.

During the year ended December 31, 2022 , the Company sold no mortgage servicing rights.

During the year ended December 31, 2023 , the Company sold mortgage servicing rights related to $ 318.4 million in loans serviced for third parties which had a book value of $ 2.9 million.

The sale generated $3.5 million in net proceeds and a $583,000 gain.

The following table shows the estimated future amortization expense for mortgage servicing rights at December 31, 2024 for the years ending December 31 periods as indicated:

18 unchanged sentences

More than four through five years

Certain directors and executive officers, including their immediate families and companies in which they are principal owners, are depositors of the Corporation.

Such deposits amounted to $ 9.0 million at December 31, 2023 and $ 9.2 million at December 31, 2022 .

We held related party deposits of $ 11.3 million at December 31, 2024 and $ 9.0 million at December 31, 2023 .

Borrowings consist of the following:

1 unchanged sentence

Callable/Putable

Call Start Date

Settlement Date

(Dollars in Thousands)

FHLB advances

$ 10,000 December 3, 2027 3.48 % Fixed

Putable December 3, 2024 Monthly

10,000 December 6, 2027 3.47 % Fixed

Putable December 4, 2024 Monthly

10,000 December 10, 2027 3.49 % Fixed

Putable December 10, 2024 Monthly

50,000 December 14, 2027 1.73 % Fixed

N/A December 14, 2017 N/A

10,000 May 15, 2029 3.54 % Fixed

Putable May 15, 2024 Monthly

10,000 June 4, 2029 3.55 % Fixed

Putable June 4, 2024 Monthly

10,000 June 5, 2029 3.48 % Fixed

Putable June 5, 2024 Monthly

10,000 June 14, 2029 3.43 % Fixed

Putable June 14, 2024 Monthly

10,000 June 18, 2029 3.47 % Fixed

Putable June 18, 2024 Monthly

10,000 July 9, 2029 3.40 % Fixed

Putable July 8, 2024 Monthly

10,000 July 12, 2029 3.35 % Fixed

Putable July 12, 2024 Monthly

Total FHLB long-term advances

$ 150,000 2.89 %

80,300 January 2, 2025 4.44 % Fixed

16,000 January 6, 2025 4.59 % Fixed

27,453 January 6, 2025 4.59 % Fixed

10,000 January 6, 2025 3.53 % Fixed

13,600 January 9, 2025 4.50 % Fixed

28,500 January 9, 2025 4.50 % Fixed

12,300 January 9, 2025 4.50 % Fixed

9,900 January 16, 2025 4.41 % Fixed

2,000 January 17, 2025 4.40 % Fixed

20,700 January 21, 2025 4.39 % Fixed

15,500 January 23, 2025 4.36 % Fixed

20,000 January 29, 2025 4.74 % Fixed

11,300 March 17, 2025 4.41 % Fixed

26,000 October 1, 2025 3.95 % Fixed

Total FHLB short-term advances

$ 293,553 4.41 %

Total FHLB advances

$ 443,553 3.89 %

Repurchase agreements

$ 2,966 N/A 7.49 % Variable

Total borrowings

$ 446,519 3.92 %

December 31, 2023

Callable/Putable

Settlement Date

(Dollars in Thousands)

FHLB advances

$ 50,000 December 14, 2027

December 14, 2017

10,000 August 7, 2028

10 unchanged sentences

December 6, 2023

15,000 November 14, 2028 3.39 % Fixed

Putable December 14, 2023 Quarterly

10,000 November 29, 2028 3.38 % Fixed

Putable December 29, 2023 Quarterly

10,000 November 29, 2028 3.43 % Fixed

Putable January 29, 2024 Quarterly

10,000 December 4, 2028 3.31 % Fixed

Putable January 4, 2023 Quarterly

15,000 November 14, 2028

December 14, 2023

10,000 November 29, 2028

December 29, 2023

10,000 November 29, 2028

January 29, 2024

10,000 December 4, 2028

January 4, 2023

Total FHLB long-term advances

27 unchanged sentences

$ 611,054 4.62 %

December 31, 2022

Callable/Putable

(Dollars in Thousands)

