What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2026-02-26 compared with 2025-02-28 · 35 added, 46 removed, 863 unchanged (9% of the section changed)

59 unchanged sentences

Our deposit offerings include certificates of deposit, money market savings accounts, transaction deposit accounts, noninterest bearing demand accounts and individual retirement accounts.

Our investment securities portfolio is comprised principally of mortgage-backed securities, collateralized mortgage obligations, government-sponsored enterprise bonds, private-label enterprise bonds, municipal obligations, and other debt securities.

Our investment securities portfolio is comprised principally of mortgage-backed securities, government-sponsored enterprise bonds, private-label enterprise bonds, municipal obligations, and other debt securities.

WaterStone Bank is subject to comprehensive regulation and examination by the Wisconsin Department of Financial Institutions (the "WDFI") and the Federal Deposit Insurance Corporation (the "FDIC").

30 unchanged sentences

Waterstone Mortgage Corporation.

As of December 31, 2024, Waterstone Mortgage Corporation had nine offices in Florida, eight offices in New Mexico, six offices each in Virginia and Wisconsin, four offices each in Arizona, Oklahoma, and Texas, three offices in New Hampshire, two offices each in California, Idaho, Maryland, and Minnesota, and one office each in Colorado, Connecticut, Delaware, Iowa, Illinois, Kansas, Massachusetts, Michigan, Missouri, North Carolina, New Jersey, Rhode Island, South Carolina, and Tennessee.

As of December 31, 2025, Waterstone Mortgage Corporation had nine offices in Florida, six offices in New Mexico, five offices in Wisconsin, four offices each in Oklahoma and Texas, three offices each in Arizona and Virginia, two offices each in Idaho, Maryland, Minnesota, and Montana and one office each in California, Colorado, Iowa, Illinois, Kansas, Massachusetts, New Hampshire, New Jersey, North Carolina, Rhode Island, South Dakota, Tennessee, and Wyoming.

WaterStone Bank .

75 unchanged sentences

We also require homeowner’s insurance and where circumstances warrant, flood insurance, on properties securing real estate loans.

The average one- to four-family first mortgage loan balance was approximately $302,000 on December 31, 2024, and the largest outstanding balance on that date was $5.7 million, which is a consolidation loan that is collateralized by 80 single family properties.

The average one- to four-family first mortgage loan balance was approximately $202,000 on December 31, 2025, and the largest outstanding balance on that date was $12.5 million, which is a consolidation loan that is collateralized by multiple properties.

A total of 35% of our one- to four-family loans are collateralized by properties in the state of Wisconsin.

48 unchanged sentences

We also require borrowers to provide an annual report of income and expenses for the property, including a tenant list and copies of leases, as applicable.

The average commercial real estate loan in our portfolio at December 31, 2024 was approximately $1.1 million, and the largest outstanding balance at that date was $11.6 million.

The average commercial real estate loan in our portfolio at December 31, 2025 was approximately $820,000, and the largest outstanding balance at that date was $19.5 million.

Commercial Loans.

71 unchanged sentences

The ratio of non-accrual loans to total loans receivable was 0.37% at December 31, 2025 compared to 0.34% at December 31, 2024.

During the year ended December 31, 2024, $370,000 of loans were transferred to real estate owned, no loans were charged off, $1.3 million in principal payments were received and $842,000 in loans were returned to accrual status.

During the year ended December 31, 2025, $592,000 of loans were transferred to real estate owned, no loans were charged off, $1.1 million in principal payments were received and $3.8 million in loans were returned to accrual status.

Offsetting this activity, $6.0 million in loans were placed on non-accrual status during the year ended December 31, 2025.

16 unchanged sentences

Total financing receivables whose borrowers are experiencing financial difficulty

There were no financial receivables whose borrowers are experiencing financial difficulty at December 31, 2024, compared to $543,000 at December 31, 2023.

There were three financial receivables whose borrowers are experiencing financial difficulty at December 31, 2025, compared to none at December 31, 2024.

All financial receivables whose borrowers are experiencing financial difficulty are considered to be impaired and are risk rated as either substandard or watch and are included in the internal risk rating tables disclosed in the notes to the consolidated financial statements.

