Attached files
file | filename |
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EX-31.1 - EXHIBIT 31.1 - Polonia Bancorp | v239531_ex31-1.htm |
EX-31.2 - EXHIBIT 31.2 - Polonia Bancorp | v239531_ex31-2.htm |
EX-32.0 - EXHIBIT 32.0 - Polonia Bancorp | v239531_ex32-0.htm |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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United States
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41-2224099
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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3993 Huntingdon Pike, 3rd Floor, Huntingdon Valley,
Pennsylvania
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19006
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(Address of principal executive offices)
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(Zip Code)
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(215) 938-8800
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(Registrant’s telephone number, including area code)
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N/A
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(Former name, former address and former fiscal year, if changed since last report)
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This Amendment No. 1 to Form 10-Q is being filed to reflect the results of restatement due to a misapplication of U.S. generally accepted accounting principles relating to loans acquired as a result of a Federal Deposit Insurance Corporation (“FDIC”) assisted transaction. Loans acquired with specific evidence of deterioration in credit quality were accounted for under ASC 310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality. For all other loans the entire discount was being accreted into earnings. As accretion of the discount on these loans was being recognized, the Company also recognized a provision for loan losses that corresponded to the credit component of the discount being accreted. Subsequently, the Company determined that this approach was not consistent with GAAP. The Company concluded that such loans are more indicative of those accounted for by analogy to ASC 310-30 due to the fact that the discount recognized for these loans was attributable at least in part to credit quality as well as the Company being unable to identify specific loans within this portfolio for which it was probable at acquisition that the Company would be unable to collect all contractually required payments receivable. As a result, certain reclassifications occurred primarily between the allowance for loan losses and loans receivable, interest income on loans, provision for loan losses and deferred income taxes and tax expense. This also resulted in updating corresponding disclosures under the headings Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to Unaudited Consolidated Financial Statements.
Page
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No.
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Part I.
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Financial Information
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Item 1.
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Financial Statements
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Consolidated Balance Sheets at March 31, 2011 and December 31, 2010 (Unaudited)
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1
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Consolidated Statements of Income for the Three Months Ended March 31, 2011 and
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|||
2010 (Unaudited)
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2
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Consolidated Statement of Changes in Stockholders' Equity for the Three Months Ended
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March 31, 2011 (Unaudited)
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3
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010
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(Unaudited)
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4
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Notes to Unaudited Consolidated Financial Statements
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5
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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21
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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28
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Item 4.
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Controls and Procedures
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28
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Part II.
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Other Information
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Item 6.
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Exhibits
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28
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Signatures
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29
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March 31,
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December 31,
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|||||||
2011
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2010
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|||||||
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(Restated)
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|||||||
ASSETS
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||||||||
Cash and due from banks
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$ | 2,446,219 | $ | 2,426,126 | ||||
Interest-bearing deposits with other institutions
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5,586,937 | 51,578,423 | ||||||
Cash and cash equivalents
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8,033,156 | 54,004,549 | ||||||
Investment securities available for sale
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25,693,806 | 27,350,263 | ||||||
Investment securities held to maturity (fair value $53,177,056 and $26,075,142)
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53,515,771 | 26,127,630 | ||||||
Loans receivable (net of allowance for loan losses of $862,639 and $833,984)
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140,062,066 | 137,665,300 | ||||||
Covered loans
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31,396,593 | 32,808,086 | ||||||
Accrued interest receivable
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1,099,970 | 1,073,223 | ||||||
Federal Home Loan Bank stock
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3,292,300 | 3,465,600 | ||||||
Premises and equipment, net
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4,563,200 | 4,571,178 | ||||||
Bank-owned life insurance
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4,157,636 | 4,140,267 | ||||||
