##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2006
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number 000-51507
 WAUWATOSA HOLDINGS, INC.
  Wisconsin
    
    20-3598485(State or other jurisdiction of
    
    (IRS Employer Identification No.)incorporation or organization)
 11200 W. Plank Ct.
Wauwatosa, WI 53226
(414) 761-1000
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
  o þ




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##### 



WAUWATOSA HOLDINGS, INC.
 10-Q INDEX
  
 Page No.PART I. FINANCIAL INFORMATIONItem l. Financial StatementsConsolidated Statements of Financial Condition as of June 30, 2006 (unaudited) and December 31, 2005
    
    3Consolidated Statements of Income for the three and six months ended June 30, 2006 and 2005 (unaudited)
    
    4Consolidated Statements of Changes in Shareholders Equity for the six months ended June 30, 2006 and 2005 (unaudited)
    
    6Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005 (unaudited)
    
    7Notes to Consolidated Financial Statements
    
    8-15Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    16-38Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    39-41Item 4. Controls and Procedures
    
    42PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    43Item 6. Exhibits
    
    43Signatures
    
    44CertificationCertificationCertificationCertificationSection 302 Certification signed by the Chairman and CEOSection 302 Certification signed by the Chief Financial OfficerSection 906 Certification signed by the Chairman and CEOSection 906 Certification signed by the Chief Financial Officer
  -2-




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 WAUWATOSA HOLDINGS, INC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 (Unaudited)June 30,
    
    
    December 31,2006
    
    
    2005(In Thousands, except share data)AssetsCash
    
    $
    10,788
    
    
    
    8,761Federal funds sold
    
    
    869
    
    
    
    5,388Short-term investments
    
    
    4,252
    
    
    
    2,349Cash and cash equivalents
    
    
    15,909
    
    
    
    16,498Securities available-for-sale (at fair value)
    
    
    112,577
    
    
    
    121,955Loans held for sale
    
    
    5,566
    
    
    
    Loans receivable
    
    
    1,367,913
    
    
    
    1,306,018Less: Allowance for loan losses
    
    
    5,983
    
    
    
    5,250Loans receivable, net
    
    
    1,361,930
    
    
    
    1,300,768Office properties and equipment, net
    
    
    31,168
    
    
    
    25,022Federal Home Loan Bank stock, at cost
    
    
    13,366
    
    
    
    14,406Cash surrender value of life insurance
    
    
    23,359
    
    
    
    22,792Prepaid expenses and other assets
    
    
    11,426
    
    
    
    9,768Total assets
    
    $
    1,575,301
    
    
    
    1,511,209Liabilities and Shareholders EquityLiabilities:Demand deposits
    
    $
    67,947
    
    
    
    82,290Money market and savings deposits
    
    
    70,319
    
    
    
    33,565Time deposits
    
    
    930,293
    
    
    
    929,738Total deposits
    
    
    1,068,559
    
    
    
    1,045,593Federal Home Loan Bank advances short-term
    
    
    36,209
    
    
    
    87,209Federal Home Loan Bank advances long-term
    
    
    202,003
    
    
    
    114,003Advance payments by borrowers for taxes
    
    
    16,948
    
    
    
    181Other liabilities
    
    
    16,044
    
    
    
    32,527Total liabilities
    
    
    1,339,763
    
    
    
    1,279,513Shareholders equity:Preferred stock (par value $.01 per share, authorized
20,000,000 shares, no shares issued)
    
    
    
    
    
    
    Common stock (par value $.01 per share, authorized
200,000,000 shares, 33,723,750 shares issued,
33,057,164 shares outstanding)
    
    
    337
    
    
    
    337Additional paid-in-capital
    
    
    103,946
    
    
    
    103,859Accumulated other comprehensive loss (net of taxes)
    
    
    (3,106
    )
    
    
    (1,571
    )Retained earnings
    
    
    141,619
    
    
    
    136,756Unearned ESOP shares
    
    
    (7,258
    )
    
    
    (7,685
    )Total shareholders equity
    
    
    235,538
    
    
    
    231,696Total liabilities and shareholders equity
    
    $
    1,575,301
    
    
    
    1,511,209
  -3-




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##### Table of Contents



WAUWATOSA HOLDINGS, INC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)Three Months Ended June 30,2006
    
    
    2005(In Thousands, except share data)Interest income:Loans
    
    $
    20,795
    
    
    
    18,191Mortgage-related securities
    
    
    1,018
    
    
    
    525Debt securities, federal funds sold and
short-term investments
    
    
    605
    
    
    
    581Total interest income
    
    
    22,418
    
    
    
    19,297Interest expense:Deposits
    
    
    10,356
    
    
    
    8,942Borrowings
    
    
    2,472
    
    
    
    837Total interest expense
    
    
    12,828
    
    
    
    9,779Net interest income
    
    
    9,590
    
    
    
    9,518Provision for loan losses
    
    
    345
    
    
    
    (25
    )Net interest income after
provision for loan losses
    
    
    9,245
    
    
    
    9,543Noninterest income:Service charges on loans and deposits
    
    
    452
    
    
    
    421Increase in cash surrender value of life insurance
    
    
    230
    
    
    
    151Gain on sale of securities
    
    
    
    
    
    
    (49
    )Gain on sale of loans
    
    
    756
    
    
    
    Other
    
    
    53
    
    
    
    148Total noninterest income
    
    
    1,491
    
    
    
    671Noninterest expenses:Compensation, payroll taxes, and other employee benefits
    
    
    4,239
    
    
    
    2,892Occupancy, office furniture, and equipment
    
    
    1,032
    
    
    
    858Advertising
    
    
    286
    
    
    
    435Data processing
    
    
    418
    
    
    