4 unchanged sentences

One- to four-family

Commercial real estate

Interest payments received on non-accrual financing receivables whose borrowers are experiencing financial difficulty are treated as interest income on a cash basis as long as the remaining book value of the loan (i.e., after charge-off of all identified losses) is deemed to be fully collectible.

12 unchanged sentences

Total loans past due to total loans receivable

Past due loans increased by $3.9 million, or 34.4%, to $15.1 million at December 31, 2024 from $11.3 million at December 31, 2023.

Loans past due less than 90 days increased by $4.3 million during the year ended December 31, 2024.

The increase was primarily due to an increase in delinquent one- to four-family loans during the year ended December 31, 2024.

Loans past due 90 days or more decreased $448,000.

The decrease in loans past due 90 days or more was primarily due to a decrease in one-to four-family loans receivable during the year ended December 31, 2024.

Past due loans decreased by $715,000, or 4.7%, to $14.4 million at December 31, 2025 from $15.1 million at December 31, 2024.

Loans past due less than 90 days decreased by $1.6 million during the year ended December 31, 2025.

The decrease was primarily due to a decrease in delinquent one- to four-family loans during the year ended December 31, 2025.

Loans past due 90 days or more increased $847,000.

The increase in loans past due 90 days or more was primarily due to a increase in one-to four-family loans receivable during the year ended December 31, 2025.

Potential Problem Loans.

13 unchanged sentences

Comparing the estimated current value to that of updated listed sales prices on our real estate owned and that of similar properties (not owned by the Company).

We owned two properties at December 31, 2024 and three properties at December 31, 2023.

We owned three properties at December 31, 2025 and two properties at December 31, 2024.

Habitable real estate owned is managed with the intent of attracting a lessee to generate revenue.

Foreclosed properties are transferred to real estate owned at estimated net realizable value (which includes costs to sell the property), with charge-offs, if any, charged to the allowance for loan losses upon transfer to real estate owned.

The fair value is primarily based upon updated appraisals in addition to an analysis of current real estate market conditions.

4 unchanged sentences

Balance at beginning of period

Adoption of CECL (1)

Provision (credit) for credit losses - loans

16 unchanged sentences

Net charge-offs (recoveries) to average loans outstanding

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

The allowance for credit losses - loans decreased $769,000 to $17.5 million at December 31, 2025 from $18.2 million at December 31, 2024.

During the year ended December 31, 2024, there was a $342,000 provision for credit losses.

During the year ended December 31, 2025, there was a $891,000 negative provision for credit losses.

Additionally, net recoveries totaled $122,000 for the year ended December 31, 2025.

We had net recoveries of $40,000, or less than 0.01% of average loans annualized, for the year ended December 31, 2024, compared to net charge-offs of $135,000 or 0.01% of average loans annualized, for the year ended December 31, 2023.

Of the $40,000 in net recoveries during the year ended December 31, 2024, the majority of the activity related to loans secured by one-to four-family loan categories.

We had net recoveries of $122,000, or less than 0.01% of average loans annualized, for the year ended December 31, 2025, compared to net recoveries of $40,000 , or less than 0.01% of average loans annualized, for the year ended December 31, 2024.

Of the $122,000 in net recoveries during the year ended December 31, 2025, the majority of the activity related to loans secured by one-to four-family and home equity loan categories.

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.

32 unchanged sentences

In addition to the lending activities previously discussed, we also originate single-family residential mortgage loans for sale in the secondary market through Waterstone Mortgage Corporation.

Waterstone Mortgage Corporation originated, including loans sold to WaterStone Bank, $2.15 billion in mortgage loans held for sale during the year ended December 31, 2024, which was a volume increase of $26.6 million, or 1.3%, from the $2.12 billion originated during the year ended December 31, 2023.

The increase in loan production volume was driven by a $109.4 million, or 128.5%, increase in refinance products due to a decrease in mortgage rates at times throughout the year.

Mortgage purchase products decreased $82.8 million, or 4.1% as housing inventory remained low.

Total mortgage banking noninterest income increased $5.8 million, or 7.4%, to $84.3 million during the year ended December 31, 2024 compared to $78.5 million during the year ended December 31, 2023.

