What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 310 added, 365 removed, 1658 unchanged (29% of the section changed)

3 unchanged sentences

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30, 2025

September 30, 2025

December 31, 2024

44 unchanged sentences

Shareholders’ equity:

Preferred stock (par value $ .01 per share) authorized - 50,000,000 shares at June 30, 2025 and at December 31, 2024, no shares issued

Common stock (par value $ .01 per share) authorized - 100,000,000 shares at June 30, 2025 and at December 31, 2024, issued and outstanding - 18,776,229 at June 30, 2025 and 19,343,251 at December 31, 2024

Preferred stock (par value $ .01 per share) authorized - 50,000,000 shares at September 30, 2025 and at December 31, 2024, no shares issued

Common stock (par value $ .01 per share) authorized - 100,000,000 shares at September 30, 2025 and at December 31, 2024, issued and outstanding - 18,524,115 at September 30, 2025 and 19,343,251 at December 31, 2024

Additional paid-in capital

14 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(In Thousands, except per share amounts)

Interest income:

$ 25,875 $ 25,601 $ 50,953 $ 50,085

Mortgage-related securities

1,253 $ 1,125 2,444 2,223

Debt securities, federal funds sold and short-term investments

1,557 1,294 3,043 2,617

Total interest income

28,685 28,020 56,440 54,925

Interest expense:

10,967 9,716 22,299 18,686

4,010 7,625 7,857 14,423

Total interest expense

14,977 17,341 30,156 33,109

Net interest income

13,708 10,679 26,284 21,816

Provision (credit) for credit losses

( 9 ) ( 225 ) ( 567 ) ( 158 )

Net interest income after provision (credit) for credit losses

13,717 10,904 26,851 21,974

Noninterest income:

Service charges on loans and deposits

413 465 1,006 889

Increase in cash surrender value of life insurance

1,014 804 1,495 1,152

Mortgage banking income

22,559 24,838 38,287 44,906

343 390 638 798

Total noninterest income

24,329 26,497 41,426 47,745

Noninterest expenses:

Compensation, payroll taxes, and other employee benefits

21,121 21,762 38,168 41,638

Occupancy, office furniture, and equipment

1,753 2,029 3,682 4,137

746 987 1,469 1,901

Data processing

1,313 1,242 2,525 2,448

Communications

257 240 492 466

Professional fees

500 758 2,236 1,501

Real estate owned

( 8 ) 1 ( 18 ) 14

Loan processing expense

817 861 1,737 1,907

1,878 2,379 4,436 3,797

Total noninterest expenses

28,377 30,259 54,727 57,809

Income before income taxes

9,669 7,142 13,550 11,910

Income tax expense

1,942 1,430 2,787 3,160

$ 7,727 $ 5,712 $ 10,763 $ 8,750

Income per share:

$ 0.43 $ 0.31 $ 0.59 $ 0.47

Weighted average shares outstanding:

17,989 18,524 18,127 18,772

18,004 18,568 18,143 18,802

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(In Thousands)

$ 7,926 $ 4,728 $ 18,689 $ 13,478

Other comprehensive income (loss), net of tax:

Net unrealized holding gain (loss) on available for sale securities:

Net unrealized holding gain (loss) arising during the period, net of tax (expense) benefit of $( 323 ), $ 134 , $( 982 ) and $ 539 , respectively

Other comprehensive income, net of tax:

Net unrealized holding gain on available for sale securities:

Net unrealized holding gain arising during the period, net of tax expense of $ 564 , $ 1,394 , $ 1,546 and $ 855 , respectively

2,005 4,965 5,499 3,042

Total other comprehensive income (loss)

Total other comprehensive income

2,005 4,965 5,499 3,042

9 unchanged sentences

(In Thousands, except per share amounts)

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

Balances at December 31, 2023

2 unchanged sentences

- - - 13,478 - - 13,478

Other comprehensive loss

Other comprehensive income

- - - - - 3,042 3,042

10 unchanged sentences

( 975 ) ( 10 ) ( 12,105 ) - - - ( 12,115 )

Balances at June 30, 2024

Balances at September 30, 2024

19,457 $ 194 $ 92,789 $ 274,748 $ ( 10,979 ) $ ( 14,750 ) $ 342,002

For the six months ended June 30, 2025

For the nine months ended September 30, 2025

Balances at December 31, 2024

15 unchanged sentences

( 1,015 ) ( 10 ) ( 13,475 ) - - - ( 13,485 )

Balances at June 30, 2025

Balances at September 30, 2025

18,524 $ 185 $ 80,521 $ 287,868 $ ( 9,792 ) $ ( 13,287 ) $ 345,495

3 unchanged sentences

(In Thousands, except per share amounts)

For the three months ended June 30, 2024

Balances at March 31, 2024

For the three months ended September 30, 2024

Balances at June 30, 2024

19,479 195 92,964 272,778 ( 11,276 ) ( 19,715 ) $ 334,946

1 unchanged sentence

- - - 4,728 - - 4,728

Other comprehensive loss

Other comprehensive income

- - - - - 4,965 4,965

10 unchanged sentences

( 72 ) ( 1 ) ( 998 ) - - - ( 999 )

Balances at June 30, 2024

Balances at September 30, 2024

19,457 $ 194 $ 92,789 $ 274,748 $ ( 10,979 ) $ ( 14,750 ) $ 342,002

(In Thousands, except per share amounts)

For the three months ended June 30, 2025

Balances at March 31, 2025

For the three months ended September 30, 2025

Balances at June 30, 2025

18,776 188 84,106 282,578 ( 10,089 ) ( 15,292 ) 341,491

14 unchanged sentences

( 270 ) ( 3 ) ( 3,815 ) - - - ( 3,818 )

Balances at June 30, 2025

Balances at September 30, 2025

18,524 $ 185 $ 80,521 $ 287,868 $ ( 9,792 ) $ ( 13,287 ) $ 345,495

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended June 30,

Nine months ended September 30,

(In Thousands)

Operating activities:

$ 10,763 $ 8,750

Adjustments to reconcile net income to net cash used in operating activities:

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

Provision (credit) for credit losses

( 567 ) ( 158 )

Depreciation, amortization, accretion

2 unchanged sentences

Origination of mortgage servicing rights

( 306 ) ( 432 )

Gain on sale of loans held for sale

( 37,907 ) ( 44,052 )

Loans originated for sale

( 976,701 ) ( 1,106,930 )

Proceeds on sales of loans originated for sale

988,691 1,093,219

(Increase) decrease in accrued interest receivable

Increase in accrued interest receivable

Increase in cash surrender value of life insurance

( 1,495 ) ( 1,152 )

Decrease (increase) in derivative assets

3,486 ( 2,061 )

Decrease in derivative assets

Increase in accrued interest on deposits and borrowings

1 unchanged sentence

Gain on sale of mortgage servicing rights

(Decrease) increase in derivative liabilities

( 2,970 ) 867

Decrease in derivative liabilities

Decrease (increase) in other assets

Increase (decrease) in other liabilities

1,024 ( 3,501 )

Net cash used in operating activities

( 11,705 ) ( 49,456 )

(Decrease) increase in other liabilities

Net cash provided by operating activities

Investing activities:

Net decrease (increase) in loans receivable

16,375 ( 14,541 )

Net increase in loans receivable

Purchases of:

Debt securities

( 4,856 ) ( 4,000 )

Mortgage related securities

( 18,423 ) ( 9,683 )

Bank Owned Life Insurance

( 180 ) ( 180 )

( 2,105 ) ( 2,340 )

Premises and equipment

( 324 ) ( 551 )

Proceeds from:

Principal repayments on mortgage-related securities

12,307 10,737

Maturities of debt securities

FHLB Stock Repurchased

Sales of FHLB Stock

Sales of mortgage servicing rights

Net cash provided by (used in) investing activities

10,440 ( 14,225 )

Net cash used in investing activities

Financing activities:

Net increase in deposits

24,810 33,299

Net change in short-term borrowings

( 40,793 ) 104,770

Repayment of long-term debt

( 40,000 ) ( 145,000 )

Proceeds from long-term debt

100,000 90,000

Net change in advance payments by borrowers for taxes

Cash dividends on common stock

( 5,472 ) ( 5,761 )

Purchase of common stock returned to authorized but unissued

( 9,667 ) ( 11,116 )

Proceeds from stock option exercises

Net cash provided by financing activities

32,427 68,576

Increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

39,761 36,421

Cash and cash equivalents at end of period

$ 70,923 $ 41,316

Supplemental information:

1 unchanged sentence

Income tax payments

$ 1,075 $ 454

Interest payments

30,929 36,131

Noncash activities:

22 unchanged sentences

The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the Company’s December 31, 2024 Annual Report on Form 10 -K.

Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other period.

Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other period.

The preparation of the unaudited consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period.

3 unchanged sentences

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the unaudited consolidated financial statements included in this Quarterly Report on Form 10 -Q were issued.

There were no significant subsequent events for the three and six months ended June 30, 2025 through the issuance date of these unaudited consolidated financial statements that warranted adjustment to or disclosure in the unaudited consolidated financial statements.

There were no significant subsequent events for the three and nine months ended September 30, 2025 through the issuance date of these unaudited consolidated financial statements that warranted adjustment to or disclosure in the unaudited consolidated financial statements.

Impact of Recent Accounting Pronouncements

7 unchanged sentences

The amortized cost and fair values of the Company’s investment in securities available for sale follow:

June 30, 2025

September 30, 2025

(In Thousands)

8 unchanged sentences

180,045 459 ( 16,486 ) 164,018

Government sponsored enterprise bonds

2,500 - ( 15 ) 2,485

Municipal securities

26 unchanged sentences

The Company’s mortgage-backed securities and collateralized mortgage obligations issued by government sponsored enterprises are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

At June 30, 2025 , $ 84,000 of the Company's mortgage related securities were pledged as collateral to secure mortgage banking related activities.

At September 30, 2025 , $ 72,000 of the Company's mortgage related securities were pledged as collateral to secure mortgage banking related activities.

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

The amortized cost and fair values of investment securities by contractual maturity at June 30, 2025 are shown below.

The amortized cost and fair values of investment securities by contractual maturity at September 30, 2025 are shown below.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

13 unchanged sentences

Gross unrealized losses on securities available for sale and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows:

June 30, 2025

September 30, 2025

Less than 12 months

8 unchanged sentences

- - 4,822 541 4,822 541

Government sponsored enterprise bonds

- - 2,485 15 2,485 15

Municipal securities

23 unchanged sentences

In making this evaluation, management considers the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

As of June 30, 2025 and December 31, 2024 , no allowance for credit losses on securities was recognized.

As of September 30, 2025 and December 31, 2024 , no allowance for credit losses on securities was recognized.

The Company does not consider its securities with unrealized losses to be attributable to credit-related factors, as the unrealized losses in each category have occurred as a result of changes in noncredit-related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration.