FHLB advances

$ 50,000 September 22, 2025

September 20, 2023

50,000 December 14, 2027

December 16, 2019

25,000 November 3, 2025

November 1, 2023

25,000 November 7, 2025

November 7, 2023

25,000 November 24, 2025

25,000 December 1, 2032

March 1, 2023

Total FHLB long-term advances

200,000 3.12 %

7,700 January 9, 2023

25,000 January 23, 2023

20,000 January 23, 2023

48,000 January 30, 2023

20,000 January 6, 2023

50,000 January 6, 2023

15,000 January 4, 2023

Total FHLB short-term advances

185,700 4.26 %

Total FHLB advances

$ 385,700 3.67 %

Short-Term Borrowings

Repurchase agreements

$ 1,084 N/A 7.21 % Variable

Total short-term borrowings

Total borrowings

$ 386,784 3.68 %

The short-term repurchase agreement represents the outstanding portion of a total $ 50.0 million commitment with one unrelated bank.

11 unchanged sentences

Under the master netting agreement, the Company is entitled to set off the collateral placed with a single counterparty against obligations owed to that counterparty.

The Federal Reserve Bank ("FRB") created a new borrowing facility called the Bank Term Funding Program in 2023.

This program allows a bank to borrow against its investment portfolio, at par value, with no reduction for unrealized losses.

The term is for one year and the interest rate is fixed at the time the advance is taken.

There is no prepayment penalty.

Allowable investments for pledge are those the FRB can own.

This would include all of the Company's investment securities except municipal securities, private label bonds, and corporate bonds.

At December 31, 2023 , the Company had fully utilized its borrowing capacity under this program.

The program expires on March 11, 2024.

The Company selects loans that meet underwriting criteria established by the Federal Home Loan Bank Chicago (FHLBC) as collateral for outstanding advances.

188 unchanged sentences

( 38,231 ) 16.69

( 2,005 ) 20.75

Nonvested at December 31, 2024

7 unchanged sentences

Participating employees may annually contribute pretax compensation in accordance with IRS limits.

The Company made matching contributions of $ 1.0 million, $ 1.3 million and $ 1.6 million to the plans during the years ended December 31, 2023, 2022 and 2021 , respectively.

The Company made matching contributions of $ 962,000 , $ 1.0 million, and $ 1.3 million to the plans during the years ended December 31, 2024, 2023 and 2022 , respectively.

Employee Stock Ownership Plan

28 unchanged sentences

980 ( 1,073 ) ( 484 )

Valuation Allowance:

Available for sale securities, net

$ 5,314 $ 1,657 $ 4,992

21 unchanged sentences

( 126 ) ( 168 ) ( 273 )

Valuation allowance - available for sale securities

Valuation allowance - other temporary differences

( 1 ) ( 6 ) 14

Income tax provision

15 unchanged sentences

Unrealized loss on securities available for sale, net

Valuation allowance - available for sale securities

Valuation allowance - other temporary differences

Total gross deferred tax assets

5 unchanged sentences

( 968 ) ( 815 )

( 815 ) ( 1,138 )

Deferred loan fees

4 unchanged sentences

$ 10,942 $ 12,161

The Company had a Wisconsin net operating loss carry forward of $ 15,000 at December 31, 2023 which will begin to expire in 2028.

The Company had a state net operating loss carry forward of $ 1.4 million at December 31, 2024 .

The Company has no capital loss carryforwards as of December 31, 2024 .

For the year ended December 31, 2024 , income tax expense was impacted by a change in Wisconsin state income taxes.

On March 18, 2024, the State of Wisconsin Department of Revenue issued an emergency ruling with additional details of the law.

This publication enabled us to estimate the impact on our Wisconsin state income tax expense.