    286Charitable contributions
    
    
    
    
    
    
    188Communications
    
    
    161
    
    
    
    158Professional fees
    
    
    289
    
    
    
    186Other
    
    
    902
    
    
    
    878Total noninterest expenses
    
    
    7,327
    
    
    
    5,881Income before income taxes
    
    
    3,409
    
    
    
    4,333Income taxes
    
    
    1,252
    
    
    
    1,593Net income
    
    $
    2,157
    
    
    
    2,740Earnings per share:Basic
    
    $
    0.07
    
    
    
    N/ADiluted
    
    
    0.07
    
    
    
    N/AWeighted average shares outstanding:Basic
    
    
    33,066,761
    
    
    
    N/ADiluted
    
    
    33,066,761
    
    
    
    N/A
  -4-




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WAUWATOSA HOLDINGS, INC AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)Six Months Ended June 30,2006
    
    
    2005(In Thousands, except share data)Interest income:Loans
    
    $
    41,001
    
    
    
    35,504Mortgage-related securities
    
    
    2,081
    
    
    
    1,076Debt securities, federal funds sold and
short-term investments
    
    
    1,193
    
    
    
    1,119Total interest income
    
    
    44,275
    
    
    
    37,699Interest expense:Deposits
    
    
    19,690
    
    
    
    17,172Borrowings
    
    
    4,935
    
    
    
    1,606Total interest expense
    
    
    24,625
    
    
    
    18,778Net interest income
    
    
    19,650
    
    
    
    18,921Provision for loan losses
    
    
    652
    
    
    
    875Net interest income after
provision for loan losses
    
    
    18,998
    
    
    
    18,046Noninterest income:Service charges on loans and deposits
    
    
    937
    
    
    
    805Increase in cash surrender value of life insurance
    
    
    387
    
    
    
    218Gain on sale of securities
    
    
    
    
    
    
    12Gain on sale of loans
    
    
    1,095
    
    
    
    Other
    
    
    265
    
    
    
    219Total noninterest income
    
    
    2,684
    
    
    
    1,254Noninterest expenses:Compensation, payroll taxes, and other employee benefits
    
    
    8,102
    
    
    
    5,729Occupancy, office furniture, and equipment
    
    
    1,994
    
    
    
    1,768Advertising
    
    
    571
    
    
    
    591Data processing
    
    
    793
    
    
    
    572Charitable contributions
    
    
    
    
    
    
    375Communications
    
    
    322
    
    
    
    319Professional fees
    
    
    467
    
    
    
    397Other
    
    
    1,734
    
    
    
    1,563Total noninterest expenses
    
    
    13,983
    
    
    
    11,314Income before income taxes
    
    
    7,699
    
    
    
    7,986Income taxes
    
    
    2,836
    
    
    
    4,656Net income
    
    $
    4,863
    
    
    
    3,330Earnings per share:Basic
    
    $
    0.15
    
    
    
    N/ADiluted
    
    
    0.15
    
    
    
    N/AWeighted average shares outstanding:Basic
    
    
    33,057,373
    
    
    
    N/ADiluted
    
    
    33,057,373
    
    
    
    N/A
  -5-




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WAUWATOSA HOLDINGS, INC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 AccumulatedCommon
    
    
    Additional
    
    
    
    
    
    
    Unearned
    
    
    OtherStock
    
    
    Paid-In
    
    
    Retained
    
    
    ESOP
    
    
    Comprehensive
    
    
    TotalShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Shares
    
    
    Income (Loss)
    
    
    Equity(In Thousands)Balances at December 31, 2004
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    130,713
    
    
    
    
    
    
    
    (390
    )
    
    
    130,323Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,330
    
    
    
    
    
    
    
    
    
    
    
    3,330Other comprehensive income:Net unrealized holding gains (losses) on
available for sale securities arising during the
period, net of taxes $118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )
    
    
    (229
    )Less reclassification adjustment for net gains on available for saleSecurities realized in net income, net of taxes
of $4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (8
    )Total comprehensive income (loss)Balances at June 30, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    134,043
    
    
    
    
    
    
    
    (627
    )
    
    
    133,416Balances at December 31, 2005
    
    
    33,724
    
    
    $
    337
    
    
    
    103,859
    
    
    
    136,756
    
    
    
    (7,685
    )
    
    
    (1,571
    )
    
    
    231,696Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,863
    
    
    
    
    
    
    
    
    
    
    
    4,863Other comprehensive income:Net unrealized holding gains (losses) on
available for sale securities arising during the period,
net of taxes $828
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,535
    )
    
    
    (1,535
    )Total comprehensive
incomeESOP shares committed to be released to Plan participants
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    427
    
    
    
    
    
    
    
    514Balances at June 30, 2006
    
    
    33,724
    
    
    $
    337
    
    
    
    103,946
    
    
    
    141,619
    
    
    
    (7,258
    )
    
    
    (3,106
    )
    
    
    235,538
  -6-




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##### Table of Contents



WAUWATOSA HOLDINGS, INC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)Six Months Ended June 30,2006
    
    
    2005Operating activities:Net income
    
    $
    4,863
    
    
    
    3,330Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    652
    
    
    
    875Provision for depreciation
    
    
    1,142
    
    
    
    965Deferred income taxes
    
    
    (890
    )
    
    
    (1,521
    )Net amortization of premium on debt and mortgage-related securities
    
    
    23
    
    
    
    117Commitment of ESOP shares
    
    
    513
    
    
    
    Gain on sale of loans held for sale
    
    
    (1,095
    )
    
    
    Loans originated for sale
    
    
    (27,249
    )
    
    
    Proceeds from sale of loans held for sale
    
    
    22,778
    
    
    