Furthermore, the Company does not have the intent to sell any of these securities and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost.

During the three and six months ended June 30, 2025 and June 30, 2024 , there were no sales of securities.

During the three and nine months ended September 30, 2025 and September 30, 2024 , there were no sales of securities.

Note 3 - Loans Receivable

Loans receivable at June 30, 2025 and December 31, 2024 are summarized as follows:

June 30, 2025

Loans receivable at September 30, 2025 and December 31, 2024 are summarized as follows:

September 30, 2025

December 31, 2024

17 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 $ 1.23 billion and $ 1.23 billion at June 30, 2025 and December 31, 2024 , respectively, were pledged as collateral against $ 452.2 million and $ 443.6 million in outstanding Federal Home Loan Bank of Chicago ("FHLB") advances under a blanket security agreement at June 30, 2025 and December 31, 2024 .

An analysis of past due loans receivable as of June 30, 2025 and December 31, 2024 follows:

As of June 30, 2025

Qualifying loans receivable totaling $ 1.22 billion and $ 1.23 billion at September 30, 2025 and December 31, 2024 , respectively, were pledged as collateral against $ 460.2 million and $ 443.6 million in outstanding Federal Home Loan Bank of Chicago ("FHLB") advances under a blanket security agreement at September 30, 2025 and December 31, 2024 .

An analysis of past due loans receivable as of September 30, 2025 and December 31, 2024 follows:

As of September 30, 2025

1-59 Days Past Due (1) 60-89 Days Past Due (2) 90 Days or Greater Total Past Due Current (3)

34 unchanged sentences

$ 9,732 $ 1,405 $ 3,985 $ 15,122 $ 1,665,454 $ 1,680,576

( 1 ) Includes $ 593,000 and $ 522,000 at June 30, 2025 and December 31, 2024 , respectively, which are on non-accrual status.

( 2 ) Includes $ - and $ 1.1 million June 30, 2025 and December 31, 2024 , respectively, which are on non-accrual status.

( 3 ) Includes $ 1.2 million and $ 28,000 at June 30, 2025 and December 31, 2024 , respectively, which are on non-accrual status.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2025 and the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2024 :

( 1 ) Includes $ 489,000 and $ 522,000 at September 30, 2025 and December 31, 2024 , respectively, which are on non-accrual status.

( 2 ) Includes $ 590,000 and $ 1.1 million September 30, 2025 and December 31, 2024 , respectively, which are on non-accrual status.

( 3 ) Includes $ 733,000 and $ 28,000 at September 30, 2025 and December 31, 2024 , respectively, which are on non-accrual status.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2025 and the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2024 :

One- to Four-Family

2 unchanged sentences

(In Thousands)

Six months ended June 30, 2025

Nine months ended September 30, 2025

Balance at beginning of period

6 unchanged sentences

$ 4,948 $ 7,088 $ 188 $ 1,141 $ 3,909 $ 90 $ 306 $ 17,670

Six months ended June 30, 2024

Nine months ended September 30, 2024

Balance at beginning of period

10 unchanged sentences

(In Thousands)

Three months ended June 30, 2025

Three months ended September 30, 2025

Balance at beginning of period

6 unchanged sentences

$ 4,948 $ 7,088 $ 188 $ 1,141 $ 3,909 $ 90 $ 306 $ 17,670

Three months ended June 30, 2024

Three months ended September 30, 2024

Balance at beginning of period

41 unchanged sentences

This reserve is maintained at a level that management believes is sufficient to absorb losses arising from unfunded loan commitments, and is determined quarterly based on methodology similar to the methodology for determining the ACL-Loans.

The allowance for unfunded commitments were $ 1.1 million and $ 1.2 million at June 30, 2025 and December 31, 2024 , respectively.

The allowance for unfunded commitments were $ 1.0 million and $ 1.2 million at September 30, 2025 and December 31, 2024 , respectively.

Provision for Credit Losses :

3 unchanged sentences

Three months ended

Six months ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Nine months ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

(In Thousands)

9 unchanged sentences

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

The following tables present collateral dependent loans by portfolio segment as of June 30, 2025 and December 31, 2024 :

June 30, 2025

The following tables present collateral dependent loans by portfolio segment as of September 30, 2025 and December 31, 2024 :

September 30, 2025

December 31, 2024

32 unchanged sentences

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

The following table presents information relating to the Company’s internal risk ratings of its loans receivable as of June 30, 2025 and December 31, 2024 :

The following table presents information relating to the Company’s internal risk ratings of its loans receivable as of September 30, 2025 and December 31, 2024 :

One to Four-Family

2 unchanged sentences

(In Thousands)

At June 30, 2025

At September 30, 2025

$ 5,674 $ 182 $ 70 $ - $ 11,346 $ - $ - $ 17,272

8 unchanged sentences

Credit Quality Information:

The following table presents total loans by risk categories and year of origination as of June 30, 2025 :

The following table presents total loans by risk categories and year of origination as of September 30, 2025 :

(In Thousands)

67 unchanged sentences

$ 223,353 $ 422,359 $ 399,336 $ 235,390 $ 169,655 $ 210,260 $ 20,223 $ 1,680,576

There were no borrowers experiencing financial difficulty as of June 30, 2025 and December 31, 2024 .

There were no restructuring of financing receivables whose borrowers are experiencing financial difficulty during the three or six months ended June 30, 2025 or June 30, 2024 .

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 three or six months ended June 30, 2025 or June 30, 2024 .

The following table presents data on non-accrual loans as of June 30, 2025 and December 31, 2024 :

June 30, 2025

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

As of September 30, 2025

(Dollars in Thousands)

Commercial Real Estate

$ 6,706 1 $ - - $ 6,706 1

One- to four-family

- - 590 1 590 1

$ 6,706 1 $ 590 1 $ 7,296 2

The following presents restructurings of financing receivables whose borrowers are experiencing financial difficulty by concession type:

As of September 30, 2025

Performing in accordance with modified terms

(Dollars in Thousands)

Principal forbearance

$ 7,296 2 $ - - $ 7,296 2

There were no borrowers experiencing financial difficulty as of December 31, 2024.

There were no of financing receivables whose borrowers are experiencing financial difficulty within the past twelve months of which there was a default during the three or nine months ended September 30, 2025 and September 30, 2024 .

The following table presents data on non-accrual loans as of September 30, 2025 and December 31, 2024 :

September 30, 2025

December 31, 2024

11 unchanged sentences

0.26 % 0.26 %

Residential one - to four -family mortgage loans that were in the process of foreclosure were $ 3.1 million and $ 1.9 million at June 30, 2025 and December 31, 2024 , respectively.

Residential one - to four -family mortgage loans that were in the process of foreclosure were $ 1.8 million and $ 1.9 million at September 30, 2025 and December 31, 2024 , respectively.

Note 4 — Mortgage Servicing Rights

The following table presents the activity in the Company’s mortgage servicing rights:

Six months ended June 30,

Nine months ended September 30,

(In Thousands)

5 unchanged sentences

Mortgage servicing rights at end of the period, net

The unpaid principal balance of loans serviced for others was $ 107.3 million and $ 83.4 million at June 30, 2025 and December 31, 2024 , respectively.

$ 1,039 $ 491

The unpaid principal balance of loans serviced for others was $ 118.3 million and $ 83.4 million at September 30, 2025 and December 31, 2024 , respectively.

These loans are not reflected in the consolidated statements of financial condition.

The fair value of mortgage servicing rights was $ 1.2 million at June 30, 2025 and $ 807,000 at December 31, 2024 , respectively.

During the three and six months ended June 30, 2025 , there were no sales of mortgage servicing rights.

During the three and six months ended June 30, 2024 , the Company sold mortgage servicing rights related to $ 233.0 million in loans receivable with a book value of $ 2.0 million for $ 2.1 million resulting in a gain on sale of $ 152,000 .

The fair value of mortgage servicing rights was $ 1.3 million at September 30, 2025 and $ 807,000 at December 31, 2024 , respectively.

During the three and nine months ended September 30, 2025 , there were no sales of mortgage servicing rights.

During the the three months ended September 30, 2024, there were no sales of mortgage servicing rights.

During the nine months ended September 30, 2024 , the Company sold mortgage servicing rights related to $ 233.0 million in loans receivable with a book value of $ 2.0 million for $ 2.1 million resulting in a gain on sale of $ 152,000 .

The following table shows the estimated future amortization expense for mortgage servicing rights for the periods indicated:

2 unchanged sentences

Note 5 — Deposits

At June 30, 2025 and December 31, 2024 , the aggregate balance of uninsured time deposits of $250,000 or more was $ 174.2 million and $ 167.3 million, respectively.

At September 30, 2025 and December 31, 2024 , the aggregate balance of uninsured time deposits of $250,000 or more was $ 174.4 million and $ 167.3 million, respectively.

The Company does not have uninsured deposits less than $250,000 in aggregate balance.

A summary of the contractual maturities of time deposits at June 30, 2025 is as follows:

A summary of the contractual maturities of time deposits at September 30, 2025 is as follows:

(In Thousands)

5 unchanged sentences

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

Such deposits amounted to $ 12.1 million and $ 11.3 million at June 30, 2025 and December 31, 2024 , respectively.

Such deposits amounted to $ 12.1 million and $ 11.3 million at September 30, 2025 and December 31, 2024 , respectively.

Note 6 — Borrowings

Borrowings consist of the following:

June 30, 2025

September 30, 2025

December 31, 2024

19 unchanged sentences

$ 469,061 3.70 % $ 446,519 3.92 %

The short-term repurchase agreement represents the outstanding portion of a total $ 50.0 million commitment with one unrelated bank as of June 30, 2025 .

The short-term repurchase agreement represents the outstanding portion of a total $ 50.0 million commitment with one unrelated bank as of September 30, 2025 .

The short-term repurchase agreement is utilized by Waterstone Mortgage Corporation to finance loans originated for sale.

1 unchanged sentence

Related interest rates are based upon the note rate associated with the loans being financed.

The short-term repurchase agreement had a $ 13.5 million balance at June 30, 2025 and a $ 3.0 million balance at December 31, 2024 .

The $ 242.2 million in FHLB short-term advances as of June 30, 2025 have fixed rates.

The $ 210.0 million in FHLB long-term advances as of June 30, 2025 have fixed rates.

The short-term repurchase agreement had a $ 8.9 million balance at September 30, 2025 and a $ 3.0 million balance at December 31, 2024 .

The $ 250.2 million in FHLB short-term advances as of September 30, 2025 have fixed rates.

The $ 210.0 million in FHLB long-term advances as of September 30, 2025 have fixed rates.

A total of $ 160.0 million in FHLB long-term advances have FHLB call options available.

7 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.

At June 30, 2025 , the Company had approximately $ 337.6 million in unused borrowing capacity at the FHLB.

