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Employee Stock Ownership Plan

12 Months Ended

Dec. 31, 2012

Employee Stock Ownership Plan [Abstract]

Employee Stock Ownership Plan

12) Employee Stock Ownership Plan

All employees are eligible to participate in the WaterStone Bank Employee Stock Ownership Plan (the “Plan”) after they attain twenty-one years of age and complete twelve consecutive months of service in which they work at least 1,000 hours of service. During the year ended December 31, 2005, the Plan borrowed $8.5 million from the Company and purchased 761,515 shares of common stock of the Company in the open market. The Plan debt is secured by shares of the Company. The Company has committed to make annual contributions to the Plan necessary to repay the loan, including interest. The loan is scheduled to be repaid in ten annual installments through the year ended December 31, 2015. While the shares are not released and allocated to Plan participants until the loan payment is made, the shares are deemed to be earned and are therefore, committed to be released throughout the service period. As such, one-tenth of the shares are scheduled to be released annually as shares are earned over a period of ten years, beginning with the period ended December 31, 2005. As the debt is repaid, shares are released from collateral and allocated to active participant accounts. The shares pledged as collateral are reported as “Unearned ESOP shares” in the consolidated statement of financial condition. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average fair market price of the shares, and the shares become outstanding for earnings per share computations. Compensation expense attributed to the ESOP was $306,000, $202,000 and $264,000, respectively for the years ended December 31, 2012, 2011 and 2010.

The aggregate activity in the number of unearned ESOP shares, considering the allocation of those shares committed to be released as of December 31, is as follows:

		2012			2011
Beginning ESOP shares		228,453			304,605
Shares committed to be released		(76,151		)	(76,152	)
Unreleased shares		152,302			228,453

Fair value of unreleased shares (in thousands)		$	1,188		432

The entire disclosure of the description of the plan, the basis for determining contributions, including the employee groups covered, and the nature and effect of significant matters affecting comparability of information for all periods presented. For leveraged ESOPs and pension reversion ESOPs, the disclosure may include the basis for releasing shares and how dividends on allocated and unallocated shares are used. Disclosure may also include a description of the accounting policies followed for ESOP transactions, including the method of measuring compensation, the classification of dividends on ESOP shares, and the treatment of ESOP shares for EPS computations. If the employer has both old ESOP shares for which it does not adopt the latest guidance and new ESOP shares for which the new guidance is required, the accounting policies for both blocks of shares may be described. Disclosure may also include he amount of compensation cost recognized during the period, the number of allocated shares, committed-to-be-released shares, and suspense shares held by the ESOP at the balance-sheet date, the fair value of unearned ESOP shares at the balance-sheet date for shares accounted for under the latest guidance, the existence and nature of any repurchase obligation, including disclosure of the fair value of the shares allocated as of the balance sheet date, which are subject to a repurchase obligation.

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