Financial Performance - Net income for the community banking segment decreased to $2.6 million for Q1 2024, down from $4.8 million in Q1 2023, reflecting a decline of 45.8%[161] - Net interest income for the community banking segment fell by $2.4 million to $11.6 million in Q1 2024, compared to $14.0 million in Q1 2023, a decrease of 17.1%[161] - The mortgage banking segment reported a net income of $298,000 for Q1 2024, a significant recovery from a net loss of $2.7 million in Q1 2023[164] - Total noninterest income increased by $2.7 million, or 14.5%, to $21.2 million, primarily due to a rise in mortgage banking income[179] - Mortgage banking income grew by $3.3 million, or 19.7%, to $20.1 million, resulting from a $62.0 million increase in total loan origination volume, which rose by 14.9%[180] Interest Income and Expense - Interest income on loans increased by $4.6 million, or 23.1%, to $24.5 million, driven by a 59 basis point increase in average yield and an 8.7% increase in average loans held for investment[176] - Interest expense on deposits and borrowings increased by $7.6 million in Q1 2024 due to rising interest rates, impacting net interest income[161] - Net interest income decreased by $2.7 million, or 19.3%, to $11.1 million for the three months ended March 31, 2024, compared to $13.8 million for the same period in 2023, primarily due to increased cost of funds from rising interest rates[175] - Interest expense on time deposits rose by $4.6 million, or 150.8%, to $7.7 million, attributed to a 227 basis point increase in average cost and a $91.0 million increase in average balance[176] - The net interest margin on a fully tax equivalent basis was 2.16% for the three months ended March 31, 2024, compared to 2.90% for the same period in 2023[175] Asset Quality - The provision for credit losses was $105,000 in Q1 2024, down from $388,000 in Q1 2023, indicating improved credit quality[162] - The provision for credit losses was $67,000 for the three months ended March 31, 2024, a decrease from $460,000 for the same period in 2023[177] - Total nonperforming assets increased slightly to $5.078 million at March 31, 2024, from $5.062 million at March 31, 2023[198] - The allowance for credit losses remained at $18.5 million at March 31, 2024, with a negative provision of $3,000 for the quarter[189] - Past due loans decreased by $604,000, or 5.4%, to $10.6 million at March 31, 2024, from $11.3 million at December 31, 2023[208] Balance Sheet Highlights - Total assets increased to $2.19 billion as of March 31, 2024, compared to $2.05 billion as of March 31, 2023[175] - Cash and cash equivalents rose by $9.3 million, or 25.5%, to $45.7 million at March 31, 2024, compared to $36.4 million at December 31, 2023[184] - Total deposits increased by $9.3 million to $1.20 billion at March 31, 2024, primarily due to a $17.0 million increase in time deposits[191] - Total borrowings increased by $23.1 million, or 3.8%, to $634.2 million at March 31, 2024[192] - Shareholders' equity decreased by $6.1 million to $338.0 million at March 31, 2024, primarily due to dividends declared and stock repurchases[195] Regulatory and Capital Management - As of March 31, 2024, WaterStone Bank exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines[230] - The Company had approximately $293.5 million of uninsured deposits for approximately 1,243 customers as of March 31, 2024[225] - The Company authorized a 2,000,000 share stock repurchase program in the second quarter of 2023, with approximately 403,000 shares remaining as of March 31, 2024[229] Interest Rate Risk Management - A 100 basis point instantaneous increase in interest rates is projected to decrease forecast net interest income over the next 12 months by 7.08%, while a 100 basis point decrease in rates is expected to increase net interest income by 7.86%[239] - WaterStone Bank emphasizes variable rate loans and has implemented strategies to manage interest rate risk, including reducing the expected average life of the investment portfolio[235] - Management regularly monitors interest rate risk to minimize exposure of earnings and capital to changes in interest rates[236] - The Asset/Liability Committee meets at least weekly to review asset/liability policies and interest rate risk position, which are evaluated quarterly[234] Internal Controls and Procedures - The company’s disclosure controls and procedures have been evaluated and deemed effective by the CEO and CFO as of the end of the reporting period[240] - There have been no changes in the company's internal control over financial reporting that materially affected its effectiveness during the fiscal quarter[241]