At September 30, 2025 , the Company had approximately $ 334.0 million in unused borrowing capacity at the FHLB.

The Company selects loans that meet underwriting criteria established by the FHLB as collateral for outstanding advances.

The Company’s borrowings from the FHLB are limited to 76 % of the carrying value of unencumbered one - to four -family mortgage loans, 73 % of the carrying value of multi-family loans and 62 % of the carrying value of home equity loans.

In addition, these advances were collateralized by FHLB stock of $ 20.3 million at June 30, 2025 and $ 20.3 million at December 31, 2024 , respectively.

In addition, these advances were collateralized by FHLB stock of $ 20.7 million at September 30, 2025 and $ 20.3 million at December 31, 2024 , respectively.

In the event of prepayment, the Company is obligated to pay all remaining contractual interest on the advance.

18 unchanged sentences

The minimum capital conservation buffer is 2.5%.

As of June 30, 2025 , the Bank was considered well-capitalized, with all capital ratios exceeding the well-capitalized requirement.

As of September 30, 2025 , the Bank was considered well-capitalized, with all capital ratios exceeding the well-capitalized requirement.

There are no conditions or events that management believes have changed the Bank’s prompt corrective action capitalization category.

The Bank is subject to regulatory restrictions on the amount of dividends it may declare and pay to the Company without prior regulatory approval, and to regulatory notification requirements for dividends that do not require prior regulatory approval.

The actual and required capital amounts and ratios for the Bank as of June 30, 2025 and December 31, 2024 are presented in the tables below:

June 30, 2025

The actual and required capital amounts and ratios for the Bank as of September 30, 2025 and December 31, 2024 are presented in the tables below:

September 30, 2025

For Capital Adequacy Purposes

58 unchanged sentences

The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

June 30, 2025

September 30, 2025

December 31, 2024

22 unchanged sentences

The Company holds mortgages on the underlying real estate as collateral supporting those commitments for which collateral is deemed necessary.

The Company has determined that there are no probable losses related to commitments to extend credit or the standby letters of credit as of June 30, 2025 and December 31, 2024 .

The Company has determined that there are no probable losses related to commitments to extend credit or the standby letters of credit as of September 30, 2025 and December 31, 2024 .

Please see Note 3 - Loans Receivable for discussion on the allowance for credit losses - unfunded commitments.

6 unchanged sentences

Given that the underlying loans delivered to buyers are predominantly conventional first lien mortgages, historical experience has resulted in insignificant losses and repurchase activity.

The Company's reserve for losses related to these recourse provisions totaled $ 1.3 million as of June 30, 2025 and $ 1.3 million as of December 31, 2024 .

The Company's reserve for losses related to these recourse provisions totaled $ 1.0 million as of September 30, 2025 and $ 1.3 million as of December 31, 2024 .

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

30 unchanged sentences

The following tables presents the outstanding notional balances and fair values of outstanding derivative instruments:

June 30, 2025

September 30, 2025

Derivatives not designated as Hedging Instruments

39 unchanged sentences

Commercial borrower swaps are completed independently with each borrower and are not subject to master netting arrangements.

As of June 30, 2025 and December 31, 2024 , no back-to-back swaps were in default.

As of September 30, 2025 and December 31, 2024 , no back-to-back swaps were in default.

The Company pays fixed rates and receives floating rates based upon SOFR on the swaps with dealer counterparties.

Dealer counterparty swaps are subject to master netting agreements among the contracts within our Bank.

No right of offset existed with dealer counterparty swaps as of June 30, 2025 and December 31, 2024 .

No right of offset existed with dealer counterparty swaps as of September 30, 2025 and December 31, 2024 .

All changes in the fair value of these instruments are recorded in other non-interest income.

The Company pledged no cash at June 30, 2025 and at December 31, 2024 .

The Company pledged no cash at September 30, 2025 and at December 31, 2024 .

Note 10 – Earnings Per Share

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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 217,000 and 539,000 antidilutive shares of common stock for the three months ended June 30, 2025 and 2024 , respectively.

There were 216,000 and 539,000 antidilutive shares of common stock for the six months ended June 30, 2025 and 2024 , respectively.

There were 179,000 and 183,000 antidilutive shares of common stock for the three months ended September 30, 2025 and 2024 , respectively.

There were 216,000 and 206,000 antidilutive shares of common stock for the nine months ended September 30, 2025 and 2024 , respectively.

Presented below are the calculations for basic and diluted earnings per share:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(In Thousands, except per share amounts)

21 unchanged sentences

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following table presents information about our assets recorded in the consolidated statements of financial condition at their fair value on a recurring basis as of June 30, 2025 and December 31, 2024 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The following table presents information about our assets recorded in the consolidated statements of financial condition at their fair value on a recurring basis as of September 30, 2025 and December 31, 2024 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

Fair Value Measurements Using

June 30, 2025

September 30, 2025

(In Thousands)

7 unchanged sentences

5,707 - 5,707 -

Government sponsored enterprise bonds

2,485 - 2,485 -

Municipal securities

9 unchanged sentences

Mortgage banking derivative liabilities

1,149 - - 1,149

Interest rate swap liabilities

54 unchanged sentences

The table below presents reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 ) during 2025 and 2024 .

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(In Thousands)

8 unchanged sentences

Assets Recorded at Fair Value on a Non-recurring Basis

The following tables present information about assets recorded in the consolidated statements of financial condition at their fair value on a non-recurring basis as of June 30, 2025 and December 31, 2024 , and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The following tables present information about assets recorded in the consolidated statements of financial condition at their fair value on a non-recurring basis as of September 30, 2025 and December 31, 2024 , and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.

Fair Value Measurements Using

June 30, 2025

September 30, 2025

(In Thousands)

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The Company records the mortgage servicing rights at the lower of amortized cost or fair value.

For Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2025 and December 31, 2024 , the significant unobservable inputs used in the fair value measurements were as follows:

For Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2025 and December 31, 2024 , the significant unobservable inputs used in the fair value measurements were as follows:

Significant Unobservable Input Value

Fair Value at Significant

September 30,

(Dollars in Thousands)

13 unchanged sentences

9.5 % 11.0 % 9.5 %

Cost to service

$ 83 $ 129 $ 90

Mortgage banking derivatives

14 unchanged sentences

The carrying amounts and fair values of the Company’s financial instruments consist of the following:

June 30, 2025

September 30, 2025

December 31, 2024

38 unchanged sentences

Fair values for the Company’s commitments to extend credit and standby letters of credit are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the counterparty’s credit standing, and discounted cash flow analyses.

The fair value of the Company’s commitments to extend credit was not material at June 30, 2025 and December 31, 2024 .

The fair value of the Company’s commitments to extend credit was not material at September 30, 2025 and December 31, 2024 .

Note 12 – Segment Reporting

22 unchanged sentences

Presented below is the segment information:

As of or for the three months ended June 30, 2025

As of or for the three months ended September 30, 2025

(In Thousands)

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Communications

108 141 - 249

Professional fees

1 unchanged sentence

Real estate owned

( 8 ) - - ( 8 )

Loan processing expense

8 unchanged sentences

$ 2,501,480 $ 169,697 $ ( 402,008 ) $ 2,269,169

As of or for the three months ended June 30, 2024

As of or for the three months ended September 30, 2024

(In Thousands)

27 unchanged sentences

941 194 23 1,158

Net income (loss)

$ 4,705 $ ( 50 ) $ 73 $ 4,728

$ 2,472,126 $ 193,726 $ ( 421,516 ) $ 2,244,336

As of or for the six months ended June 30, 2025

As of or for the nine months ended September 30, 2025

(In Thousands)

26 unchanged sentences

23,747 58,574 ( 128 ) 82,193

Income (loss) before income tax expense (benefit)

Income before income tax expense

22,119 1,116 159 23,394

Income tax expense (benefit)

Income tax expense

4,345 325 35 4,705

Net income (loss)

$ 17,774 $ 791 $ 124 $ 18,689

As of or for the six months ended June 30, 2024

As of or for the nine months ended September 30, 2024

(In Thousands)

Net interest income (loss)

Net interest income (expense)

$ 35,082 $ ( 1,853 ) $ 104 $ 33,333

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It is intended to complement the unaudited consolidated financial statements, footnotes, and supplemental financial data appearing elsewhere in this Quarterly Report on Form 10-Q and should be read in conjunction therewith.

The detailed discussion in the sections below focuses on the results of operations for the three and six months ended June 30, 2025 and 2024 and the financial condition as of June 30, 2025 compared to the financial condition as of December 31, 2024.

The detailed discussion in the sections below focuses on the results of operations for the three and nine months ended September 30, 2025 and 2024 and the financial condition as of September 30, 2025 compared to the financial condition as of December 31, 2024.

As described in the notes to the unaudited consolidated financial statements, we have two reportable segments:

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Our mortgage banking segment generates the significant majority of our noninterest income and a majority of our noninterest expenses.

We have provided below a discussion of the material results of operations for each segment on a separate basis for the three and six months ended June 30, 2025 and 2024, which focuses on noninterest income and noninterest expenses.

We have provided below a discussion of the material results of operations for each segment on a separate basis for the three and nine months ended September 30, 2025 and 2024, which focuses on noninterest income and noninterest expenses.

We have also provided a discussion of the consolidated operations of the Company, which includes the consolidated operations of the Bank and Waterstone Mortgage Corporation, for the same periods.

4 unchanged sentences

Significant Items

There were no significant items that impacted earnings for the three and six months ended June 30, 2025 and 2024.

Comparison of Community Banking Segment Results of Operations for the Three Months Ended June 30, 2025 and 2024

Net income totaled $6.2 million for the three months ended June 30, 2025 compared to $4.3 million for the three months ended June 30, 2024.

Net interest income increased $2.4 million to $13.6 million for the three months ended June 30, 2025 compared to $11.2 million for the three months ended June 30, 2024.

There were no significant items that impacted earnings for the three and nine months ended September 30, 2025 and 2024.

Comparison of Community Banking Segment Results of Operations for the Three Months Ended September 30, 2025 and 2024

Net income totaled $6.9 million for the three months ended September 30, 2025 compared to $4.7 million for the three months ended September 30, 2024.

Net interest income increased $2.4 million to $14.6 million for the three months ended September 30, 2025 compared to $12.3 million for the three months ended September 30, 2024.

Interest expense on borrowings decreased $3.1 million as growth in time deposits allowed us to carry a lower average balance of FHLB advances.

There was a negative provision for credit losses of $19,000 for the three months ended June 30, 2025 compared to a negative provision for credit losses of $279,000 for the three months ended June 30, 2024.

The negative provision for credit losses of $19,000 consisted of a $115,000 negative provision related to loans and $97,000 provision related to unfunded commitments for the three months ended June 30, 2025.

The negative provision for credit losses related to funded loans of $125,000 for the quarter ended June 30, 2025 compared to a negative provision for credit losses related to funded loans of $197,000 for the quarter ended June 30, 2024.