FDIC indemnification asset
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5,408,461 | 5,397,192 | ||||||
Other assets
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1,835,730 | 2,225,661 | ||||||
TOTAL ASSETS
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$ | 279,058,689 | $ | 298,828,949 | ||||
LIABILITIES
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||||||||
Deposits
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$ | 217,311,776 | $ | 239,705,812 | ||||
FHLB advances - short-term
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5,000,000 | - | ||||||
FHLB advances - long-term
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26,520,025 | 28,426,193 | ||||||
Advances by borrowers for taxes and insurance
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717,901 | 1,005,753 | ||||||
Accrued interest payable
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100,775 | 103,534 | ||||||
Other liabilities
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2,079,138 | 2,328,096 | ||||||
TOTAL LIABILITIES
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251,729,615 | 271,569,388 | ||||||
Commitments and contingencies
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- | - | ||||||
STOCKHOLDERS' EQUITY
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||||||||
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued or outstanding)
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- | - | ||||||
Common stock ($.01 par value; 14,000,000 shares authorized; 3,306,250 shares issued)
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33,063 | 33,063 | ||||||
Additional paid-in-capital
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13,906,424 | 13,863,863 | ||||||
Retained earnings
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14,994,813 | 15,001,215 | ||||||
Unallocated shares held by Employee Stock Ownership Plan
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||||||||
"ESOP" (92,905 and 95,043 shares)
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(929,056 | ) | (950,437 | ) | ||||
Treasury Stock (149,154 shares)
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(1,262,141 | ) | (1,262,141 | ) | ||||
Accumulated other comprehensive income
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585,971 | 573,998 | ||||||
TOTAL STOCKHOLDERS' EQUITY
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27,329,074 | 27,259,561 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 279,058,689 | $ | 298,828,949 |
Three Months
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||||||||
Ended March 31,
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||||||||
2011
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2010
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|||||||
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(Restated)
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INTEREST AND DIVIDEND INCOME
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||||||||
Loans receivable
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$ | 2,229,652 | $ | 2,111,854 | ||||
Investment securities
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569,496 | 459,317 | ||||||
Other interest and dividend income
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3,526 | 741 | ||||||
Total interest and dividend income
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2,802,674 | 2,571,912 | ||||||
INTEREST EXPENSE
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||||||||
Deposits
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673,327 | 741,342 | ||||||
FHLB advances - short-term
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3,302 | - | ||||||
FHLB advances - long-term
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190,744 | 205,865 | ||||||
Advances by borrowers for taxes and insurance
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5,746 | 7,010 | ||||||
Total interest expense
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873,119 | 954,217 | ||||||
NET INTEREST INCOME BEFORE PROVISION (RECOVERY) FOR LOAN LOSSES
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1,929,555 | 1,617,695 | ||||||
Provision (recovery) for loan losses
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25,766 | (134,484 | ) | |||||
NET INTEREST INCOME AFTER PROVISION (RECOVERY) FOR LOAN LOSSES
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1,903,789 | 1,752,179 | ||||||
NONINTEREST INCOME
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||||||||
Service fees on deposit accounts
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29,570 | 18,715 | ||||||
Earnings on bank-owned life insurance
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17,369 | 24,384 | ||||||
Investment securities gains, net
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- | 293,815 | ||||||
Gain on sale of loans, net
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- | 26,074 | ||||||
Rental income
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72,790 | 72,716 | ||||||
Accretion of FDIC indemnification asset
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11,269 | - | ||||||
Other
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50,476 | 51,975 | ||||||
Total noninterest income
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181,474 | 487,679 | ||||||
NONINTEREST EXPENSE
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||||||||
Compensation and employee benefits
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1,100,519 | 871,298 | ||||||
Occupancy and equipment
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353,189 | 264,123 | ||||||
Federal deposit insurance premiums
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92,391 | 149,236 | ||||||
Data processing expense
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151,224 | 68,264 | ||||||
Professional fees
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94,014 | 92,766 | ||||||
Other
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304,605 | 621,812 | ||||||
Total noninterest expense
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2,095,942 | 2,067,499 | ||||||
Income
(loss) before income tax benefit
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(10,679 | ) | 172,359 | |||||
Income
tax benefit
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(4,277 | ) | (43,623 | ) | ||||
NET
INCOME (LOSS)
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$ | (6,402 | ) | $ | 215,982 | |||
EARNINGS PER SHARE
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$ | 0.00 | $ | 0.07 |
Shares of
Common
Stock
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Common
Stock
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Additional
Paid-In-Capital
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Retained
Earnings
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Unallocated
Shares Held
by ESOP
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Treasury
Stock
