##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10  K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2005
 Commission
file number: 000-51507
 WAUWATOSA HOLDINGS, INC.
  Wisconsin
    
    39-0691250(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 11200 W Plank Ct, Wauwatosa, WI
    
    53226(Address of principal executive offices)
    
    (Zip Code)
 (414) 761-1000
  NONESecurities registered pursuant to Section 12(g) of the Act:
 Common Stock, $0.01 Par Value
  o þ
 þ
  o þ
  o þ
  DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Part of Form 10-K Into Which
Portions of Document are IncorporatedNONE




---



WAUWATOSA HOLDINGS, INC.
 FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED JUNE 30, 2005
 TABLE OF CONTENTS
 ITEM
    
    
    
    PAGEPART I1.
    
    Business
    
    3  482.
    
    Properties
    
    
    493.
    
    Legal Proceedings
    
    
    504.
    
    Submission of Matters to a Vote of Security Holders
    
    
    50Executive Officers of the Registrant
    
    
    50PART II5.
    
    Market for Registrants Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities
    
    
    516.
    
    Selected Financial Data
    

    52  547.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    55  757A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    76  778.
    
    Financial Statements and Supplementary Data
    
    78  1039.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    1049A.
    
    Controls and Procedures
    
    
    1059B.
    
    Other Information
    
    
    105PART III10.
    
    Directors and Executive Officers of the Registrant
    
    106-11011.
    
    Executive Compensation
    
    111-11912.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    12013.
    
    Certain Relationships and Related Transactions
    
    
    12114.
    
    Principal Accounting Fees and Services
    
    
    122PART IV15.
    
    Exhibits and Financial Statement Schedules
    
    
    123Signatures
    
    
    124SubsidiariesCertificationCertificationCertificationCertification
  
 2




---



##### Table of Contents



Part 1
  
 Item 1. Business
 BUSINESS OF WAUWATOSA HOLDINGS, INC.
     3




---



##### Table of Contents



Cautionary Factors
  
    
    inflation and changes in the interest rate environment that reduce our margins or
reduce the fair value of financial instruments;
    
    legislative or regulatory changes that adversely affect our business;
    
    changes in our organization, compensation and benefit plans;
    
    our ability to enter new markets successfully and take advantage of growth
opportunities;
    
    general economic conditions, either nationally or in our market areas, that are
worse than expected;
    
    significantly increased competition among depository and other financial
institutions;
    
    adverse changes in the securities markets;
    
    changes in accounting policies and practices, as may be adopted by the bank
regulatory agencies and the Financial Accounting Standards Board; and
    
    changes in consumer spending, borrowing and savings habits.
  BUSINESS OF WAUWATOSA SAVINGS BANK
 General
   4




---



##### Table of Contents



Business Strategy
   
    
    Remaining a Community-Oriented Institution.We were established in
Wauwatosa, Wisconsin, a suburb of Milwaukee, in 1921, and have been
operating continuously since that time. We have been, and continue to
be, committed to meeting the financial needs of the communities we
serve, and we are dedicated to providing quality personal service to
our customers. Our focus will be to retain our essentially mutual
charter and reinvest the proceeds of the offering consistent with our
historical, community-oriented focus.
    
    Continuing Emphasis on Residential Real Estate Lending.We intend to
continue our emphasis on the origination of residential real estate
loans, especially over four-family loans. Current loans-to-one
borrower limitations cap the amount of credit that we can extend to
affiliated investors/developers at 15% of Wauwatosa Savings capital.
The additional capital raised in the offering will increase our
commercial real estate lending capacity by enabling us to originate
more loans and loans with larger balances. This will permit us to
serve over four-family borrowers with larger lending needs and to
originate larger commercial real estate loans than we have in the
past. In addition, we intend to expand the owner-occupied residential
mortgage product offering by developing a long-term, fixed-rate loan
and an indexed, adjustable mortgage loan product.
Expansion within Our Market Area.Wauwatosa Savings growth in recent
years has been achieved through the origination of real estate
mortgages funded primarily by fixed-term deposits. We currently
operate six banking offices, one of which is a supermarket branch open
seven days a week. In 2003 and 2004, we opened two new full service
branches in Waukesha County, Wisconsin, one in the city of Oconomowoc
and the other in the city of Pewaukee. We plan to expand our branch
network in the next few years by adding one to two branches each year
within our existing market area
 5




---



##### Table of Contents




    
    defined as Milwaukee and Waukesha
counties and each of the other six contiguous counties. The additional
capital raised in the offering will provide support for this growth.
    
    Maintaining High Asset Quality.We have emphasized maintaining strong
asset quality by following conservative underwriting criteria, and by
exclusively originating loans secured by real estate in relatively
favorable economic and real estate market conditions. Through
strategies which focus on borrower workout arrangements, Wauwatosa
Savings has been proactive in managing non-performing assets such that
realized losses are minimized.
 Competition
 th th
  Market Area
   6




---



##### Table of Contents



Lending Activities
  7




---



##### Table of Contents



Loan Portfolio Composition.
 At June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Real estate loans:Residential (1)Single family
    
    $
    430,333
    
    
    
    33.11
    %
    
    $
    391,864
    
    
    
    34.60
    %
    
    $
    357,212
    
    
    
    36.63
    %
    
    $
    371,754
    
    
    
    40.21
    %
    
    $
    394,118
    
    
    
    42.70
    %Two- to four-family
    
    
    251,268
    
    
    
    19.33
    
    
    
    224,765
    
    
    
    19.85
    
    
    
    203,655
    
    
    
    20.88
    
    
    
    185,218
    
    
    
    20.04
    
    
    
    170,079
    
    
    
    18.42Over four-family
    
    
    407,601
    
    
    
    31.36
    
    
    
    340,753
    
    
    
    30.09
    
    
    
    287,589
    
    
    
    29.49
    
    
    
    262,310
    
    
    
    28.38
    
    
    
    261,394
    
    
    
    28.32Construction
    
    
    149,540
    
    
    
    11.50
    
    
    
    110,495
    
    
    
    9.76
    
    
    
    75,535
    
    
    
    7.74
    
    
    
    66,918
    
    
    
    7.24
    
    
    
    58,100
    
    
    
    6.29Commercial
    
    
    36,586
    
    
    
    2.81
    
    
    
    46,138
    
    
    
    4.07
    
    
    
    43,895
    
    
    
    4.50
    
    
    
    28,552
    
    
    
    3.09
    
    
    
    30,381
    
    
    
    3.29Land
    
    
    24,282
    
    
    
    1.87
    
    
    
    18,307
    
    
    
    1.62
    
    
    
    7,195
    
    
    
    0.74
    
    
    
    9,434
    
    
    
    1.02
    
    
    
    8,904
    
    
    
    0.96Other loans
    
    
    202
    
    
    
    .02
    
    
    
    186
    
    
    
    0.01
    
    
    
    214
    
    
    
    0.02
    
    
    
    214
    
    
    
    0.02
    
    
    
    167
    
    
    
    0.02Total loans
    
    
    1,299,812
    
    
    
    100.00
    %
    
    
    1,132,507
    
    
    
    100.00
    %
    
    
    975,295
    
    
    
    100.00
    %
    
    
    924,400
    
    
    
    100.00
    %
    
    
    923,143
    
    
    
    100.00
    %Undisbursed loan proceeds
    
    
    (77,484
    )
    
    
    
    
    
    
    (61,904
    )
    
    
    
    
    
    
    (29,173
    )
    
    
    
    
    
    
    (23,947
    )
    
    
    
    
    
    
    (33,956
    )Net deferred loan fees and
premiums
    
    
    (4,161
    )
    
    
    
    
    
    
    (3,631
    )
    
    
    
    
    
    
    (3,099
    )
    
    
    
    
    
    
    (2,576
    )
    
    
    
    
    
    
    (2,641
    )Allowance for loan losses
    
    
    (4,606
    )
    
    
    
    
    
    
    (3,378
    )
    
    
    
    
    
    
    (2,970
    )
    
    
    
    
    
    
    (2,479
    )
    
    
    
    
    
    
    (1,973
    )Loans, net
    
    $
    1,213,561
    
    
    
    
    
    
    $
    1,063,594
    
    
    
    
    
    
    $
    940,053
    
    
    
    
    
    
    $
    895,398
    
    
    
    
    
    
    $
    884,573
 
 (1)
    
    Residential mortgage loans include home equity loans and home equity lines of credit. -8-




---



##### Table of Contents



Loan Portfolio Maturities and Yields.
 Residential(1)Two- to
    
    
    OverSingle Family
    
    
    four-family
    
    
    four-family
    
    
    Construction
    
    
    Commercial
    
    
    LandWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageMaturity Date
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(Dollars in Thousands)July 1, 2005  June
30, 2006
    
    $
    3,594
    
    
    
    9.37
    %
    
    $
    20,324
    
    
    
    6.64
    %
    
    $
    23,050
    
    
    
    6.39
    %
    
    $
    81,033
    
    
    
    5.94
    %
    
    $
    2,181
    
    
    
    7.46
    %
    
    $
    3,149
    
    
    
    6.36
    %July 1, 2006  June
30, 2007
    
    
    16,420
    
    
    
    6.16
    
    
    
    46,471
    
    
    
    6.09
    
    
    
    59,799
    
    
    
    5.94
    
    
    
    3,084
    
    
    
    6.21
    
    
    
    2,441
    
    
    
    5.92
    
    
    
    5,590
    
    
    
    6.19July 1, 2007  June
30, 2008
    
    
    27,004
    
    
    
    6.46
    
    
    
    62,819
    
    
    
    6.46
    
    
    
    89,627
    
    
    
    6.07
    
    
    
    12,465
    
    
    
    6.22
    
    
    
    6,080
    
    
    
    6.10
    
    
    
    3,749
    
    
    
    6.28July 1, 2008  June
30, 2009
    
    
    3,325
    
    
    
    6.25
    
    
    
    7,534
    
    
    
    6.32
    
    
    
    14,794
    
    
    
    6.01
    
    
    
    7,793
    
    
    
    5.99
    
    
    
    2,602
    
    
    
    6.01
    
    
    
    207
    
    
    
    6.00July 1, 2009  June
30, 2010
    
    
    1,336
    
    
    
    6.07
    
    
    
    2,615
    
    
    
    6.27
    
    
    
    7,355
    
    
    
    6.01
    
    
    
    
    
    
    
    
    
    
    
    1,182
    
    
    
    5.52
    
    
    
    
    
    
    
    July 1, 2010 and
thereafter
    
    
    378,654
    
    
    
    5.78
    
    
    
    111,505
    
    
    
    6.00
    
    
    
    212,976
    
    
    
    5.85
    
    
    
    45,165
    
    
    
    5.74
    
    
    
    22,100
    
    
    
    5.97
    
    
    
    11,587
    
    
    
    5.84Total
    
    $
    430,333
    
    
    
    5.87
    %
    
    $
    251,268
    
    
    
    6.19
    %
    
    $
    407,601
    
    
    
    5.95
    %
    
    $
    149,540
    
    
    
    5.91
    %
    
    $
    36,586
    
    
    
    6.07
    %
    
    $
    24,282
    
    
    
    6.06
    %
 Other
    
    
    Total LoansWeighted AverageMaturity Date
    
    Amount
    
    
    Weighted Average Rate
    
    
    Amount
    
    
    Rate(Dollars in Thousands)July 1, 2005  June 30, 2006
    
    $
    202
    
    
    
    0.00
    %
    
    $
    133,533
    
    
    
    6.24
    %July 1, 2006  June 30, 2007
    
    
    
    
    
    
    
    
    
    
    133,805
    
    
    
    6.03July 1, 2007  June 30, 2008
    
    
    
    
    
    
    
    
    
    
    201,744
    
    
    
    6.26July 1, 2008  June 30, 2009
    
    
    
    
    
    
    
    
    
    
    36,255
    
    
    
    6.09July 1, 2009  June 30, 2010
    
    
    
    
    
    
    
    
    
    
    12,488
    
    
    
    6.02July 1, 2010 and thereafter
    
    
    
    
    
    
    
    
    
    
    781,987
    
    
    
    5.83Total
    
    $
    202
    
    
    
    0.00
    %
    
    $
    1,299,812
    
    
    
    5.97
    %
 
 (1) Residential mortgage loans include home equity loans and home equity lines of
credit. -9-




---



##### Table of Contents



Due After June 30, 2006Fixed
    
    
    Variable
    
    
    Total(In Thousands)Real estate loans:Residential(1)Single family
    
    $
    50,000
    
    
    $
    376,739
    
    
    $
    426,739Two- to four-family
    
    
    117,832
    
    
    
    113,112
    
    
    
    230,944Over four-family
    
    
    180,016
    
    
    
    204,535
    
    
    
    384,551Construction
    
    
    25,893
    
    
    
    42,614
    
    
    
    68,507Commercial
    
    
    11,183
    
    
    
    23,222
    
    
    
    34,405Land
    
    
    7,568
    
    
    
    13,565
    
    
    
    21,133Other
    
    
    
    
    
    
    
    
    
    
    Total loans
    
    $
    392,492
    
    
    $
    773,787
    
    
    $
    1,166,279
 
 (1) Residential mortgage loans include home equity loans and home equity lines of
credit. -10-




---



##### Table of Contents



One- to Four-Family Residential Mortgage Loans.
     -11-




---



##### Table of Contents



The Wall Street Journal
 Over Four-family Real Estate Loans.
 -12-




---



##### Table of Contents



Residential Construction Loans.
  -13-




---



##### Table of Contents



Commercial Real Estate Loans.
  -14-




---



##### Table of Contents



Years Ended June 30,2005
    
    
    2004
    
    
    2003(In Thousands)Total loans at beginning of
year
    
    $
    1,132,507
    
    
    $
    975,296
    
    
    $
    924,400Real estate loans originated:Residential (1)Single family
    
    
    139,878
    
    
    
    146,712
    
    
    
    118,301Two  to four-family
    
    
    96,560
    
    
    
    98,223
    
    
    
    85,001Over fourfamily
    
    
    148,964
    
    
    
    129,187
    
    
    
    109,182Construction
    
    
    80,221
    
    
    
    49,898
    
    
    
    52,426Commercial
    
    
    11,733
    
    
    
    8,651
    
    
    
    17,843Land
    
    
    19,775
    
    
    
    26,930
    
    
    
    3,909Total loans originated.
    
    
    497,131
    
    
    
    459,601
    
    
    
    386,662Other loans  net activity
    
    
    16
    
    
    
    (29
    )
    
    
    Loans purchased
    
    
    
    
    
    
    1,398
    
    
    
    Principal repayments
    
    
    (329,842
    )
    
    
    (303,766
    )
    
    
    (335,766
    )Net loan activity
    
    
    167,305
    
    
    
    157,211
    
    
    
    50,896Total loans at end of period
    
    $
    1,299,812
    
    
    $
    1,132,507
    
    
    $
    975,296
 
 (1) Residential mortgage loans include home equity loans and home equity lines of
credit. Origination, Purchasing and Servicing of Loans.
 - - -
 -15-




---



##### Table of Contents



Loan Approval Procedures and Authority .
  
    
    Any secured mortgage loan up to $999,999 can be approved and closed by
any loan officer, commercial real estate loan officer, the Director of
Lending-Retail, or the Head of Lending.
    
    Any secured mortgage loan within $1,000,000-$1,999,999 must be approved
by a commercial real estate loan officer, the Director of Lending-Retail, or the
Head of Lending prior to closing.
    
    Any secured mortgage loan within $2,000,000-$2,999,999 must be approved
by the Head of Lending prior to closing.
    