The current quarter decrease was primarily due to decreases in multifamily qualitative risk factors, offset by an increase in the single-family loan qualitative factors primarily related to increases in internal asset quality risk factors and an increase in construction loan balances.

The provision for credit losses related to unfunded loan commitments was $106,000 for the quarter ended June 30, 2025 compared to a negative provision for credit losses related to unfunded loan commitments of $82,000 for the quarter ended June 30, 2024.

The provision for credit losses related to unfunded loan commitments for the quarter ended June 30, 2025 was due primarily to an increase in the loans approved that are currently waiting to close compared to the prior quarter end.

Compensation, payroll taxes, and other employee benefits expense decreased $89,000 to $5.0 million compared to the quarter ending June 30, 2024 primarily due to a decrease in health insurance expense as claims decreased.

Other noninterest expense decreased $206,000 to $466,000 as certain loan fees paid to the mortgage banking segment for the purchase of single-family adjustable rate mortgage loans decreased.

These fees are eliminated in the consolidated statements of income.

Comparison of Mortgage Banking Segment Results of Operations for the Three Months Ended June 30, 2025 and 2024

Net income totaled $1.5 million for the three months ended June 30, 2025 compared to net income of $1.3 million for the three months ended June 30, 2024.

We originated $588.8 million in mortgage loans held for sale (including sales to the community banking segment) during the three months ended June 30, 2025, which represents a decrease of $45.3 million, or 7.1%, from the $634.1 million originated during the three months ended June 30, 2024.

The decrease in loan production volume was driven by a $47.9 million, or 8.1%, decrease in purchase products and was offset by a $2.6 million increase in refinance products.

Total mortgage banking noninterest income decreased $2.4 million, or 9.7%, to $22.6 million during the three months ended June 30, 2025 compared to $25.1 million during the three months ended June 30, 2024.

The decrease in mortgage banking noninterest income was related to a 7.1% decrease in volume and a 2.5% decrease in gross margin on loans originated and sold for the three months ended June 30, 2025 compared to June 30, 2024.

There was a negative provision for credit losses of $276,000 for the three months ended September 30, 2025 compared to a negative provision for credit losses of $302,000 for the three months ended September 30, 2024.

The negative provision for credit losses of $276,000 consisted of a $137,000 negative provision related to loans and $139,000 provision related to unfunded commitments for the three months ended September 30, 2025.

The current quarter decrease was primarily due to decreases in single-family and commercial real estate qualitative risk factors, offset by an increase in the multi-family loan balances.

The negative provision for credit losses related to unfunded loan commitments was $139,000 for the quarter ended September 30, 2025 compared to a negative provision for credit losses related to unfunded loan commitments of $84,000 for the quarter ended September 30, 2024.

The negative provision for credit losses related to unfunded loan commitments for the quarter ended September 30, 2025 was due primarily to a decrease in the construction loans waiting to be funded.

Compensation, payroll taxes, and other employee benefits expense decreased $290,000 to $5.0 million compared to the quarter ending September 30, 2024 primarily due to a decrease in health insurance expense as claims decreased.

Comparison of Mortgage Banking Segment Results of Operations for the Three Months Ended September 30, 2025 and 2024

Net income totaled $948,000 for the three months ended September 30, 2025 compared to a net loss of $50,000 for the three months ended September 30, 2024.

We originated $539.4 million in mortgage loans held for sale (including sales to the community banking segment) during the three months ended September 30, 2025, which represents a decrease of $19.3 million, or 3.5%, from the $558.7 million originated during the three months ended September 30, 2024.

The decrease in loan production volume was driven by a $10.7 million, or 2.2%, decrease in purchase products and a $8.6 million decrease in refinance products.

Total mortgage banking noninterest income decreased $401,000, or 1.9%, to $21.0 million during the three months ended September 30, 2025 compared to $21.4 million during the three months ended September 30, 2024.

The decrease in mortgage banking noninterest income was related to a 3.5% decrease in volume and was partially offset by a 1.1% increase in gross margin on loans originated and sold for the three months ended September 30, 2025 compared to September 30, 2024.

Gross margin on loans originated and sold is the ratio of mortgage banking income (excluding the change in interest rate lock fair value) divided by total loan originations.

4 unchanged sentences

Department of Agriculture loan.

Loans originated for the purchase of a residential property comprised 91.7% of total originations during the three months ended June 30, 2025, compared to 92.7% of total originations during the three months ended June 30, 2024, respectively.

The mix of loan type trended towards more governmental loans and less conventional loans, with governmental loans and conventional loans comprising 42.4% and 57.6% of all loan originations, respectively, during the three months ended June 30, 2025, compared to 35.4% and 64.6% of all loan originations, respectively, during the three months ended June 30, 2024.

Total compensation, payroll taxes and other employee benefits decreased $574,000, or 3.4%, to $16.3 million for the three months ended June 30, 2025 compared to $16.9 million for the three months ended June 30, 2024.

The decrease primarily related to decreased commission expense due to a decrease in loan origination volumes and salary expense due to reduced employee headcount and a offset by an increase in health insurance expense.

Loans originated for the purchase of a residential property comprised 90.1% of total originations during the three months ended September 30, 2025, compared to 88.9% of total originations during the three months ended September 30, 2024, respectively.

The mix of loan type trended towards more governmental loans and less conventional loans, with governmental loans and conventional loans comprising 37.7% and 62.3% of all loan originations, respectively, during the three months ended September 30, 2025, compared to 35.2% and 64.8% of all loan originations, respectively, during the three months ended September 30, 2024.

Total compensation, payroll taxes and other employee benefits decreased $214,000, or 1.3%, to $15.7 million for the three months ended September 30, 2025 compared to $15.9 million for the three months ended September 30, 2024.

Consolidated Waterstone Financial, Inc.

Results of Operations

Three months ended June 30,

Three months ended September 30,

(Dollars In Thousands, except per share amounts)

9 unchanged sentences

Yields on interest-earning assets are computed on a fully tax-equivalent yield, where applicable.

Three months ended June 30,

Three months ended September 30,

Average Balance

25 unchanged sentences

Average interest-earning assets to average interest-bearing liabilities

Interest income includes net deferred loan fee amortization (expense) income of ($55,000) and $166,000 for the three months ended June 30, 2025 and 2024, respectively.

Interest income includes net deferred loan fee amortization income of $185,000 and $168,000 for the three months ended September 30, 2025 and 2024, respectively.

Average balance of mortgage related and debt securities are based on amortized historical cost.

Yields on tax-exempt municipal securities are not presented on a tax-equivalent basis in this table.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 4.93% and 5.05% for the three months ended June 30, 2025 and 2024, respectively.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 4.97% and 5.26% for the three months ended September 30, 2025 and 2024, respectively.

Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities and is presented on a fully tax equivalent basis.

7 unchanged sentences

For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

Three months ended June 30,

Three months ended September 30,

2025 versus 2024

15 unchanged sentences

______________

Interest income includes net deferred loan fee amortization (expense) income of ($55,000) and $166,000 for the three months ended June 30, 2025 and 2024, respectively.

Interest income includes net deferred loan fee amortization income of $185,000 and $168,000 for the three months ended September 30, 2025 and 2024, respectively.

Non-accrual loans have been included in average loans receivable balance.

2 unchanged sentences

Yields on tax-exempt municipal securities are not presented on a tax-equivalent basis in this table.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 4.93% and 5.05% for the three months ended June 30, 2025 and 2024, respectively.

Net interest income increased $3.0 million, or 28.4%, to $13.7 million during the three months ended June 30, 2025 compared to $10.7 million during the three months ended June 30, 2024 primarily due to increased yields on our loan and securities portfolios as well as decreased cost of borrowings as a larger portion of our investments were funded by deposits rather than borrowings.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 4.97% and 5.26% for the three months ended September 30, 2025 and 2024, respectively.

Net interest income increased $3.2 million, or 28.0%, to $14.7 million during the three months ended September 30, 2025 compared to $11.5 million during the three months ended September 30, 2024 primarily due to increased yields on our loan and securities portfolios as well as decreased cost of borrowings as a larger portion of our investments were funded by deposits rather than borrowings.

Additionally, there was a decrease in borrowing rates compared to the prior year period.

Interest income on loans increased $35,000, or 0.1%, to $26.6 million due primarily to a 19 basis point increase in average yield on loans as interest rates continued to increase.

The increase was offset by a $47.5 million decrease on the average loans receivable and held for sales balance.

Interest expense on retail time deposits increased $192,000 , or 2.3%, to $8.5 million primarily due to the the increase in average balance of $72.3 million.

This was partially offset by a 30 basis point decrease in average cost of retail time deposits compared to the prior year period.

Interest expense on brokered time deposits increased $786,000 due to the addition of $72.5 million in average brokered time deposits.

Interest expense on money market, savings, and escrow accounts increased $274,000, or 19.8%, to $1.7 million due primarily to a 18 basis point increase in average cost of money market, savings, and escrow accounts as rates increased to stay attract new account openings.

The increase in yield was offset by a $61.0 million decrease on the average loans receivable and held for sales balance.

Interest expense on retail time deposits decreased $823,000, or 9.2%, to $8.1 million primarily due to the the 62 basis point decrease in average in average cost of retail time deposits compared to the prior year period.

This decrease was partially offset by a $37.5 million increase in average retail time deposit balance.

Interest expense on brokered time deposits increased $635,000 due to the increase of $61.4 million in average brokered time deposits.

Interest expense on money market, savings, and escrow accounts increased $238,000, or 16.0%, to $1.7 million due primarily to a 10 basis point increase in average cost of money market, savings, and escrow accounts as rates increased to attract new account openings.

Additionally, the average balance increased $30.2 million.

Interest expense on borrowings decreased $3.6 million, or 47.4%, to $4.0 million due to a $185.0 million decrease in the average balance of borrowings during the three months ended June 30, 2025 compared to the three months ended June 30, 2024 as we transitioned to more time deposits and money market accounts.

Interest expense on borrowings decreased $2.9 million, or 40.4%, to $4.3 million due to a $159.6 million decrease in the average balance of borrowings during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 as we transitioned to more time deposits and money market accounts.

Additionally, the average cost of borrowings decreased by 91 basis points as there were fed funds rate cuts over the past year.

Provision for Credit Losses

There was a negative provision for credit losses of $9,000 for the three months ended June 30, 2025 compared to a negative $225,000 provision for credit losses for the three months ended June 30, 2024.

The $9,000 negative provision for credit losses consisted of a $115,000 negative provision related to loans and a provision related to unfunded commitments of $106,000 for the three months ended June 30, 2025.

During the three months ended June 30, 2025, the decrease was primarily due to decreases in multifamily qualitative risk factors, offset by an increase in the single-family loan qualitative factors primarily related to increases in internal asset quality risk factors and an increase in construction loan balances.