The impact moving forward should result in no Wisconsin state income taxes being expensed, resulting in a lower estimated effective tax rate.

A valuation allowance is required if it is more likely than not that some portion of the deferred tax asset will not be realized.

The valuation allowance as of December 31, 2024, of $ 2.4 million is the result of the valuation allowance for state related attributes, net of subsequent changes to those attributes along with the state related impact of changes to the unrealized losses on securities AFS disposed.

Of the $ 1.4 million in state operating loss carry forward, there is a $ 1.3 million valuation allowance recorded against it.

At December 31, 2023, no valuation allowance was determined to be necessary.

Under the Internal Revenue Code and Wisconsin Statutes, the Company was permitted to deduct, for tax years beginning before 1988, an annual addition to a reserve for bad debts.

This amount differs from the provision for loan losses recorded for financial accounting purposes.

This amount differs from the provision for credit losses recorded for financial accounting purposes.

Under prior law, bad debt deductions for income tax purposes were included in taxable income of later years only if the bad debt reserves were used for purposes other than to absorb bad debt losses.

16 unchanged sentences

Commitments to extend credit under home equity lines of credit

11,531 11,722

Unused portion of construction loans

24 unchanged sentences

In the normal course of business, the Company, or its subsidiaries are involved in various legal proceedings.

In the opinion of management, any liability resulting from pending proceedings would not be expected to have a material adverse effect on the Company's consolidated financial statements.

The outcomes of these actions are not predictable, but we do not believe that the ultimate resolution of any pending or threatened actions of these types will have a material adverse effect on our financial position, results of operations, liquidity, or capital resources.

The Company intends to continue to vigorously defend its interests in these matters and pursue all possible legal defenses against the claims.

In relation to various legal matters, we had an accrued legal liability balance of $ 1.3 million and $ 125,000 included within accrued liabilities on the consolidated balance sheets as of December 31, 2024 and 2023, respectively.

Derivative Financial Instruments

130 unchanged sentences

11,163 - 11,163 -

Other Securities

Loans held for sale

1 unchanged sentence

Mortgage banking derivative assets

2,619 - - 2,619

Interest rate swap assets

1 unchanged sentence

Mortgage banking derivative liabilities

3,613 - - 3,613

Interest rate swap liabilities

32 unchanged sentences

Balance at December 31, 2022

Mortgage derivative loss, net

Mortgage derivative gain, net

Balance at December 31, 2023

9 unchanged sentences

$ 505 $ - $ - $ 505

Impaired mortgage servicing rights

1,063 - - 1,063

Fair Value Measurements Using

4 unchanged sentences

Impaired mortgage servicing rights

( 1 ) Represents collateral-dependent impaired loans, net, which are included in loans.

1,063 - - 1,063

Real estate owned – On a non-recurring basis, real estate owned is recorded in the consolidated statements of financial condition at the lower of cost or fair value.

20 unchanged sentences

32.4 % 96.9 % 79.6 %

Mortgage servicing rights

1,063 Pricing models

Prepayment rate

6.7 % 23.9 % 14.6 %

Discount rate

10.0 % 15.5 % 11.2 %

Cost to service

$ 77 $ 471 $ 107

December 31, 2023

7 unchanged sentences

23.3 % 73.1 % 39.3 %

Mortgage servicing rights

1,063 Pricing models

Prepayment rate

6.7 % 23.9 % 14.6 %

Discount rate

10.0 % 15.5 % 11.2 %

Cost to service

$ 77 $ 471 $ 107

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

92 unchanged sentences

Shareholders' equity

Preferred Stock (par value $.

01 per share), Authorized - 50,000,000 shares in 2023 and 2022, no shares issued

Common stock (par value $.