    Increase in accrued interest receivable
    
    
    (57
    )
    
    
    (228
    )Increase in cash surrender value of life insurance
    
    
    (387
    )
    
    
    (341
    )Increase in accrued interest on deposits
    
    
    596
    
    
    
    800Decrease in other liabilities
    
    
    (888
    )
    
    
    (48
    )FHLB stock dividends
    
    
    
    
    
    
    (376
    )Gain on sale of securities
    
    
    
    
    
    
    (12
    )Gain on sale of other real estate owned
    
    
    (109
    )
    
    
    (18
    )Other
    
    
    53
    
    
    
    (349
    )Net cash provided by (used in) operating
activities
    
    
    (55
    )
    
    
    3,194Investing activities:Principal repayments on mortgage-related securities
    
    
    7,789
    
    
    
    6,176Proceeds from sales of debt securities
    
    
    
    
    
    
    262Net increase in loans receivable
    
    
    (62,299
    )
    
    
    (72,991
    )Net purchases of office properties and equipment
    
    
    (4,365
    )
    
    
    (1,844
    )Purchase and premiums on life insurance
    
    
    (180
    )
    
    
    (180
    )Redemption of FHLB stock
    
    
    1,040
    
    
    
    Purchase of land
    
    
    (2,797
    )
    
    
    Purchase of Waterstone Mortgage Corporation
    
    
    (1,082
    )
    
    
    Proceeds from sales of foreclosed properties
    
    
    891
    
    
    
    1,329Net cash used in investing activities
    
    
    (61,003
    )
    
    
    (67,248
    )Financing activities:Net increase in deposits
    
    
    22,966
    
    
    
    45,903Net change in short-term FHLB advances
    
    
    (51,000
    )
    
    
    (15,000
    )Proceeds from long-term FHLB advances
    
    
    88,000
    
    
    
    36,507Net decrease in advance payments by borrowers for taxes
    
    
    503
    
    
    
    3,541Net cash provided by financing activities
    
    
    60,469
    
    
    
    70,951(Decrease) Increase in cash and cash
equivalents
    
    
    (589
    )
    
    
    6,897Cash and cash equivalents at beginning of period
    
    
    16,498
    
    
    
    13,570Cash and cash equivalents at end of period
    
    $
    15,909
    
    
    
    20,467Supplemental information:Cash paid or credited during the period for:Income tax payments
    
    $
    2,940
    
    
    
    2,795Interest payments
    
    
    24,029
    
    
    
    17,978Noncash investing activities:Loans receivable transferred to foreclosed properties
    
    
    626
    
    
    
    Capital leases originated
    
    
    
    
    
    
    3,423Non Cash financing activities:Long-term FHLB advances reclassified to short-term
    
    
    7,000
    
    
    
    35,000
  -7-




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WAUWATOSA HOLDINGS, INC AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Basis of Presentation
     Note 2  Reclassifications
  -8-




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Note 3  Securities Available-for-Sale
  June 30, 2006(In Thousands)Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealizedcost
    
    
    gains
    
    
    losses
    
    
    Fair valueMortgage-backed securities
    
    $
    16,546
    
    
    
    2
    
    
    
    (730
    )
    
    
    15,818Collateralized mortgage obligations
    
    
    69,174
    
    
    
    
    
    
    
    (3,203
    )
    
    
    65,971Mortgage-related securities
    
    
    85,720
    
    
    
    2
    
    
    
    (3,933
    )
    
    
    81,789Government agency bonds
    
    
    26,575
    
    
    
    
    
    
    
    (879
    )
    
    
    25,696Municipals
    
    
    4,278
    
    
    
    109
    
    
    
    (50
    )
    
    
    4,337Debt securities
    
    
    30,853
    
    
    
    109
    
    
    
    (929
    )
    
    
    30,033Other securities
    
    
    782
    
    
    
    
    
    
    
    (27
    )
    
    
    755$
    117,355
    
    
    
    111
    
    
    
    (4,889
    )
    
    
    112,577
 December 31, 2005(In Thousands)Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealizedcost
    
    
    gains
    
    
    losses
    
    
    Fair valueMortgage-backed securities
    
    $
    17,478
    
    
    
    3
    
    
    
    (340
    )
    
    
    17,141Collateralized mortgage obligations
    
    
    76,037
    
    
    
    
    
    
    
    (1,600
    )
    
    
    74,437Mortgage-related securities
    
    
    93,515
    
    
    
    3
    
    
    
    (1,940
    )
    
    
    91,578Government agency bonds
    
    
    26,577
    
    
    
    
    
    
    
    (627
    )
    
    
    25,950Municipals
    
    
    4,278
    
    
    
    176
    
    
    
    (27
    )
    
    
    4,427Debt securities
    
    
    30,855
    
    
    
    176
    
    
    
    (654
    )
    
    
    30,377$
    124,370
    
    
    
    179
    
    
    
    (2,594
    )
    
    
    121,955
  -9-




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##### Table of Contents



Amortized
    
    
    FairCost
    
    
    Value(In Thousands)Due within one year
    
    $
    3,000
    
    
    $
    2,930Due after one year through five years
    
    
    23,824
    
    
    
    23,016Due after five years through ten years
    
    
    855
    
    
    
    827Due after ten years
    
    
    3,424
    
    
    
    3,510Mutual funds
    
    
    532
    
    
    
    505Mortgage-related securities
    
    
    85,720
    
    
    
    81,789$
    117,355
    
    
    $
    112,577
  June 30, 2006Less than 12 months
    
    
    12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealizedvalue
    
    
    loss
    
    
    value
    
    
    loss
    
    
    value
    
    
    loss(In Thousands)Government agency bonds
    
    $
    1,422
    
    
    