Financial Performance - Consolidated net income for the quarter ended March 31, 2024, was $3.0 million, or $0.16 per diluted share, compared to $2.2 million, or $0.10 per diluted share for the same period in 2023[1][4] - Net income for the quarter was $3,038 thousand, a significant recovery from a net loss of $40 thousand in the same quarter of the previous year[15] - Net income for the quarter was $2,640,000, down 35.4% from $4,074,000 in the same quarter last year[18] Loan and Asset Growth - Average loans held for investment increased by $133.0 million, or 8.7%, to $1.66 billion during the quarter ended March 31, 2024, compared to $1.53 billion for the same period in 2023[4] - Loan originations increased by $42.4 million, or 9.6%, to $485.1 million during the quarter ended March 31, 2024, compared to $442.7 million for the same period in 2023[6] - Total assets increased to $2,234,724 thousand as of March 31, 2024, compared to $2,213,389 thousand on December 31, 2023, reflecting a growth of 0.96%[13] - Total deposits increased to $1,199,894 thousand, up from $1,190,624 thousand, marking a growth of 0.2%[13] Income and Margin Analysis - Net interest income decreased by $2.4 million, or 17.2%, to $11.6 million for the quarter ended March 31, 2024, compared to $14.0 million for the same period in 2023[4] - The net interest margin decreased by 73 basis points to 2.15% for the quarter ended March 31, 2024, compared to 2.88% for the same period in 2023[4] - The net interest margin for the quarter was 2.15%, a decrease from 2.25% in the previous quarter[15] - Net interest income for the three months ended March 31, 2024, was $11,598,000, a decrease of 3.8% from $12,056,000 in the previous quarter[18] Noninterest Income - Mortgage banking non-interest income increased by $2.4 million, or 13.2%, to $20.3 million for the quarter ended March 31, 2024, compared to $18.0 million for the same period in 2023[6] - Total noninterest income rose to $21,248 thousand, up 25.5% from $16,876 thousand in the previous quarter[15] - Total noninterest income increased to $990,000 for the quarter, up from $894,000 in the previous quarter, representing an increase of 10.8%[18] - In the mortgage banking segment, total noninterest income rose to $20,328,000, up from $16,028,000 in the previous quarter, marking a 26.8% increase[20] Efficiency and Operational Metrics - The efficiency ratio for the Mortgage Banking segment was 65.17% for the quarter ended March 31, 2024, compared to 54.53% for the same period in 2023[6] - The efficiency ratio for the quarter was 65.17%, compared to 63.26% in the previous quarter, indicating a decline in operational efficiency[18] - The efficiency ratio for the mortgage banking segment was 98.33%, a significant improvement from 137.86% in the previous quarter[20] Shareholder Returns - Dividends declared during the quarter totaled $0.15 per common share[4] - The company declared dividends of $0.15 per common share, consistent with the previous quarter[15] - The company repurchased approximately 417,000 shares at a cost of $5.3 million, or $12.65 per share, during the quarter[4] Credit Quality - Nonperforming assets as a percentage of total assets remained stable at 0.23% as of March 31, 2024, compared to 0.22% at March 31, 2023[4] - The allowance for credit losses on loans remained stable at 1.11% of loans receivable[15] - The provision for credit losses in the mortgage banking segment was $(38,000), compared to a provision of $115,000 in the previous quarter, indicating a reduction in expected credit losses[20]

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 F O R M 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-36271 WATERSTONE FINANCIAL, INC. (Exact name of registrant as specified in its charter) Maryland 90-1026709 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer ...