The increase in provision for unfunded commitments was primarily due to an increase in the loans approved that are currently waiting to close compared to the prior quarter end.

We made adjustments to our qualitative factors, primarily to account for the changes in internal metrics and external risk factors.

The forecast factor remained unchanged as we monitor the economic environment going forward.

There was a negative provision for credit losses of $269,000 for the three months ended September 30, 2025 compared to a negative $377,000 provision for credit losses for the three months ended September 30, 2024.

The $269,000 negative provision for credit losses consisted of a $130,000 negative provision related to loans and a provision related to unfunded commitments of $139,000 for the three months ended September 30, 2025.

During the three months ended September 30, 2025, the decrease was primarily due to decreases in single-family and commercial real estate qualitative risk factors, offset by an increase in the multi-family loan balances.

The negative provision for credit losses related to unfunded loan commitments for the quarter ended September 30, 2025 was due primarily to a decrease in the construction loans waiting to be funded.

The provision is primarily a function of the Company's reserving methodology and assessments of certain quantitative and qualitative factors which are used to determine an appropriate allowance for credit losses for the period.

1 unchanged sentence

Noninterest Income

Three months ended June 30,

Three months ended September 30,

(Dollars In Thousands)

3 unchanged sentences

Total noninterest income

Total noninterest income decreased $2.2 million, or 8.2%, to $24.3 million during the three months ended June 30, 2025 compared to $26.5 million during the three months ended June 30, 2024.

The decrease in mortgage banking income was primarily the result of a decrease in loan origination volumes and a decrease in gross margin on loans originated.

Total loan origination volume on a consolidated basis decreased $40.2 million, or 6.4%, to $589.0 million during the three months ended June 30, 2025 compared to $629.2 million during the three months ended June 30, 2024.

Total noninterest income decreased $250,000, or 1.1%, to $22.3 million during the three months ended September 30, 2025 compared to $22.6 million during the three months ended September 30, 2024.

The decrease in mortgage banking income was primarily the result of a decrease in loan origination volumes offset by an increase in gross margin on loans originated.

Total loan origination volume on a consolidated basis decreased $19.9 million, or 3.6%, to $535.6 million during the three months ended September 30, 2025 compared to $555.5 million during the three months ended September 30, 2024.

Gross margin on loans originated and sold is the ratio of mortgage banking income (excluding the change in interest rate lock fair value) divided by total loan originations.

Gross margin on loans originated and sold decreased 2.5% at the mortgage banking segment.

See "Comparison of Mortgage Banking Segment Results of Operations for the Three Months Ended June 30, 2025 and 2024" above for additional discussion of the increase in mortgage banking income.

Three months ended June 30,

Gross margin on loans originated and sold increased 1.1% at the mortgage banking segment.

See "Comparison of Mortgage Banking Segment Results of Operations for the Three Months Ended September 30, 2025 and 2024" above for additional discussion of the increase in mortgage banking income.

Three months ended September 30,

(Dollars In Thousands)

7 unchanged sentences

Total noninterest expenses

Total noninterest expenses decreased $1.9 million, or 6.2%, to $28.4 million during the three months ended June 30, 2025 compared to $30.3 million during the three months ended June 30, 2024.

Compensation, payroll taxes and other employee benefits expense at our mortgage banking segment decreased $574,000, or 3.4%, to $16.3 million during the three months ended June 30, 2025.

Total noninterest expenses decreased $1.1 million, or 3.8%, to $27.5 million during the three months ended September 30, 2025 compared to $28.6 million during the three months ended September 30, 2024.

Compensation, payroll taxes and other employee benefits expense at our mortgage banking segment decreased $214,000, or 1.3%, to $15.7 million during the three months ended September 30, 2025.

Compensation, payroll taxes and other employee benefits expense at the community banking segment decreased $89,000, or 1.7%, to $5.0 million during the three months ended June 30, 2025.

Compensation, payroll taxes and other employee benefits expense at the community banking segment decreased $290,000, or 5.4%, to $5.0 million during the three months ended September 30, 2025.

The decrease was primarily due to a decrease in health insurance expense as claims decreased.

Occupancy, office furniture and equipment expense at the mortgage banking segment decreased $212,000 to $833,000 during the three months ended June 30, 2025, primarily resulting from decreased rent and depreciation expenses as underperforming branches were closed over the past year.

Occupancy, office furniture and equipment expense at the community banking segment decreased $63,000 to $920,000 during the three months ended June 30, 2025.

The decrease was due primarily to decreases in equipment maintenance and utility costs.

Professional fees decreased $258,000 to $500,000 during the three months ended June 30, 2025.

Occupancy, office furniture and equipment expense at the mortgage banking segment decreased $171,000 to $781,000 during the three months ended September 30, 2025, primarily resulting from decreased rent and depreciation expenses as underperforming branches were closed over the past year.

Occupancy, office furniture and equipment expense at the community banking segment increased $3,000 to $907,000 during the three months ended September 30, 2025.

The increase was due primarily to increases in equipment maintenance and utility costs.

Professional fees decreased $189,000 to $380,000 during the three months ended September 30, 2025.

The decrease was primarily related to a decrease in legal fees at the mortgage banking segment as a settlement related to a prior year dispute was finalized in previous quarter.

Other noninterest expense decreased $501,000, or 21.1%, to $1.9 million during the three months ended June 30, 2025.

The decrease primarily related to decreased provision for loan sale losses, provision for branch losses, and branch overhead at the mortgage banking segment.

Income tax expense totaled $1.9 million for the three months ended June 30, 2025 compared to $1.4 million during the three months ended June 30, 2024.

Income tax expense was recognized on the statement of income during the three months ended June 30, 2025 at an effective rate of 20.1% of pretax income compared to the three months ended June 30, 2024 at an effective rate of 20.0% of pretax income.

Comparison of Community Banking Segment Results of Operations for the Six Months Ended June 30, 2025 and 2024

Net income totaled $10.9 million for the six months ended June 30, 2025 compared to $7.0 million for the six months ended June 30, 2024.

Net interest income increased $3.2 million to $26.0 million for the six months ended June 30, 2025 compared to $22.8 million for the six months ended June 30, 2024.

Interest expense on borrowings decreased $6.8 million as growth in time deposits allowed us to carry a lower average balance of FHLB advances.

Interest expense on deposits increased $3.6 million.

There was a negative provision for credit losses of $537,000 for the six months ended June 30, 2025 compared to a negative provision for credit losses of $174,000 for the six months ended June 30, 2024.

The negative provision for credit losses of $537,000 consisted of a $439,000 negative provision related to loans and $98,000 provision related to unfunded commitments for the six months ended June 30, 2025.

The current year decrease was primarily due to decreases in historical loss rates, loan portfolio balances, and certain loan qualitative factors primarily in the multi-family category.

The provision for credit losses related to unfunded loan commitments was $98,000 for the six months ended June 30, 2025 compared to a negative provision for credit losses related to unfunded loan commitments of $12,000 for the quarter ended June 30, 2024.

The negative provision for credit losses related to unfunded loan commitments was primarily due to a decrease in construction loans that are waiting to be funded compared to the prior year end and decrease in historical loss rates and certain qualitative factors.

Compensation, payroll taxes, and other employee benefits expense decreased $237,000 to $10.2 million compared to the quarter ending June 30, 2024 primarily due to a decrease in health insurance expense as claims decreased.

Other noninterest expense increased $36,000, or 1.8%, to $2.0 million during the three months ended September 30, 2025.

The increase primarily related to increased provision for loan sale losses, provision for branch losses, and branch overhead at the mortgage banking segment.

Income tax expense totaled $1.9 million for the three months ended September 30, 2025 compared to $1.2 million during the three months ended September 30, 2024.

Income tax expense was recognized on the statement of income during the three months ended September 30, 2025 at an effective rate of 19.5% of pretax income compared to the three months ended September 30, 2024 at an effective rate of 19.7% of pretax income.

Comparison of Community Banking Segment Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Net income totaled $17.8 million for the nine months ended September 30, 2025 compared to $11.7 million for the nine months ended September 30, 2024.

Net interest income increased $5.6 million to $40.7 million for the nine months ended September 30, 2025 compared to $35.1 million for the nine months ended September 30, 2024.

Interest expense on borrowings decreased $10.0 million as growth in time deposits allowed us to carry a lower average balance of FHLB advances along with a decrease in average cost of borrowings as there were fed funds rate cuts over the past year..

Interest expense on deposits increased $3.6 million due primarily to a reduction in time deposit interest rate offerings.

There was a negative provision for credit losses of $813,000 for the nine months ended September 30, 2025 compared to a negative provision for credit losses of $476,000 for the nine months ended September 30, 2024.

The negative provision for credit losses of $813,000 consisted of a $575,000 negative provision related to loans and $237,000 provision related to unfunded commitments for the nine months ended September 30, 2025.

The current year decrease was primarily due to decreases in historical loss rates, loan portfolio balances, and certain loan qualitative factors primarily in the single-family category.

The negative provision for credit losses related to unfunded loan commitments was $237,000 for the nine months ended September 30, 2025 compared to a negative provision for credit losses related to unfunded loan commitments of $96,000 for the nine months ended September 30, 2024.

Compensation, payroll taxes, and other employee benefits expense decreased $527,000 to $15.3 million compared to the quarter ending September 30, 2024 primarily due to a decrease in health insurance expense as claims decreased.

Other noninterest expense decreased $286,000 to $1.7 million primarily due to a decrease in certain loan fees paid to the mortgage banking segment for the purchase of single-family adjustable rate mortgage loans decreased.

These fees are eliminated in the consolidated statements of income.

Comparison of Mortgage Banking Segment Results of Operations for the Six Months Ended June 30, 2025 and 2024

Net loss totaled $157,000 for the six months ended June 30, 2025 compared to net income of $1.6 million for the six months ended June 30, 2024.

We originated $976.6 million in mortgage loans held for sale (including sales to the community banking segment) during the six months ended June 30, 2025, which represents a decrease of $142.7 million, or 12.7%, from the $1.12 billion originated during the six months ended June 30, 2024.

Comparison of Mortgage Banking Segment Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Net income totaled $791,000 for the nine months ended September 30, 2025 compared to net income of $1.6 million for the nine months ended September 30, 2024.

We originated $1.52 billion in mortgage loans held for sale (including sales to the community banking segment) during the nine months ended September 30, 2025, which represents a decrease of $162.0 million, or 9.7%, from the $1.68 billion originated during the nine months ended September 30, 2024.

The decrease in loan production volume was driven by a $170.5 million, or 11.1%, decrease in purchase products offset by a $8.5 million increase in refinance products.

Total mortgage banking noninterest income decreased $7.0 million, or 15.5%, to $38.4 million during the six months ended June 30, 2025 compared to $45.4 million during the six months ended June 30, 2024.