    (44
    )
    
    
    24,274
    
    
    
    (835
    )
    
    
    25,696
    
    
    
    (879
    )Municipals
    
    
    1,305
    
    
    
    (50
    )
    
    
    
    
    
    
    
    
    
    
    1,305
    
    
    
    (50
    )Mortgage-related securities
    
    
    43,733
    
    
    
    (1,624
    )
    
    
    37,906
    
    
    
    (2,309
    )
    
    
    81,639
    
    
    
    (3,933
    )Other securities
    
    
    755
    
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    755
    
    
    
    (27
    )$
    47,215
    
    
    
    (1,745
    )
    
    
    62,180
    
    
    
    (3,144
    )
    
    
    109,395
    
    
    
    (4,889
    )
  -10-




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##### Table of Contents



Note 4  Loans Receivable
  June 30,
    
    
    December 31,2006
    
    
    2005(In Thousands)Mortgage loans:Residential real estate:Single family
    
    $
    476,337
    
    
    
    469,395Two- to four-family
    
    
    260,499
    
    
    
    256,270Over four-family
    
    
    480,988
    
    
    
    443,528Construction
    
    
    180,020
    
    
    
    165,516Commercial real estate
    
    
    35,286
    
    
    
    34,543Land
    
    
    26,672
    
    
    
    23,685Credit cards
    
    
    124
    
    
    
    126Other
    
    
    140
    
    
    
    331,460,066
    
    
    
    1,393,096Less:Undisbursed loan proceeds
    
    
    87,580
    
    
    
    82,712Unearned loan fees
    
    
    4,573
    
    
    
    4,366Loans Receivable
    
    $
    1,367,913
    
    
    
    1,306,018
   For the six months endedJune 30,2006
    
    
    2005(In Thousands)Balance at beginning of period
    
    $
    5,250
    
    
    
    3,737Provision for loan losses
    
    
    652
    
    
    
    875Charge-offs
    
    
    (144
    )
    
    
    (7
    )Recoveries
    
    
    225
    
    
    
    1Balance at end of period
    
    $
    5,983
    
    
    
    4,606Allowance to loans receivable
    
    
    0.44
    %
    
    
    0.38
    %
 -11-




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##### Table of Contents



Note 5  Deposits
  (In Thousands)Within one year
    
    $
    617,647One to two years
    
    
    210,890Two to three years
    
    
    54,332Three to four years
    
    
    33,307Four through five years
    
    
    14,111After five years
    
    
    6$
    930,293
 -12-




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##### Table of Contents



Note 6  FHLB Advances
  June 30,
    
    
    December 31,2006
    
    
    2005(In Thousands)Federal Home Loan Bank (FHLB) advances:Short-term FHLB advances:FHLB advance, 4.41%, due January 2006
    
    $
    
    
    
    
    23,000FHLB advance, 2.62%, due January 2006
    
    
    
    
    
    
    25,000FHLB advance, 2.21%, due January 2006
    
    
    
    
    
    
    10,000FHLB advance, 3.26%, due July 2006
    
    
    11,777
    
    
    
    11,777FHLB advance, 2.83%, due September 2006
    
    
    2,432
    
    
    
    2,432FHLB advance, 4.49%, due October 2006
    
    
    15,000
    
    
    
    15,000FHLB advance, 3.56%, due February 2007
    
    
    7,000
    
    
    
    Total short-term FHLB advances
    
    
    36,209
    
    
    
    87,209Long-term FHLB advances:FHLB advance, 3.56%, due February 2007
    
    
    
    
    
    
    7,000FHLB advance, 3.17%, due August 2007
    
    
    5,408
    
    
    
    5,408FHLB advance, 3.19%, due September 2007
    
    
    4,123
    
    
    
    4,123FHLB advance, 3.09%, due October 2007
    
    
    4,693
    
    
    
    4,693FHLB advance, 4.56%, due October 2007
    
    
    10,000
    
    
    
    10,000FHLB advance, 4.73%, due December 2007
    
    
    10,000
    
    
    
    10,000FHLB advance, 3.67%, due January 2008
    
    
    6,819
    
    
    
    6,819FHLB advance, 3.63%, due January 2008
    
    
    3,074
    
    
    
    3,074FHLB advance, 3.80%, due February 2008
    
    
    7,836
    
    
    
    7,836FHLB advance, 3.58%, due August 2008
    
    
    5,000
    
    
    
    5,000FHLB advance, 4.78%, due November 2008
    
    
    9,150
    
    
    
    9,150FHLB advance, 4.69%, due November 2008
    
    
    8,900
    
    
    
    8,900FHLB advance, 4.76%, due December 2008
    
    
    7,000
    
    
    
    7,000FHLB advance, 4.72%, due October 2010
    
    
    25,000
    
    
    
    25,000FHLB advance, 4.47%, due February 2011
    
    
    25,000
    
    
    
    FHLB advance, 4.01%, due January 2016
    
    
    50,000
    
    
    
    FHLB advance, 4.48%, due May 2016
    
    
    10,000
    
    
    
    FHLB advance, 4.49%, due June 2016
    
    
    10,000
    
    
    
    Total long-term FHLB advances
    
    
    202,003
    
    
    
    114,003Total FHLB advances
    
    $
    238,212
    
    
    
    201,212
  -13-




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##### Table of Contents



Note 7  Financial Instruments with Off-Balance Sheet Risk
  June 30,
    
    
    December 31,2006
    
    
    2005(In Thousands)Financial instruments whose contract amounts represent
potential credit risk:Commitments to extend credit under first mortgage loans
    
    $
    42,772
    
    
    
