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Note 7 - Regulatory Capital

9 Months Ended

Sep. 30, 2025

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note 7 – Regulatory Capital

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements, or overall financial performance deemed by the regulators to be inadequate, can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Company's and Bank’s assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices. The Company's and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

As required by applicable legislation, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement.

The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%. The Community Bank Leverage Ratio is currently 9%. A financial institution can elect to be subject to this new definition, and opt-out of this new definition, at any time. As a qualified community bank, we elected to opt-out of this definition.

Prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

The minimum capital ratios set forth in the Regulatory Capital Plans will be increased and other minimum capital requirements will be established if and as necessary. In accordance with the Regulatory Capital Plans, the Bank will not pursue any acquisition or growth opportunity, declare any dividend or conduct any stock repurchase that would cause the Bank's total risk-based capital ratio and/or its Tier 1 leverage ratio to fall below the established minimum capital levels or the capital levels required for capital adequacy plus the capital conservation buffer. The minimum capital conservation buffer is 2.5%.

As of September 30, 2025, the Bank was considered well-capitalized, with all capital ratios exceeding the well-capitalized requirement. There are no conditions or events that management believes have changed the Bank’s prompt corrective action capitalization category.

The Bank is subject to regulatory restrictions on the amount of dividends it may declare and pay to the Company without prior regulatory approval, and to regulatory notification requirements for dividends that do not require prior regulatory approval.

The actual and required capital amounts and ratios for the Bank as of September 30, 2025 and December 31, 2024 are presented in the tables below:

	*September 30, 2025*
	*Actual*					*For Capital Adequacy Purposes*					*Minimum Capital Adequacy with Capital Buffer*					*To Be Well-Capitalized Under Prompt Corrective Action Provisions*
	*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*
	(Dollars In Thousands)
Total Capital (to risk-weighted assets)
Consolidated Waterstone Financial, Inc.	$	376,646		20.46	%	$	147,260		8.00	%	$	193,280		10.50	%		N/A		N/A
Waterstone Bank		364,300		19.79	%		147,260		8.00	%		193,290		10.50	%		184,081		10.00	%
Tier I Capital (to risk-weighted assets)
Consolidated Waterstone Financial, Inc.		357,971		19.45	%		110,450		6.00	%		156,470		8.50	%		N/A		N/A
Waterstone Bank		345,625		18.78	%		110,450		6.00	%		156,470		8.50	%		147,265		8.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)
Consolidated Waterstone Financial, Inc.		357,971		19.45	%		82,840		4.50	%		128,860		7.00	%		N/A		N/A
Waterstone Bank		345,625		18.78	%		82,840		4.50	%		128,860		7.00	%		119,653		6.50	%
Tier I Capital (to average assets)
Consolidated Waterstone Financial, Inc.		357,971		19.45	%		73,630		4.00	%		N/A		N/A			N/A		N/A
Waterstone Bank		345,625		18.78	%		73,630		4.00	%		N/A		N/A			92,041		5.00	%
State of Wisconsin (to total assets)
Waterstone Bank		345,625		15.24	%		136,110		6.00	%		N/A		N/A			N/A		N/A

	*December 31, 2024*
	*Actual*					*For Capital Adequacy Purposes*					*Minimum Capital Adequacy with Capital Buffer*					*To Be Well-Capitalized Under Prompt Corrective Action Provisions*
	*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*
	(Dollars In Thousands)
Total capital (to risk-weighted assets)
Consolidated Waterstone Financial, Inc.	$	376,624		20.90	%	$	144,162		8.00	%	$	189,213		10.50	%		N/A		N/A
Waterstone Bank		365,634		20.29	%		144,167		8.00	%		189,220		10.50	%		180,209		10.00	%
Tier I capital (to risk-weighted assets)
Consolidated Waterstone Financial, Inc.		357,135		19.81	%		108,168		6.00	%		153,238		8.50	%		N/A		N/A
Waterstone Bank		346,145		19.21	%		108,126		6.00	%		153,178		8.50	%		144,168		8.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)
Consolidated Waterstone Financial, Inc.		357,135		19.81	%		81,126		4.50	%		126,196		7.00	%		N/A		N/A
Waterstone Bank		346,145		19.21	%		81,094		4.50	%		126,147		7.00	%		117,136		6.50	%
Tier I Capital (to average assets)
Consolidated Waterstone Financial, Inc.		357,135		16.04	%		89,061		4.00	%		N/A		N/A			N/A		N/A
Waterstone Bank		346,145		15.55	%		89,041		4.00	%		N/A		N/A			111,301		5.00	%
State of Wisconsin (to total assets)
Waterstone Bank		346,145		15.68	%		132,453		6.00	%		N/A		N/A			N/A		N/A

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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