    Any secured mortgage loan for $3,000,000 or greater must be approved by
the Loan Committee and the Board of Directors prior to closing.
  Non-performing and Problem Assets
   -16-




---



##### Table of Contents



Non-Performing Assets.
  At June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in Thousands)Non-accrual loans:Residential(1)Single family
    
    $
    3,842
    
    
    $
    3,425
    
    
    $
    4,764
    
    
    $
    4,970
    
    
    $
    4,572Two- to four-family
    
    
    1,390
    
    
    
    603
    
    
    
    1,387
    
    
    
    709
    
    
    
    2,163Over four-family
    
    
    5,877
    
    
    
    4,776
    
    
    
    5,268
    
    
    
    6,137
    
    
    
    1,230Construction
    
    
    830
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    696Commercial
    
    
    1,137
    
    
    
    1,139
    
    
    
    2,528
    
    
    
    141
    
    
    
    937Land
    
    
    
    
    
    
    2,072
    
    
    
    1,421
    
    
    
    983
    
    
    
    Total non-performing loans
    
    
    13,076
    
    
    
    12,015
    
    
    
    15,588
    
    
    
    12,940
    
    
    
    9,598Real estate owned
    
    
    475
    
    
    
    770
    
    
    
    
    
    
    
    998
    
    
    
    2,927Total non-performing assets
    
    $
    13,551
    
    
    $
    12,785
    
    
    $
    15,588
    
    
    $
    13,938
    
    
    $
    12,525Total non-performing loans to total loans
    
    
    1.07
    %
    
    
    1.13
    %
    
    
    1.65
    %
    
    
    1.44
    %
    
    
    1.08
    %Total non-performing loans to total assets
    
    
    0.94
    %
    
    
    0.97
    %
    
    
    1.41
    %
    
    
    1.29
    %
    
    
    0.98
    %Total non-performing assets and troubled
debt restructurings to total assets
    
    
    0.98
    %
    
    
    1.03
    %
    
    
    1.41
    %
    
    
    1.39
    %
    
    
    1.28
    %
 
 (1) Residential mortgage loans include home equity loans and home equity lines of
credit.  Classified Assets.
 -17-




---



##### Table of Contents



Allowance for Loan Losses
   -18-




---



##### Table of Contents



-19-




---



##### Table of Contents



At or For the Years Ended June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in Thousands)Balance at beginning of year
    
    $
    3,378
    
    
    $
    2,970
    
    
    $
    2,479
    
    
    $
    1,973
    
    
    $
    1,655Provision for loan losses
    
    
    1,238
    
    
    
    860
    
    
    
    520
    
    
    
    1,336
    
    
    
    879Charge-offs:Residential(1)Single family
    
    
    1
    
    
    
    320
    
    
    
    26
    
    
    
    307
    
    
    
    24Two- to four-family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131
    
    
    
    104Over four-family
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    408
    
    
    
    523Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    25Land
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    56Other loans
    
    
    9
    
    
    
    9
    
    
    
    3
    
    
    
    16
    
    
    
    Total charge-offs
    
    
    12
    
    
    
    454
    
    
    
    29
    
    
    
    880
    
    
    
    732Recoveries:Residential1)Single family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    47Two- to four-family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    4Over four-family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    96Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Land
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Other loans
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Total recoveries
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    50
    
    
    
    171Net charge-offs
    
    
    10
    
    
    
    452
    
    
    
    29
    
    
    
    830
    
    
    
    561Allowance at end of year
    
    $
    4,606
    
    
    $
    3,378
    
    
    $
    2,970
    
    
    $
    2,479
    
    
    $
    1,973Ratios:Allowance for loan losses to non-performing
loans at end of year
    
    
    35.22
    %
    
    
    28.11
    %
    
    
    19.05
    %
    
    
    19.16
    %
    
    
    20.56
    %Allowance for loan losses to total loans
outstanding at end of year
    
    
    0.38
    %
    
    
    0.32
    %
    
    
    0.32
    %
    
    
    0.28
    %
    
    
    0.22
    %Net charge-offs to average loans outstanding
    
    
    0.00
    %
    
    
    0.05
    %
    
    
    0.00
    %
    
    
    0.09
    %
    
    
    0.07
    %
 
 (1) Real estate loans include home equity loans, home equity lines of credit, commercial
real estate and construction loans. -20-




---



##### Table of Contents



Allocation of Allowance for Loan Losses.
 At June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001% of Loans
    
    
    
    
    
    
    % of Loans
    
    
    
    
    
    
    % of Loans
    
    
    
    
    
    
    % of Loans
    
    
    
    
    
    
    % of LoansAllowance
    
    
    in Category
    
    
    Allowance
    
    
    in Category
    
    
    Allowance
    
    
    in Category
    
    
    Allowance
    
    
    in Category
    
    
    Allowance
    
    
    in Categoryfor Loan
    
    
    to Total
    
    
    for Loan
    
    
    to Total
    
    
    for Loan
    
    
    to Total
    
    
    for Loan
    
    
    to Total
    
    
    for Loan
    
    
    to TotalLosses
    
    
    Loans
    
    
    Losses
    
    
    Loans
    
    
    Losses
    
    
    Loans
    
    
    Losses
    
    
    Loans
    
    
    Losses
    
    
    Loans(Dollars in Thousands)Real Estate:Residential(1)Single family
    
    $
    1,211
    
    
    
    33.11
    %
    
    $
    766
    
    
    
    34.60
    %
    
    $
    517
    
    
    
    36.63
    %
    
    $
    163
    
    
    
    40.21
    %
    
    $
    
    
    
    
    42.70
    %Two- to four-family
    
    
    392
    
    
    
    19.33
    
    
    
    352
    
    
    
    19.85
    
    
    
    327
    
    
    
    20.88
    
    
    
    302
    
    
    
    20.04
    
    
    
    
    
    
    
    18.42Over four-family
    
    
    1,646
    
    
    
    31.36
    
    
    
    1,831
    
    
    
    30.09
    
    
    
    1,852
    
    
    
    29.49
    
    
    
    1,582
    
    
    
    28.38
    
    
    
    1,095
    
    
    
    28.32Construction
    
    
    712
    
    
    
    11.50
    
    
    
    100
    
    
    
    9.76
    
    
    
    
    
    
    
    7.74
    
    
    
    
    
    
    
    7.24
    
    
    
    
    
    
    
    6.29Commercial
    
    
    450
    
    
    
    2.81
    
    
    
    309
    
    
    
    4.07
    
    
    
    259
    
    
    
    4.50
    
    
    
    154
    
    
    
    3.09
    
    
    
    418
    
    
    
    3.29Land
    
    
    10
    
    
    
    1.87
    
    
    
    
    
    
    
    1.62
    
    
    
    
    
    
    
    0.74
    
    
    
    
    
    
    
    1.02
    
    
    
    
    
    
    
    0.96Other
    
    
    25
    
    
    
    .02
    
    
    
    20
    
    
    
    0.01
    
    
    
    15
    
    
    
    0.02
    
    
    
    10
    
    
    
    0.02
    
    
    
    5
    
    
    
    0.02Unallocated
    
    
    160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268
    
    
    
    
    
    
    
    455
    
    
    
    Total allowance for loan
losses
    
    $
    4,606
    
    
    
    100.00
    %
    
    $
    3,378
    
    
    
    100.00
    %
    
    $
    2,970
    
    
    
    100.00
    %
    
    $
    2,479
    
    
    
    100.00
    %
    
    $
    1,973
    
    
    
    100.00
    %
 
 (1)
Residential mortgage loans include home equity loans and home equity lines of
credit. -21-




---



##### Table of Contents



-22-




---



##### Table of Contents



Investment Activities
     U.S. Government and Agency Obligations.
 -23-




---



##### Table of Contents



Mortgage-Backed Securities.
   Municipal Obligations.
 -24-




---



##### Table of Contents



Investment Securities Portfolio.
  At June 30,2005
    
    
    2004
    
    
    2003Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)Available for Sale:Government agency bonds
    
    $
    26,579
    
    
    $
    26,386
    
    
    $
    17,683
    
    
    $
    17,462
    
    
    $
    5,007
    
    
    $
    5,084Mortgage-related securities
    
    
    54,438
    
    
    
    53,445
    
    
    
    80,918
    
    
    
    77,819
    
    
    
    75,759
    
    
    
    75,757Municipal Obligations
    
    
    3,923
    
    
    
    4,160
    
    
    
    4,173
    
    
    
    4,268
    
    
    
    9,303
    
    
    
    9,611Total available for sale
    
    $
    84,940
    
    
    $
    83,991
    
    
    $
    102,774
    
    
    $
    99,549
    
    
    $
    90,070
    
    
    $
    90,452
 Portfolio Maturities and Yields.
 More than One Year
    
    
    More than Five YearsOne Year or Less
    
    
    through Five Years
    
    
    through Ten Years
    
    
    More than Ten Years
    
    
    Total SecuritiesWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedCarrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    AverageValue
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield(Dollars in Thousands)Securities available for sale:Government agency bonds
    
    $
    
    
    
    
    
    %
    
    $
    26,386
    
    
    
    3.65
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    26,386
    
    
    
    3.65
    %Mortgage-related securities
    
    
    9,739
    
    
    
    4.00
    
    
    
    42,279
    
    
    
    3.79
    
    
    
    1,427
    
    
    
    5.04
    
    
    
    
    
    
    
    
    
    
    
    53,445
    
    
    
    3.86Other debt securities
    
    
    999
    
    
    
    2.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,161
    
    
    
    5.00
    
    
    
    4,160
    
    
    
    4.24Total securities available for
sale
    
    $
    10,738
    
    
    
    
    
    
    $
    68,665
    
    
    
    
    
    
    $
    1,427
    
    
    
    
    
    
    $
    3,161
    
    
    
    
    
    
    $
    83,991
 -25-




---



##### Table of Contents



Sources of Funds
 General.
 Deposits.
    -26-




---



##### Table of Contents



-27-




---



##### Table of Contents



At June 30,2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageBalance
    
    
    Percent
    
    
    Rate
    
    
    Balance
    
    
    Percent
    
    
    Rate
    
    
    Balance
    
    
    Percent
    
    
    Rate(Dollars in Thousands)Deposit type:Demand deposits
    
    $
    18,816
    
    
    
    1.67
    %
    
    
    0.00
    %
    
    $
    15,923
    
    
    
    1.54
    %
    
    
    0.00
    %
    
    $
    9,857
    
    
    
    1.08
    %
    
    
    0.00
    %NOW accounts
    
    
    82,045
    
    
    
    7.27
    
    
    
    1.74
    
    
    
    83,260
    
    
    
    8.04
    
    
    
    0.98
    
    
    
    30,053
    
    
    
    3.30
    
    
    
    0.99Regular savings
    
    
    23,614
    
    
    
    2.09
    
    
    
    0.50
    
    
    
    24,877
    
    
    
    2.40
    
    
    
    0.50
    
    
    
    21,706
    
    
    
    2.39
    
    
    
    0.50Money market and
savings deposits
    
    
    3,503
    
    
    
    0.31
    
    
    
    1.06
    
    
    
    3,597
    
    
    
    0.35
    
    
    
    1.03
    
    
    
    40,172
    
    
    
    4.42
    
    
    
    1.02Total transaction
accounts
    
    
    127,978
    
    
    
    11.34
    
    
    
    1.24
    
    
    
    127,657
    
    
    
    12.33
    
    
    
    0.77
    
    
    
    101,788
    
    
    
    11.19
    
    
    
    0.81Certificates of deposit
    
    
    1,000,813
    
    
    
    88.66
    
    
    
    3.52
    
    
    
    907,931
    
    
    
    87.67
    
    
    
    3.28
    
    
    
    807,703
    
    
    
    88.81
    
    
    
    3.70Total deposits
    
    $
    1,128,791
    
    
    
    100.00
    %
    
    
    3.26
    %
    
    $
    1,035,588
    
    
    
    100.00
    %
    
    
    2.97
    %
    
    $
    909,491
    
    
    
    100.00
    %
    
    
    3.38
    %
  AtJune 30, 2005(In Thousands)Three months or less
    
    $
    34,952Over three months through six months
    
    
    46,470Over six months through 12 months
    
    
    65,455Over 12 months
    
    
    130,823Total
    
    $
    277,700
 -28-




---



##### Table of Contents



Years Ended June 30,2005
    
    
    2004
    
    
    2003(In Thousands)Beginning balance
    
    $
    1,035,588
    
    
    $
    909,491
    
    
    $
    841,873Net increase in deposits
before interest credited
    
    
    62,085
    
    
    
    101,529
    
    
    
    39,753Interest credited
    
    
    31,118
    
    
    
    24,568
    
    
    
    27,865Net increase in deposits
    
    
    93,203
    
    
    
    126,097
    
    
    
    67,618Ending balance
    
    $
    1,128,791
    
    
    $
    1,035,588
    
    
    $
    909,491
 Advances From Federal Home Loan Bank.
 At or For the Years Ended June 30,2005
    
    
    2004
    
    
    2003(Dollars in Thousands)FHLB Advances:Maximum amount of advances outstanding at any
month end during the year
    
    $
    106,162
    
    
    $
    96,000
    
    
    $
    60,000Average advances outstanding during the year:Balance outstanding at end of year
    
    
    93,162
    
    
    
    60,000
    
    
    
    60,000Weighted average interest rate during the year
    
    
    3.59
    %
    
    
    3.27
    %
    
    
    3.84
    %Weighted average interest rate at the end of
year
    
    
    3.07
    %
    
    
    3.32
    %
    
    
    3.53
    %
 Average Balance Sheet and Rate Yield Analysis
  -29-




---



##### Table of Contents



Cash Dividends
  Subsidiary Activities
  Wauwatosa Investments, Inc.
  Main Street Real Estate Holdings, LLC.
 Personnel
  -30-




---



##### Table of Contents



Supervision and Regulation
  Regulation of Wauwatosa Savings Bank
  Intrastate and Interstate Merger and Branching Activities
 Wisconsin Law and Regulation.
 Federal Law and Regulation de novo
 Loans and Investments
 Wisconsin Law and Regulations.
 -31-




---



##### Table of Contents



Federal Law and Regulation
  -32-




---



##### Table of Contents



Lending Standards
 Wisconsin Law and Regulation.
 Federal Law and Regulation
  
    
    for loans secured by raw land, the supervisory loan-to-value limit is 65% of the
value of the collateral;
    
    for land development loans (i.e., loans for the purpose of improving unimproved
property prior to the erection of structures), the supervisory limit is 75%;
    
    for loans for the construction of commercial, over four-family or other
non-residential property, the supervisory limit is 80%;
    
    for loans for the construction of one- to four-family properties, the
supervisory limit is 85%; and
    
    for loans secured by other improved property (e.g., farmland, completed
commercial property and other income-producing property, including non-owner
occupied, one- to four-family property), the limit is 85%.
  -33-




---



##### Table of Contents



Deposits
 Wisconsin Law and Regulation.
 Federal Law and Regulation
 Deposit Insurance
 Wisconsin Law and Regulation.
 Federal Law and Regulation
  -34-




---



##### Table of Contents



Capitalization
 Wisconsin Law and Regulation
 Federal Law and Regulation
  -35-




---



##### Table of Contents



Safety and Soundness Standards
  Prompt Corrective Action
  -36-




---



##### Table of Contents



Tier 1
    
    Tier 1Capital to
    
    CapitalTotal Capital to
    
    Risk Weighted
    
    to TotalCategory
    
    Risk Weighted Assets
    
    Assets
    
    AssetsWell capitalized
    
    
    310
    %
    
    
    36
    %
    
    
    35
    %Adequately capitalized
    
    
    3 8
    %
    
    
    34
    %
    
    
    34
    %*Under capitalized
    
    
    < 8
    %
    
    
    <4
    %
    
    
    <4
    %*Significantly
undercapitalized
    
    
    < 6
    %
    
    
    <3
    %
    
    
    <3
    %Critically undercapitalized
    
    Tangible assets tocapital of < 2%
 
 *
    
    3% if the bank receives the highest rating under the uniform system  
    
    an amount equal to five percent of the banks total assets at the time it became
undercapitalized; and
    
    the amount that is necessary (or would have been necessary) to bring the bank
into compliance with all capital standards applicable with respect to such bank as
of the time it fails to comply with the plan.
   -37-




---



##### Table of Contents



Dividends
  Liquidity and Reserves
 Wisconsin Law and Regulation.
 Federal Law and Regulation
 -38-




---



##### Table of Contents



Transactions with Affiliates and Insiders
 Wisconsin Law and Regulation
 Federal Law and Regulation.
   -39-




---



##### Table of Contents



Transactions between Bank Customers and Affiliates
  Examinations and Assessments
  Customer Privacy
  -40-




---



##### Table of Contents



Community Reinvestment Act
   
    
    a lending test, to evaluate the institutions record of making loans in its
service areas;
    
    an investment test, to evaluate the institutions record of investing in
community development projects, affordable housing, and programs benefiting low or
moderate income individuals and businesses; and
    
    a service test, to evaluate the institutions delivery of services through its
branches, ATMs and other offices.
  Federal Home Loan Bank System
   -41-




---



##### Table of Contents



USA PATRIOT Act
   
    
    All financial institutions must establish anti-money laundering programs that
include, at minimum; (a) internal policies, procedures, and controls; (b) specific
designation of an anti-money laundering compliance officer; (c) ongoing employee
training programs, and (d) an independent audit function to test the anti-money
laundering program.
    