    43,375Commitments to extend credit under home equity lines
of credit
    
    
    34,034
    
    
    
    31,809Standby letters of credit
    
    
    1,320
    
    
    
    1,576
  Note 8  Earnings per share
   -14-




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2006
    
    
    June 30, 2006(In Thousands, except per share data)Net income
    
    $
    2,157
    
    
    $
    4,863Weighted average shares outstanding
    
    
    33,067
    
    
    
    33,057Effect of dilutive potential common shares
    
    
    
    
    
    
    Diluted weighted average shares outstanding
    
    
    33,067
    
    
    
    33,057Basic earnings per share
    
    $
    0.07
    
    
    $
    0.15Diluted earnings per share
    
    $
    0.07
    
    
    $
    0.15
 Note 9  Recent Accounting Developments
  -15-




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cautionary Statements Regarding Forward-Looking Information
  
    
    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;
    
    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;
 -16-




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##### Table of Contents




    
    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.
  Overview
     -17-




---



##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses.
    Income Taxes.
 -18-




---



##### Table of Contents



Comparison of Operating Results for the Six Months Ended June 30, 2006 and 2005
 General
 Total Interest Income
 -19-




---



##### Table of Contents



Total Interest Expense 
   Net Interest Income
 Provision for Loan Losses
 Noninterest Income
 -20-




---



##### Table of Contents



Noninterest Expense
  Income Taxes
 Net Income 
 Comparison of Operating results for the Three Months Ended June 30, 2006 and 2005
 General
 -21-




---



##### Table of Contents



Total Interest Income
 Total Interest Expense 
   Net Interest Income
 -22-




---



##### Table of Contents



Provision for Loan Losses
 Noninterest Income
 Noninterest Expense
  Income Taxes
 -23-




---



##### Table of Contents



Net Income 
 Comparison of Financial Condition at June 30, 2006 and December 31, 2005
 Total Assets
 Loans Held for Sale 
 Loans Receivable
 -24-




---



##### Table of Contents



As of or for the
    
    
    As of or for theSix Months Ended
    
    
    Six Months EndedJune 30, 2006
    
    
    December 31, 2005(In Thousands)Total loans at beginning of period
    
    $
    1,393,096
    
    
    
    1,299,812Real estate loans originated:Residential (1)Single family
    
    
    42,812
    
    
    
    81,397Two- to four-family
    
    
    36,837
    
    
    
    52,030Over four-family
    
    
    74,433
    
    
    
    95,734Construction
    
    
    25,796
    
    
    
    43,865Commercial
    
    
    6,824
    
    
    
    2,658Land
    
    
    6,277
    
    
    
    10,451Total loans originated
    
    
    192,979
    
    
    
    286,135Other loans  net activity
    
    
    (18
    )
    
    
    (43
    )Principal repayments
    
    
    (125,991
    )
    
    
    (192,808
    )Net loan activity
    
    
    66,970
    
    
    
    93,284Total loans at end of period
    
    $
    1,460,066
    
    
    
    1,393,096
 
 (1)
    
    Residential mortgage loans include home equity loans and home equity lines
of credit. Office Properties and Equipment 
 Deposits
 Borrowings
 -25-




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##### Table of Contents



Advance Payments by Borrowers for Taxes
 Other Liabilities
 Shareholders Equity
 Average Balance Sheets, Interest and Yields/Costs
  -26-




---



##### Table of Contents



Three Months Ended June 30,2006
    
    
    2005Average
    
    
    Interest and
    
    
    
    
    
    
    Average
    
    
    Interest andBalance
    
    
    Dividends
    
    
    Yield/Cost
    
    
    Balance
    
    
    Dividends
    
    
    Yield/Cost(Dollars in Thousands)Interest-earning assets:Loans receivable, net
    
    $
    1,357,788
    
    
    
    (1)  $20,795
    
    
    
    6.14
    %
    
    $
    1,201,340
    
    
    
    (1)  $18,191
    
    
    
    6.07
    %Available for sale securities(2)
    
    
    115,831
    
    
    
    1,314
    
    
    
    4.55
    
    
    
    86,383
    
    
    
    815
    
    
    
    3.78Other earning assets
    
    
    27,620
    
    
    
    309
    
    
    
    4.50
    
    
    
    26,742
    
    
    
    291
    
    
    
    4.36Total interest-earning assets
    
    
    1,501,239
    
    
    
    22,418
    
    
    
    5.99
    
    
    
    1,314,465
    
    
    
    19,297
    
    
    
    5.89Noninterest-earning assets
    
    
    67,068
    
    
    
    
    
    
    
    
    
    
    
    52,754Total assets
    
    $
    1,568,307
    
    
    
    
    
    
    
    
    
    
    $
    1,367,219Interest-bearing liabilities:Demand and money market accounts
    
    $
    105,872
    
    
    $
    604
    
    
    
    2.29
    
    
    $
    88,856
    
    
    
    299
    
    
    
    1.35Savings accounts
    
    
    20,846
    
    
    
    26
    
    
    
    0.50
    
    
    
    24,185
    
    
    
    30
    
    
    
    0.50Certificates of deposit
    
    
    947,275
    
    
    
    9,717
    
    
    
    4.11
    
    
    
    998,548
    
    
    
    8.605
    
    
    
    3.46Total interest-bearing deposits
    
    
    1,073,993
    
    
    
    10,347
    
    
    
    3.86
    
    
    
    1,111,589
    
    
    
    8,934
    
    
    
    3.22Advances from the Federal Home Loan Bank
    
    
    225,051
    
    
    
    2,373
    
    
    
    4.23
    
    
    
    93,607
    
    
    
    750
    
    
    