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Accumulated
Other
Comprehensive
Income
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Total
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Comprehensive
Income
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||||||||||||||||||||||||||||
Balance, December 31, 2010
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3,306,250 | $ | 33,063 | $ | 13,863,863 | $ | 15,001,215 | $ | (950,437 | ) | $ | (1,262,141 | ) | $ | 573,998 | $ | 27,259,561 | |||||||||||||||||||
Net
loss (restated)
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(6,402 | ) | (6,402 | ) | $ | (6,402 | ) | |||||||||||||||||||||||||||||
Other comprehensive income:
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||||||||||||||||||||||||||||||||||||
Unrealized gain on available-for-sale securities, net of reclassification adjustment, net of tax expense of $6,168
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11,973 | 11,973 | 11,973 | |||||||||||||||||||||||||||||||||
Comprehensive
income (restated)
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$ | 5,571 | ||||||||||||||||||||||||||||||||||
Stock options compensation expense
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22,398 | 22,398 | ||||||||||||||||||||||||||||||||||
Allocation of unearned ESOP shares
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(8,770 | ) | 21,381 | 12,611 | ||||||||||||||||||||||||||||||||
Allocation of unearned restricted stock
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28,933 | 28,933 | ||||||||||||||||||||||||||||||||||
Balance,
March 31, 2011 (restated)
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3,306,250 | $ | 33,063 | $ | 13,906,424 | $ | 14,994,813 | $ | (929,056 | ) | $ | (1,262,141 | ) | $ | 585,971 | $ | 27,329,074 |
Three Months Ended
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||||||||
March 31,
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||||||||
2011
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2010
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|||||||
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(Restated)
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|||||||
OPERATING ACTIVITIES
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Net
income (loss)
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$ | (6,402 | ) | $ | 215,982 | |||
Adjustments
to reconcile net income (loss) to net cash provided by (used for) operating activities:
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Provision (recovery) for loan losses
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25,766 | (134,484 | ) | |||||
Depreciation, amortization and accretion
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151,587 | 97,744 | ||||||
Investment securities gains, net
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- | (293,815 | ) | |||||
Origination of loans held for sale
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- | (992,081 | ) | |||||
Proceeds from sale of loans
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- | 1,018,155 | ||||||
Net gain on sale of loans
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- | (26,074 | ) | |||||
Earnings on bank-owned life insurance
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(17,369 | ) | (24,384 | ) | ||||
Deferred federal income taxes
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57,664 | (3,150 | ) | |||||
Increase in accrued interest receivable
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(26,747 | ) | (56,237 | ) | ||||
Increase (decrease) in accrued interest payable
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(2,759 | ) | 28,888 | |||||
Compensation expense for stock options, ESOP and restricted stock
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63,942 | 65,536 | ||||||
Other, net
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65,872 | (184,002 | ) | |||||
Net cash provided by (used for) operating activities
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311,554 | (287,922 | ) | |||||
INVESTING ACTIVITIES
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Investment securities available for sale:
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Proceeds from sales
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- | 6,483,428 | ||||||
Proceeds from principal repayments and maturities
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1,627,609 | 4,337,091 | ||||||
Purchases
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- | (6,326,438 | ) | |||||
Investment securities held to maturity:
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||||||||
Proceeds from principal repayments and maturities
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1,579,639 | - | ||||||
Purchases
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(29,016,481 | ) | - | |||||
(Increase) decrease in loans receivable, net
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(2,401,058 | ) | 664,520 | |||||
Decrease in covered loans
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1,411,493 | - | ||||||
Redemptions of Federal Home Loan Bank stock
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173,300 | - | ||||||
Purchase of premises and equipment
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(69,393 | ) | (15,215 | ) | ||||
Net cash (used for) provided by investing activites
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(26,694,891 | ) | 5,143,386 | |||||
FINANCING ACTIVITES
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||||||||
Decrease in deposits, net
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(22,394,036 | ) | (5,595,308 | ) | ||||
Net increase in FHLB advances - short-term
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5,000,000 | - | ||||||
Repayment of FHLB advances - long-term
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(1,906,168 | ) | (1,634,857 | ) | ||||
Proceeds of FHLB advances - long-term
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- | 4,000,000 | ||||||
Decrease in advances by borrowers for taxes and insurance, net
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(287,852 | ) | (444,639 | ) | ||||
Net cash used for financing activites
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(19,588,056 | ) | (3,674,804 | ) | ||||
Increase (decrease) in cash and cash equivalents
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(45,971,393 | ) | 1,180,660 | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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54,004,549 | 8,426,530 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 8,033,156 | $ | 9,607,190 | ||||
SUPPLEMENTAL CASH FLOW DISCLOSURES
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||||||||
Cash paid:
|
||||||||
Interest
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$ | 875,878 | $ | 925,329 | ||||
Income taxes
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- | - |
1.