    The Secretary of the Treasury, in conjunction with other bank regulators, may
issue regulations that provide for minimum standards with respect to customer
identification at the time new accounts are opened.
    
    Financial institutions that establish, maintain, or manage private banking
accounts or correspondent accounts in the United States for non-United States
persons or their representatives (including foreign individuals visiting the United
States) must establish appropriate, specific, and, where necessary, enhanced due
diligence policies, procedures, and controls designed to detect and report money
laundering.
    
    Financial institutions are prohibited from establishing, maintaining,
administering or managing correspondent accounts for foreign shell banks (foreign
banks that do not have a physical presence in any country), and will be subject to
certain recordkeeping obligations with respect to correspondent accounts of foreign
banks.
 -42-




---



##### Table of Contents




    
    Bank regulators are directed to consider a holding companys effectiveness in
combating money laundering when ruling on Federal Reserve Act and Bank merger act
applications.
 Regulation of Wauwatosa Holdings
 Holding Company Regulation
 Wisconsin Law and Regulation.
 Federal Law and Regulation
    -43-




---



##### Table of Contents



Federal Securities Laws Regulation
 Securities Act
 Securities Exchange Act
 Sarbanes-Oxley Act of 2002.
   -44-




---



##### Table of Contents




    
    audit committees and auditor independence;
    
    certification of financial statements by the chief executive officer and the
chief financial officer;
    
    the forfeiture of bonuses or other incentive-based compensation and profits from
the sale of an issuers securities if the issuers financial statements later
require restatement;
    
    a prohibition on insider trading during retirement plan black-out periods;
    
    further disclosure of off-balance sheet transactions;
    
    a prohibition on many personal loans to directors and officers (with exceptions
for financial institutions);
    
    expedited filing requirements for reporting of insiders transactions; and
    
    disclosure of a code of ethics and disclosure of a change or waiver of such
code.
  Regulation
of Lamplighter Financial, MHC
 Bank Holding Company Regulation
 Wisconsin Law and Regulation.
 Federal Law and Regulation.
 -45-




---



##### Table of Contents



Mutual Holding Company Regulation
  Membership.
 Permitted Activities
 Examinations and Assessments.
 Federal and State Taxation
 Federal Taxation
 General.
 Method of Accounting.
 Bad Debt Reserves.
 -46-




---



##### Table of Contents



Taxable Distributions and Recapture.
 Alternative Minimum Tax.
 Net Operating Loss Carryovers.
 Corporate Dividends-Received Deduction.
 State Taxation
 Wisconsin State Taxation.
 -47-




---



##### Table of Contents



-48-




---



##### Table of Contents



Item 2. Properties
  Year
    
    
    Date of
    
    
    June 30, 2005Owned Or
    
    
    Acquired
    
    
    Lease
    
    
    Net BookLocation
    
    Leased
    
    
    Or Leased
    
    
    Expiration
    
    
    Value(In Thousands)Main Office:7500 West State Street
Wauwatosa, Wisconsin
    
    Own
    
    
    1971
    
    
    
    N/A
    
    
    $
    1,559Branches:6560 South 27thStreet
Oak Creek, Wisconsin
    
    Own
    
    
    1986
    
    
    
    N/A
    
    
    
    1,2181710 Paramount Drive(1)
Waukesha, Wisconsin
    
    Own
    
    
    1988
    
    
    
    N/A
    
    
    
    27321505 East Moreland Blvd (1)
    
    CapitalWaukesha, Wisconsin
    
    Lease
    
    
    2005
    
    
    
    2009
    
    
    
    3,4161233 Corporate Center Drive
Oconomowoc, Wisconsin
    
    Own
    
    
    2003
    
    
    
    N/A
    
    
    
    3,0501230 George Towne Drive
Pewaukee, Wisconsin
    
    Own
    
    
    2004
    
    
    
    N/A
    
    
    
    3,9481405 Capitol Drive(2)
Pewaukee, Wisconsin
    
    Lease
    
    
    1999
    
    
    
    2009
    
    
    
    34Corporate Center:11200 West Plank Ct.
    
    Prior Lease
    
    
    2002Wauwatosa, Wisconsin
    
    Own
    
    
    2004
    
    
    
    N/A
    
    
    
    5,204
 
 (1) The Moreland Boulevard office was built to replace the Paramount Drive office and
opened on September 12, 2005. The Paramount Drive office closed on September 10, 2005.(2) Supermarket banking facility. -49-




---



##### Table of Contents



Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Executive Officers of the Registrant
  ExecutiveOffices and Positions with Wauwatosa Holdings and
    
    OfficerName and Age
    
    Wauwatosa Savings Bank*
    
    Since (1)Donald J. Stephens, 60
    
    Chairman, President and Chief
Executive Officer of Wauwatosa
Holdings and of Wauwatosa Savings
Bank
    
    
    1984Richard C. Larson, 48
    
    Chief Financial Officer and Vice
President of Wauwatosa Holdings and
of Wauwatosa Savings Bank
    
    
    1990Barbara J. Coutley, 54
    
    Senior Vice President and Secretary
of Wauwatosa Holdings and of
Wauwatosa Savings Bank
    
    
    1984Kenneth A. Snyder, 39
    
    Vice President and Head of the
Lending Division of Wauwatosa
Savings Bank
    
    
    1998
 
 *
    
    Excluding directorships and excluding positions with Bank subsidiaries. Those positions do
not constitute a substantial part of the officers duties.(1)
    
    Indicates date when individual first held an executive officer position with the Bank.
  These individuals will become executive officers of Wauwatosa Holdings upon its
organization as noted. -50-




---



##### Table of Contents



Part II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters and
Issuer Purchase of Equity Securities
     -51-




---



##### Table of Contents



Item 6 . Selected Financial Data
 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
  At June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Thousands)Selected Financial Condition Data:Total assets
    
    $
    1,386,132
    
    
    $
    1,240,084
    
    
    $
    1,104,893
    
    
    $
    1,002,435
    
    
    $
    978,616Available for sale securities
    
    
    83,991
    
    
    
    99,549
    
    
    
    90,453
    
    
    
    41,733
    
    
    
    39,761Federal Home Loan Bank stock
    
    
    14,097
    
    
    
    13,322
    
    
    
    8,658
    
    
    
    8,088
    
    
    
    Loans receivable, net
    
    
    1,213,561
    
    
    
    1,063,594
    
    
    
    940,053
    
    
    
    895,398
    
    
    
    884,573Cash and cash equivalents
    
    
    20,467
    
    
    
    19,392
    
    
    
    28,767
    
    
    
    38,945
    
    
    
    36,065Deposits
    
    
    1,128,791
    
    
    
    1,035,588
    
    
    
    909,491
    
    
    
    841,873
    
    
    
    863,207Advance payments by borrowers for taxes
    
    
    15,821
    
    
    
    14,446
    
    
    
    13,649
    
    
    
    13,837
    
    
    
    13,966Advances from the Federal HomeLoan Bank
    
    
    93,162
    
    
    
    60,000
    
    
    
    60,000
    
    
    
    35,000
    
    
    
    Total equity
    
    
    133,416
    
    
    
    122,799
    
    
    
    114,596
    
    
    
    103,507
    
    
    
    92,703Allowance for loan losses
    
    
    4,606
    
    
    
    3,378
    
    
    
    2,970
    
    
    
    2,479
    
    
    
    1,973Non-performing loans
    
    
    13,076
    
    
    
    12,015
    
    
    
    15,588
    
    
    
    12,940
    
    
    
    9,598
 -52-




---



##### Table of Contents



Years Ended June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Thousands)Selected Operating Data:Interest income
    
    $
    74,207
    
    
    $
    66,088
    
    
    $
    66,451
    
    
    $
    70,125
    
    
    $
    68,026Interest expense
    
    
    36,068
    
    
    
    32,433
    
    
    
    34,459
    
    
    
    41,412
    
    
    
    49,127Net interest income
    
    
    38,139
    
    
    
    33,656
    
    
    
    31,933
    
    
    
    28,712
    
    
    
    18,899Provision for loan losses
    
    
    1,238
    
    
    
    860
    
    
    
    520
    
    
    
    1,336
    
    
    
    879Net interest income after
provision for loan losses
    
    
    36,901
    
    
    
    32,796
    
    
    
    31,472
    
    
    
    27,377
    
    
    
    19,455Noninterest income
    
    
    3,311
    
    
    
    3,035
    
    
    
    2,993
    
    
    
    2,141
    
    
    
    1,687Noninterest expense
    
    
    23,576
    
    
    
    20,384
    
    
    
    17,618
    
    
    
    13,863
    
    
    
    11,637Income before income taxes
    
    
    16,636
    
    
    
    15,447
    
    
    
    16,847
    
    
    
    15,655
    
    
    
    8,070Provision for income taxes
    
    
    7,520
    
    
    
    4,863
    
    
    
    5,742
    
    
    
    4,816
    
    
    
    2,740Net income
    
    $
    9,116
    
    
    $
    10,584
    
    
    $
    11,105
    
    
    $
    10,839
    
    
    $
    5,326
 -53-




---



##### Table of Contents



At or For the Years Ended June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Selected Financial Ratios and Other Data:Performance Ratios:Return on average assets
    
    
    0.70
    %
    
    
    0.90
    %
    
    
    1.08
    %
    
    
    1.10
    %
    
    
    0.57
    %Return on average equity
    
    
    7.12
    
    
    
    8.88
    
    
    
    10.19
    
    
    
    11.21
    
    
    
    6.15Interest rate spread (1)
    
    
    2.74
    
    
    
    2.70
    
    
    
    2.84
    
    
    
    2.50
    
    
    
    1.49Net interest margin (2)
    
    
    3.04
    
    
    
    2.98
    
    
    
    3.19
    
    
    
    2.97
    
    
    
    2.07Noninterest expense to average assets
    
    
    1.81
    
    
    
    1.74
    
    
    
    1.71
    
    
    
    1.40
    
    
    
    1.25Efficiency ratio (3)
    
    
    56.88
    
    
    
    55.55
    
    
    
    50.36
    
    
    
    44.93
    
    
    
    56.53Average interest-earning assets to
average interest-bearing liabilities
    
    
    110.29
    
    
    
    109.71
    
    
    
    110.09
    
    
    
    110.92
    
    
    
    110.88Capital Ratios:Equity to total assets at end of period
    
    
    9.63
    %
    
    
    9.90
    %
    
    
    10.37
    %
    
    
    10.33
    %
    
    
    9.47
    %Average equity to average assets
    
    
    9.83
    
    
    
    10.15
    
    
    
    10.56
    
    
    
    9.79
    
    
    
    9.29Total capital to risk-weighted assets
    
    
    14.05
    
    
    
    15.02
    
    
    
    15.61
    
    
    
    15.11
    
    
    
    13.87Tier I capital to risk-weighted assets
    
    
    13.58
    
    
    
    14.62
    
    
    
    15.22
    
    
    
    15.07
    
    
    
    13.83Tier I capital to average assets
    
    
    9.84
    
    
    
    10.18
    
    
    
    10.50
    
    
    
    10.25
    
    
    
    9.60Asset Quality Ratios:Allowance for loan losses as a percent
of total loans
    
    
    0.38
    %
    
    
    0.32
    %
    
    
    0.32
    %
    
    
    0.28
    %
    
    
    0.22
    %Allowance for loan losses as a percent
of nonperforming loans
    
    
    35.22
    
    
    
    28.11
    
    
    
    19.05
    
    
    
    19.16
    
    
    
    20.56Net charge-offs to average outstanding
loans during the period
    
    
    0.00
    
    
    
    0.05
    
    
    
    0.00
    
    
    
    0.09
    
    
    
    0.07Nonperforming loans as a percent of
total loans
    
    
    1.07
    
    
    
    1.13
    
    
    
    1.65
    
    
    
    1.44
    
    
    
    1.08Nonperforming assets as a percent of
total assets
    
    
    0.98
    
    
    
    1.03
    
    
    
    1.41
    
    
    
    1.39
    
    
    
    1.28Other Data:Number of full service offices
    
    
    5
    
    
    
    5
    
    
    
    4
    
    
    
    3
    
    
    
    3Number of limited service offices
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1
 
 (1)
    
    Represents the difference between the weighted average yield on average interest-earning
assets and the weighted average cost of interest-bearing liabilities.(2)
    
    Represents net interest income as a percent of average interest-earning assets.(3)
    
    Represents noninterest expense divided by the sum of net interest income and noninterest
income. -54-




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Overview
     -55-




---



##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses.
   -56-




---



##### Table of Contents



Income Taxes.
   Comparison of Financial Condition at June 30, 2005 and June 30, 2004
  -57-




---



##### Table of Contents



Average Balance Sheets, Interest and Yields/Costs
  -58-




---



##### Table of Contents



Year Ended June 30,2005
    
    
    2004
    
    
    2003Interest
    
    
    
    
    
    
    
    
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    and
    
    
    
    
    
    
    Average
    
    
    and
    
    
    
    
    
    
    Average
    
    
    andBalance
    
    
    Dividends
    
    
    Yield/Cost
    
    
    Balance
    
    
    Dividends
    
    
    Yield/Cost
    
    
    Balance
    
    
    Dividends
    
    
    Yield/Cost(Dollars in Thousands)Interest-earning assets:Loans receivable, net
    
    $
    1,140,444
    
    
    $
    69,775
    
    
    
    6.12
    %
    
    $
    996,511
    
    
    $
    61,530
    (1)
    
    
    6.17
    %
    
    $
    911,743
    
    
    $
    63,815
    (1)
    
    
    7.00
    %Available for sale securities(5) (6)
    
    
    78,870
    
    
    
    3,442
    
    
    
    4.36
    
    
    
    97,092
    
    
    
    3,700
    
    
    
    3.82
    
    
    
    57,322
    
    
    
    1,839
    
    
    
    3.21Other earning assets
    
    
    37,302
    
    
    
