W. M. Waterman sold half of his company to Vandervant Lumber Company of Kansas City, Kansas, in 1905. The name remained the same, and the officers were W. F. Ingham, president, W. M. Waterman; vice president; and G. W. Beach, secretary. The Waterman Lumber Company built a second mill in Shelby County about 1908. It was located sixteen miles south of Timpson and connected to it by the company tap-line and logging tram road, the Texas & Gulf. In October 1908, the company, now named the Waterman Lumber and Supply Company, with Hans Dierks, president, W. M. Waterman, vice president and general manager, and F. J. Bushaw, secretary-treasurer, issued company bonds in order to finance large yellow pine and hardwood sawmills at Waterman. Timpson and Waterman were connected by Waterman's private telephone line in 1906. The 1910 Census records for Shelby County that 210 employees worked in Waterman's mills. McCoy does record that labor difficulty occurred in 1913, with nails being driven in the logs. She records that about 200 tenant homes were built. The community also included segregated company commissaries, and churches, a large hotel, a post office, depot, barber shop, and a drug store. The Union Church was shared by Methodists, Disciples of Christ, and Baptists. The community had its share of violence, particularly after moonshine came in with Prohibition; several murders were committed in Waterman.
In 1915, the Dierks Coal and Lumber Company, with Hans Dierks, president, and Waterman superintendent, was cutting 100,000 board feet daily of yellow pine, cypress, oak, gum, hickory, ash, walnut, and cottonwood. Bowman and McCoy are inaccurate in their estimates that the mills shut down between 1912 and 1914. W. T. Block is probably closer to the date in his belief the yellow pine mill closed in 1920. Frost Industries of Nacogdoches bought out 47,000 acres of stumpage in Shelby County, and the Waskom mill and lands in Harrison County.