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Summary of Significant Accounting Policies
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On December 10, 2010, the Company acquired certain assets and assumed certain liabilities of Earthstar Bank (“Earthstar”) in loss-share transactions facilitated by the FDIC. Initially, the Company identified certain loans to be accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. ASC 310-30 applies to loans acquired with evidence of deterioration of credit quality since origination for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. ASC 310-30 prohibits carrying over or creating an allowance for loan losses upon initial recognition for loans which fall under the scope of this statement. Loans with specific evidence of deterioration in credit quality were accounted for under ASC 310-30. For all other loans the entire discount was being accreted into earnings. As accretion of the discount on these loans was being recognized, the Company also recognized a provision for loan losses that corresponded to the credit component of the discount being accreted. Subsequently, the Company determined that this approach was not consistent with GAAP. The Company concluded that such loans are more indicative of those accounted for by analogy to ASC 310-30 due to the inherent risk in the portfolio, the discount recognized for these loans was attributable at least in part to credit quality, the Company being unable to identify specific loans within this portfolio for which it was probable at acquisition that the Company would be unable to collect all contractually required payments receivable, as well as local economic and real estate conditions that continue to exhibit a long and slow recovery which would add pressure to the ability of creditors to continue to make contractual payments or to realize proceeds from the sale of collateral sufficient to cover debt obligations. As a result, certain reclassifications occurred primarily between the allowance for loan losses and loans receivable, interest income on loans, provision for loan losses and deferred income taxes and tax expense.
The effects of the restatement on the Company’s consolidated balance sheet, statement of income, and statement of cash flows as of and for the three month period ended March 31, 2011 are summarized as follows:
As of and for the Three Months Ended | ||||||||||||
Condensed Consolidated Statement of Income | March 31, 2011 | |||||||||||
As Previously | ||||||||||||
Reported | Adjustment | As Restated | ||||||||||
Interest and dividend income | ||||||||||||
Loans receivable | $ | 2,614,838 | $ | (385,186 | ) | $ | 2,229,652 | |||||
Total interest and dividend income | 3,187,860 | (385,186 | ) | 2,802,674 | ||||||||
Net interest income before provision for loan losses | 2,314,741 | (385,186 | ) | 1,929,555 | ||||||||
Provision for loan losses | 309,481 | (283,715 | ) | 25,766 | ||||||||
Net interest income after provision for loan losses | 2,005,260 | (101,471 | ) | 1,903,789 | ||||||||
Noninterest income | ||||||||||||
Other noninterest income | 38,201 | 12,275 | 50,476 | |||||||||
Total noninterest income | 169,199 | 12,275 | 181,474 | |||||||||
Income before income tax expense (benefit) | 78,516 | (89,195 | ) | (10,679 | ) | |||||||
Income tax expense (benefit) | 26,049 | (30,326 | ) | (4,277 | ) | |||||||
Net income (loss) | 52,467 | (58,869 | ) | (6,402 | ) | |||||||
Earnings per share | 0.02 | (0.02 | ) | - | ||||||||
Condensed Consolidated Balance Sheet | ||||||||||||
Assets | ||||||||||||
Loans receivable | $ | 140,949,313 | $ | (24,608 | ) | $ | 140,924,705 | |||||
Covered loans | 31,734,525 | (337,932 | ) | 31,396,593 | ||||||||
Allowance for loan losses | 1,146,354 | (283,715 | ) | 862,639 | ||||||||
Other assets | 1,846,101 | (10,371 | ) | 1,835,730 | ||||||||