    989
    
    
    
    2.65
    
    
    
    35,287
    
    
    
    858
    
    
    
    2.43
    
    
    
    34,847
    
    
    
    798
    
    
    
    2.29Total interest-earning assets
    
    
    1,256,616
    
    
    
    74,207
    
    
    
    5.91
    
    
    
    1,128,890
    
    
    
    66,088
    
    
    
    5.85
    
    
    
    1,003,912
    
    
    
    66,452
    
    
    
    6.62Noninterest-earning assets
    
    
    45,149
    
    
    
    
    
    
    
    
    
    
    
    44,973
    
    
    
    
    
    
    
    
    
    
    
    28,455Total assets
    
    $
    1,301,765
    
    
    
    
    
    
    
    
    
    
    $
    1,173,863
    
    
    
    
    
    
    
    
    
    
    
    1,032,367Interest-bearing liabilities:Demand and money market accounts
    
    
    76,758
    
    
    
    899
    
    
    
    1.17
    
    
    $
    88,324
    
    
    
    884
    
    
    
    1.00
    
    
    $
    65,636
    
    
    
    696
    
    
    
    1.06Savings accounts
    
    
    27,944
    
    
    
    122
    
    
    
    0.44
    
    
    
    22,675
    
    
    
    113
    
    
    
    0.50
    
    
    
    20,401
    
    
    
    150
    
    
    
    0.74Certificates of deposit
    
    
    954,322
    
    
    
    32,068
    
    
    
    3.36
    
    
    
    847,126
    
    
    
    29,084
    
    
    
    3.43
    
    
    
    772,862
    
    
    
    31,496
    
    
    
    4.08Total interest-bearing deposits
    
    
    1,059,024
    
    
    
    33,089
    
    
    
    3.12
    
    
    
    958,125
    
    
    
    30,081
    
    
    
    3.14
    
    
    
    858,899
    
    
    
    32,342
    
    
    
    3.77Mortgagors escrow accounts
    
    
    5,579
    
    
    
    196
    
    
    
    3.51
    
    
    
    5,624
    
    
    
    242
    
    
    
    4.29
    
    
    
    6,140
    
    
    
    317
    
    
    
    5.16Advances from the Federal Home Loan Bank and
Federal funds purchased
    
    
    74,785
    
    
    
    2,783
    
    
    
    3.72
    
    
    
    65,237
    
    
    
    2,109
    
    
    
    3.23
    
    
    
    46,866
    
    
    
    1,800
    
    
    
    3.84Total interest-bearing liabilities
    
    
    1,139,388
    
    
    
    36,068
    
    
    
    3.17
    
    
    
    1,028,986
    
    
    
    32,432
    
    
    
    3.15
    
    
    
    911,905
    
    
    
    34,459
    
    
    
    3.78Noninterest-bearing liabilities
    
    
    34,351
    
    
    
    
    
    
    
    
    
    
    
    25,680
    
    
    
    
    
    
    
    
    
    
    
    11,445Total liabilities
    
    
    1,173,739
    
    
    
    
    
    
    
    
    
    
    
    1,054,666
    
    
    
    
    
    
    
    
    
    
    
    923,350Equity
    
    
    128,026
    
    
    
    
    
    
    
    
    
    
    
    119,197
    
    
    
    
    
    
    
    
    
    
    
    109,017Total liabilities and equity
    
    $
    1,301,765
    
    
    
    
    
    
    
    
    
    
    $
    1,173,863
    
    
    
    
    
    
    
    
    
    
    $
    1,032,367Net interest income
    
    
    
    
    
    $
    38,139
    
    
    
    
    
    
    
    
    
    
    $
    33,656
    
    
    
    
    
    
    
    
    
    
    $
    31,993Net interest rate spread (2)
    
    
    
    
    
    
    
    
    
    
    2.74
    %
    
    
    
    
    
    
    
    
    
    
    2.70
    %
    
    
    
    
    
    
    
    
    
    
    2.84
    %Net interest-earning assets (3)
    
    $
    117,288
    
    
    
    
    
    
    
    
    
    
    $
    99,904
    
    
    
    
    
    
    
    
    
    
    $
    92,007Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.04
    %
    
    
    
    
    
    
    
    
    
    
    2.98
    %
    
    
    
    
    
    
    
    
    
    
    3.19
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    110.29
    %
    
    
    
    
    
    
    
    
    
    
    109.71
    %
    
    
    
    
    
    
    
    
    
    
    110.09
    %
 
 (1)
    
    Includes net deferred loan fee amortization income of $932,000, $1,008,000 and $930,000 for
the years ended June 30, 2005, 2004 and 2003, respectively.(2)
    
    Net interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing liabilities.(3)
    
    Net interest-earning assets represent total interest-earning assets less total
interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income divided by average total interest-earning
assets.(5)
    
    Average balance of available for sale securities is based on amortized historical cost.(6)
    
    Interest income from tax exempt securities is not significant to total interest income,
therefore, interest and yield on interest earnings assets is not stated on a tax equivalent
basis. -59-




---



##### Table of Contents



Rate/Volume Analysis
  Years Ended June 30,
    
    
    Years Ended June 30,2005 vs. 2004
    
    
    2004 vs. 2003Increase (Decrease)
    
    
    
    
    
    
    Increase (Decrease)Due to
    
    
    
    
    
    
    Due toVolume
    
    
    Rate
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Net(In Thousands)Interest and dividend income:Loans receivable(1) (2)
    
    $
    8,811
    
    
    $
    (567
    )
    
    $
    8,244
    
    
    $
    5,625
    
    
    $
    (7,909
    )
    
    $
    (2,284
    )Securities interest and income
from other earning
assets(3)
    
    
    (590
    )
    
    
    465
    
    
    
    (126
    )
    
    
    1,596
    
    
    
    325
    
    
    
    1,921Total interest-earning assets
    
    
    8,221
    
    
    
    (102
    )
    
    
    8,118
    
    
    
    7,221
    
    
    
    (7,584
    )
    
    
    (363
    )Interest expense:Demand and Money Market accounts
    
    
    (124
    )
    
    
    139
    
    
    
    15
    
    
    
    229
    
    
    
    (40
    )
    
    
    189Savings accounts
    
    
    24
    
    
    
    (15
    )
    
    
    9
    
    
    
    15
    
    
    
    (52
    )
    
    
    (37
    )Certificates of deposit
    
    
    3,613
    
    
    
    (630
    )
    
    
    2,982
    
    
    
    2,846
    
    
    
    (5,259
    )
    
    
    (2,411
    )Total interest-bearing deposits
    
    
    3,513
    
    
    
    (506
    )
    
    
    3,006
    
    
    
    3,090
    
    
    
    (5,351
    )
    
    
    (2,259
    )FHLB Advances
    
    
    (1,128
    )
    
    
    1,802
    
    
    
    674
    
    
    
    626
    
    
    
    (317
    )
    
    
    309Other interest-bearing
liabilities
    
    
    (2
    )
    
    
    (43
    )
    
    
    (45
    )
    
    
    (25
    )
    
    
    (51
    )
    
    
    (76
    )Total interest-bearing
liabilities
    
    
    2,383
    
    
    
    1,253
    
    
    
    3,635
    
    
    
    3,691
    
    
    
    (5,719
    )
    
    
    (2,026
    )Net change in interest income
    
    $
    5,838
    
    
    $
    (1,355
    )
    
    $
    4,483
    
    
    $
    3,530
    
    
    $
    (1,865
    )
    
    $
    1,663
 
 (1)
    
    Includes net deferred loan fee amortization income of $932,000, $1,008,000 and $930,000 for
the years ended June 30, 2005, 2004 and 2003, respectively.(2)
    
    Non-accrual loans have been included in average loans
receivable balance.(3)
    
    Average balance of available for sale securities is based on amortized historical cost. Comparison of Operating Results for the Years Ended June 30, 2005 and June 30, 2004
 General. rd
 -60-




---



##### Table of Contents



Interest Income.
 Interest Expense.
 Net Interest Income.
 Provision for Loan Losses.
 Noninterest Income.
 Noninterest Expense.
 -61-




---



##### Table of Contents



Income Tax Expense.
 Comparison of Operating Results for the Years Ended June 30, 2004 and June 30, 2003
 General.
 Interest Income.
 Interest Expense.
 Net Interest Income.
 Provision for Loan Losses.
 -62-




---



##### Table of Contents



Noninterest Income.
  Noninterest Expense.
 Income Tax Expense.
 Liquidity and Capital Resources
  -63-




---



##### Table of Contents



-64-




---



##### Table of Contents



Contractual Obligations, Commitments, Contingent Liabilities, and Off-balance Sheet Arrangements
   Contractual Obligations
 More
    
    
    MoreThan
    
    
    ThanOne
    
    
    ThreeOne
    
    
    Year
    
    
    Years
    
    
    OverYear
    
    
    Through Three
    
    
    Through
    
    
    FiveTotal
    
    
    or Less
    
    
    Years
    
    
    Five Years
    
    
    Years(In Thousands)Federal Home Loan Bank advances(1)
    
    $
    93,162
    
    
    $
    35,000
    
    
    $
    53,162
    
    
    $
    5,000
    
    
    $
    Operating leases(2)
    
    
    359
    
    
    
    212
    
    
    
    110
    
    
    
    37
    
    
    
    Capital lease
    
    
    4,800
    
    
    
    300
    
    
    
    600
    
    
    
    3,900
    
    
    
    Salary continuation agreements
    
    
    4,033
    
    
    
    506
    
    
    
    982
    
    
    
    1,152
    
    
    
    1,393Total Contractual Obligations
    
    $
    102,354
    
    
    $
    36,018
    
    
    $
    54,854
    
    
    $
    10,089
    
    
    $
    1,393
 
 (1)
    
    Secured under a blanket security agreement on qualifying assets, principally,
mortgage loans. Excludes interest which will accrue on the advances.(2)
    
    Represents non-cancelable operating leases for offices. -65-




---



##### Table of Contents



Other Commitments
 More
    
    
    MoreThan
    
    
    ThanOne
    
    
    ThreeYear
    
    
    YearsThrough
    
    
    Through
    
    
    OverOne Year
    
    
    Three
    
    
    Five
    
    
    FiveTotal
    
    
    or Less
    
    
    Years
    
    
    Years
    
    
    Years(In Thousands)Real estate loan commitments(1)
    
    $
    65,566
    
    
    $
    65,566
    
    
    $
    
    
    
    $
    
    
    
    $
    Unused portion of home equity lines of credit(2)
    
    
    30,253
    
    
    
    30,253
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of construction loans(3)
    
    
    77,484
    
    
    
    77,484
    
    
    
    
    
    
    
    
    
    
    
    Standby letters of credit
    
    
    1,374
    
    
    
    810
    
    
    
    564
    
    
    
    
    
    
    
    Total Other Commitments
    
    $
    174,677
    
    
    $
    174,113
    
    
    $
    564
    
    
    $
    
    
    
    $
    
 
 General:
    
    Commitments to extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract and generally have fixed expiration dates or
other termination clauses.(1) Commitments for loans are extended to customers for up to 180 days after which they
expire.(2) Unused portions of home equity loans are available to the borrower for up to 10
years.(3) Unused portions of construction loans are available to the borrower for up to 1
year. Impact of Recent Accounting Pronouncements
    -66-




---



##### Table of Contents



Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 Impact of Inflation and Changing Prices
  Risk Factors
  
 Risks Associated With the Business of Wauwatosa Savings
 Changing Interest Rates May Hurt Our Profits.
  -67-




---



##### Table of Contents



We Have Opened New Branches and Expect to Open Additional New Branches Which Will Reduce Our
Profitability In the Near Term as They Generate New Deposit and Loan Portfolios.
 de novo
 Wisconsin Tax Developments Could Reduce Our Net Income.
   -68-




---



##### Table of Contents



If Our Allowance for Loan Losses is Not Sufficient to Cover Actual Loan Losses, Our Earnings
Could Decrease.
   If Economic Conditions Deteriorate, Our Results of Operations and Financial Condition Could Be
Adversely Affected as Borrowers Ability to Repay Loans Declines and the Value of the Collateral
Securing Our Loans Decreases.
  -69-




---



##### Table of Contents



A Large Portion of Our Loan Portfolio Is Relatively Unseasoned Over Four-Family Loans, Which May
Be Individually Riskier Than One- To Four-Family Loans.
  Strong Competition Within Our Market Area May Limit Our Growth and Profitability.
  We Operate in a Highly Regulated Environment and We May Be Adversely Affected by Changes in Laws
and Regulations.
  -70-




---



##### Table of Contents



Risks
Related to Our Stock
 The Implementation of Our Stock Benefit Plans Will Increase Our Costs, Which Will Reduce Our
Income.
    The Implementation of Our Stock-Based Benefit Plans Also May Dilute Your Ownership Interest.
  -71-




---



##### Table of Contents



Our Return on Equity Will Be Low Compared to Other Financial Institutions. This Could
Negatively Affect the Trading Price of Our Common Stock.
  Our Shareholders Will Own a Minority of Wauwatosa Holdings Common Stock and Will Not Be Able to
Exercise Voting Control Over Most Matters Put to a Vote of Shareholders.
  Our Stock Value May be Negatively Affected by Regulations Restricting Takeovers and our Mutual
Holding Company Structure.
 The Mutual Holding Company Structure May Impede Takeovers.
 -72-




---



##### Table of Contents



Federal and Wisconsin Regulations Restricting Takeovers.
 If We Declare Dividends on Our Common Stock, Lamplighter Financial, MHC Will be Prohibited From
Waiving the Receipt of Dividends by Current Federal Reserve Board Policy.
  The Issuance of Shares to the Charitable Foundation Will Dilute Your Ownership Interests and
Adversely Affect Net Income.
  There Will be a Limited Trading Market in Our Common Stock, Which Will Hinder Your Ability to
Sell Our Common Stock and May Lower the Market Price of the Stock.
  -73-




---



##### Table of Contents



We Will Need to Manage Costs to Implement Additional Finance and Accounting Systems, Procedures
and Controls in Order to Satisfy Our New Public Company Reporting Requirements.
  We Have Broad Discretion in Allocating the Proceeds of the Offering. Our Failure to Effectively
Utilize Such Proceeds Could Reduce Our Profits.
  -74-




---



##### Table of Contents



Quarterly Financial Information
  Quarter EndedSeptember 30
    
    
    December 31
    
    
    March 31
    
    
    June 30(In thousands, except per share amounts)2005 (unaudited)Interest income
    
    $
    17,642,800
    
    
    $
    18,909,023
    
    
    $
    18,383,909
    
    
    $
    19,271,141Interest expense
    
    
    8,441,086
    
    
    
    8,848,841
    
    
    
    8,998,795
    
    
    
    9,779,111Net interest income
    
    
    9,201,714
    
    
    
    10,060,182
    
    
    
    9,385,114
    
    
    
    9,492,030Provision for loan losses
    
    
    117,530
    
    
    
    245,693
    
    
    
    900,598
    
    
    
    (25,857
    )Net income after provision
for loan losses
    
    
    9,084,184
    
    
    
    9,814,489
    
    
    
    8,484,516
    
    
    
    9,517,887Total noninterest income
    
    
    1,256,283
    
    
    
    756,839
    
    
    
    600,822
    
    
    
    696,943Total noninterest expense
    
    
    5,092,164
    
    
    
    7,169,970
    
    
    
    5,432,772
    
    
    
    5,881,406Income before income taxes
    
    
    5,248,303
    
    
    
    3,401,358
    
    
    
    3,652,566
    
    
    
    4,333,424Income taxes
    
    
    1,794,000
    
    
    