    3.21Other interest bearing liabilities
    
    
    10,803
    
    
    
    108
    
    
    
    4.01
    
    
    
    8,852
    
    
    
    95
    
    
    
    4.30Total interest-bearing liabilities
    
    
    1,309,847
    
    
    
    12,828
    
    
    
    3.93
    
    
    
    1,214,048
    
    
    
    9,779
    
    
    
    3.23Noninterest-bearing liabilities
    
    
    24,575
    
    
    
    
    
    
    
    
    
    
    
    21,178Total liabilities
    
    
    1,334,422
    
    
    
    
    
    
    
    
    
    
    
    1,235,226Equity
    
    
    233,885
    
    
    
    
    
    
    
    
    
    
    
    131,993Total liabilities and equity
    
    $
    1,568,307
    
    
    
    
    
    
    
    
    
    
    $
    1,367,219Net interest income
    
    
    
    
    
    
    9,590
    
    
    
    
    
    
    
    
    
    
    
    9,518Net interest rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.06
    %
    
    
    
    
    
    
    
    
    
    
    2.66
    %Net interest-earning assets (4)
    
    $
    191,392
    
    
    
    
    
    
    
    
    
    
    $
    100,417Net interest margin (5)
    
    
    
    
    
    
    2.56
    %
    
    
    
    
    
    
    
    
    
    
    2.90
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    114.61
    %
    
    
    
    
    
    
    
    
    
    
    108.27
    %
 
 (1)
    
    Includes net deferred loan fee amortization income of $194 and $249 for the three months
ended June 30,2006 and 2005, respectively.(2)
    
    Average balance of available for sale securities is based on amortized historical cost.(3)
    
    Net interest rate spread represents the difference between the yield on average
interest-earning assets and the cost ofaverage interest-bearing liabilities.(4)
    
    Net interest-earning assets represent total interest-earning assets less total
interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by average total interest-earning
assets. -27-




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##### Table of Contents



Six Months Ended June 30,2006
    
    
    2005Average
    
    
    Interest and
    
    
    
    
    
    
    Average
    
    
    Interest andBalance
    
    
    Dividends
    
    
    Yield/Cost
    
    
    Balance
    
    
    Dividends
    
    
    Yield/Cost(Dollars in Thousands)Interest-earning assets:Loans receivable, net
    
    $
    1,341,583
    
    
    
    (1)  $41,001
    
    
    
    6.16
    %
    
    $
    1,180,819
    
    
    
    (1)  $35,504
    
    
    
    6.06
    %Available for sale securities(2)
    
    
    119,219
    
    
    
    2,692
    
    
    
    4.55
    
    
    
    88,384
    
    
    
    1,657
    
    
    
    3.78Other earning assets
    
    
    25,868
    
    
    
    582
    
    
    
    4.54
    
    
    
    22,334
    
    
    
    538
    
    
    
    4.86Total interest-earning assets
    
    
    1,486,670
    
    
    
    44,275
    
    
    
    6.01
    
    
    
    1,291,537
    
    
    
    37,699
    
    
    
    5.89Noninterest-earning assets
    
    
    63,647
    
    
    
    
    
    
    
    
    
    
    
    51,936Total assets
    
    $
    1,550,317
    
    
    
    
    
    
    
    
    
    
    $
    1,343,473Interest-bearing liabilities:Demand and money market accounts
    
    $
    100,036
    
    
    $
    1,041
    
    
    
    2.10
    
    
    $
    87,218
    
    
    
    486
    
    
    
    1.12Savings accounts
    
    
    20,986
    
    
    
    52
    
    
    
    0.50
    
    
    
    23,944
    
    
    
    59
    
    
    
    0.50Certificates of deposit
    
    
    939,721
    
    
    
    18,585
    
    
    
    3.99
    
    
    
    980,809
    
    
    
    16,615
    
    
    
    3.42Total interest-bearing deposits
    
    
    1,060,743
    
    
    
    19,678
    
    
    
    3.74
    
    
    
    1,091,971
    
    
    
    17,160
    
    
    
    3.17Advances from the Federal Home Loan Bank
    
    
    225,000
    
    
    
    4,733
    
    
    
    4.24
    
    
    
    94,912
    
    
    
    1,462
    
    
    
    3.11Other interest bearing liabilities
    
    
    9,180
    
    
    
    214
    
    
    
    4.70
    
    
    
    6,788
    
    
    
    156
    
    
    
    4.63Total interest-bearing liabilities
    
    
    1,294,923
    
    
    
    24,625
    
    
    
    3.83
    
    
    
    1,193,671
    
    
    
    18,778
    
    
    
    3.17Noninterest-bearing liabilities
    
    
    21,102
    
    
    
    
    
    
    
    
    
    
    
    17,926Total liabilities
    
    
    1,316,025
    
    
    
    
    
    
    
    
    
    
    
    1,211,597Equity
    
    
    234,292
    
    
    
    
    
    
    
    
    
    
    
    131,876Total liabilities and equity
    
    $
    1,550,317
    
    
    
    
    
    
    
    
    
    
    $
    1,343,473Net interest income
    
    
    
    
    
    
    19,650
    
    
    
    
    
    
    
    
    
    
    
    18,921Net interest rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.18
    %
    
    
    
    
    
    
    
    
    
    
    2.72
    %Net interest-earning assets (4)
    
    $
    191,747
    
    
    
    
    
    
    
    
    
    
    $
    97,866Net interest margin (5)
    
    
    
    
    
    
    2.67
    %
    
    
    
    
    
    
    
    
    
    
    2.95
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    114.81
    %
    
    
    
    
    
    
    
    
    
    
    108.20
    %
 
 (1)
    