The decrease in mortgage banking noninterest income was related to a 12.7% decrease in volume and a 2.9% decrease in gross margin on loans originated and sold for the six months ended June 30, 2025 compared to June 30, 2024.

Total mortgage banking noninterest income decreased $7.4 million, or 11.1%, to $59.4 million during the nine months ended September 30, 2025 compared to $66.8 million during the nine months ended September 30, 2024.

The decrease in mortgage banking noninterest income was related to a 9.7% decrease in volume and a 1.6% decrease in gross margin on loans originated and sold for the nine months ended September 30, 2025 compared to September 30, 2024.

Gross margin on loans originated and sold is the ratio of mortgage banking income (excluding the change in interest rate lock fair value) divided by total loan originations.

5 unchanged sentences

Department of Agriculture loan.

Loans originated for the purchase of a residential property comprised 90.0% of total originations during the six months ended June 30, 2025, compared to 91.8% of total originations during the six months ended June 30, 2024, respectively.

The mix of loan type trended towards more governmental loans and less conventional loans, with governmental loans and conventional loans comprising 40.7% and 59.3% of all loan originations, respectively, during the six months ended June 30, 2025, compared to 36.7% and 63.3% of all loan originations, respectively, during the six months ended June 30, 2024.

Total compensation, payroll taxes and other employee benefits decreased $3.3 million, or 10.4%, to $28.4 million for the six months ended June 30, 2025 compared to $31.6 million for the six months ended June 30, 2024.

The decrease primarily related to decreased commission expense, branch manager pay, salary expense, and sign-on incentives driven by reduced employee headcount and a decrease in loan origination volumes and branch profitability.

Professional fees increased $587,000, or 54.5% , to $1.7 million for the six months ended June 30, 2025, compared to $1.1 million for the six months ended June 30, 2024.

The increase was primarily related to legal services and the finalization of a settlement related to a previously disclosed legal matter during the six months ended June 30, 2025 .

Loans originated for the purchase of a residential property comprised 90.0% of total originations during the nine months ended September 30, 2025, compared to 90.9% of total originations during the nine months ended September 30, 2024, respectively.

The mix of loan type trended towards more governmental loans and less conventional loans, with governmental loans and conventional loans comprising 39.6% and 60.4% of all loan originations, respectively, during the nine months ended September 30, 2025, compared to 36.7% and 63.7% of all loan originations, respectively, during the nine months ended September 30, 2024.

Total compensation, payroll taxes and other employee benefits decreased $3.5 million, or 7.3%, to $44.1 million for the nine months ended September 30, 2025 compared to $47.6 million for the nine months ended September 30, 2024.

The decrease primarily related to decreased commission expense, branch manager pay, and salary expense driven by reduced employee headcount and a decrease in loan origination volumes and branch profitability.

Professional fees increased $388,000, or 26.4%, to $1.9 million for the nine months ended September 30, 2025, compared to $1.5 million for the nine months ended September 30, 2024.

The increase was primarily related to legal services and the finalization of a settlement related to a previously disclosed legal matter during the nine months ended September 30, 2025 .

The Company maintained a $1.3 million accrual related to this legal matter as of December 31, 2024.

1 unchanged sentence

Results of Operations

Six months ended June 30,

Nine months ended September 30,

(Dollars In Thousands, except per share amounts)

9 unchanged sentences

Yields on interest-earning assets are computed on a fully tax-equivalent yield, where applicable.

Six months ended June 30,

Nine months ended September 30,

Average Balance

25 unchanged sentences

Average interest-earning assets to average interest-bearing liabilities

Interest income includes net deferred loan fee amortization income of $151,000 and $317,000 for the six months ended June 30, 2025 and 2024, respectively.

Interest income includes net deferred loan fee amortization income of $336,000 and $486,000 for the nine months ended September 30, 2025 and 2024, respectively.

Average balance of mortgage related and debt securities are based on amortized historical cost.

Yields on tax-exempt municipal securities are not presented on a tax-equivalent basis in this table.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 5.01% and 5.05% for the six months ended June 30, 2025 and 2024, respectively.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 5.00% and 5.12% for the nine months ended September 30, 2025 and 2024, respectively.

7 unchanged sentences

Six months ended June 30,

Nine months ended September 30,

2025 versus 2024

15 unchanged sentences

______________

Interest income includes net deferred loan fee amortization income of $151,000 and $317,000 for the six months ended June 30, 2025 and 2024, respectively.

Interest income includes net deferred loan fee amortization income of $336,000 and $486,000 for the nine months ended September 30, 2025 and 2024, respectively.

Non-accrual loans have been included in average loans receivable balance.

2 unchanged sentences

Yields on tax-exempt municipal securities are not presented on a tax-equivalent basis in this table.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 5.01% and 5.05% for the six months ended June 30, 2025 and 2024, respectively.

Net interest income increased $4.5 million, or 20.5%, to $26.3 million during the six months ended June 30, 2025 compared to $21.8 million during the six months ended June 30, 2024 primarily due to increased yields on our loan and securities portfolios as well as decreased cost of borrowings as a larger portion of our investments were funded by deposits rather than borrowings.

The tax-equivalent yields on debt securities, federal funds sold and short-term investments were 5.00% and 5.12% for the nine months ended September 30, 2025 and 2024, respectively.

Net interest income increased $7.7 million, or 23.1%, to $41.0 million during the nine months ended September 30, 2025 compared to $33.3 million during the nine months ended September 30, 2024 primarily due to increased yields on our loan and securities portfolios as well as decreased cost of borrowings as a larger portion of our investments were funded by deposits rather than borrowings.

Additionally, there was a decrease in borrowing rates compared to the prior year period.

1 unchanged sentence

The increase was offset by a $48.3 million decrease on the average loans receivable and held for sale balances.

Interest expense on retail time deposits increased $1.2 million, or 7.8%, to $17.3 million primarily due to the the increase in average balance of $75.7 million.

Interest expense on retail time deposits increased $425,000, or 1.7%, to $25.4 million primarily due to the the increase in average balance of $62.9 million.

Interest expense on brokered time deposits increased $2.4 million due to the addition of $77.0 million in average brokered time deposits balance.

1 unchanged sentence

Additionally, the average balance increased $25.8 million.

Interest expense on borrowings decreased $6.6 million, or 45.5%, to $7.9 million due to a $195.2 million decrease in the average balance of borrowings during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 as we transitioned to more time deposits.

Interest expense on borrowings decreased $9.5 million, or 43.8%, to $12.1 million due to a $183.2 million decrease in the average balance of borrowings during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 as we transitioned to more time deposits.

Additionally, the average cost of borrowings decreased by 92 basis points as there were fed funds rate cuts over the past year.

Provision for Credit Losses

There was a negative provision for credit losses of $567,000 for the six months ended June 30, 2025 compared to a negative provision for credit losses of $158,000 for the six months ended June 30, 2024.

The $567,000 negative provision for credit losses consisted of a $469,000 negative provision related to loans and a negative provision related to unfunded commitments of $98,000 for the six months ended June 30, 2025.

During the six months ended June 30, 2025, the decrease was primarily due to decreases in multifamily qualitative risk factors, offset by an increase in commercial real estate qualitative factors primarily related to increases in internal asset quality risk factors.

There was a negative provision for credit losses of $836,000 for the nine months ended September 30, 2025 compared to a negative provision for credit losses of $535,000 for the nine months ended September 30, 2024.

The $836,000 negative provision for credit losses consisted of a $599,000 negative provision related to loans and a negative provision related to unfunded commitments of $237,000 for the nine months ended September 30, 2025.

During the nine months ended September 30, 2025, the decrease was primarily due to decreases in single-family qualitative risk factors.

The decrease in provision for unfunded commitments was primarily due to a decrease in historical loss and qualitative factors in certain loan categories.

4 unchanged sentences

Noninterest Income

Six months ended June 30,

Nine months ended September 30,

(Dollars In Thousands)

3 unchanged sentences

Total noninterest income

Total noninterest income decreased $6.3 million, or 13.2%, to $41.4 million during the six months ended June 30, 2025 compared to $47.7 million during the six months ended June 30, 2024.

Total noninterest income decreased $6.6 million, or 9.3%, to $63.7 million during the nine months ended September 30, 2025 compared to $70.3 million during the nine months ended September 30, 2024.

The decrease in mortgage banking income was primarily the result of a decrease in loan origination volumes and a decrease in gross margin.

Total loan origination volume on a consolidated basis decreased $130.2 million, or 11.8%, to $976.7 million during the six months ended June 30, 2025 compared to $1.11 billion during the six months ended June 30, 2024.

Total loan origination volume on a consolidated basis decreased $150.1 million, or 9.0%, to $1.51 billion during the nine months ended September 30, 2025 compared to $1.66 billion during the nine months ended September 30, 2024.

Gross margin on loans originated and sold is the ratio of mortgage banking income (excluding the change in interest rate lock fair value) divided by total loan originations.

Gross margin on loans originated and sold decreased 1.6% at the mortgage banking segment.

See "Comparison of Mortgage Banking Segment Results of Operations for the Six Months Ended June 30, 2025 and 2024" above for additional discussion of the increase in mortgage banking income.

See "Comparison of Mortgage Banking Segment Results of Operations for the Nine Months Ended September 30, 2025 and 2024" above for additional discussion of the increase in mortgage banking income.

The increase in cash surrender value of life insurance of $459,000 was primarily due to the additional policy added at the end of December 31, 2024 and the increase in dividend rates.

Six months ended June 30,

Nine months ended September 30,

(Dollars In Thousands)

7 unchanged sentences

Total noninterest expenses

Total noninterest expenses decreased $3.1 million, or 5.3%, to $54.7 million during the six months ended June 30, 2025 compared to $57.8 million during the six months ended June 30, 2024.

Compensation, payroll taxes and other employee benefits expense at our mortgage banking segment decreased $3.3 million, or 10.4%, to $28.4 million during the six months ended June 30, 2025.

Compensation, payroll taxes and other employee benefits expense at the community banking segment decreased $237,000,or 2.3%, to $10.2 million during the six months ended June 30, 2025.

Total noninterest expenses decreased $4.2 million, or 4.8%, to $82.2 million during the nine months ended September 30, 2025 compared to $86.4 million during the nine months ended September 30, 2024.

Compensation, payroll taxes and other employee benefits expense at our mortgage banking segment decreased $3.5 million, or 7.3%, to $44.1 million during the nine months ended September 30, 2025.

Compensation, payroll taxes and other employee benefits expense at the community banking segment decreased $527,000,or 3.3%, to $15.3 million during the nine months ended September 30, 2025.

The decrease was primarily due to a decrease in health insurance expense as claims decreased.

Occupancy, office furniture and equipment expense at the mortgage banking segment decreased $468,000, to $1.7 million during the six months ended June 30, 2025, primarily resulting from decreased rent and depreciation expenses as underperforming branches were closed over the past year.