    1,070,000
    
    
    
    3,062,349
    
    
    
    1,593,651Net income
    
    $
    3,454,303
    
    
    $
    2,331,358
    
    
    $
    590,217
    
    
    $
    2,739,7732004(unaudited)Interest income
    
    $
    16,368,683
    
    
    $
    16,267,819
    
    
    $
    16,452,084
    
    
    $
    16,999,770Interest expense
    
    
    8,202,066
    
    
    
    8,054,515
    
    
    
    8,037,729
    
    
    
    8,138,232Net interest income
    
    
    8,166,617
    
    
    
    8,213,304
    
    
    
    8,414,355
    
    
    
    8,861,538Provision for loan losses
    
    
    60,055
    
    
    
    126,666
    
    
    
    336,950
    
    
    
    336,486Net income after provision
for loan losses
    
    
    8,106,562
    
    
    
    8,086,638
    
    
    
    8,077,405
    
    
    
    8,525,052Total noninterest income
    
    
    993,446
    
    
    
    651,978
    
    
    
    695,480
    
    
    
    694,342Total noninterest expense
    
    
    4,829,352
    
    
    
    5,284,825
    
    
    
    5,257,029
    
    
    
    5,012,376Income before income taxes
    
    
    4,270,656
    
    
    
    3,453,791
    
    
    
    3,515,856
    
    
    
    4,207,018Income taxes
    
    
    1,305,000
    
    
    
    1,072,000
    
    
    
    1,105,000
    
    
    
    1,381,000Net income
    
    $
    2,965,656
    
    
    $
    2,381,791
    
    
    $
    2,410,856
    
    
    $
    2,826,018
 Recent Accounting Developments
  - 75 -




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Management of Market Risk
 General.
  Income Simulation.
 - 76 -




---



##### Table of Contents



PercentageIncrease (Decrease) in Estimated NetAnnual Interest IncomeOver 24 Months300 basis point
increase in
rates
    
    
    (14.42
    )%200 basis point increase
in rates
    
    
    (9.04
    )100 basis point increase
in rates
    
    
    (3.16
    )100 basis point decrease
in rates
    
    
    4.86
  - 77 -




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
  Report of Independent Registered Public Accounting Firm
 
    /s/ KPMG LLPMilwaukee,
WisconsinSeptember 15, 2005
 - 78 -




---



##### Table of Contents



/s/ Ernst & Young LLPMilwaukee, Wisconsin
August 8, 2003
 - 79 -




---



##### Table of Contents



Wauwatosa Savings Bank
Consolidated Statements of Financial Condition
June 30, 2005 and 2004
 June 30,2005
    
    
    2004AssetsCash
    
    $
    10,106,876
    
    
    
    11,116,357Federal funds sold
    
    
    8,779,591
    
    
    
    7,974,914Short term investments
    
    
    1,580,688
    
    
    
    300,398Cash and cash equivalents
    
    
    20,467,155
    
    
    
    19,391,669Securities available-for-sale (at fair value):Mortgage-related securities
    
    
    53,444,978
    
    
    
    77,818,962Debt securities
    
    
    30,546,421
    
    
    
    21,729,911Loans receivable
    
    
    1,218,166,886
    
    
    
    1,066,972,029Allowance for loan losses
    
    
    4,606,309
    
    
    
    3,378,037Loans receivable, net
    
    
    1,213,560,577
    
    
    
    1,063,593,992Office properties and equipment, net
    
    
    24,017,859
    
    
    
    15,894,428Federal Home Loan Bank stock
    
    
    14,096,800
    
    
    
    13,321,500Foreclosed properties
    
    
    475,495
    
    
    
    770,309Accrued interest receivable
    
    
    1,145,486
    
    
    
    915,984Cash surrender value of life insurance
    
    
    22,078,473
    
    
    
    20,980,507Prepaid expenses and other assets
    
    
    6,298,690
    
    
    
    5,667,170Total assets
    
    $
    1,386,131,934
    
    
    
    1,240,084,432Liabilities and EquityLiabilities:Demand deposits
    
    $
    18,815,534
    
    
    
    15,923,188Interest-bearing demand deposits
    
    
    82,045,453
    
    
    
    83,258,898Money market and savings deposits
    
    
    27,116,712
    
    
    
    28,474,441Time deposits
    
    
    1,000,812,840
    
    
    
    907,931,420Total deposits
    
    
    1,128,790,539
    
    
    
    1,035,587,947Federal Home
Loan Bank advances short-term
    
    
    35,000,000
    
    
    
    25,000,000Federal Home
Loan Bank advances long-term
    
    
    58,162,292
    
    
    
    35,000,000Advance payments by borrowers for taxes
    
    
    15,821,004
    
    
    
    14,445,984Accrued interest on deposits
    
    
    2,974,167
    
    
    
    1,704,718Obligations under capital lease
    
    
    3,416,329
    
    
    
    Other liabilities
    
    
    8,551,314
    
    
    
    5,547,212Total liabilities
    
    
    1,252,715,645
    
    
    
    1,117,285,861Equity:Net unrealized gain (loss) on securities
available-for-sale (net of taxes)
    
    
    (626,601
    )
    
    
    (2,128,668
    )Retained earnings
    
    
    134,042,890
    
    
    
    124,927,239Total equity
    
    
    133,416,289
    
    
    
    122,798,571Total liabilities and equity
    
    $
    1,386,131,934
    
    
    
    1,240,084,432
 See
accompanying notes to consolidated financial statements.
 80




---



##### Table of Contents



Wauwatosa Savings Bank
Consolidated Statements of Income
Years eneded June 30, 2005, 2004 and 2003
 Years ended June 30,2005
    
    
    2004
    
    
    2003Interest income:Loans
    
    $
    69,775,431
    
    
    
    61,530,554
    
    
    
    63,815,443Mortgage-related securities
    
    
    2,282,541
    
    
    
    3,264,199
    
    
    
    1,142,936Debt securities, federal funds sold and
short-term investments
    
    
    2,148,901
    
    
    
    1,293,603
    
    
    
    1,493,440Total interest income
    
    
    74,206,873
    
    
    
    66,088,356
    
    
    
    66,451,819Interest expense:Deposits
    
    
    33,284,790
    
    
    
    30,323,780
    
    
    
    32,659,271Borrowings
    
    
    2,783,043
    
    
    
    2,108,762
    
    
    
    1,799,954Total interest expense
    
    
    36,067,833
    
    
    
    32,432,542
    
    
    
    34,459,225Net interest income
    
    
    38,139,040
    
    
    
    33,655,814
    
    
    
    31,992,594Provision for loan losses
    
    
    1,237,964
    
    
    
    860,157
    
    
    
    520,352Net interest income after
provision for loan losses
    
    
    36,901,076
    
    
    
    32,795,657
    
    
    
    31,472,242Noninterest income:Service charges on loans and deposits
    
    
    1,216,319
    
    
    
    1,143,910
    
    
    
    1,507,121Rental income
    
    
    202,066
    
    
    
    164,380
    
    
    
    136,666Increase in cash surrender value of life insurance
    
    
    642,293
    
    
    
    1,007,261
    
    
    
    620,482Gain on sale of securities
    
    
    11,921
    
    
    
    46,947
    
    
    
    30,147Gain on sale of office properties and equipment
    
    
    488,246
    
    
    
    200
    
    
    
    36Other
    
    
    750,042
    
    
    
    672,548
    
    
    
    698,401Total noninterest income
    
    
    3,310,887
    
    
    
    3,035,246
    
    
    
    2,992,853Noninterest expenses:Compensation, payroll taxes, and other employee benefits
    
    
    11,434,060
    
    
    
    10,762,800
    
    
    
    8,730,143Federal insurance premiums
    
    
    151,880
    
    
    
    142,898
    
    
    
    143,681Occupancy, office furniture, and equipment
    
    
    3,482,210
    
    
    
    3,470,392
    
    
    
    2,534,742Advertising
    
    
    1,127,674
    
    
    
    1,024,534
    
    
    
    862,011Data processing
    
    
    1,142,260
    
    
    
    1,047,614
    
    
    
    1,175,088Net cost of foreclosed properties
    
    
    391,503
    
    
    
    58,120
    
    
    
    237,335Stationery and supplies
    
    
    257,744
    
    
    
    377,154
    
    
    
    565,077Charitable contributions
    
    
    2,087,500
    
    
    
    987,500
    
    
    
    1,000,004Communications expense
    
    
    591,071
    
    
    
    524,690
    
    
    
    527,915Professional Fees
    
    
    627,039
    
    
    
    386,328
    
    
    
    385,920Write-off of
investment in low-income housing
    
    
    306,237
    
    
    
    
    
    
    
    Other
    
    
    1,977,134
    
    
    
    1,601,552
    
    
    
    1,455,980Total noninterest expenses
    
    
    23,576,312
    
    
    
    20,383,582
    
    
    
    17,617,896Income before income taxes
    
    
    16,635,651
    
    
    
    15,447,321
    
    
    
    16,847,199Income taxes
    
    
    7,520,000
    
    
    
    4,863,000
    
    
    
    5,742,000Net income
    
    $
    9,115,651
    
    
    
    10,584,321
    
    
    
    11,105,199
 See
accompanying notes to consolidated financial statements.
 81




---



##### Table of Contents



Wauwatosa Savings Bank
Consolidated Statements of Equity
June 30, 2005, 2004 and 2003
 Netunrealizedgain (loss) on
    
    
    Retainedsecurities
    
    
    earnings,
    
    
    Totalavailable for
    
    
    substantiallysale
    
    
    restricted
    
    
    equityBalances at June 30, 2002
    
    $
    269,644
    
    
    
    103,237,719
    
    
    
    103,507,363Comprehensive income:Net income
    
    
    
    
    
    
    11,105,199
    
    
    
    11,105,199Other comprehensive income:Net unrealized holding gains on
available for sale securities arising
during the year, net of taxes $1,493
    
    
    2,900
    
    
    
    
    
    
    
    2,900Less reclassification adjustment for net
gains on available for sale
securities realized in net income, net
of taxes of $10,250
    
    
    (19,897
    )
    
    
    
    
    
    
    (19,897
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    11,088,202Balances at June 30, 2003
    
    
    252,647
    
    
    
    114,342,918
    
    
    
    114,595,565Comprehensive income:Net income
    
    
    
    
    
    
    10,584,321
    
    
    
    10,584,321Other comprehensive income:Net unrealized holding losses
on available for sale securities arising
during the year, net of taxes $1,210,776
    
    
    (2,350,330
    )
    
    
    
    
    
    
    (2,350,330
    )Less reclassification adjustment for net
gains on available for sale
securities realized in net income, net
of taxes of $15,962
    
    
    (30,985
    )
    
    
    
    
    
    
    (30,985
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    8,203,006Balances at June 30, 2004
    
    
    (2,128,668
    )
    
    
    124,927,239
    
    
    
    122,798,571Comprehensive income:Net income
    
    
    
    
    
    
    9,115,651
    
    
    
    9,115,651Other comprehensive income:Net unrealized holding gains on
available for sale securities arising
during the period, net of taxes $778,620
    
    
    1,509,159
    
    
    
    
    
    
    
    1,509,159Less reclassification adjustment for net
gains on available for sale
securities realized in net income, net
of taxes of $4,829
    
    
    (7,902
    )
    
    
    
    
    
    
    (7,092
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    10,617,718Balances at June 30, 2005
    
    $
    (626,601
    )
    
    
    134,042,890
    
    
    
    133,416,289
 See accompanying notes to
consolidated financial statements. 82




---



##### Table of Contents



Wauwatosa Savings Bank
Consolidated Statements of Cash Flows
Years Ended June 30, 2005, 2004 and 2003
 Years ended June 30,2005
    
    
    2004
    
    
    2003Operating activities:Net income
    
    $
    9,115,651
    
    
    
    10,584,321
    
    
    
    11,105,199Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    1,237,964
    
    
    
    860,157
    
    
    
    520,352Provision for depreciation
    
    
    1,606,608
    
    
    
    1,353,438
    
    
    
    1,241,791Deferred income taxes
    
    
    (1,192,000
    )
    
    
    (133,000
    )
    
    
    287,000Net amortization of premium on debt and
mortgage-related securities
    
    
    49,001
    
    
    
    190,145
    
    
    
    210,457Decrease (increase) in accrued interest receivable
    
    
    (229,502
    )
    
    
    87,151
    
    
    
    (254,704
    )Increase in cash surrender value of life insurance
    
    
    (642,293
    )
    
    
    (1,007,261
    )
    
    
    (620,482
    )Increase (decrease) in accrued interest on deposits
    
    
    1,269,449
    
    
    
    332,499
    
    
    
    (781,998
    )Increase (decrease) in other liabilities
    
    
    3,004,102
    
    
    
    (237,914
    )
    
    
    25,553FHLB stock dividends
    
    
    (775,300
    )
    
    
    (663,700
    )
    
    
    (240,200
    )Gain on sale of securities
    
    
    (11,921
    )
    
    
    (46,947
    )
    
    
    (30,147
    )Gain on sale of office properties and equipment
    
    
    (488,246
    )
    
    
    (200
    )
    
    
    (36
    )Other
    
    
    121,066
    
    
    
    (94,504
    )
    
    
    (677,255
    )Net cash provided by operating activities
    
    
    13,064,579
    
    
    
    11,224,185
    
    
    
    10,785,530Investing activities:Proceeds from maturities of debt securities
    
    
    25,397,233
    
    
    
    19,300,000
    
    
    
    52,360,000Proceeds from sales of debt securities
    
    
    261,509
    
    
    
    5,040,140
    
    
    
    Purchases of debt securities
    
    
    (34,299,180
    )
    
    
    (31,884,910
    )
    
    
    (51,577,697
    )Principal repayments on mortgage-related securities
    
    
    21,091,344
    
    
    
    31,992,902
    
    
    
    18,764,147Proceeds from sales of mortgage-related securities
    
    
    5,347,546
    
    
    
    2,056,112
    
    
    
    9,827,296Purchase of mortgage-related securities
    
    
    
    
    
    
    (39,400,613
    )
    
    
    (78,299,498
    )Purchase of FHLB stock
    
    
    
    
    
    
    (4,000,000
    )
    
    
    (329,400
    )Net increase in loans receivable
    
    
    (153,125,518
    )
    
    
    (127,550,030
    )
    
    
    (48,395,799
    )Purchase of bank owned life insurance
    
    
    (455,673
    )
    
    
    (363,473
    )
    
    
    (13,274,774
    )Net purchases of office properties and equipment
    
    
    (5,828,826
    )
    
    
    (5,086,659
    )
    
    
    (6,768,266
    )Proceeds from sales of foreclosed properties
    
    
    1,882,568
    
    
    
    2,403,072
    
    
    
    4,299,208Net cash used by investing activities
    
    
    (139,728,997
    )
    
    
    (147,493,459
    )
    
    
    (113,394,783
    )Financing activities:Net increase (decrease) in deposits
    
    
    93,202,592
    
    
    
    126,097,009
    
    
    
    67,619,925Net change
in short-term FHLB advances
    
    
    10,000,000
    
    
    
    (10,000,000
    )
    
    
    Proceeds
from long-term FHLB advances
    
    
    23,162,292
    
    
    
    10,000,000
    
    
    
    25,000,000Increase (decrease) in advance payments by borrowers for taxes
    
    
    1,375,020
    
    
    
    796,680
    
    
    
    (188,106
    )Net cash provided by financing activities
    
    
    127,739,904
    
    
    
    126,893,689
    
    
    
    92,431,819Increase (decrease) in cash and cash equivalents
    
    
    1,075,486
    
    
    
    (9,375,585
    )
    