    Includes net deferred loan fee amortization income of $391 and $428 for the six months ended
June 30,2006 and 2005, respectively.(2)
    
    Average balance of available for sale securities is based on amortized historical cost.(3)
    
    Net interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing liabilities.(4)
    
    Net interest-earning assets represent total interest-earning assets less total
interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by average total interest-earning
assets. -28-




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##### Table of Contents



Rate/Volume Analysis
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006 versus 2005
    
    
    2006 versus 2005Increase (Decrease)
    
    
    
    
    
    
    Increase (Decrease) DueDue to
    
    
    
    
    
    
    toVolume
    
    
    Rate
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Net(In Thousands)Interest and dividend income:Loans receivable(1) (2)
    
    $
    2,398
    
    
    
    206
    
    
    
    2,604
    
    
    $
    5,583
    
    
    
    (86
    )
    
    
    5,497Securities interest and income from other earning
assets(3)
    
    
    407
    
    
    
    110
    
    
    
    517
    
    
    
    1,396
    
    
    
    (317
    )
    
    
    1,079Total interest-earning assets
    
    
    2,805
    
    
    
    316
    
    
    
    3,121
    
    
    
    6,979
    
    
    
    (403
    )
    
    
    6,576Interest expense:Demand and Money Market accounts
    
    
    43
    
    
    
    262
    
    
    
    305
    
    
    
    (26
    )
    
    
    581
    
    
    
    555Savings accounts
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )Certificates of deposit
    
    
    (462
    )
    
    
    1,575
    
    
    
    1,113
    
    
    
    (167
    )
    
    
    2,137
    
    
    
    1,970Total interest-bearing deposits
    
    
    (423
    )
    
    
    1,837
    
    
    
    1,414
    
    
    
    (200
    )
    
    
    2,718
    
    
    
    2,518FHLB Advances
    
    
    1,481
    
    
    
    142
    
    
    
    1,623
    
    
    
    3,726
    
    
    
    (455
    )
    
    
    3,271Other interest-bearing liabilities
    
    
    20
    
    
    
    (8
    )
    
    
    12
    
    
    
    58
    
    
    
    
    
    
    
    58Total interest-bearing liabilities
    
    
    1,078
    
    
    
    1,971
    
    
    
    3,049
    
    
    
    3,584
    
    
    
    2,263
    
    
    
    5,847Net change in net interest income
    
    $
    1,727
    
    
    
    (1,655
    )
    
    
    72
    
    
    $
    3,395
    
    
    
    (2,666
    )
    
    
    729
 
 (1)
    
    Includes net deferred loan fee amortization income of $194, $249, $391 and $428 for the
three months ended June 30, 2006 and 2005 and the six months ended June 30, 2006 and 2005,
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. -29-




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##### Table of Contents



ASSET QUALITY
  NON-PERFORMING LOANS AND ASSETS
 At June 30,
    
    
    At December 31,2006
    
    
    2005(Dollars in Thousands)Non-accrual loans:Residential (1)Single family
    
    $
    7,695
    
    
    
    5,654Two- to four-family
    
    
    2,740
    
    
    
    3,386Over four-family
    
    
    3,160
    
    
    
    6,703Construction
    
    
    1,535
    
    
    
    760Commercial
    
    
    0
    
    
    
    962Land
    
    
    330
    
    
    
    600Total non-performing loans
    
    
    15,460
    
    
    
    18,065Real estate owned
    
    
    8
    
    
    
    215Total non-performing assets
    
    $
    15,468
    
    
    
    18,280Total non-performing loans to total loans receivable
    
    
    1.13
    %
    
    
    1.40
    %Total non-performing loans to total assets
    
    
    0.98
    %
    
    
    1.20
    %Total non-performing assets to total assets
    
    
    0.98
    %
    
    
    1.21
    %
 
 (1)
    
    Residential mortgage loans include home equity loans and home equity lines of credit.  -30-




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##### Table of Contents



ALLOWANCE FOR LOAN LOSSES
 At or for the Six
    
    
    At or for the Six
    
    
    At or for the SixMonths Ended
    
    
    Months Ended
    
    
    Months EndedJune 30, 2006
    
    
    June 30, 2005
    
    
    December 31, 2005(Dollars in Thousands)Balance at beginning of period
    
    $
    5,250
    
    
    
    3,737
    
    
    
    4,606Provision for loan losses
    
    
    652
    
    
    
    875
    
    
    
    1,035Charge-offs:Residential (1)Single family
    
    
    
    
    
    
    
    
    
    
    37Two- to four-family
    
    
    137
    
    
    
    
    
    
    
    60Over four-family
    
    
    
    
    
    
    
    
    
    
    169Construction
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    2
    
    
    
    2
    
    
    
    102Land
    
    
    
    
    
    
    
    
    
    
    Other loans
    
    
    5
    
    
    
    5
    
    
    
    23Total charge-offs
    
    
    144
    
    
    
    7
    
    
    
    391Total recoveries
    
    
    225
    
    
    
    1
    
    
    
    Net charge-offs
    
    
    (81
    )
    
    
    6
    
    
    
    391Allowance at end of period
    
    $
    5,983
    
    
    
    4,606
    
    
    
    5,250Ratios:Allowance for loan losses to non-performing loans at
end of period
    
    
    38.69
    %
    
    
    35.22
    %
    
    
    29.06
    %Allowance for loan losses to loans receivable at
end of period
    
    
    0.44
    %
    
    
    0.38
    %
    
    
    0.40
    %Net charge-offs to average loans outstanding (annualized)
    
    
    (0.01
    %)
    
    
    0.00
    %
    
    
    0.06
    %
 
 (1)
    
