• A community bank for Wisconsin, similar to a smaller, locally-focused U.S. Bancorp.
• Essentially Wisconsin's version of a traditional community bank, akin to a smaller-scale Bank of America focused on local customers.

• Deposit Accounts: A range of checking, savings, money market, and certificate of deposit accounts for individuals and businesses to manage their funds.
• Residential Mortgage Loans: Loans provided to customers for the purchase or refinancing of homes.
• Commercial Real Estate & Business Loans: Financing solutions including commercial real estate, construction, and commercial and industrial loans for businesses.
• Wealth Management & Investment Services: Financial planning, investment advisory, and brokerage services to help individuals and businesses manage and grow their assets.

Waterstone Financial (WSBF) operates as a bank holding company, with its primary subsidiary, WaterStone Bank, serving a broad base of customers rather than a few major corporate clients. Therefore, it primarily serves individuals and a diverse range of businesses rather than selling to specific other companies.

The company serves the following categories of customers:

• Individual Customers (Retail Banking): This category includes individuals and families who utilize a variety of personal banking services such as checking accounts, savings accounts, money market accounts, certificates of deposit, residential mortgage loans, home equity loans and lines of credit, auto loans, and other consumer loans.
• Small to Medium-Sized Businesses: This category encompasses various local and regional businesses that utilize commercial checking and savings accounts, treasury management services, commercial real estate loans, commercial and industrial (C&I) loans, and lines of credit to support their operations and growth.
• Commercial Real Estate Developers and Investors: This category includes individuals and entities involved in the acquisition, development, and management of income-producing commercial properties, who seek specialized financing and lending solutions for their real estate projects.

• Intercontinental Exchange (ICE)
• nCino (NCNO)
• RSM US LLP

William F. Bruss, President and CEO

William F. Bruss joined WaterStone Bank in 1997 as General Counsel. He was promoted to Senior Vice President in 2006, Chief Operating Officer in 2013, and President in 2022, before assuming his current role as CEO in 2024. Prior to joining the company, Mr. Bruss spent three years in private legal practice, which included representing WaterStone Bank. He earned a J.D. from Marquette Law School in 1994 and a B.A. from St. Olaf College in 1991.

Mark R. Gerke, Executive Vice President, Chief Financial Officer

Mark R. Gerke joined WaterStone Bank as Corporate Controller in 2005. He became Vice President, Controller, and Principal Accounting Officer of Waterstone Financial, Inc. in 2014. In June 2016, he was appointed Senior Vice President and Chief Financial Officer, and in January 2020, he was promoted to Executive Vice President. Before his tenure at WaterStone, Mr. Gerke worked in various roles at Ernst & Young LLP, including Senior Manager in Assurance Services. He has been a Certified Public Accountant since 2002 and holds degrees in accounting and business administration from the University of Wisconsin-Green Bay.

Julie Glynn, Executive Vice President, Chief Retail Officer

Julie Glynn joined WaterStone Bank in 2016, bringing more than 30 years of high-level banking experience. Her background includes proficiency in corporate strategy, colleague experience, retail management, business development, sales leadership, and operational integrity.

Ryan Gordon, Executive Vice President, Chief Credit Officer

Ryan Gordon serves as WaterStone Bank's Executive Vice President and Chief Credit Officer. He also chairs the Officer Loan Committee and is a member of the Board of Directors of Waterstone Mortgage Corporation. He holds a B.A. in Real Estate and Finance and an MBA with a finance emphasis from Marquette University.

Donald Bray, Senior Vice President, Chief Information Officer

Donald Bray has been an integral part of WaterStone Bank's information technology realm for the past 16 years. He holds numerous professional certifications, including Certified Information Systems Security Professional (CISSP), Certified Information Systems Auditor (CISA), Certified Information Security Manager (CISM), and Certified Community Bank Technology Officer (CCBTO). Mr. Bray earned his B.A. in History from the University of Wisconsin-Milwaukee.

1. Interest Rate Risks

Waterstone Financial faces significant risks from changes in interest rates, which can negatively affect its financial condition and operational results. Such fluctuations may lead to increased loan delinquencies and defaults, reduced loan originations, and compressed interest rate spreads. The company has observed a shift in deposits from lower-cost accounts to higher-cost certificates of deposit, which could further impact profitability. In recent periods, the Community Banking segment has experienced margin compression due to elevated funding costs, a direct consequence of higher interest rates.

