Case 78 Waterstone Financial

Waterstone Financial, Inc. is the holding company of WaterStone Bank SSB and its subsidiaries. WaterStone Bank is a community bank which was established in the year 1921. WaterStone Bank also has an active mortgage banking subsidiary, Waterstone Mortgage Corporation, with 78 offices in 26 states in the United States. The major lending activity of WaterStone Bank involves origination of one to four family, multifamily residential, and commercial real estate loans. WaterStone Bank also offers home equity loans and lines of credit, construction and land loans, commercial business loans, and consumer loans. The sources of funds for WaterStone Bank are primarily retail deposits and home loan bank advances. The deposit offerings consist of certificates of deposits, money market savings accounts, transaction deposit accounts, non-interest-bearing demand accounts, and individual retirement accounts. The investment securities portfolio of Waterstone Financial consists of mortgage-backed securities, collateralized mortgage obligations, government-sponsored enterprise bonds, private label enterprise bonds, and other debt securities. Waterstone Mortgage Corporation originates single-family residential real estate loans for sale into the secondary market. The 5-year holding period return for Waterstone Financial, Inc. was 40% compared to 6% and 22% return for S&P Composite 1500 Thrifts & Mortgage Finance Index and Russell 2000 Index, respectively.