Waterstone Financial, Inc. operates as the bank holding company for WaterStone Bank SSB that engages in the community banking and mortgage banking business.
The company’s principal lending activity is originating one- to four-family, multi-family residential, and commercial real estate loans for retention in its portfolio. The company also offers home equity loans and lines of credit, construction and land loans, commercial business loans, and consumer loans. The company funds its loan producti...
Waterstone Financial, Inc. operates as the bank holding company for WaterStone Bank SSB that engages in the community banking and mortgage banking business.
The company’s principal lending activity is originating one- to four-family, multi-family residential, and commercial real estate loans for retention in its portfolio. The company also offers home equity loans and lines of credit, construction and land loans, commercial business loans, and consumer loans. The company funds its loan production primarily with retail deposits, brokered deposits, and Federal Home Loan Bank advances. The company’s deposit offerings include certificates of deposit, money market savings accounts, transaction deposit accounts, noninterest bearing demand accounts and individual retirement accounts. The company’s 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.
The bank’s mortgage banking operations are conducted through its wholly-owned subsidiary, Waterstone Mortgage Corporation. The company originates single-family residential real estate loans for sale into the secondary market. The company utilizes lines of credit provided by WaterStone Bank as a primary source of funds, and also utilizes a line of credit with another financial institution as needed.
Subsidiary Activities
Wauwatosa Investments, Inc., which holds and manages the company’s investment portfolio, is located and incorporated in Nevada. Waterstone Mortgage Corporation is a mortgage banking business incorporated in Wisconsin. Main Street Real Estate Holdings, LLC is a Wisconsin limited liability corporation.
Main Street Real Estate Holdings, LLC: Main Street Real Estate Holdings, LLC was established to acquire and hold WaterStone Bank office and retail facilities, both owned and leased. Main Street Real Estate Holdings, LLC conducts real estate broker activities limited to real estate owned.
Market Area
The company’s market area is broadly defined as the Milwaukee, Wisconsin metropolitan market, which is geographically located in the southeast corner of the state. The company’s primary market area is Milwaukee and Waukesha counties and the five surrounding counties of Ozaukee, Washington, Jefferson, Walworth and Racine. The company has branch offices in Milwaukee County, four branch offices in Waukesha County and branch office in Washington County.
The company’s primary market area for deposits includes the communities in which it maintains its banking office locations. The company’s primary lending market area is broader than its primary deposit market area and includes all of the primary market area but extends further west to the Madison, Wisconsin market and further north to the Appleton and Green Bay, Wisconsin markets.
Lending Activities
The company retains the loans that it originates, which it refers to as loans originated for investment. The company also offers construction and land loans, home equity lines of credit and commercial loans.
One- to Four-Family Residential Mortgage Loans: The company’s one- to four-family residential mortgage loans have fixed or adjustable rates. The company’s single family adjustable-rate mortgage loans generally provide for maximum annual rate adjustments of 200 basis points, with a lifetime maximum adjustment of 500 basis points. The company’s adjustable-rate mortgage loans typically amortize over terms of up to 30 years, and is indexed to the 12-month SOFR rate. Single family adjustable rate mortgage loans are originated at both the company’s community banking segment and its mortgage banking segment.
All residential mortgage loans that the company originates include due-on-sale clauses, which give it the right to declare a loan immediately due and payable in the event that, among other things, the borrower sells or otherwise transfers the real property subject to the mortgage and the loan is not repaid. The company also requires 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.
Multi-family Real Estate Loans: The company’s multi-family real estate underwriting policies generally provide that such real estate loans may be made in amounts of up to 80% of the appraised value of the property provided the loan complies with its current loans-to-one borrower limit. Multi-family real estate loans are offered with interest rates that are fixed for periods of up to five years or are variable and either adjust based on a market index or at the company’s discretion. Generally, multi-family loans made to corporations, partnerships and other business entities require personal guarantees from the principals and by the owners of 20% or more of the borrower.
Loans secured by multi-family real estate generally involve larger principal amounts than owner-occupied, one- to four-family residential mortgage loans. Because payments on loans secured by multi-family properties often depend on the successful operation or management of the properties, repayment of such loans may be affected by adverse conditions in the real estate market or the economy.