Total assets | 279,147,885 | (89,196 | ) | 279,058,689 | ||||||||
Liabilities | ||||||||||||
Other liabilities | 2,109,465 | (30,327 | ) | 2,079,138 | ||||||||
Total liabilities | 251,759,942 | (30,327 | ) | 251,729,615 | ||||||||
Stockholders' Equity | ||||||||||||
Retained earnings | 15,053,682 | (58,869 | ) | 14,994,813 | ||||||||
Total stockholders' equity | 27,387,943 | (58,869 | ) | 27,329,074 | ||||||||
Total liabilities and stockholders' equity | 279,147,885 | (89,196 | ) | 279,058,689 | ||||||||
Condensed Consolidated Statement of Cash Flows | ||||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | 52,467 | $ | (58,869 | ) | $ | (6,402 | ) | ||||
Provision for loan losses | 309,481 | (283,715 | ) | 25,766 | ||||||||
Deferred federal income taxes | (8,472 | ) | 66,136 | 57,664 | ||||||||
Other, net | 151,964 | (86,092 | ) | 65,872 | ||||||||
Net cash provided by operating activities | 674,095 | (362,541 | ) | 311,554 | ||||||||
Investing activities | ||||||||||||
Increase in loans receivable, net | (2,425,666 | ) | 24,608 | (2,401,058 | ) | |||||||
Decrease in covered loans | 1,073,561 | 337,932 | 1,411,493 | |||||||||
Net cash used for investing activities | (27,057,431 | ) | 362,540 | (26,694,891 | ) |
2.
|
Earnings Per Share
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Net
Income (loss):
|
$ | (6,402 | ) | $ | 215,982 | |||
Weighted average number of shares issued
|
3,306,250 | 3,306,250 | ||||||
Less weighted average number of treasury stock shares
|
(149,154 | ) | (147,172 | ) | ||||
Less weighted average number of unearned ESOP shares
|
(93,629 | ) | (102,269 | ) | ||||
Less weighted average number of nonvested restricted stock awards
|
(18,502 | ) | (30,814 | ) | ||||
Weighted average shares outstanding basic
|
3,044,965 | 3,025,995 | ||||||
Weighted average shares outstanding diluted
|
3,044,965 | 3,025,995 | ||||||
Earnings per share:
|
||||||||
Basic
|
$ | 0.00 | $ | 0.07 | ||||
Diluted
|
0.00 | 0.07 |
3.
|
FDIC-Assisted Acquisition
|
U.S. generally accepted accounting principles prohibits carrying over an allowance for loan losses for impaired loans purchased in the Earthstar FDIC-assisted acquisition. Purchased credit-impaired loans are accounted for in accordance with guidance for certain loans or debt securities acquired in a transfer when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments. For evidence of credit deterioration since origination, the Company considered loans on a loan-by-loan basis by primarily focusing on past due status, frequency of late payments, internal loan classification, as well as interviews with current loan officers and collection employees for other evidence that may be indicative of deterioration of credit quality. Once these loans were segregated, the Company evaluated each of these loans on a loan-by-loan basis to determine the probability of collecting all contractually required payments. On the acquisition date, the preliminary estimate of the unpaid principal balance for all loans with specific evidence of credit impairment acquired in the Earthstar acquisition was $3.3 million and the estimated fair value of the loans was $1.6 million. Total contractually required payments on these loans, including interest, at the acquisition date was $4.4 million. However, the Company’s preliminary estimate of expected cash flows was $1.8 million. At such date, the Company established a credit risk related non-accretable discount (a discount representing amounts which are not expected to be collected from the customer or liquidation of collateral) of $2.7 million relating to these impaired loans, reflected in the recorded net fair value. The Bank further estimated the timing and amount of expected cash flows in excess of the estimated fair value and established an accretable discount of $114,448 on the acquisition date relating to these impaired loans.