Financial Performance - Net income for the community banking segment was $4.5 million for the three months ended September 30, 2023, down from $6.6 million for the same period in 2022[165]. - Net income for the nine months ended September 30, 2023, totaled $14.6 million, down from $17.1 million for the same period in 2022[189]. - Earnings per share for the nine months ended September 30, 2023, was $0.46, down from $0.84 for the same period in 2022[199]. Deposits and Borrowings - Total deposits increased by 0.5% to $1.21 billion as of September 30, 2023, compared to December 31, 2022, with a $18.2 million increase, or 1.5%, during the three months ended September 30, 2023[162]. - Total borrowings increased by $201.1 million, or 52.0%, to $587.9 million at September 30, 2023[223]. - The average balance of time deposits increased by $94.6 million compared to the prior year period, contributing to the rise in interest expense[208]. Interest Income and Expenses - Net interest income decreased by $3.1 million to $12.4 million for the three months ended September 30, 2023, compared to $15.5 million in 2022[165]. - Interest income on loans increased by $7.6 million, or 46.8%, to $23.8 million, driven by a 94 basis point increase in average yield and a $316.3 million, or 24.1%, increase in average loans held for investment[181]. - Interest expense on time deposits surged by $5.5 million, or 722.5%, to $6.2 million, attributed to a 292 basis point increase in average cost and a $133.7 million increase in average balance[181]. Credit Losses and Non-Performing Loans - The provision for credit losses was $445,000 for the three months ended September 30, 2023, compared to $234,000 in the same period of 2022[167]. - Total non-accrual loans decreased by $224,000, or 5.2%, to $4.1 million as of September 30, 2023, with a ratio of non-accrual loans to total loans receivable at 0.25%[230]. - The allowance for credit losses increased by $796,000 to $18.6 million at September 30, 2023, with a provision of $829,000 for the nine months ended September 30, 2023[221]. Mortgage Banking - The mortgage banking segment reported a net loss of $1.4 million for the three months ended September 30, 2023, compared to a net loss of $1.3 million in 2022[170]. - Mortgage loan originations decreased by $132.3 million, or 18.1%, to $597.6 million for the three months ended September 30, 2023, compared to $729.9 million in 2022[170]. - Total mortgage banking noninterest income decreased by $5.9 million, or 21.4%, to $21.5 million during the three months ended September 30, 2023[170]. Expenses - Total noninterest expenses decreased by $5.7 million, or 15.9%, to $30.0 million for the three months ended September 30, 2023, compared to $35.7 million for the same period in 2022[187]. - Compensation, payroll taxes, and other employee benefits expense increased by $194,000 to $4.6 million for the three months ended September 30, 2023, primarily due to annual raises[169]. - Total noninterest income decreased by $5.2 million, or 18.9%, to $22.2 million, primarily due to declines in mortgage banking income and other income[185]. Asset and Liability Management - The company has implemented strategies to manage interest rate risk, including emphasizing variable rate loans and shortening the expected average life of the investment portfolio[264]. - The Asset/Liability Committee meets at least weekly to review asset/liability policies and interest rate risk positions, which are evaluated quarterly[263]. - The company focuses on managing interest rate risk to minimize exposure of earnings and capital to changes in interest rates[264]. Regulatory and Capital Position - The company exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of September 30, 2023[259]. - Shareholders' equity decreased by $24.2 million to $346.3 million at September 30, 2023, primarily due to dividends and stock repurchases[257]. - The company had outstanding commitments to originate loans receivable of $31.0 million as of September 30, 2023[255].

Financial Performance - Net income for the community banking segment was $5.2 million for the three months ended June 30, 2023, down from $6.3 million in the same period of 2022 [163]. - Net income for the six months ended June 30, 2023, totaled $10.0 million, a decrease from $10.6 million for the same period in 2022 [186]. - Earnings per share (basic) decreased to $0.30 for the six months ended June 30, 2023, from $0.59 for the same period in 2022 [195]. - The mortgage banking segment reported a net loss of $4.0 million for the six months ended June 30, 2023, compared to a net income of $2.8 million for the same period in 2022 [192]. Income and Expenses - Net interest income decreased by $472,000 to $13.2 million for the three months ended June 30, 2023, compared to $13.7 million in 2022 [163]. - Total noninterest income decreased by $7.7 million, or 24.7%, to $23.5 million, primarily due to declines in mortgage banking income and other income [182]. - Total noninterest expenses decreased by $4.1 million, or 11.8%, to $30.9 million for the three