Professional fees increased $735,000 to $2.2 million during the six months ended June 30, 2025.

The increase was primarily related to legal services and the finalization of a settlement related to a previously disclosed legal matter during the six months ended June 30, 2025.

Occupancy, office furniture and equipment expense at the mortgage banking segment decreased $640,000, to $2.5 million during the nine months ended September 30, 2025, primarily resulting from decreased rent and depreciation expenses as underperforming branches were closed over the past year.

Advertising expense decreased $646,000, or 22.9%, to $2.2 million during the nine months ended September 30, 2025.

This was driven by a decrease of $535,000, or 25.3%, at the mortgage banking segment as it continues to focus on control costs in the challenging rate environment.

Professional fees increased $546,000 to $2.6 million during the nine months ended September 30, 2025.

The increase was primarily related to legal services and the finalization of a settlement related to a previously disclosed legal matter during the nine months ended September 30, 2025.

The Company maintained a $1.3 million accrual related to this legal matter as of December 31, 2024.

Other noninterest expense increased $639,000 ,or 16.8%, to $4.4 million during the six months ended June 30, 2025.

The increase primarily related to increased provision for branch losses, amortization of mortgage serving rights, and branch overhead at the mortgage banking segment.

Income tax expense totaled $2.8 million for the six months ended June 30, 2025 compared to $3.2 million during the six months ended June 30, 2024.

Income tax expense was recognized on the statement of income during the six months ended June 30, 2025 at an effective rate of 20.6% of pretax income and during the six months ended June 30, 2024 at an effective rate of 26.5% of pretax income.

Other noninterest expense increased $675,000,or 11.7%, to $6.4 million during the nine months ended September 30, 2025.

The increase primarily related to increased provision for branch losses, amortization of mortgage serving rights, hedging expense, and branch overhead at the mortgage banking segment.

Income tax expense totaled $4.7 million for the nine months ended September 30, 2025 compared to $4.3 million during the nine months ended September 30, 2024.

Income tax expense was recognized on the statement of income during the nine months ended September 30, 2025 at an effective rate of 20.1% of pretax income and during the nine months ended September 30, 2024 at an effective rate of 24.3% of pretax income.

The decrease was primarily due to the 2024 Wisconsin tax law enacted which resulted in no Wisconsin state income taxes being expensed in future years, resulting in a lower estimated effective tax rate.

The elimination of Wisconsin state income tax expense resulted in the establishment of a valuation allowance for 2024 Wisconsin state income deferred tax assets, resulting in a one-time $1.1 million charge to state income tax expense in the first quarter.

Comparison of Financial Condition at June 30, 2025 and December 31, 2024

Total Assets – Total assets increased by $47.0 million, or 2.1%, to $2.26 billion at June 30, 2025 from $2.21 billion at December 31, 2024.

The increase in total assets primarily reflects an increase in cash and cash equivalents, loans held for sale, and securities available for sale funded through an increase in deposits and borrowings.

Cash and Cash Equivalents – Cash and cash equivalents increased $31.2 million, or 78.4%, to $70.9 million at June 30, 2025, compared to $39.8 million at December 31, 2024.

Comparison of Financial Condition at September 30, 2025 and December 31, 2024

Total Assets – Total assets increased by $59.6 million, or 2.7%, to $2.27 billion at September 30, 2025 from $2.21 billion at December 31, 2024.

The increase in total assets primarily reflects an increase in cash and cash equivalents, loans held for investment, and securities available for sale funded through an increase in deposits, borrowings, and advance payments by borrowers for taxes.

Cash and Cash Equivalents – Cash and cash equivalents increased $14.0 million, or 35.2%, to $53.8 million at September 30, 2025, compared to $39.8 million at December 31, 2024.

The increase in cash and cash equivalents primarily reflects the increase of funding sources from deposits, borrowings, and advance payments by borrowers for taxes.

Securities Available for Sale – Securities available for sale increased $10.2 million to $218.8 million at June 30, 2025.

Securities Available for Sale – Securities available for sale increased $17.9 million to $226.4 million at September 30, 2025.

The increase was primarily due to the purchases of securities exceeding paydowns and maturities and an increase in fair value as longer term interest rates decreased compared to the prior year period.

Loans Held for Sale - Loans held for sale increased $25.9 million to $161.8 million at June 30, 2025 due to an increase primarily due to seasonal demand in the summer months.

Loans Receivable - Loans receivable held for investment decreased $16.3 million to $1.66 billion at June 30, 2025.

The decrease in total loans receivable was primarily attributable to decreases in each of the one-to-four family, multi-family, commercial loan categories offset by increases in the commercial real estate and construction loan categories.

Loans Held for Sale - Loans held for sale decreased $233,000 to $135.7 million at September 30, 2025 due to a decrease primarily due to seasonal slowdown as year end approaches.

Loans Receivable - Loans receivable held for investment increased $34.3 million to $1.71 billion at September 30, 2025.

The increase in total loans receivable was primarily attributable to increases in each of the multi-family, commercial real estate, and construction loan categories offset by a decrease in the one-to-four family loan category.

The following table shows loan originations during the periods indicated.

Six months ended June 30,

Nine months ended September 30,

(In Thousands)

7 unchanged sentences

Total loans originated for investment

Allowance for Credit Losses - Loans - The allowance for credit losses decreased to $17.8 million at June 30, 2025.

There was a $469,000 negative provision for credit losses - loans for the six months ended June 30, 2025.

The negative provision for credit losses related to loans decreased primarily due to a decrease in historical losses used in the calculation, decrease in loan balance, and decreases in certain qualitative factors.

Allowance for Credit Losses - Loans - The allowance for credit losses decreased to $17.7 million at September 30, 2025.

There was a $599,000 negative provision for credit losses - loans for the nine months ended September 30, 2025.

The negative provision for credit losses related to loans decreased primarily due to a decrease in historical losses used in the calculation and decreases in certain qualitative factors.

See Note 3 - Loans Receivable of the notes to unaudited consolidated financial statements for further discussion on the allowance for credit losses.

Additionally, net recoveries totaled $22,000 for the six months ended June 30, 2025.

Prepaid expenses and other assets – Total prepaid expenses and other assets decreased $5.3 million to $43.0 million at June 30, 2025.

Additionally, net recoveries totaled $22,000 for the nine months ended September 30, 2025.

Prepaid expenses and other assets – Total prepaid expenses and other assets decreased $8.4 million to $39.8 million at September 30, 2025.

The decrease was primarily due to decreases in back-to-back loan swap fair value adjustment and the deferred tax asset for unrealized losses as long term interest rates decreased.

Deposits – Total deposits increased $24.8 million to $1.38 billion at June 30, 2025.

Deposits – Total deposits increased $26.1 million to $1.39 billion at September 30, 2025.

The increase was driven by increases of $5.5 million in demand deposits and $23.5 million in money market and savings deposits offset by a decrease of $2.9 million in time deposits.

Borrowings – Total borrowings increased $19.2 million, or 4.3%, to $465.7 million at June 30, 2025.

Borrowings – Total borrowings increased $22.5 million, or 5.0%, to $469.1 million at September 30, 2025.

The community banking segment increased its FHLB long-term borrowings by $100.0 million, decreased its short-term FHLB borrowings by $43.4 million, and paid off $40.0 million in long-term FHLB borrowings.

External short-term borrowings at the mortgage banking segment increased a total of $10.6 million at June 30, 2025 from December 31, 2024.

Advance Payments by Borrowers for Taxes - Advance payments by borrowers for taxes increased $15.5 million to $21.1 million at June 30, 2025.

External short-term borrowings at the mortgage banking segment increased a total of $5.9 million at September 30, 2025 from December 31, 2024.

Advance Payments by Borrowers for Taxes - Advance payments by borrowers for taxes increased $21.4 million to $27.0 million at September 30, 2025.

The increase was the result of payments received from borrowers for their real estate taxes and is seasonally normal, as balances increase during the course of the calendar year until real estate tax obligations are paid in the fourth quarter.

Other Liabilities - Other liabilities decreased $14.9 million to $43.6 million at June 30, 2025.

Other Liabilities - Other liabilities decreased $16.8 million to $41.6 million at September 30, 2025.

Other liabilities decreased primarily due to a seasonal decrease in outstanding checks related to advance payments by borrowers for taxes.

2 unchanged sentences

The decrease was also due to decrease in back-to-back loan swap fair value adjustment as long-term interest rates decreased.

Shareholders ’ Equity – Shareholders' equity increased $2.4 million to $341.5 million at June 30, 2025.

Shareholders' equity increased primarily due an increase in the fair value of the securities portfolio.

Shareholders ’ Equity – Shareholders' equity increased $6.4 million to $345.5 million at September 30, 2025.

Shareholders' equity increased primarily due increases in net income and the fair value of the securities portfolio.

ASSET QUALITY

NONPERFORMING ASSETS

At September 30,

At December 31,

24 unchanged sentences

The following table sets forth activity in our non-accrual loans for the periods indicated.

At or for the Six Months

Ended June 30,

At or for the Nine Months

Ended September 30,

(In Thousands)

4 unchanged sentences

Balance at end of period

Total non-accrual loans increased by $2.5 million, or 44.7%, to $8.2 million as of June 30, 2025 compared to $5.7 million as of December 31, 2024.

The ratio of non-accrual loans to total loans receivable was 0.49% at June 30, 2025 and 0.34% at December 31, 2024.

During the six months ended June 30, 2025, $3.6 million in loans were placed on non-accrual status.

Offsetting this activity, $983,000 in loans returned to accrual status and $64,000 in principal payments were received during the six months ended June 30, 2025.

Of the $8.2 million in total non-accrual loans as of June 30, 2025, $5.3 million in loans have been specifically reviewed to assess whether a specific valuation allowance is necessary.

Total non-accrual loans increased by $331,000, or 5.8%, to $6.0 million as of September 30, 2025 compared to $5.7 million as of December 31, 2024.

The ratio of non-accrual loans to total loans receivable was 0.35% at September 30, 2025 and 0.34% at December 31, 2024.

During the nine months ended September 30, 2025, $3.6 million in loans were placed on non-accrual status.

Offsetting this activity, $2.1 million in loans returned to accrual status and $1.2 million in principal payments were received during the nine months ended September 30, 2025.

Of the $6.0 million in total non-accrual loans as of September 30, 2025, $4.3 million in loans have been specifically reviewed to assess whether a specific valuation allowance is necessary.

A specific valuation allowance is established for an amount equal to the impairment when the carrying value of the loan exceeds the present value of expected future cash flows, discounted at the loan's original effective interest rate or the fair value of the underlying collateral with an adjustment made for costs to dispose of the asset.

Based upon these specific reviews, no charge-offs have been recorded over the life of these loans and there were no specific reserves as of June 30, 2025.

The remaining $2.4 million of non-accrual loans were reviewed on an aggregate basis as of June 30, 2025.