01 per share) Authorized - 100,000,000 shares at December 31, 2023 and at December 31, 2022, Issued and Outstanding - 20,314,786 at December 31, 2023 and 22,174,225 at December 31, 2022

Preferred Stock (par value $ .01 per share), Authorized - 50,000,000 shares in 2024 and 2023, no shares issued

Additional paid-in-capital

21 unchanged sentences

Total expense

Income before income tax expense

9,507 19,481 70,769

Income tax (benefit) expense

Income before income tax expense (benefit)

18,784 9,507 19,481

Income tax expense (benefit)

$ 18,688 $ 9,375 $ 19,487

4 unchanged sentences

$ 18,688 $ 9,375 $ 19,487

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of unearned ESOP

1 unchanged sentence

Stock based compensation

Deferred income taxes

Equity in loss of subsidiaries

13 unchanged sentences

( 14,915 ) ( 26,032 ) ( 47,830 )

Net cash (used in) provided by financing activities

Net cash used in financing activities

( 15,816 ) ( 25,821 ) ( 21,932 )

Net (decrease) increase in cash

Net decrease in cash

( 14,163 ) ( 23,731 ) ( 19,391 )

4 unchanged sentences

Segment Reporting

Selected financial and descriptive information is required to be provided about reportable operating segments, considering a "management approach" concept as the basis for identifying reportable segments.

The management approach is based on the way that management organizes the segments within the enterprise for making operating decisions, allocating resources, and assessing performance.

Consequently, the segments are evident from the structure of the enterprise's internal organization, focusing on financial information that an enterprise's chief operating decision-makers use to make decisions about the enterprise's operating matters.

The Company has determined that it has two reportable segments:

15 unchanged sentences

Mortgage banking products and services are provided by offices in 26 states with the ability to lend in 48 states.

The Company’s chief executive officer has been identified as the chief operating decision maker (“CODM”).

Selected financial and descriptive information is reported to the CODM.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The CODM uses the Community Banking and Mortgage Banking segment's net interest income, non-interest income, non-interest expense, and pre-tax income for making operating decisions, allocating resources (including employees, financial, or capital resources), and assessing performance.

Based on the reviews of these two segments and other company-wide initiatives, the CODM is informed about allocation of resources to the Holding Company and Other segment.

As of or for the Year ended December 31, 2024

5 unchanged sentences

$ 47,968 $ ( 1,945 ) $ 145 $ 46,168

Provision for credit losses

Provision (credit) for credit losses

( 145 ) ( 23 ) - ( 168 )

Net interest income after provision for credit losses

Net interest income after provision (credit) for credit losses

48,113 ( 1,922 ) 145 46,336

19 unchanged sentences

31,737 80,443 ( 544 ) 111,636

Income (loss) before income taxes (benefit)

Income before income taxes

21,679 1,885 438 24,002

Income taxes (benefit)

4,697 521 96 5,314

Net income (loss)

$ 16,982 $ 1,364 $ 342 $ 18,688

9 unchanged sentences

441 215 - 656

Net interest income after provision (credit) for loan losses

Net interest income after provision for credit losses

51,292 ( 2,036 ) 303 49,559

26 unchanged sentences

$ 2,178,488 $ 206,452 $ ( 171,551 ) $ 2,213,389

( 1 ) The Company adopted ASU 2016 - 13 as of January 1, 2022.

The prior year amounts presented are calculated under the prior accounting standard.

As of or for the Year ended December 31, 2022

5 unchanged sentences

$ 56,606 $ 157 $ 191 $ 56,954

Provision (credit) for loan losses

Provision for credit losses

677 291 - 968

Net interest income after provision for loan losses

Net interest income after provision for credit losses

55,929 ( 134 ) 191 55,986

19 unchanged sentences

32,209 108,445 ( 3,592 ) 137,062

Income before income taxes

Income (loss) before income taxes (benefit)

28,941 ( 4,478 ) 16 24,479

Income taxes (benefit)

6,116 ( 1,117 ) ( 7 ) 4,992

Net income (loss)

$ 22,825 $ ( 3,361 ) $ 23 $ 19,487

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data