2. Intense Competition

As a small regional bank with limited resources and what has been described as an "antiquated website," Waterstone Financial is highly susceptible to intense competition within the banking sector. This competitive landscape makes it challenging for the company to achieve substantial growth or effectively defend its market position against more robust competitors.

3. Regulatory Risks

Waterstone Financial operates within a highly regulated environment, subject to supervision by various bank regulatory agencies. This exposes the company to significant regulatory risks, as non-compliance with laws, such as anti-money laundering and anti-terrorism regulations, could result in substantial fines or sanctions.

• Digital-first challenger banks and neobanks: These entities, operating primarily online and often without physical branches, offer modern user experiences, competitive rates, and lower fees. They are attracting customers, especially younger demographics, away from traditional community banks for deposits and basic banking services, thereby threatening Waterstone Financial's established branch-based retail banking operations.
• Specialized online mortgage lenders: For Waterstone Financial's significant mortgage banking segment, the continued growth and technological advancement of large-scale, online-only mortgage lenders present a clear threat. These lenders leverage technology to offer highly streamlined, rapid, and often fully digital mortgage application and approval processes, challenging traditional originators on convenience, speed, and potentially cost.

Waterstone Financial (NASDAQ: WSBF) operates in two primary segments: Community Banking and Mortgage Banking. They also offer personal investment services within their Community Banking segment.

Community Banking

• Market Size: The U.S. community banking market was valued at approximately USD 6.35 billion in 2024 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 3.8%. North America holds a dominant position, with the United States being the largest contributor to the global community banking market.
  Region: U.S.

Mortgage Banking

• Market Size: The North American mortgage lending market was valued at USD 780.0 billion in 2024 and is projected to reach USD 1270.0 billion by 2035. Separately, the U.S. home mortgage market size, in terms of originations, was approximately USD 180.91 billion in 2023 and is predicted to grow to around USD 501.67 billion by 2032.
  Region: North America (for mortgage lending market) and U.S. (for home mortgage originations).

Wealth Management (as part of Community Banking services)

• Market Size: The global wealth management market size was approximately USD 1636.83 billion in 2024 and is predicted to grow to around USD 4893.17 billion by 2034. North America held the largest share of this market, contributing about two-thirds of the global wealth management market revenue in 2022.
  Region: Global, with North America being a dominant contributor.

1. Sustained Net Interest Margin Improvement: Waterstone Financial's Community Banking segment has seen significant growth in net interest income, primarily driven by increasing yields on loans and a reduction in its cost of funds. Management expects a continued focus on net interest margin improvement. This ongoing optimization of lending rates and deposit costs is anticipated to positively impact future revenue.

2. Continued Strength and Strategic Growth in Community Banking: The Community Banking segment has demonstrated strong asset quality and a rise in net interest income. Waterstone Financial has a measured growth strategy that includes organic expansion and targeted acquisitions to broaden its product offerings and geographic reach, particularly in its regional footprint of southeastern Wisconsin and the Phoenix metropolitan region of Arizona. This strategy, combined with a community-focused banking mission and strengthening local deposits, is expected to drive future revenue.

3. Enhanced Profitability in Mortgage Banking through Expense Management and Improved Margins: The Mortgage Banking segment has returned to pre-tax income due to a sustained focus on expense management and improved margins. As interest rates potentially decline, the mortgage banking segment is likely to experience even greater profitability or at least sustain its current levels, contributing to overall revenue growth.

4. Strategic Financial Management and Capital Allocation: Management emphasizes strategic financial management, including an active share repurchase program, which has contributed to increasing book value per share. While directly impacting profitability and shareholder value, sound capital allocation and efficiency improvements derived from strategic financial management can indirectly support revenue growth by freeing up capital for growth initiatives or enhancing competitiveness.

Share Repurchases

• Waterstone Financial repurchased approximately $13.25 million in shares in 2024, $25.21 million in 2023, $47.27 million in 2022, $7.87 million in 2021, and $32.54 million in 2020.
• The Board of Directors authorized a share repurchase program on May 24, 2023, for up to 2 million shares. Under the previous authorization, 3.5 million shares were repurchased at an average price of $17.25 per share.
• In December 2021, a program was authorized to repurchase up to 3.5 million shares, following the repurchase of 1,453,554 shares at a weighted average price of $17.16 per share under a prior program.

Capital Expenditures

• Waterstone Financial's capital expenditures were approximately $1.10 million in 2024, $700,000 in 2023, $701,000 in 2022, $778,000 in 2021, and $1.23 million in 2020.