months ended June 30, 2023, compared to $35.1 million for the same period in 2022 [184]. - Total noninterest income decreased by $19.0 million, or 31.1%, to $42.1 million, mainly due to declines in mortgage banking income and service charges on loans and deposits [208]. - Total noninterest expenses decreased by $10.0 million, or 14.2%, to $60.0 million for the six months ended June 30, 2023, compared to $70.0 million for the same period in 2022 [210]. Loans and Mortgage Banking - Mortgage loans originated for sale totaled $623.3 million, a decrease of $155.4 million, or 20.0%, from $778.8 million in the prior year [167]. - Mortgage loan originations decreased by $421.2 million, or 28.3%, to $1.07 billion for the six months ended June 30, 2023, compared to $1.49 billion for the same period in 2022 [192]. - Mortgage banking income fell by $7.5 million, or 25.5%, to $21.9 million, resulting from a decrease in loan origination volume by $185.6 million, or 24.8% [183]. - Mortgage banking income fell by $19.0 million, or 32.9%, to $38.7 million, attributed to a $468.0 million, or 32.4%, decrease in total loan origination volume [209]. Credit Losses and Provisions - The provision for credit losses was $158,000 for the three months ended June 30, 2023, compared to a negative provision of $41,000 in the same period of 2022 [164]. - The provision for credit losses was $186,000 for the three months ended June 30, 2023, compared to a negative provision of $48,000 for the same period in 2022 [180]. - Provision for credit losses was $546,000 for the six months ended June 30, 2023, compared to a negative provision of $181,000 for the same period in 2022 [187]. - The allowance for credit losses increased by $617,000 to $18.4 million at June 30, 2023, with a provision for credit losses of $623,000 during the same period [219]. Assets and Deposits - Total deposits decreased by 1.0% to $1.19 billion as of June 30, 2023, with a minimal deposit outflow in the first half of the year [161]. - Total assets grew to $2.16 billion as of June 30, 2023, compared to $1.99 billion in the prior year [178]. - Total assets increased by $198.2 million, or 9.8%, to $2.23 billion at June 30, 2023, primarily due to an increase in loans held for investment and loans held for sale [213]. - Cash and cash equivalents rose by $14.5 million, or 31.2%, to $61.2 million at June 30, 2023, reflecting increased funding sources from borrowings [214]. Interest Income and Expense - Interest income on loans increased by $7.6 million, or 52.3%, to $22.2 million, driven by a 98 basis point increase in average yield and a $339.6 million, or 27.2%, increase in average loans held for investment [179]. - Interest expense on time deposits rose by $4.3 million, or 794.3%, to $4.9 million, attributed to a 243 basis point increase in average cost and a $111.1 million increase in average balance [179]. - Interest expense on time deposits surged by $6.8 million, or 621.8%, to $7.9 million, primarily due to a 201 basis point increase in average cost [205]. Capital and Shareholder Equity - The company remains well capitalized with a Total Capital ratio of 22.43% as of June 30, 2023 [161]. - Shareholders' equity decreased by $14.7 million to $355.8 million at June 30, 2023, primarily due to dividends and stock repurchases [259]. - WaterStone Bank exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of June 30, 2023 [261]. Interest Rate Risk Management - The company has implemented strategies to manage interest rate risk, including emphasizing variable rate loans and shortening the expected average life of the investment portfolio [265]. - The Asset/Liability Committee meets at least weekly to review asset/liability policies and interest rate risk position [264]. - The company’s interest rate risk exposure is evaluated quarterly through simulation analysis [266]. - As of June 30, 2023, a 100 basis point instantaneous increase in interest rates is projected to decrease forecast net interest income over the next 12 months by 2.37% [269]. Legal and Regulatory Matters - The company is currently involved in legal proceedings initiated by Mutual of Omaha Mortgage, Inc. regarding employee hiring practices [273]. - There have been no changes in the company's internal control over financial reporting that materially affect its effectiveness [272]. - The company’s disclosure controls and procedures have been evaluated as effective by the CEO and CFO [271].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 | 53226 | | --- | | 11200 W. Plank Court Wauwatosa, Wisconsin | Form 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2023 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-36271 WATERSTONE FINANCIAL, INC. (Exact name of registrant as specified in its charter) Mar ...

Table of Contents SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 F O R M 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-36271 WATERSTONE FINANCIAL, INC. (Exact name of registrant as specified in its charter) Maryland 90-1026709 (State or other jurisdiction of incorporation or organization) ...