    
    (10,177,434
    )Cash and cash equivalents at beginning of year
    
    
    19,391,669
    
    
    
    28,767,254
    
    
    
    38,944,688Cash and cash equivalents at end of year
    
    $
    20,467,155
    
    
    
    19,391,669
    
    
    
    28,767,254
 See accompanying notes to
consolidated financial statements. 83




---



##### Table of Contents



Wauwatosa Savings Bank
Consolidated Statements of Cash Flows
Years Ended June 30, 2005, 2004 and 2003
 Supplemental information:Cash paid or credited during the year for:Income tax payments
    
    $
    5,925,000
    
    
    
    5,045,000
    
    
    
    5,115,000Interest payments
    
    
    34,798,384
    
    
    
    32,100,043
    
    
    
    35,241,223Noncash investing activities:Loans receivable transferred to foreclosed properties
    
    
    1,920,969
    
    
    
    1,057,498
    
    
    
    2,303,708Obligations
under capital lease
    
    
    3,422,886
    
    
    
    
    
    
    
    Non Cash
financing activities:Long-term FHLB advances reclassified to short-term
    
    
    25,000,000
    
    
    
    25,000,000
    
    
    
    10,000,000
 See accompanying notes to
consolidated financial statements. 84




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
   1) Summary of Accounting Policies
 a)
    
    Principles of ConsolidationThe consolidated financial statements include the accounts and operations of Wauwatosa
Savings Bank (the Bank) and its wholly owned subsidiaries, Wauwatosa Investments, Inc. and
Main Street Real Estate Holdings, LLC. All significant intercompany accounts and
transactions have been eliminated in consolidation.The Bank provides a full range of financial services to customers through branch locations
in Wauwatosa, Oak Creek, Waukesha, Oconomowoc, and Pewaukee, Wisconsin. The Bank is subject
to the regulations of certain federal and state agencies and undergoes periodic examinations
by those regulatory authorities.b)
    
    Use of EstimatesThe preparation of the consolidated financial statements requires management of the Bank to
make a number of estimates and assumptions relating to the reported amount of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during
the period. Significant items subject to such estimates and
assumptions include the allowance
for loan losses and deferred income taxes. Actual results could differ from those estimates.c)
    
    Cash and Cash EquivalentsThe Bank considers federal funds sold and highly liquid debt instruments with a maturity of
three months or less when purchased to be cash equivalents.d)
    
    SecuritiesManagement has designated all securities as available-for-sale. As such, they are stated at
fair value, with the unrealized gains and losses, net of tax, reported as a separate
component of equity.The cost of debt securities is adjusted for amortization of premiums and accretion of
discounts to maturity or, in the case of mortgage-related securities, over the estimated
life of the security. Such amortization is included in interest income from investments.
Realized gains and losses and impairment in value determined to be other than temporary are
included in gain or loss on the sale of investments and mortgage-related securities. The
cost of securities sold is based on the specific identification method.e)
    
    Interest on LoansInterest on loans is recorded as income as it is earned. Allowances are established for
uncollected interest on mortgage loans on which any payments are 90 days or more past due
and are determined to be uncollectible. Generally, loans are restored to accrual status when
the obligation is brought current, has performed in accordance with the contractual terms
for a reasonable period of time, and the ultimate collectibility of the total contractual
principal and interest is no longer in doubt.
 85




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
   f)
    
    Allowance for Loan LossesThe Bank establishes valuation allowances on multi-family and commercial real estate loans
considered impaired. A loan is considered impaired when, based on current information and
events, it is probable that the Bank will not be able to collect all amounts due according
to the contractual terms of the loan agreement. A valuation allowance is established for an
amount equal to the impairment when the carrying amount of the loan exceeds the present
value of the expected future cash flows, discounted at the loans original effective
interest rate or the fair value of the underlying collateral.The Bank also establishes valuation allowances based on an evaluation of the various risk
components that are inherent in the loan portfolio. The risk components that are evaluated
include past loan loss experience; the level of nonperforming and classified assets; current
economic conditions; volume, growth, and composition of the loan portfolio; adverse
situations that may affect the borrowers ability to repay; the estimated value of any
underlying collateral; peer group comparisons; regulatory guidance; and other relevant
factors. The allowance is increased by provisions charged to earnings and reduced by
charge-offs, net of recoveries. The adequacy of the allowance for loan losses is approved
quarterly by the Banks board of directors. The allowance reflects managements best
estimate of the amount needed to provide for the probable loss on impaired loans, as well as
other credit risks of the Bank, and is based on a risk model developed and implemented by
management and approved by the Banks board of directors.Actual results could differ from this estimate, and future additions to the allowance may be
necessary based on unforeseen changes in economic conditions. In addition, federal
regulators periodically review the Banks allowance for loan losses. Such regulators have
the authority to require the Bank to recognize additions to the allowance at the time of
their examination.g)
    
    Foreclosed PropertiesForeclosed properties acquired through, or in lieu of, loan foreclosure are recorded at the
lower of cost or fair value, minus estimated costs to sell at the date of foreclosure.
Impairments of foreclosed properties after acquisition are charged to expense at the time of
impairment.h)
    
    Loan FeesLoan origination and commitment fees and certain direct loan origination costs are deferred
and the net amount amortized as an adjustment of the related loans yield. Amortization is
based on a level-yield method over the contractual life of the related loans or until the
loan is paid in full.i)
    
    Office Properties and EquipmentOffice properties and equipment, including leasehold improvements and software, are stated
at cost, net of depreciation and amortization. Depreciation and amortization are computed on
the straight-line method over the estimated useful lives of the related assets. Leasehold
improvements are amortized over the lease term, if shorter than the estimated useful life.
Maintenance and repairs are charged to expense as incurred, while additions or major
improvements are capitalized and depreciated over their estimated useful lives. Estimated
useful lives of the assets are 10 to 30 years for office properties, three to 10 years for
equipment, and three years for software. Rent expense related to long-term operating leases
is recorded on the accrual basis.
 86




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
   j)
    
    Income TaxesDeferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income, and, if necessary, tax
planning strategies in making this assessment.k)
    
    ReclassificationsCertain 2004 and 2003 accounts have been reclassified to conform to the 2005 presentation.l)
    
    Recent Accounting PronouncementsIn December 2004, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 123 (revised December 2004), Share-Based Payment,
(SFAS 123R), which replaces SFAS 123 and supersedes APB Opinion 25. SFAS 123R is effective
for all stock-based awards granted on or after July 1, 2005. SFAS 123R requires all
share-based payments to employees, including grants of employee stock options, to be valued
at fair value on the date of grant and to be expensed over the applicable vesting period.
Pro forma disclosure of the income statement effects of share-based payments is no longer an
alternative. In addition, companies must recognize compensation expense related to any
stock-based awards that are not fully vested as of the effective date. The Bank does not
expect the adoption of this statement to have a material impact on the Banks results of
operations, financial position and liquidity.In March 2004, the SEC issued Staff Accounting Bulletin (SAB) No. 105, Application of
Accounting Principles Loan Commitments. SAB 105 provides guidance regarding loan
commitments accounted for as derivative instruments. Specially, SAB 105 requires servicing
assets to be recognized only once the servicing asset has been contractually separated from
the underlying loan by sale or securitization of the loan with servicing retained. As such,
consideration for the expected future cash flows related to the associated servicing of the
loan may not be recognized in valuing the loan commitment. This will result in a lower fair
value mark of loan commitments, and recognition of the value of the servicing asset later
upon sale or securitization of the underlying loan. The provisions of SAB 105 were effective
for loan commitments accounted for as derivatives entered into after March 31, 2004. The
adoption of SAB 105 did not have a material impact on the Banks results of operations,
financial position, or liquidity.In March 2004, the FASB ratified the consensus reached by the Emerging Issues Task Force
(EITF) in Issue 03-1, The Meaning of Other-Than-Temporary Impairment and its Application to
Certain Investments. EITF Issue 03-1 provides guidance for determining when an investment is
considered impaired, whether impairment is other-than-temporary, and measurement of an
impairment loss. An investment is considered impaired if the fair value of the investment is
less than its cost. Generally, an
 87




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
   impairment is considered other-than-temporary unless the investor has the ability and intent
to hold an investment for a reasonable period of time sufficient for a forecasted recovery
of fair value up to (or beyond) the cost of the time outweighs evidence to the contrary. If
impairment is determined to be other-than-temporary, then an impairment loss should be
recognized through earnings equal to the difference between the investments cost and its
fair value. In September 2004, the FASB delayed the measurement
requirements of EITF Issue 03-1
until additional implementation guidance is issued and goes into effect.In December 2003, the AICPAs Accounting Standards Executive Committee issued Statement of
Position (SOP) 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. SOP 03-3 addresses accounting for differences between contractual cash flows and
cash flows expected to be collected from an investors initial investment in loans or debt
securities acquired in a transfer if those differences are attributable, at least in part,
to credit quality. The provisions of this SOP are effective for loans acquired in fiscal
years beginning after December 15, 2004. Adoption of SOP 03-3 is not expected to have a
material impact on the Banks results of operations, financial position, or liquidity.
 2)
    
    Securities Available for Sale
 The amortized cost and fair values of the Banks investment in securities follow:
 June 30, 2005Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealizedcost
    
    
    gains
    
    
    losses
    
    
    Fair valueMortgage-backed securities
    
    $
    5,817,357
    
    
    
    3,068
    
    
    
    (179,480
    )
    
    
    5,640,945Collateralized mortgage
obligations
    
    
    48,620,674
    
    
    
    8,728
    
    
    
    (825,369
    )
    
    
    47,804,033Mortgage-related
securities
    
    
    54,438,031
    
    
    
    11,796
    
    
    
    (1,004,849
    )
    
    
    53,444,978Government agency bonds
    
    
    26,579,430
    
    
    
    27,368
    
    
    
    (220,098
    )
    
    
    26,386,700Municipals
    
    
    3,923,334
    
    
    
    238,164
    
    
    
    (1,777
    )
    
    
    4,159,721Debt securities
    
    
    30,502,764
    
    
    
    265,532
    
    
    
    (221,875
    )
    
    
    30,546,421$
    84,940,795
    
    
    
    277,328
    
    
    
    (1,226,724
    )
    
    
    83,991,399
 88




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
   June 30, 2004Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealizedcost
    
    
    gains
    
    
    losses
    
    
    Fair valueMortgage-backed securities
    
    $
    12,473,361
    
    
    
    5,820
    
    
    
    (267,277
    )
    
    
    12,211,904Collateralized mortgage
obligations
    
    
    68,444,712
    
    
    
    1,274
    
    
    
    (2,838,928
    )
    
    
    65,607,058Mortgage-related
securities
    
    
    80,918,073
    
    
    
    7,094
    
    
    
    (3,106,205
    )
    
    
    77,818,962Government agency bonds
    
    
    17,683,502
    
    
    
    2,580
    
    
    
    (223,752
    )
    
    
    17,462,330Municipals
    
    
    4,172,552
    
    
    
    100,016
    
    
    
    (4,987
    )
    
    
    4,267,581Debt securities
    
    
    21,856,054
    
    
    
    102,596
    
    
    
    (228,739
    )
    
    
    21,729,911$
    102,774,127
    
    
    
    109,690
    
    
    
    (3,334,944
    )
    
    
    99,548,873
 The amortized cost and fair value of securities at June 30, 2005 and 2004, by contractual
maturity, are shown below. Expected maturities may differ from contractual maturities because
issuers or borrowers may have the right to prepay obligations with or without prepayment
penalties.
 June 30, 2005
    
    
    June 30, 2004Amortized
    
    
    
    
    
    
    Amortizedcost
    
    
    Fair value
    
    
    cost
    
    
    Fair valueDebt securities:Due within one year
    
    $
    1,000,445
    
    
    
    998,668
    
    
    
    1,000,000
    
    
    
    995,013Due after one year
through five years
    
    
    26,579,430
    
    
    
    26,386,700
    
    
    
    17,683,502
    
    
    
    17,462,330Due after five years
through ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due after ten years
    
    
    2,922,889
    
    
    
    3,161,053
    
    
    
    3,172,552
    
    
    
    3,272,568Mortgage-related securities
    
    
    54,438,031
    
    
    
    53,444,978
    
    
    
    80,918,073
    
    
    
    77,818,962$
    84,940,795
    
    
    
    83,991,399
    
    
    
    102,774,127
    
    
    
    99,548,873
 89




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
   Total proceeds and gross realized gains and losses from sale of securities available for sale
for the years ended June 30, 2005, 2004 and 2003 were:
 Year ended June 30,2005
    
    
    2004
    
    
    2003Proceeds
    
    $
    5,609,055
    
    
    
    7,096,252
    
    
    
    9,827,296Gross gains
    
    
    15,793
    
    
    
    48,677
    
    
    
    32,018Gross losses
    
    
    3,872
    
    
    
    1,730
    
    
    
    1,871
 Gross unrealized losses on securities available-for-sale and the fair value of the related
securities, aggregated by investment category and length of time that individual securities
have been in a continuous unrealized loss position, were as follows:
 June 30, 2005Less than 12 months
    
    
    12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealizedvalue
    
    
    loss
    
    
    value
    
    
    loss
    
    
    value
    
    
    lossGovernment agency bonds
    
    $
    18,951,500
    
    
    
    (166,817
    )
    
    
    2,947,500
    
    
    
    (53,281
    )
    
    
    21,899,000
    
    
    
    (220,098
    )Municipals
    
    
    998,668
    
    
    
    (1,777
    )
    
    
    
    
    
    
    
    
    
    
    998,668
    
    
    
    (1,777
    )Mortgage-related securities
    
    
    17,340,772
    
    
    
    (173,005
    )
    
    
    34,378,277
    
    
    
    (831,844
    )
    
    
    51,719,049
    
    
    
    (1,004,849
    )$
    37,290,940
    
    
    
    (341,599
    )
    
    
    37,325,777
    
    
    
    (885,125
    )
    
    
    74,616,717
    
    
    
    (1,226,724
    )
 The unrealized losses reported for government agency bonds and mortgage-related securities
relate exclusively to debt securities issued by government agencies such as the Federal
National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC).
Because the decline in fair value is attributable to changes in interest rates and not credit
quality, and because the Bank has the ability and intent to hold these debt securities until a
market price recovery or maturity, these investments are not considered other-than-temporarily
impaired.
 90




---



##### Table of Contents



WAUWATOSA SAVING BANK
   3) Loans Receivable
  June 30,2005
    
    
    2004Mortgage loans:Residential real estate:Single family
    
    $
    430,333,367
    
    
    
    391,864,009Two- to four-family
    
    
    251,267,900
    
    
    
    224,765,133Over four-family
    
    
    407,601,393
    
    
    
    340,753,004Construction
    
    
    149,539,532
    
    
    
    110,495,105Commercial real estate
    
    
    36,585,503
    
    
    
    46,138,012Land
    
    
    24,281,934
    
    
    
    18,306,537Credit cards
    
    
    150,042
    
    
    
    154,341Other
    
    
    52,100
    
    
    
    31,2961,299,811,771
    
    
    
    1,132,507,437Less:Undisbursed loan proceeds
    
    
    77,483,660
    
    
    
    61,904,486Unearned loan fees
    
    
    4,161,225
    
    
    
    3,630,922$
    1,218,166,886
    
    
    
    1,066,972,029
    Year ended June 30,2005
    
    
    2004
    
    
    2003Balance at beginning of year
    
    $
    3,378,037
    
    
    
    2,970,336
    
    
    
    2,478,924Provision for loan losses
    
    
    1,237,964
    
    
    
    860,157
    
    
    
    520,352Charge-offs
    
    
    (11,257
    )
    