7 |
Under U.S. generally accepted accounting principles, fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values become available. The Company deemed it appropriate to analogize the accounting guidance under ASC 310-30 to all other loans since (i) the discount recognized for these loans was attributable at least in part to credit quality, and (ii) the Company was unable to identify specific loans within this portfolio for which it was probable at acquisition that the Company would be unable to collect all contractually required payments receivable. The Company has aggregated all other loans into four loan pools by common risk characteristics, which generally conform to the loan type. The first pool of loans consists primarily of 15 and 20 year loans and lines of credit secured by 1-4 family residential properties within our current market area. Such loans represented approximately 53% of the total loans pooled at March 31, 2011, and have been aggregated into this pool because of the similarities of the underlying products which have combined loan to value ratios of up to 80%. This pool relates primarily to loans originated for the withdrawal of additional equity from an existing home, and to a much lesser extent the purchase or refinance of a home. The second pool of loans consisted primarily of fixed rate, multi-family and nonresidential real estate loans originated within the Company’s market area. These loans are generally secured by apartment buildings, small office buildings and owner-occupied properties and make up approximately 38 percent of the total loans pooled at March 31, 2011. The third pool of loans primarily consisted of secured commercial and industrial loans originated to small business within the Company’s market area. Commercial loans account for approximately 5 percent of the total loans pooled at March 31, 2011. The last pool of loans consisted of consumer loans, which are almost entirely made up of mobile home loans. These loans were generally originated with 20 to 30 year maturities. Such loans total approximately 4 percent of the total loans pooled at March 31, 2011. For each loan pool, the Company has developed individual cash flow expectations and calculates a non-accretable difference and an accretable difference. The difference between contractually required payments and the cash flows expected to be collected at acquisition is the nonaccretable difference. The accretable difference on purchased loans is the difference between the expected cash flows and the net present value of expected cash flows (fair value of the loan pool). The accretable difference is accreted into earnings using the level yield method over the term of the loan pool. Over the life of the acquired loan pool, the Company continues to estimate cash flows expected to be collected on acquired loans with specific evidence of credit deterioration as well as on pools of loans sharing common risk characteristics. The Company evaluates, at each balance sheet date, whether the present value of its loans has significantly decreased and if so, recognizes a provision for loan loss in its consolidated statement of income. For any significant increases in cash flows expected to be collected, the Company adjusts the amount of accretable yield recognized on a prospective basis over the loan’s or pool’s remaining life.
The carrying value of loans acquired and accounted for in accordance with ASC 310-30 was determined by projecting discounted contractual cash flows. The table below presents the components of the acquisition accounting adjustments related to the loans acquired in the Earthstar acquisition accounted for under ASC 310-30 and ASC 310-30 by analogy as of the beginning of the period ended March 31, 2011:
Acquired Loans | ||||||||
Acquired Loans | Without Specific | |||||||
With Specific | Evidence of | |||||||
Evidence of | Deterioration in | |||||||
Deterioration in | Credit Quality | |||||||
Credit Quality | (ASC 310-30 | |||||||
(ASC 310-30) | Analogized) | |||||||
(unaudited) | ||||||||
Contractually required principal and interest | $ | 4,419,384 | $ | 51,386,762 | ||||
Non-accretable discount | (2,657,833 | ) | (8,289,676 | ) | ||||
Expected cash flows | 1,761,551 | 43,097,086 | ||||||
Accretable yield | (114,448 | ) | (10,665,986 | ) | ||||
Basis in acquired loans | $ | 1,647,103 | $ | 32,431,100 |
The outstanding balance, including interest, and carrying values of loans acquired were as follows:
March 31, 2011 | ||||||||||||||||
(unaudited) | December 31, 2010 | |||||||||||||||
Acquired Loans | Acquired Loans | |||||||||||||||
Acquired Loans | Without Specific | Acquired Loans | Without Specific | |||||||||||||
With Specific | Evidence of | With Specific | Evidence of | |||||||||||||
Evidence of | Deterioration in | Evidence of | Deterioration in | |||||||||||||
Deterioration in | Credit Quality | Deterioration in | Credit Quality | |||||||||||||
Credit Quality | (ASC 310-30 | Credit Quality | (ASC 310-30 | |||||||||||||
(ASC 310-30) | Analogized) | (ASC 310-30) | Analogized) | |||||||||||||
Outstanding balance | $ | 4,411,707 | $ | 48,989,983 | $ | 4,419,384 | $ | 51,386,762 | ||||||||
Carrying amount, net of allowance | $ | 1,628,157 | $ | 30,892,667 | $ | 1,647,103 | $ | 32,431,100 |
There has been no allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of March 31, 2011 and December 31, 2010. In addition, there has been no allowance for loan losses reversed.