Table of Contents For the quarterly period ended September 30, 2022 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-36271 WATERSTONE FINANCIAL, INC. (Exact name of registrant as specified in its charter) Maryland 90-1026709 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ Quarterly report pursuant to Secti ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%20l.%20Financial%20Statements) The financial statements present the company's financial position, results of operations, and cash flows, highlighting a decrease in assets and net income Consolidated Statements of Financial Condition - Total assets decreased to **$1.94 billion** as of June 30, 2022, from **$2.22 billion** at December 31, 2021, primarily due to a significant reduction in cash and cash equivalents and loans held for sale[11](index=11&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $122,193 | $376,722 | | Loans held for sale | $206,702 | $312,738 | | Loans receivable, net | $1,259,289 | $1,190,007 | | **Total Assets** | **$1,941,097** | **$2,215,858** | | **Liabilities & Equity** | | | | Total deposits | $1,213,230 | $1,233,386 | | Borrowings | $281,100 | $477,127 | | **Total Liabilities** | **$1,554,717** | **$1,783,085** | | **Total Shareholders' Equity** | **$386,380** | **$432,773** | Consolidated Statements of Income - Net income for the second quarter of 2022 was **$8.0 million**, a significant decrease from **$17.9 million** in the same period of 2021, driven by a sharp reduction in mortgage banking income[13](index=13&type=chunk) Consolidated Income Statement Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $14,081 | $14,277 | $25,945 | $28,229 | | Mortgage Banking Income | $29,410 | $49,649 | $57,685 | $104,040 | | Total Noninterest Income | $31,238 | $52,044 | $61,056 | $108,243 | | Total Noninterest Expenses | $35,050 | $43,297 | $69,984 | $86,297 | | **Net Income** | **$7,990** | **$17,894** | **$13,282** | **$39,238** | | Diluted EPS | $0.36 | $0.74 | $0.58 | $1.64 | Consolidated Statements of Changes in Shareholders' Equity - Shareholders' equity decreased from **$432.8 million** at year-end 2021 to **$386.4 million** at June 30, 2022, driven by stock repurchases, comprehensive loss, and cash dividends[17](index=17&type=chunk) - The company repurchased **2,099,000 shares** of common stock for **$37.9 million** during the first six months of 2022[17](index=17&type=chunk) Consolidated Statements of Cash Flows - Cash and cash equivalents decreased by **$254.5 million** in the first six months of 2022, compared to an increase of **$134.0 million** in the same period of 2021[22](index=22&type=chunk) - Significant financing activities in the first half of 2022 included the repayment of **$195.0 million** in long-term debt and the repurchase of **$37.9 million** in common stock[22](index=22&type=chunk) Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $118,163 | $76,913 | | Net cash (used in) provided by investing activities | ($100,752) | $64,108 | | Net cash used in financing activities | ($271,940) | ($7,049) | | **(Decrease) increase in cash and cash equivalents** | **($254,529)** | **$133,972** | Notes to Consolidated Financial Statements - The Company adopted ASC Topic 326 (CECL) on January 1, 2022, resulting in a **$1.4 million** after-tax decrease to retained earnings[35](index=35&type=chunk) - The company operates through two main subsidiaries: WaterStone Bank SSB, a community bank, and Waterstone Mortgage Corporation, a mortgage banking subsidiary[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - Non-accrual loans increased to **$7.5 million** (0.59% of total loans) at June 30, 2022, from **$5.6 million** (0.46% of total loans) at December 31, 2021[80](index=80&type=chunk) - The company has two reportable segments: Community Banking and Mortgage Banking[155](index=155&type=chunk)[156](index=156&type=chunk)[158](index=158&type=chunk) Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | One- to four-family | $312,657 | $300,523 | | Multi-family | $597,304 | $537,956 | | Commercial real estate | $266,375 | $250,676 | | Construction and land | $70,075 | $82,588 | | Other | $29,149 | $34,042 | | **Total** | **$1,276,560** | **$1,205,785** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Profitability declined significantly due to the mortgage banking segment's performance amid rising interest rates, while total assets decreased from lower cash balances Results of Operations - The Mortgage Banking segment's net income plummeted to **$1.7 million** in Q2 2022 from **$10.4 million** in Q2 2021, caused by lower origination volume and compressed margins[179](index=179&type=chunk) - The Community Banking segment's Q2 2022 net income was **$6.3 million**, down from **$7.5 million** in Q2 2021, due to lower net interest income[174](index=174&type=chunk) - Consolidated noninterest income for Q2 2022 decreased **40.0%** to **$31.2 million**, primarily due to a **$20.2 million** drop in mortgage banking income[195](index=195&type=chunk) - Consolidated noninterest expenses for Q2 2022 decreased **19.0%** to **$35.1 million**, mainly from an **$8.1 million** reduction in compensation and benefits[197](index=197&type=chunk)[200](index=200&type=chunk) Consolidated Results of Operations Summary | Metric | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $7,990 | $17,894 | $13,282 | $39,238 | | Diluted EPS | $0.36 | $0.74 | $0.58 | $1.64 | | Annualized ROA | 1.61% | 3.25% | 1.30% | 3.62% | | Annualized ROE | 7.93% | 16.49% | 6.42% | 18.49% | Financial Condition - Total assets decreased by **$274.8 million (12.4%)** to **$1.94 billion** at June 30, 2022, mainly due to a **$254.5 million** decrease in cash[225](index=225&type=chunk)[226](index=226&type=chunk)[228](index=228&type=chunk) - Loans receivable held for investment grew by **$70.8 million** to **$1.28 billion**, driven by increases in core real estate loan categories[228](index=228&type=chunk) - Total borrowings decreased by **$196.0 million (41.1%)** to **$281.1 million**, primarily due to the payoff of **$200.0 million** in FHLB borrowings[235](index=235&type=chunk) - Shareholders' equity declined by **$46.4 million** to **$386.4 million**, impacted by dividends, stock repurchases, and the adoption of CECL[238](index=238&type=chunk) Asset Quality - The allowance for credit losses on loans increased by **$1.5 million** to **$17.3 million** at June 30, 2022, due to the CECL adoption and provisions[231](index=231&type=chunk)[259](index=259&type=chunk) - Total past due loans increased slightly to **$7.7 million** (0.60% of total loans) at June 30, 2022, from **$7.1 million** (0.59% of total loans) at year-end 2021[255](index=255&type=chunk) Nonperforming Assets (in thousands) | Category | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total non-accrual loans | $7,493 | $5,574 | | Real estate owned | $148 | $148 | | **Total nonperforming assets** | **$7,641** | **$5,722** | | Nonperforming assets to total assets | 0.39% | 0.26% | Liquidity and Capital Resources - Primary uses of cash in the first half of 2022 included **$1.45 billion** to fund loans, **$195.0 million** for debt payoffs, and **$37.9 million** for stock repurchases[268](index=268&type=chunk) - Primary sources of cash included **$1.59 billion** in proceeds from the sale of loans and **$13.3 million** in net income[269](index=269&type=chunk) - At June 30, 2022, WaterStone Bank **exceeded all regulatory capital requirements** and was considered "well capitalized"[278](index=278&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate sensitivity, with models showing a negative impact on net interest income from both rising and falling rates - The company's primary market risk is **interest rate risk** due to its asset/liability structure, which is managed by an Asset/Liability Committee[283](index=283&type=chunk) Net Interest Income Sensitivity Analysis (as of June 30, 2022) | Immediate Change in Rates | +300 bps | +200 bps | +100 bps | -100 bps | | :--- | :--- | :--- | :--- | :--- | | **Percentage Change** | **(2.20)%** | **(0.95)%** | **(0.43)%** | **(1.97)%** | [Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting during the quarter - Based on an evaluation as of June 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures are effective**[290](index=290&type=chunk) - **No material changes** occurred during the fiscal quarter that have affected, or are reasonably likely to affect, the company's internal control over financial reporting[291](index=291&type=chunk) [PART II. OTHER INFORMATION](index=73&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=73&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings not expected to materially impact its consolidated financial statements - Information regarding legal proceedings is detailed in Note 9 of the financial statements[292](index=292&type=chunk) [Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were identified since its 2021 Annual Report on Form 10-K - **No material changes** in risk factors were reported from the company's 2021 Annual Report on Form 10-K[293](index=293&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company continued its stock repurchase program, buying back over 1.4 million shares during the second quarter of 2022 - The current share repurchase plan allows for the repurchase of 3,500,000 shares; as of the end of the quarter, **1,350,513 shares may yet be purchased**[294](index=294&type=chunk) Common Stock Repurchases in Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2022 | 417,700 | $18.08 | | May 2022 | 657,371 | $16.53 | | June 2022 | 342,333 | $16.87 | | **Total** | **1,417,404** | **$17.07** | [Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including required Sarbanes-Oxley certifications and financial statements in iXBRL format - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and financial statements in iXBRL format[298](index=298&type=chunk)

OR Table of Contents ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-36271 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2022 (414) 761-1000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: WATERSTONE FINANCIAL, ...