    
    (453,129
    )
    
    
    (28,940
    )Recoveries
    
    
    1,565
    
    
    
    673
    
    
    
    Balance at end of year
    
    $
    4,606,309
    
    
    
    3,378,037
    
    
    
    2,970,336Percentage of allowance to gross loans
    
    
    0.38
    %
    
    
    0.32
    %
    
    
    0.32
    %
 91




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
    June 30,2005
    
    
    2004Nonaccrual loans
    
    $
    13,076,000
    
    
    
    12,015,000Total nonperforming loans
    
    $
    13,076,000
    
    
    
    12,015,000
  June 30,2005
    
    
    2004Impaired loans for which an allowance has been provided
    
    $
    1,158,602
    
    
    
    100,000Impaired loans for which no allowance has been provided
    
    
    5,950,811
    
    
    
    5,914,969Total loans determined to be impaired
    
    $
    7,109,413
    
    
    
    6,014,969Allowance for loans losses related to impaired loans
    
    $
    195,240
    
    
    
    100,000
 June 30,2005
    
    
    2004Average recorded investment in
impaired loans
    
    $
    6,823,632
    
    
    
    5,700,263Cash basis interest income recognized
from impaired loans
    
    
    492,036
    
    
    
    421,314
  2005
    
    
    2004Balance at beginning of year
    
    $
    747,462
    
    
    
    775,975New loans
    
    
    574,266
    
    
    
    19,655Repayments
    
    
    (425,440
    )
    
    
    (48,168
    )Balance at end of year
    
    $
    896,288
    
    
    
    747,462Average interest rate at end of period
    
    
    3.08
    %
    
    
    3.17
    %
 92




---



##### Table of Contents



WAUWATOSA SAVING BANK
    4) Office Properties and Equipment
  June 30,2005
    
    
    2004Land
    
    $
    5,030,883
    
    
    
    4,455,455Office buildings and improvements
    
    
    20,579,145
    
    
    
    12,068,291Furniture and equipment
    
    
    8,807,721
    
    
    
    8,163,96434,417,749
    
    
    
    24,687,710Less accumulated depreciation
    
    
    (10,399,890
    )
    
    
    (8,793,282
    )$
    24,017,859
    
    
    
    15,894,428
  Office buildings and improvements
    
    $
    3,422,886Less accumulated depreciation
    
    
    $
    3,422,886
  93




---



##### Table of Contents



WAUWATOSA SAVING BANK
    Capital
    
    
    Operatinglease
    
    
    leaseWithin one year
    
    $
    300,000
    
    
    
    54,300One to two years
    
    
    300,000
    
    
    
    55,500Two to three years
    
    
    300,000
    
    
    
    30,000Three to four years
    
    
    3,600,000
    
    
    
    6,250Four to five years
    
    
    
    
    
    
    After five years
    
    
    
    
    
    
    Total

    
    $
    4,500,000
    
    
    
    146,050Net minimum lease payments
    
    
    4,500,000Less amounts representing interest
    
    
    (1,083,671
    )Present value of net minimum
capital lease payments
    

    $
    3,416,329
 5) Deposits
   Year ended June 30,2005
    
    
    2004
    
    
    2003Interest-bearing demand deposit
    
    $
    862,501
    
    
    
    741,315
    
    
    
    213,191Money market and savings deposits
    
    
    201,766
    
    
    
    326,147
    
    
    
    750,687Time deposits
    
    
    32,220,523
    
    
    
    29,256,318
    
    
    
    31,695,393$
    33,284,790
    
    
    
    30,323,780
    
    
    
    32,659,271
 94




---



##### Table of Contents



WAUWATOSA SAVING BANK
    Within one year
    
    $
    612,809,293One to two years
    
    
    184,893,046Two to three years
    
    
    124,232,285Three to four years
    
    
    41,896,575Four through five years
    
    
    34,876,313After five years
    
    
    2,105,328$
    1,000,812,840
 6) FHLB Advances
  June 30,2005
    
    
    2004Federal Home Loan Bank (FHLB) advances:Short-term FHLB advances:FHLB advance, 2.62%, due January 2006
    
    $
    25,000,000
    
    
    
    FHLB advance, 2.21%, due January 2006
    
    
    10,000,000
    
    
    
    FHLB advance, 4.47%, due December 2004
    
    
    
    
    
    
    25,000,000Total short-term FHLB advances
    
    
    35,000,000
    
    
    
    25,000,000Long-term FHLB advances:FHLB advance, 3.26%, due July 2006
    
    
    11,777,463
    
    
    
    FHLB advance, 2.83%, due September 2006
    
    
    2,431,817
    
    
    
    FHLB advance, 3.56%, due February 2007
    
    
    7,000,000
    
    
    
    FHLB advance, 3.17%, due August 2007
    
    
    5,407,750
    
    
    
    FHLB advance, 3.19%, due September 2007
    
    
    4,123,288
    
    
    
    FHLB advance, 3.09%, due October 2007
    
    
    4,692,931
    
    
    
    FHLB advance, 3.67%, due January 2008
    
    
    6,818,766
    
    
    
    FHLB advance, 3.63%, due January 2008
    
    
    3,074,277
    
    
    
    FHLB advance, 3.8%, due February 2008
    
    
    7,836,000
    
    
    
    FHLB advance, 3.58%, due August 2008
    
    
    5,000,000
    
    
    
    FHLB advance, 2.62%, due January 2006
    
    
    
    
    
    
    25,000,000FHLB advance, 2.21%, due January 2006
    
    
    
    
    
    
    10,000,000Total long-term FHLB advances
    
    
    58,162,292
    
    
    
    35,000,000Total FHLB advances
    
    $
    93,162,292
    
    
    
    60,000,000
  95




---



##### Table of Contents



WAUWATOSA SAVING BANK
   7) Regulatory Capital
      June 30, 2005To be well-capitalized underprompt corrective actionActual
    
    
    For capital adequacy purposes
    
    
    provisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTotal capital (to risk-weighted
assets)
    
    $
    138,638
    
    
    
    14.05
    %
    
    
    78,963
    
    
    
    8.00
    %
    
    
    98,704
    
    
    
    10.00
    %Tier I capital (to risk-weighted
assets)
    
    
    134,032
    
    
    
    13.58
    %
    
    
    39,481
    
    
    
    4.00
    %
    
    
    59,222
    
    
    
    6.00
    %Tier I capital (to average assets)
    
    
    134,032
    
    
    
    9.84
    %
    
    
    54,458
    
    
    
    4.00
    %
    
    
    68,072
    
    
    
    5.00
    %State of Wisconsin (to total assets)
    
    
    134,043
    
    
    
    9.60
    %
    
    
    83,167
    
    
    
    6.00
    %
    
    
    N/A
    
    
    
    N/A
 96




---



##### Table of Contents



WAUWATOSA SAVING BANK
   June 30, 2004To be well-capitalized underprompt corrective actionActual
    
    
    For capital adequacy purposes
    
    
    provisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTotal capital (to risk-weighted
assets)
    
    $
    128,293
    
    
    
    15.02
    %
    
    $
    68,348
    
    
    
    8.00
    %
    
    $
    85,435
    
    
    
    10.00
    %Tier I capital (to risk-weighted
assets)
    
    
    124,915
    
    
    
    14.62
    %
    
    
    34,174
    
    
    
    4.00
    %
    
    
    51,261
    
    
    
    6.00
    %Tier I capital (to average assets)
    
    
    124,915
    
    
    
    10.18
    %
    
    
    49,062
    
    
    
    4.00
    %
    
    
    63,328
    
    
    
    5.00
    %State of Wisconsin (to total assets)
    
    
    122,798
    
    
    
    10.01
    %
    
    
    74,479
    
    
    
    6.00
    %
    
    
    N/A
    
    
    
    N/A
 8) Employee Benefit Plans
     9) Income Taxes
  97




---



##### Table of Contents



WAUWATOSA SAVING BANK
    Year ended June 30,2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    5,403,000
    
    
    
    4,811,000
    
    
    
    5,274,000State
    
    
    3,309,000
    
    
    
    185,000
    
    
    
    181,0008,712,000
    
    
    
    4,996,000
    
    
    
    5,455,000Deferred:Federal
    
    
    (1,155,000
    )
    
    
    (86,000
    )
    
    
    280,000State
    
    
    (37,000
    )
    
    
    (47,000
    )
    
    
    7,000(1,192,000
    )
    
    
    (133,000
    )
    
    
    287,000$
    7,520,000
    
    
    
    4,863,000
    
    
    
    5,742,000
  Year ended June 30,2005
    
    
    2004
    
    
    2003Income before income taxes
    
    $
    16,635,651
    
    
    
    15,447,321
    
    
    
    16,847,199Tax at Federal statutory rate (35%)
    
    $
    5,822,478
    
    
    
    5,406,562
    
    
    
    5,896,520Add (deduct) effect of:State income taxes, net of Federal
income tax benefit
    
    
    2,127,000
    
    
    
    90,000
    
    
    
    122,000Cash surrender value of life insurance
    
    
    (224,800
    )
    
    
    (353,000
    )
    
    
    (217,000
    )Taxexempt interest income
    
    
    (64,000
    )
    
    
    (58,000
    )
    
    
    (66,000
    )Other
    
    
    (140,678
    )
    
    
    (222,562
    )
    
    
    6,480Income tax provision
    
    $
    7,520,000
    
    
    
    4,863,000
    
    
    
    5,742,000Effective tax rate
    
    
    45.2
    %
    
    
    31.5
    %
    
    
    34.1
    %
 98




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
    June 30,2005
    
    
    2004Gross deferred tax assets:Excess book depreciation
    
    $
    394,000
    
    
    
    380,000Compensation agreements
    
    
    1,169,000
    
    
    
    1,286,000Allowance for loan losses
    
    
    1,857,000
    
    
    
    1,316,000Unrealized gain on securities available for sale
    
    
    323,000
    
    
    
    1,100,000Loans to facilitate the sale of real estate owned
    
    
    589,000
    
    
    
    744,000Other
    
    
    1,205,000
    
    
    
    Total gross deferred assets
    
    
    5,537,000
    
    
    
    4,826,000Gross deferred tax liabilities:FHLB stock dividends
    
    
    (893,000
    )
    
    
    (569,000
    )Deferred loan fees
    
    
    (275,000
    )
    
    
    (268,000
    )State contingent liabilityOther
    
    
    
    
    
    
    (35,000
    )Total gross deferred liabilities
    
    
    (1,168,000
    )
    
    
    (872,000
    )Net deferred tax assets
    
    $
    4,369,000
    
    
    
    3,954,000
     99




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
    10)
    
    Financial Instruments with Off-Balance-Sheet Risk
   June 30,2005
    
    
    2004Financial instruments whose contract amounts represent
potential credit risk:Commitments to extend credit under first mortgage loans
    
    $
    65,565,900
    
    
    
    69,324,400Commitments to extend credit under home equity lines
of credit
    
    
    30,253,000
    
    
    
    22,867,000Standby letters of credit
    
    
    1,374,374
    
    
    
    2,252,370
   100




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
     11)
    
    Fair Values of Financial Instruments
   a)
    
    Cash and Cash Equivalents and Accrued Interest ReceivableThe carrying amounts reported in the consolidated statements of financial condition for
cash and cash equivalents and accrued interest receivable approximate those assets fair
values.b)
    
    Mortgage-Related and Debt SecuritiesFair values for mortgage-related and debt securities are based on quoted market prices of
these or comparable instruments.c)
    
    Loans ReceivableFair values for loans receivable are estimated using a discounted cash flow calculation
that applies current interest rates to estimated future cash flows of the loans
receivable.d)
    
    FHLB StockFor FHLB stock, the carrying amount is the amount at which shares can be redeemed with
the FHLB and is a reasonable estimate of fair value.e)
    
    Cash Surrender Value of Life InsuranceThe carrying amounts reported in the consolidated statements of financial condition for
the cash surrender value of life insurance approximate those assets fair values.f)
    
    Deposits and Advance Payments by Borrowers for TaxesThe fair values for interest-bearing and noninterest-bearing negotiable order of
withdrawal accounts, savings accounts, and money market accounts are, by definition,
equal to the amount payable on demand at the reporting date (i.e., their carrying
amounts). The fair values for fixed-rate certificates
 101




---



##### Table of Contents



WAUWATOSA SAVINGS BANK
   of deposit are estimated using a
discounted cash flow calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities of the outstanding
certificates of deposit. The advance payments by borrowers for taxes are equal to their
carrying amounts at the reporting date.g)
    
    FHLB AdvancesFair values for FHLB advances are estimated using a discounted cash flow calculation that
applies current interest rates to estimated future cash flows of the advances.h)
    
    Accrued Interest Payable and Accrued Interest ReceivableFor accrued interest payable and accrued interest receivable, the carrying amount is a
reasonable estimate of fair value.i)
    
    Commitments to Extend Credit and Standby Letters of CreditCommitments to extend credit and standby letters of credit are generally not marketable.
Furthermore, interest rates on any amounts drawn under such commitments would be
generally established at market rates at the time of the draw. Fair values for the Banks
commitments to extend credit and standby letters of credit are based on fees currently
charged to enter into similar agreements, taking into account the remaining terms of the
agreements, the counterpartys credit standing, and discounted cash flow analyses. The
fair value of the Banks commitments to extend credit is not material at June 30, 2005
and 2004.j)
    
    Obligations under Capital LeasesThe fair value of obligations under capital leases is determined using a present value of
future minimum lease payments discounted at the current interest rate at the time of
lease inception.
  June 30,2005
    
    
    2004Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fairamount
    
    
    value
    
    
    amount
    
    
    valueCash and cash equivalents
    
    $
    20,467,155
    
    
    
    20,467,155
    
    
    
    19,391,670
    
    
    
    19,391,670Mortgage-related securities
    
    
    53,444,978
    
    
    
    53,444,978
    
    
    
    77,818,962
    
    
    
    77,818,962Debt securities
    
    
    30,456,421
    
    
    
    30,546,421
    
    
    
    21,729,911
    
    
    
    21,729,911Loans receivable
    
    
    1,213,560,577
    
    
    
    1,290,427,833
    
    
    
    1,063,593,992
    
    
    
    1,062,687,786FHLB stock
    
    
    14,096,800
    
    
    
    14,096,800
    
    
    
    13,321,500
    
    
    
    13,321,500Cash surrender value of life insurance
    
    
    22,078,473
    
    
    
    22,078,473
    
    
    
    20,980,507
    
    
    
    20,980,507Accrued interest receivable
    
    
    1,145,486
    
    
    
    1,145,486
    
    
    
    915,984
    
    
    
    915,984Deposits
    
    
    1,128,790,539
    
    
    
    1,121,832,520
    
    
    
    1,035,587,947
    
    
    
    1,041,135,138Advance payments by borrowers for taxes
    
    
    15,821,004
    
    
    
    15,821,004
    
    
    
    14,445,984
    
    
    
    14,445,984FHLB advances
    
    
    93,162,292
    
    
    
    93,162,292
    
    
    
    60,000,000
    
    
    
    60,000,000Accrued interest payable
    
    
    2,974,167
    
    
    
    2,974,167
    
    
    
    1,704,718
    
    
    
    1,704,718Obligations under capital leases
    
    
    3,416,329
    
    
    
    3,416,329
    
    
    
    
    
    
    
    Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Standby letters of credit
    
    
    9,089
    
    
    
    9,089
    
    
    
    14,896
    
    
    
    14,896
 102




---



##### Table of Contents



12)
    