    Residential loans include home equity loans and home equity lines of credit. -31-




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Impact of Inflation and Changing Prices
  Liquidity and Capital Resources
 -32-




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-33-




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-34-




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Regulatory Capital
      -35-




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June 30, 2006To Be Well-CapitalizedFor Capital
    
    Under Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action Provisions (1)Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioWauwatosa HoldingsTotal capital (to risk-weighted
assets)
    
    $
    243,827
    
    
    
    21.47
    %
    
    
    90,868
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/ATier I capital (to risk-weighted
assets)
    
    
    237,935
    
    
    
    20.95
    %
    
    
    45,434
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/ATier I capital (to average assets)
    
    
    237,935
    
    
    
    15.66
    %
    
    
    60,792
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AWauwatosa SavingsTotal capital (to risk-weighted
assets)
    
    $
    199,204
    
    
    
    17.98
    %
    
    
    88,656
    
    
    
    8.00
    %
    
    
    110,820
    
    
    
    10.00
    %Tier I capital (to risk-weighted
assets)
    
    
    193,472
    
    
    
    17.46
    %
    
    
    44,328
    
    
    
    4.00
    %
    
    
    66,492
    
    
    
    6.00
    %Tier I capital (to average assets)
    
    
    193,472
    
    
    
    12.73
    %
    
    
    60,792
    
    
    
    4.00
    %
    
    
    75,990
    
    
    
    5.00
    %State of Wisconsin (to total assets) (2)
    
    
    193,472
    
    
    
    12.65
    %
    
    
    91,746
    
    
    
    6.00
    %
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    Prompt corrective action provisions are not applicable at the bank holding company level.(2)
    
    State of Wisconsin regulatory capital requirements are not applicable at the bank holding
company level. -36-




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Contractual Obligations, Commitments, Contingent Liabilities, and Off-balance Sheet
Arrangements
  Contractual Obligations
 More than
    
    
    More thanOne Year
    
    
    Three Years
    
    
    OverOne Year
    
    
    Through
    
    
    Through
    
    
    FiveTotal
    
    
    or Less
    
    
    Three Years
    
    
    Five Years
    
    
    Years(In Thousands)Deposits without a stated maturity
    
    $
    138,266
    
    
    
    138,266
    
    
    
    
    
    
    
    
    
    
    
    Certificates of deposit
    
    
    930,293
    
    
    
    617,646
    
    
    
    265,222
    
    
    
    33,308
    
    
    
    14,117Federal Home Loan Bank advances (1)
    
    
    238,212
    
    
    
    36,209
    
    
    
    82,003
    
    
    
    50,000
    
    
    
    70,000Operating leases(2)
    
    
    413
    
    
    
    117
    
    
    
    244
    
    
    
    52
    
    
    
    Capital lease
    
    
    4,125
    
    
    
    300
    
    
    
    3,825
    
    
    
    
    
    
    
    Salary continuation agreements
    
    
    3,527
    
    
    
    406
    
    
    
    1,152
    
    
    
    949
    
    
    
    1,020$
    1,314,836
    
    
    
    792,944
    
    
    
    352,446
    
    
    
    84,309
    
    
    
    85,137
 
 (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. -37-




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Other Commitments
 More than
    
    
    More thanOne Year
    
    
    Three Years
    
    
    OverOne Year
    
    
    Through
    
    
    Through
    
    
    FiveTotal
    
    
    or Less
    
    
    Three Years
    
    
    Five Years
    
    
    Years(In Thousands)Real estate loan commitments (1)
    
    $
    42,772
    
    
    
    42,772
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of home equity lines of
credit (2)
    
    
    34,034
    
    
    
    34,034
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of construction loans
(3)
    
    
    87,580
    
    
    
    87,580
    
    
    
    
    
    
    
    
    
    
    
    Standby letters of credit
    
    
    1,320
    
    
    
    1,109
    
    
    
    192
    
    
    
    
    
    
    
    19Total Other Commitments
    
    $
    165,706
    
    
    
    165,495
    
    
    
    192
    
    
    
    
    
    
    
    19
 
  (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. -38-




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Management of Market Risk
 General.
  Income Simulation.
 -39-




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PercentageIncrease (Decrease) in Estimated NetAnnual Interest IncomeOver 24 Months300 basis point
increase in
rates
    
    
    (16.47
    )200 basis point increase
in rates
    
    
    (9.13
    )100 basis point increase
in rates
    
    
    (2.84
    )100 basis point decrease
in rates
    
    
    6.30
  -40-




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-41-




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Item 4. Controls and Procedures
 Disclosure Controls and Procedures :
 Internal Control Over Financial Reporting :
 -42-




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 6. Exhibits
  -43-




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WAUWATOSA HOLDINGS, INC.(Registrant)Date: July 31, 2006/s/Donald J. StephensDonald J. StephensChairman and Chief Executive OfficerDate: July 31, 2006/s/ Richard C. LarsonRichard C. LarsonChief Financial Officer
 -44-




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Exhibit No.
    
    Description
    
    Filed Herewith31.1
    
    Sarbanes-Oxley Act Section 302
Certification signed by the Chairman and
Chief Executive Officer of Wauwatosa
Holdings, Inc.
    
    X31.2
    
    Sarbanes-Oxley Act Section 302
Certification signed by the Chief
Financial Officer of Wauwatosa Holdings,
Inc.
    
    X32.1
    
    Certification pursuant to 18 U.S. C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002 signed by the Chairman and Chief
Executive Officer of Wauwatosa Holdings,
Inc.
    
    X32.2
    
    Certification pursuant to 18 U.S. C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002 signed by the Chief Financial Officer
of Wauwatosa Holdings, Inc.
    
    X
 -45-