The outstanding principal balance of our five largest non-accrual loans as of June 30, 2025 totaled $3.0 million, which represents 36.1% of total non-accrual loans as of that date.

Based upon these specific reviews, no charge-offs have been recorded over the life of these loans and there were no specific reserves as of September 30, 2025.

The remaining $1.7 million of non-accrual loans were reviewed on an aggregate basis as of September 30, 2025.

The outstanding principal balance of our five largest non-accrual loans as of September 30, 2025 totaled $2.7 million, which represents 45.0% of total non-accrual loans as of that date.

The loans held for investment at the mortgage segment were reviewed on an aggregate basis.

2 unchanged sentences

Determination as to the ultimate collectability of the remaining book value is supported by an updated credit department evaluation of the borrower's financial condition and prospects for repayment, including consideration of the borrower's sustained historical repayment performance and other relevant factors.

As of June 30, 2025 and December 31, 2024, there were no loans 90 or more days past due and still accruing interest.

As of September 30, 2025 and December 31, 2024, there were no loans 90 or more days past due and still accruing interest.

LOAN DELINQUENCY

The following table summarizes loan delinquency in total dollars and as a percentage of the total loan portfolio:

At September 30,

At December 31,

4 unchanged sentences

Total loans past due to total loans receivable

Past due loans decreased by $3.6 million, or 24.0%, to $11.5 million at June 30, 2025 from $15.1 million at December 31, 2024.

Past due loans decreased by $6.6 million, or 43.7%, to $8.5 million at September 30, 2025 from $15.1 million at December 31, 2024.

Loans past due less than 90 days decreased by $6.8 million, or 61.1%, primarily due to a decrease in the one-to four-family loan category.

Loans past due 90 days or more increased by $2.4 million, or 59.5%, primarily in the one- to four-family loan category during the six months ended June 30, 2025.

Loans past due 90 days or more increased by $199,000, or 5.0%, primarily in the multi-family loan category during the nine months ended September 30, 2025.

ALLOWANCE FOR CREDIT LOSSES - LOANS

At or for the Six Months

Ended June 30,

At or for the Nine Months

Ended September 30,

(Dollars in Thousands)

16 unchanged sentences

Net recoveries (annualized) to beginning of the year allowance

The allowance for credit losses - loans was $17.8 million at June 30, 2025 and $18.2 million at December 31, 2024.

During the six months ended June 30, 2025, there was a $469,000 negative provision for credit losses.

Additionally, net recoveries totaled $22,000 for the six months ended June 30, 2025.

We had net recoveries of $22,000, or less than 0.01% of average loans annualized, for the six months ended June 30, 2025, compared to net recoveries of $11,000, or less than 0.01% of average loans annualized, for the six months ended June 30, 2024.

The allowance for credit losses - loans was $17.7 million at September 30, 2025 and $18.2 million at December 31, 2024.

During the nine months ended September 30, 2025, there was a $599,000 negative provision for credit losses.

Additionally, net recoveries totaled $22,000 for the nine months ended September 30, 2025.

We had net recoveries of $22,000, or less than 0.01% of average loans annualized, for the nine months ended September 30, 2025, compared to net recoveries of $88,000, or 0.01% of average loans annualized, for the nine months ended September 30, 2024.

Our underwriting policies and procedures emphasize that credit decisions must rely on both the credit quality of the borrower and the estimated value of the underlying collateral.

17 unchanged sentences

Additional sources of liquidity used for the purpose of managing long- and short-term cash flows include advances from the FHLB.

During the six months ended June 30, 2025, primary uses of cash and cash equivalents included:

$976.7 million in funding loans held for sale, $18.4 million for purchases of mortgage related securities, $4.9 million for purchases of debt securities, $40.8 million for payoffs of short-term borrowings, $40.0 million for payoffs of long-term borrowings, $5.4 million for cash dividends paid, and $9.7 million for purchases of our common stock.

During the six months ended June 30, 2025, primary sources of cash and cash equivalents included:

$988.7 million in proceeds from the sale of loans held for sale, $100.0 million in long-term borrowings, $12.3 million in principal repayments on mortgage related securities, $24.8 million for increase in deposits, $16.3 million for decrease in loans held for investment, $5.6 million in maturities of debt securities, $2.3 million in proceeds from exercised stock options, and $10.8 million in net income.

During the six months ended June 30, 2024, primary uses of cash and cash equivalents included:

$1.11 billion in funding loans held for sale, $14.5 million to fund loans held for investment, $9.7 million for purchases of mortgage related securities, $2.3 million for FHLB stock, $148.3 million for payoffs of long-term borrowings, $5.8 million for cash dividends paid, and $11.1 million for purchases of our common stock.

During the six months ended June 3, 2024, primary sources of cash and cash equivalents included:

$1.09 billion in proceeds from the sale of loans held for sale, $90.0 million in long-term borrowings, $108.1 million in short-term borrowings, $10.7 million in principal repayments on mortgage related securities, $33.3 million for increase in deposits, $4.2 million in maturities of debt securities, $2.1 million in proceeds for mortgage servicing rights sale, and $8.8 million in net income.

During the nine months ended September 30, 2025, primary uses of cash and cash equivalents included:

$1.51 billion in funding loans held for sale, $28.6 million for purchases of mortgage related securities, $9.2 million for purchases of debt securities, $37.5 million for payoffs of short-term borrowings, $70.0 million for payoffs of long-term borrowings, $8.1 million for cash dividends paid, $34.2 million for increase in loans held for investment, and $13.5 million for purchases of our common stock.

During the nine months ended September 30, 2025, primary sources of cash and cash equivalents included:

$1.57 billion in proceeds from the sale of loans held for sale, $130.0 million in long-term borrowings, $18.6 million in principal repayments on mortgage related securities, $26.1 million for increase in deposits, $9.0 million in maturities of debt securities, $2.3 million in proceeds from exercised stock options, and $18.7 million in net income.

During the nine months ended September 30, 2024, primary uses of cash and cash equivalents included:

$1.66 billion in funding loans held for sale, $31.1 million to fund loans held for investment, $10.8 million for purchases of mortgage related securities, $12.2 million for purchases of debt securities, $2.3 million for FHLB stock, $145.0 million for payoffs of long-term borrowings, $55.9 million for payoffs of short-term borrowings, $8.5 million for cash dividends paid, and $12.1 million for purchases of common stock.

During the nine months ended September 30, 2024, primary sources of cash and cash equivalents included:

$1.74 billion in proceeds from the sale of loans held for sale, $150.0 million in long-term borrowings, $16.7 million in principal repayments on mortgage related securities, $73.2 million for increase in deposits, $5.7 million in maturities of debt securities, $2.1 million in proceeds for mortgage servicing rights sale, and $13.4 million in net income.

A portion of our liquidity consists of cash and cash equivalents, which are a product of our operating, investing and financing activities.

At June 30, 2025 and 2024, respectively, $70.9 million and $41.3 million of our assets were invested in cash and cash equivalents.

At June 30, 2025, cash and cash equivalents were comprised of the following:

At September 30, 2025 and 2024, respectively, $53.8 million and $41.4 million of our assets were invested in cash and cash equivalents.

At September 30, 2025, cash and cash equivalents were comprised of the following:

$50.1 million in cash held at the Federal Reserve Bank and other depository institutions and $3.7 million in federal funds sold and short-term investments.

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If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB which provide an additional source of funds.

At June 30, 2025, we had $210.0 million in long term advances from the FHLB with contractual maturity dates in 2027, 2028, 2029, and 2030.

At September 30, 2025, we had $210.0 million in long term advances from the FHLB with contractual maturity dates in 2027, 2028, 2029, and 2030.

See Note 6 - Borrowings of the notes to unaudited consolidated financial statements for additional information about the remaining call option details of our FHLB long-term debt.

The Company had approximately $362.7 million of uninsured deposits for approximately 1,455 customers as of June 30, 2025.

The Company had approximately $365.8 million of uninsured deposits for approximately 1,462 customers as of September 30, 2025.

Uninsured deposit amounts are estimated based on the portions of customer account balances that exceed the FDIC insurance limits.

At June 30, 2025, we had outstanding commitments to originate loans receivable of $44.0 million.

In addition, at June 30, 2025, we had unfunded commitments under construction loans of $53.1 million, unfunded commitments under business lines of credit of $12.1 million and unfunded commitments under home equity lines of credit and standby letters of credit of $13.1 million.

At June 30, 2025, certificates of deposit scheduled to mature in one year or less totaled $839.1 million.

At September 30, 2025, we had outstanding commitments to originate loans receivable of $44.7 million.

In addition, at September 30, 2025, we had unfunded commitments under construction loans of $44.3 million, unfunded commitments under business lines of credit of $15.6 million and unfunded commitments under home equity lines of credit and standby letters of credit of $12.3 million.

At September 30, 2025, certificates of deposit scheduled to mature in one year or less totaled $843.9 million.

Based on prior experience, management believes that, subject to the Bank’s funding needs, a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case.

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The ability of WaterStone Bank to pay dividends is subject to regulatory restrictions.

At June 30, 2025, Waterstone Financial, Inc.

At September 30, 2025, Waterstone Financial, Inc.

(on an unconsolidated basis) had liquid assets totaling $12.9 million.

Shareholders' equity increased $2.4 million to $341.5 million at June 30, 2025.

Shareholders' equity increased primarily due to the increase in valuations of our securities available for sale.

Shareholders' equity increased $6.4 million to $345.5 million at September 30, 2025.

Shareholders' equity increased primarily due to net income and the increase in valuations of our securities available for sale.

The Company's Board of Directors authorized a 2,000,000 share stock repurchase program in the second quarter of 2024.

As of June 30, 2025, the Company has approximately 912,000 shares remaining in the plan.

As of September 30, 2025, the Company has approximately 643,000 shares remaining in the plan.

WaterStone Bank is subject to various regulatory capital requirements, including a risk-based capital measure.

The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning assets and off-balance sheet items to broad risk categories.

At June 30, 2025, WaterStone Bank exceeded all regulatory capital requirements and is considered “well capitalized” under regulatory guidelines.

At September 30, 2025, WaterStone Bank exceeded all regulatory capital requirements and is considered “well capitalized” under regulatory guidelines.

See “Notes to Unaudited Consolidated Financial Statements - Note 7 - Regulatory Capital.”

Contractual Obligations, Commitments, Contingent Liabilities, and Off-balance Sheet Arrangements

During the three months ended June 30, 2025, we entered into $20.0 million of new long-term deb and $49.3 million of new short-term debt.

During the three months ended September 30, 2025, we entered into $39.0 million of new long-term debt, entered into $194.5 million of new short-term debt, and repaid $186.5 million in short-term debt.

See Note 6 - Borrowings of the notes to unaudited consolidated financial statements for additional information about the remaining maturities of our FHLB long-term debt.

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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-Q

Item 1. Financial Statements