Home Equity Loans and Lines of Credit: The company also offers home equity loans and home equity lines of credit, both of which are secured by owner-occupied and non-owner occupied one- to four-family residences.
Construction and Land Loans: The company originates construction loans for the acquisition of land and the construction of single-family residences, multi-family residences, and commercial real estate buildings.
The company’s construction mortgage loans generally provide for the payment of interest only during the construction phase, which is typically up to nine months for single-family residences although its policy is to consider construction periods as long as three years for multi-family residences and commercial buildings.
Commercial Real Estate Loans: Commercial real estate loans are made up of loans secured by office and retail buildings, industrial buildings, churches, restaurants, other retail properties and mixed use properties. These loans are generally secured by property located in the company’s primary market area. The company’s commercial real estate underwriting policies provide that such real estate loans may be made in amounts of up to 80% of the appraised value of the property. Commercial real estate loans are offered with interest rates that are fixed up to five years or are variable and either adjust based on a market index or at the company’s discretion.
Commercial Loans: Commercial loans are made up of loans secured by accounts receivable, inventory, equipment and real estate.
Investment Activities
The company's investment securities portfolio is principally consisted of mortgage-backed securities, collateralized mortgage obligations, government-sponsored enterprise bonds, private-label enterprise bonds, municipal obligations, and other debt securities. Wauwatosa Investments, Inc. is WaterStone Bank's investment subsidiary headquartered in the state of Nevada. Wauwatosa Investments, Inc. manages the back office function for WaterStone Bank's investment portfolio.
Deposits
A majority of the company’s depositors are persons or businesses who work, reside, or are located in Milwaukee and Waukesha Counties and to a lesser extent, other southeastern Wisconsin communities. The company offers a selection of deposit instruments, including checking, savings, money market deposit accounts, and fixed-term certificates of deposit.
Supervision and Regulation
The bank is subject to extensive regulation, supervision and examination by the WDFI and by the Federal Deposit Insurance Corporation. This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the Federal Deposit Insurance Corporation's Deposit Insurance Fund and depositors, and not for the protection of security holders. The bank also is regulated to a lesser extent by the Federal Reserve Board, governing reserves to be maintained against deposits and other matters. The bank also is a member of and owns stock in the Federal Home Loan Bank of Chicago, which is one of the 11 regional banks in the Federal Home Loan Bank System.
The 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).
As a savings and loan holding company, the company is required to comply with the rules and regulations of the Federal Reserve Board. It is required to file certain reports with the Federal Reserve Board and is subject to examination by and the enforcement authority of the Federal Reserve Board. The company is also subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.
Under Wisconsin law, WaterStone Bank is required to obtain and maintain insurance on its deposits from a deposit insurance corporation. The deposits of the bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation. The bank is a member of the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation. The bank's deposit accounts are insured by the Federal Deposit Insurance Corporation, generally up to a maximum of $250,000 per depositor per account ownership category.
Sections 23A and 23B of the Federal Reserve Act govern transactions between an insured savings bank, such as the bank, and any of its affiliates, including the company. The Federal Reserve Board has adopted Regulation W, which comprehensively implements and interprets Sections 23A and 23B, in part by codifying prior Federal Reserve Board interpretations under Sections 23A and 23B. The bank is required to file periodic reports with and is subject to periodic examinations by the Wisconsin Department of Financial Institutions (the WDFI) and the Federal Deposit Insurance Corporation (the FDIC). The bank is required to file periodic reports with and is subject to periodic examinations by the WDFI and FDIC. The bank is required to pay examination fees and annual assessments to fund its supervision.
The company is a unitary savings and loan holding company subject to regulation and supervision by the Federal Reserve Board. The Federal Reserve Board has enforcement authority over the company and its non-savings institution subsidiaries. Among other things, that authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a risk to the bank. In addition, any company that owns or controls, directly or indirectly, more than 25% of the voting securities of a state savings bank is subject to regulation as a savings bank holding company by the WDFI. The company's common stock is registered with the Securities and Exchange Commission. The company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.
History
Waterstone Financial, Inc. was founded in 1921.
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