8 |
Changes in the accretable yield for acquired loans were as follows for the three-months ended March 31, 2011 (unaudited):
Acquired Loans | ||||||||
Acquired Loans | Without Specific | |||||||
With Specific | Evidence of | |||||||
Evidence of | Deterioration in | |||||||
Deterioration in | Credit Quality | |||||||
Credit Quality | (ASC 310-30 | |||||||
(ASC 310-30) | Analogized) | |||||||
(Unaudited) | ||||||||
Balance at beginning of period | $ | 114,448 | $ | 10,665,986 | ||||
Reclassification and other | - | (343,149 | ) | |||||
Accretion | (16,240 | ) | (475,799 | ) | ||||
Balance at end of period | $ | 98,208 | $ | 9,847,038 |
The $476,000 recognized as accretion for acquired loans without specific evidence of deterioration in credit quality represents the interest income earned on these loans for the three-months ended March 31, 2011. Included in reclassification and other for loans acquired without specific evidence of deterioration in credit quality was $39,000 of reclassifications from non-accretable discounts to accretable discounts. The remaining $(383,000) change in the accretable yield represents reductions in contractual interest due to contractual principal prepayments during the period. There was no additional accretion recognized since there was no change in the expected cash flows related to these loans during the period.
4.
|
Comprehensive Income
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Net
income (loss):
|
$ | (6,402 | ) | $ | 215,982 | |||
Other comprehensive income, net of tax
|
||||||||
Changes in net unrealized gain on investment securities available for sale, net of taxes of $6,168 and $41,017
|
11,973 | 79,621 | ||||||
Reclassification adjustment for realized gains on investment securities included in net income, net of taxes of $0 and $(99,897)
|
- | (193,918 | ) | |||||
Other comprehensive income (loss), net of tax
|
11,973 | (114,297 | ) | |||||
Comprehensive income
|
$ | 5,571 | $ | 101,685 |
5.
|
Investment Securities
|
March 31, 2011
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
Available for Sale
|
||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||
Fannie Mae
|
$ | 6,919,647 | $ | 402,192 | $ | - | $ | 7,321,839 | ||||||||
Freddie Mac
|
1,013,761 | 56,650 | - | 1,070,411 | ||||||||||||
Government National Mortgage Association
|
1,020,462 | 124,397 | - | 1,144,859 | ||||||||||||
Collateralized mortgage obilgations- government sponsored entities
|
5,297,520 | 26,405 | (36,149 | ) | 5,287,776 | |||||||||||
Total mortgage-backed securities
|
14,251,390 | 609,644 | (36,149 | ) | 14,824,885 | |||||||||||
Corporate securities
|
10,536,082 | 322,639 | - | 10,858,721 | ||||||||||||
Total debt securities
|
24,787,472 | 932,283 | (36,149 | ) | 25,683,606 | |||||||||||
Equity securities - financial services
|
18,500 | - | (8,300 | ) | 10,200 | |||||||||||
Total
|
$ | 24,805,972 | $ | 932,283 | $ | (44,449 | ) | $ | 25,693,806 | |||||||
Held to Maturity
|
||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||
Fannie Mae
|