The increase in mortgage banking noninterest income was related to a 1.3% increase in volume and a 0.2% increase in gross margin on loans originated and sold for the year ended December 31, 2024 compared to December 31, 2023.

Waterstone Mortgage Corporation originated, including loans sold to WaterStone Bank, $2.05 billion in mortgage loans held for sale during the year ended December 31, 2025, which was a volume decrease of $98.0 million, or 4.6%, from the $2.13 billion originated during the year ended December 31, 2024.

The decrease in loan production volume was driven by a $135.0 million, or 7.0%, decrease in purchase products as housing inventory remained low.

The decrease in purchase volume was partially offset by an increase in refinance products of $37.0, or 16.4%.

Total mortgage banking noninterest income decreased $4.7 million, or 5.6%, to $79.5 million during the year ended December 31, 2025 compared to $84.3 million during the year ended December 31, 2024.

The decrease in mortgage banking noninterest income was related to a 4.6% decrease in volume and a 1.0% decrease in gross margin on loans originated and sold for the year ended December 31, 2025 compared to December 31, 2024.

Gross margin on those 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

Loans originated for the purchase of a residential property, which generally yield a higher margin than loans originated for refinancing existing loans, comprised 87.1% of total originations during the year ended December 31, 2025, compared to 88.9% of total originations during the year ended December 31, 2024.

The mix of loan type trended towards more conventional loans and less government loans comprising 63.8% and 36.2% of all loan originations, respectively, during the year ended December 31, 2024, compared to 59.0% and 41.0% of all loan originations, respectively, during the year ended December 31, 2023.

The mix of loan type trended towards more government loans and less conventional loans comprising 38.7% and 61.3% of all loan originations, respectively, during the year ended December 31, 2025, compared to 36.2% and 63.8% of all loan originations, respectively, during the year ended December 31, 2024.

Investment Activities

45 unchanged sentences

In addition, the fair value of such securities may be adversely affected in a rising interest rate environment, particularly since all of our mortgage-backed securities have a fixed rate of interest.

Government Sponsored Enterprise Bonds.

At December 31, 2024, our Government sponsored enterprise bond portfolio totaled $2.4 million, all of which were issued by Federal National Mortgage Association ("Fannie Mae") and were classified as available for sale.

The weighted average yield on these securities was 0.60% and the weighted average remaining average life was 0.7 years at December 31, 2024.

While these securities generally provide lower yields than other investments in our securities investment portfolio, we maintain these investments, to the extent appropriate, for liquidity purposes and prepayment protection.

The estimated fair value of our government sponsored enterprise bond portfolio at December 31, 2024 was $60,000 less than the amortized cost of $2.5 million.

Municipal Obligations.

5 unchanged sentences

The weighted average yield on this portfolio was 5.00% at December 31, 2025, with a weighted average remaining life of 10.0 years.

The estimated fair value of our municipal obligations bond portfolio at December 31, 2024 was $947,000 less than the amortized cost of $48.0 million.

The estimated fair value of our municipal obligations bond portfolio at December 31, 2025 was $681,000 more than the amortized cost of $53.4 million.

Other Debt Securities.

As of December 31, 2025, we held other debt securities in the portfolio that totaled $8.8 million.

Other debt securities consisted of two corporate bonds.

Other debt securities consisted of one corporate bond.

The weighted average yield on this portfolio was 3.17% at December 31, 2025, with a weighted average remaining life of 4.3 years.

1 unchanged sentence

The unrealized losses for the other debt securities is due to the current slope of the yield curve.

One security earns a floating rate that is indexed to the 10 year Treasury interest rate.

The security earns a floating rate that is indexed to the 10 year Treasury interest rate.

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

18 unchanged sentences

Private-label issued

Government sponsored enterprise bonds

Municipal obligations

21 unchanged sentences

At December 31, 2025 and December 31, 2024, $932.7 million and $905.5 million of our deposit accounts were certificates of deposit, of which $891.6 million and $842.4 million, respectively, had remaining maturities of one year or less.

The Company had $94.3 million in certificates of deposits obtained directly from brokers as of December 31, 2024 and none at December 31, 2023.