    Segments and Related InformationThe Bank is required to report each operating segment based
on materiality thresholds of 10% or more of certain amounts, such as revenue. Additionally, the Bank is required to report
separate operating segments until the revenue attributable to such segments is at least 75% of
total consolidated revenue. The Bank provides a broad range of financial services to
individuals and companies in southeastern Wisconsin. These services include demand, time, and
savings products, and commercial and retail lending. While the
Banks chief decision-maker
monitors the revenue streams of the various products and services, operations are managed and
financial performance is evaluated on a bank-wide basis. Since the Banks business units have
similar basic characteristics in the nature of the products, production processes, and type or
class of customer for products or services, and do not meet materiality thresholds based on
the requirements of reportable segments, these business units are considered one operating
segment.
 13)
    
    Plan of Reorganization
    103




---



##### Table of Contents



Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
     104




---



##### Table of Contents



Item 9A . Controls and Procedures
 Disclosure Controls and Procedures :
 Change in Internal Control Over Financial Reporting :
 
 Item 9B . Other Information .
  105




---



##### Table of Contents



Part III
 
 Item 10 . Directors and Executive Officers of the Registrant
 Shared Management Structure
  Directors of Wauwatosa Holdings and Wauwatosa Savings
 Composition of Wauwatosa Savings Board
  Director
    
    TermDirectors
    
    Age(1)
    
    Positions
    
    Since(2)
    
    ExpiresBarbara J. Coutley
    
    
    54
    
    
    Director, Senior
Vice President and
Secretary
    
    
    2001
    
    
    
    2009Thomas E. Dalum
    
    
    64
    
    
    Director
    
    
    1979
    
    
    
    2008Michael L. Hansen
    
    
    54
    
    
    Director
    
    
    2003
    
    
    
    2010Patrick S. Lawton
    
    
    48
    
    
    Director
    
    
    2000
    
    
    
    2008Stephen J. Schmidt
    
    
    43
    
    
    Director
    
    
    2002
    
    
    
    2006Donald J. Stephens
    
    
    60
    
    
    Chairman of the
Board, Chief
Executive Officer
and President
    
    
    1995
    
    
    
    2007
 
 (1)
    
    As of June 30, 2005.(2)
    
    All directors will be appointed to the Board of Directors of Wauwatosa Holdings in
2005 pursuant to the Plan of Reorganization. The year indicated is the year each director
was first elected or appointed to the Board of Directors of Wauwatosa Savings. Composition of Wauwatosa Holdings Board.
 -106-




---



##### Table of Contents



The Business Background of Our Directors and Executive Officers .
 Our Directors
 Barbara J. Coutley
 Thomas E. Dalum
 Michael L. Hansen
 Patrick S. Lawton
 Stephen J. Schmidt
 Donald J. Stephens
 -107-




---



##### Table of Contents



Executive Officers of Wauwatosa Holdings
  Name
    
    Age(1)
    
    PositionDonald J. Stephens
    
    
    60
    
    
    President and Chief Executive OfficerRichard C. Larson
    
    
    48
    
    
    Chief Financial Officer and TreasurerBarbara J. Coutley
    
    
    54
    
    
    Senior Vice President and SecretaryKenneth A. Snyder
    
    
    39
    
    
    Vice President
 
 (1)
    
    As of June 30, 2005.(2)
    
    Andrew L. Taylor served as Wauwatosa Savings Vice President of Sales and Retail
Banking, an executive officer position, from April 1, 2005 until his employment with
Wauwatosa Savings ended on August 26, 2005.  Bank Executive Officers Who Are Not Directors
 Richard C. Larson
 Kenneth A. Snyder
 Meetings of the Board of Directors and Committees
  Committees of Wauwatosa Holdings
   -108-




---



##### Table of Contents



Code of Ethics
 www.wsbonline.com
 -109-




---



##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
   -110-




---



##### Table of Contents



Item 11 . Executive Compensation
 Summary Compensation Table
 Annual Compensation(1)Named
    
    
    
    
    
    
    
    
    
    
    
    
    
    All OtherExecutive Officer
    
    Year
    
    
    Salary ($)(2)
    
    
    Bonus ($)
    
    
    Compensation ($)(3)Donald J. Stephens
    
    
    2005
    
    
    
    527,083
    
    
    
    550,000
    
    
    
    4,870President and Chief Executive Officer
    
    
    2004
    
    
    
    538,333
    
    
    
    470,000
    
    
    
    4,8662003
    
    
    
    512,500
    
    
    
    500,000
    
    
    
    4,270Richard C. Larson
    
    
    2005
    
    
    
    165,542
    
    
    
    130,000
    
    
    
    8,508Chief Financial Officer and Treasurer
    
    
    2004
    
    
    
    165,917
    
    
    
    117,000
    
    
    
    5,4782003
    
    
    
    144,417
    
    
    
    75,000
    
    
    
    9,478Barbara J. Coutley
    
    
    2005
    
    
    
    137,917
    
    
    
    110,000
    
    
    
    3,287Senior Vice President and Secretary
    
    
    2004
    
    
    
    134,165
    
    
    
    100,000
    
    
    
    2,9512003
    
    
    
    124,167
    
    
    
    95,000
    
    
    
    3,312Kenneth A. Snyder
    
    
    2005
    
    
    
    99,583
    
    
    
    60,300
    
    
    
    7,363Vice PresidentLending
    
    
    2004
    
    
    
    97,083
    
    
    
    55,000
    
    
    
    2,9072003
    
    
    
    92,083
    
    
    
    55,000
    
    
    
    4,738
 
 (1)
    
    Wauwatosa Savings provides its executive officers with certain non-cash benefits and
perquisites. Management of Wauwatosa Savings believes that the aggregate value of these
benefits for 2005 did not, in the case of any executive officer, exceed $50,000 or 10% of the
aggregate salary and annual bonus reported in the Summary Compensation Table.(2)
    
    Base salaries are reviewed on an annual basis and may be increased in the future. Current
annual salaries are as follows: Mr. Stephens, $500,000; Mr. Larson, $173,000; Ms. Coutley,
$144,000; and Mr. Snyder $104,000.(3)
    
    Amounts represent the dollar value of the named executives personal use of Bank-owned
automobiles. In addition, Mr. Snyders 2005 total includes $2,130 in taxable income related
to the below market rate employee interest rate charged on the mortgage of a principal
residence. Director Compensation
  -111-




---



##### Table of Contents



Employment Agreements
      -112-




---



##### Table of Contents



Defined Benefit Retirement Plan
    -113-




---



##### Table of Contents



Years of ServiceAverageAnnual Earnings
    
    15
    
    
    20
    
    
    25
    
    
    30
    
    
    35$100,000
    
    $
    13,568
    
    
    $
    18,090
    
    
    $
    22,613
    
    
    $
    27,135
    
    
    $
    31,658$125,000
    
    $
    18,630
    
    
    $
    24,840
    
    
    $
    31,050
    
    
    $
    37,260
    
    
    $
    43,470$150,000
    
    $
    23,693
    
    
    $
    31,590
    
    
    $
    39,488
    
    
    $
    47,385
    
    
    $
    55,283$175,000
    
    $
    28,755
    
    
    $
    38,340
    
    
    $
    47,925
    
    
    $
    57,510
    
    
    $
    67,095$200,000
    
    $
    33,818
    
    
    $
    48,090
    
    
    $
    56,363
    
    
    $
    67,635
    
    
    $
    78,908$210,000 or more
    
    $
    35,843
    
    
    $
    47,790
    
    
    $
    59,783
    
    
    $
    71,685
    
    
    $
    83,633
 
 (1)
    
    Estimated annual benefits are computed on the basis of a straight life annuity with ten
years certain and are not subject to offset.  Name
    
    Years of ServiceDonald J. Stephens
    
    36Richard C. Larson
    
    14Barbara J. Coutley
    
    31Kenneth A. Snyder
    
    18
 401(k) Plan
   -114-




---



##### Table of Contents



Supplemental Retirement Benefit Plan
    Future Stock Benefit Plans
 Employee Stock Ownership Plan and Trust.
 -115-




---



##### Table of Contents



Stock Option Plan.
 -116-




---



##### Table of Contents



-117-




---



##### Table of Contents




    
    non-employee directors in the aggregate may not receive more than 30% of the
options authorized under the plan;
    
    any one non-employee director may not receive more than 5% of the options
authorized under the plan;
    
    any officer or employee may not receive more than 25% of the options authorized
under the plan;
    
    the options may not vest more rapidly than 20% per year, beginning on the first
anniversary of stockholder approval of the plan; and
    
    accelerated vesting is not permitted except for death, disability or upon a
change in control of Wauwatosa Savings or Wauwatosa Holdings.
   Recognition and Retention Plan
  
    
    all non-employee directors in the aggregate may not receive more than 30% of
 -118-




---



##### Table of Contents



the shares authorized under the plan;
 
    
    no non-employee director may receive more than 5% of the shares authorized
under the plan;
    
    no officer or employee may receive more than 25% of the shares authorized under
the plan;
    
    the awards may not vest more rapidly than 20% per year, beginning on the first
anniversary of shareholder approval of the plan; and
    
    accelerated vesting is not permitted except for death, disability or upon a
change of control of Wauwatosa Savings or Wauwatosa Holdings.
   Limitations on Federal Tax Deductions for Executive Officer Compensation
  -119-




---



##### Table of Contents



Item 12 . Security Ownership of Certain Beneficial Owners and Management
 Participation By Management in the Offering
  Aggregate
    
    
    Number ofDirectors
    
    Purchase Price
    
    
    SharesBarbara J. Coutley
    
    $
    90,000
    
    
    
    9,000Thomas E. Dalum
    
    $
    500,000
    
    
    
    50,000Michael L. Hansen
    
    $
    500,000
    
    
    
    50,000Patrick S. Lawton
    
    $
    500,000
    
    
    
    50,000Stephen J. Schmidt
    
    $
    10,000
    
    
    
    1,000Donald J. Stephens
    
    $
    500,000
    
    
    
    50,000
 Executive Officers Who Are Not
    
    Aggregate
    
    
    NumberDirectors
    
    Purchase Price
    
    
    of SharesRichard C. Larson
    
    $
    100,000
    
    
    
    10,000Kenneth A. Snyder
    
    $
    100,000
    
    
    
    10,000
 -120-




---



##### Table of Contents



Item 13 . Certain Relationships and Related Transactions
   Non-Named
    
    Amount of
    
    
    Employee
    
    
    employee InterestExecutive Officer
    
    Mortgage Loan
    
    
    Interest Rate
    
    
    RateBarbara J. Coutley
    
    $
    261,401
    
    
    
    3.08
    %
    
    
    6.25
    %Richard C. Larson
    
    $
    336,123
    
    
    
    3.08
    %
    
    
    5.75
    %Kenneth A. Snyder
    
    $
    298,288
    
    
    
    3.08
    %
    
    
    5.25
    %
   -121-




---



##### Table of Contents



Item 14 . Principal Accountant Fees and Services
  2005
    
    
    2004Audit Fees(1)
    
    $
    201,500
    
    
    $
    50,500Audit Related Fees(2)
    
    
    13,050
    
    
    
    Tax Fees(3)
    
    
    13,590
    
    
    
    23,576Total
    
    $
    228,140
    
    
    $
    74,076
 
 (1)
    
    Audit fees consist of professional services rendered by KPMG LLP for the audit of the
Banks annual financial statements. In addition, the 2005 audit fees include professional
services rendered by KPMG LLP of $110,000 and by Ernst & Young LLP of $32,500 in conjunction
with the filing of the form S-1 Registration Statement with the SEC.(2)
    
    Audit related fees consist of services rendered by KPMG LLP of $8,000 in conjunction with
Federal Home Loan Bank collateral verification and by Virchow Krause and Company of $5,050 in
conjunction with the audit of an employee benefit plan.(3)
    
    Tax fees consist of tax return preparation for the Bank and for Bank employee benefit plans.
Fees billed in 2005 were paid to KPMG LLP and fees billed in 2004 were paid to Ernst & Young
LLP.  Pre-approval Policy 
 -122-




---



##### Table of Contents



Part IV
 
 Item 15 . Exhibits and Financial Statement Schedules
  Financial Statements and Financial Statement Schedules
          Exhibits
 -123-




---



##### Table of Contents



SIGNATURES
  WAUWATOSA HOLDING INC.September 27, 2005By:
    
    /s/Donald J. StephensDonald J. StephensChairman, President and ChiefExecutive Officer
 
 POWER OF ATTORNEY
  
  Signature and Title
 /s/Donald J. Stephens
    
    /s/Thomas E. DalumDonald J. Stephens, Chairman, President
    
    Thomas E. Dalum, DirectorChief Executive Officer and Director(Principal Executive Officer)/s/Richard C. Larson
    
    /s/Michael L. HansenRichard C. Larson, Chief Financial Officer
    
    Michael L. Hansen, Director(Principal Financial and
Accounting Officer)/s/Barbara J. Coutley
    
    /s/Patrick S. LawtonBarbara J. Coutley, Senior Vice President
    
    Patrick S. Lawton, DirectorSecretary and Director/s/Stephen J. SchmidtStephen J. Schmidt, Director
 
 *
    
    Each of the above signatures is affixed as of September 27, 2005. 124




---



##### Table of Contents



WAUWATOSA HOLDINGS, INC.
( Wauwatosa Holdings or the Company)**
Commission File No. 000-51507
 
 EXHIBIT INDEX
TO
2005 REPORT ON FORM 10-K
  Incorporated Herein
    
    FiledExhibit
    
    Description
    
    By Reference To
    
    Herewith2.1
    
    Plan of Reorganization from
    
    Exhibit 2.1 to theMutual Savings Bank to Mutual
    
    Company's RegistrationHolding Company of Wauwatosa
    
    Statement on Form S-1,Savings Bank (the Bank), as
    
    Registration No.adopted on May 17,2005 and
    
    333-125715 (the 2005amended on June 3, 2005 (the
    
    S-1)Plan)3.1
    
    Proposed Articles of
    
    Exhibit 3.1 to 2005 S-1Incorporation of the Company3.2
    
    Proposed Bylaws of the Company
    
    Exhibit 3.1 to 2005 S-110.1
    
    Wauwatosa Savings Bank
    
    Exhibit 10.1 to 2005 S-1Employee Stock Ownership Planand Trust10.2
    
    Supplemental Retirement
    
    Exhibit 10.2 to 2005 S-1Benefit Plan between the Bankand Donald J. Stephens10.3
    
    Form of Employment Agreement
    
    Exhibit 10.3 to 2005 S-1between the Bank and DonaldJ. Stephens16.1
    
    Letter from Ernst & Young LLP
    
    Exhibit 16.1 to 2005 S-121.1
    
    List of Subsidiaries
    
    
    
    X24.1
    
    Powers of Attorney
    
    Signature Page31.1
    
    Sarbanes-Oxley Act Section
    
    
    
    X302 Certification signed bythe Chairman, President andChief Executive Officer ofWauwatosa Holdings31.2
    
    Sarbanes-Oxley Act Section
    
    
    
    X302 Certification signed bythe Chief Financial Officerof Bank Wauwatosa Holdings32.1
    
    Certification pursuant to 18
    
    
    
    XU.S. C. Section 1350, asadopted pursuant to Section906 of the Sarbanes-Oxley Actof 2002 signed by theChairman, President and ChiefExecutive Officer ofWauwatosa Holdings
 EI-1




---



##### Table of Contents



Incorporated Herein
    
    FiledExhibit
    
    Description
    
    By Reference To
    
    Herewith32.2
    
    Certification pursuant to 18
    
    
    
    XU.S. C. Section 1350, asadopted pursuant to Section906 of the Sarbanes-Oxley Actof 2002 signed by the ChiefFinancial Officer ofWauwatosa Holdings
  EI-2