The Company had $110.3 million in certificates of deposits obtained directly from brokers as of December 31, 2025 and $94.3 million at December 31, 2024.

Deposits increased by $77.4 million, or 5.7%, from December 31, 2024 to December 31, 2025.

The increase in deposits was the result of a $175.3 million, or 24.0%, increase in total certificates of deposit offset by an $6.0 million, or 1.3% decrease in demand deposits.

The increase in deposits was the result of increases across all categories.

Most notably, money market & savings accounts increased $45.8 million, or 16.2%.

The following table sets forth the distribution of total deposit accounts, by account type, at the dates indicated.

144 unchanged sentences

Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.

Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.

Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.

Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities).

8 unchanged sentences

The optional community bank leverage ratio has currently been established at 9%.

In November 2025, the federal banking agencies issued a proposed rule to lower the community bank leverage ratio to 8%.

WaterStone Bank has not opted into the community bank leverage ratio.

7 unchanged sentences

well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.

Under the implementing regulations, a bank is deemed to be (i) "well capitalized" if it has total risk-based capital ratio of 10.0% or more, has a Tier 1 risk-based capital ratio of 8.0% or more, has a Tier 1 leverage ratio of 5.0% or more and a common equity Tier 1 ratio of 6.5% or more, and is not subject to any written agreement, order or capital or prompt corrective action directive;

Under the implementing regulations, a bank is deemed to be (i) "well capitalized" if it has a total risk-based capital ratio of 10.0% or more, a Tier 1 risk-based capital ratio of 8.0% or more, a Tier 1 leverage ratio of 5.0% or more and a common equity Tier 1 capital ratio of 6.5% or more, and is not subject to any written agreement, order or capital directive, or prompt corrective action directive;

(ii) "adequately capitalized" if it has a total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 6.0% or more, a Tier 1 leverage ratio of 4.0% or more and a common equity Tier 1 capital ratio of 4.5% or more, and does not meet the definition of "well capitalized";

(iii) "undercapitalized" if it has a total risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio that is less than 6.0%, a Tier 1 leverage ratio that is less than 4.0%, or a common equity Tier 1 capital ratio of less than 4.5%;

(iv) "significantly undercapitalized" if it has a total risk-based capital ratio that is less than 6.0%, a Tier 1 risk-based capital ratio that is less than 4.0%, a Tier 1 leverage ratio that is less than 3.0%, or a common equity Tier 1 ratio of less than 3.0%;

and (v) "critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.

51 unchanged sentences

Under the terms of the discontinued program, the employee interest rate is based on WaterStone Bank’s cost of funds on December 31st of the immediately preceding year and is adjusted annually.

Employee rate mortgage loans totaled $466,000, or 0.1%, of our single family residential mortgage loan portfolio on December 31, 2024.

Employee rate mortgage loans totaled $157,000, or less than 0.1%, of our single family residential mortgage loan portfolio on December 31, 2025.

Transactions between WaterStone Bank Customers and Affiliates

14 unchanged sentences

As of the date of its most recent regulatory examination, WaterStone Bank was rated “satisfactory” with respect to its Community Reinvestment Act compliance.

On October 24, 2023, the Federal Deposit Insurance Corporation, Federal Reserve Board, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the federal Community Reinvestment Act regulations.

Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies will evaluate large banks under four performance tests:

the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.

Under the regulations, the applicability date for the majority of the provisions in the Community Reinvestment Act regulations is January 1, 2026, and for additional requirements, January 1, 2027.

However, ongoing litigation may delay these implementation dates and/or permanently enjoin enforcement.

Federal Home Loan Bank System

107 unchanged sentences

State Taxation

The Company is subject to primarily the Wisconsin corporate franchise (income) tax and taxation in a number of states due primarily to the operations of the mortgage banking segment.

Under current law, the state of Wisconsin imposes a corporate franchise tax of 7.9% on the combined taxable incomes of the members of our consolidated income tax group.

The Company is subject to taxation in a number of states due primarily to the operations of the mortgage banking segment.

The years open to examination by state and local government authorities varies by jurisdiction.

1 unchanged sentence

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

What changed 10-K

Item 1. Business