$ | 42,389,286 | $ | 143,687 | $ | (452,221 | ) | $ | 42,080,752 | |||||||
Freddie Mac
|
11,126,485 | 27,325 | (57,506 | ) | 11,096,304 | |||||||||||
Total mortgage-backed securities
|
$ | 53,515,771 | $ | 171,012 | $ | (509,727 | ) | $ | 53,177,056 |
December 31, 2010
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
Available for Sale
|
||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||
Fannie Mae
|
$ | 7,557,936 | $ | 440,925 | $ | - | $ | 7,998,861 | ||||||||
Freddie Mac
|
1,061,808 | 54,633 | - | 1,116,441 | ||||||||||||
Government National Mortgage Association
|
1,054,443 | 124,805 | - | 1,179,248 | ||||||||||||
Collateralized mortgage obilgations- government sponsored entities
|
6,236,550 | 24,575 | (16,411 | ) | 6,244,714 | |||||||||||
Total mortgage-backed securities
|
15,910,737 | 644,938 | (16,411 | ) | 16,539,264 | |||||||||||
Corporate securities
|
10,551,331 | 251,437 | (869 | ) | 10,801,899 | |||||||||||
Total debt securities
|
26,462,068 | 896,375 | (17,280 | ) | 27,341,163 | |||||||||||
Equity securities - financial services
|
18,500 | - | (9,400 | ) | 9,100 | |||||||||||
Total
|
$ | 26,480,568 | $ | 896,375 | $ | (26,680 | ) | $ | 27,350,263 | |||||||
Held to Maturity
|
||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||
Fannie Mae
|
$ | 22,611,248 | $ | 165,083 | $ | (213,520 | ) | $ | 22,562,811 | |||||||
Freddie Mac
|
3,516,382 | - | (4,051 | ) | 3,512,331 | |||||||||||
Total mortgage-backed securities
|
$ | 26,127,630 | $ | 165,083 | $ | (217,571 | ) | $ | 26,075,142 |
March 31, 2011
|
||||||||||||||||||||||||
Less Than Twelve Months
|
Twelve Months or Greater
|
Total
|
||||||||||||||||||||||
Gross
|
Gross
|
Gross
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||||||||||
Fannie Mae
|
$ | 24,579,338 | $ | (452,221 | ) | $ | - | $ | - | $ | 24,579,338 | $ | (452,221 | ) | ||||||||||
Freddie Mac
|
7,856,719 | (57,506 | ) | - | - | 7,856,719 | (57,506 | ) | ||||||||||||||||
Collateralized mortgage obligations-
government sponsored entities |
1,948,903 | (34,329 | ) | 7,422 | (1,820 | ) | 1,956,325 | (36,149 | ) | |||||||||||||||
Total mortgage-backed securities
|
34,384,960 | (544,056 | ) | 7,422 | (1,820 | ) | 34,392,382 | (545,876 | ) | |||||||||||||||
Corporate securities
|
- | - | ||||||||||||||||||||||
Equity securities
|
10,200 | (8,300 | ) | - | - | 10,200 | (8,300 | ) | ||||||||||||||||
Total
|
$ | 34,395,160 | $ | (552,356 | ) | $ | 7,422 | $ | (1,820 | ) | $ | 34,402,582 | $ | (554,176 | ) |
December 31, 2010
|
||||||||||||||||||||||||
Less Than Twelve Months
|
Twelve Months or Greater
|
Total
|
||||||||||||||||||||||
Gross
|
Gross
|
Gross
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||||||||||
Fannie Mae
|
$ | 10,974,673 | $ | (213,520 | ) | $ | - | $ | - | $ | 10,974,673 | $ | (213,520 | ) | ||||||||||
Freddie Mac
|
3,512,331 | (4,051 | ) | - | - | 3,512,331 | (4,051 | ) | ||||||||||||||||
Collateralized mortgage obligations-
government sponsored entities |
3,500,603 | (14,718 | ) | 7,712 | (1,693 | ) | 3,508,315 | (16,411 | ) | |||||||||||||||
Total mortgage-backed securities
|
17,987,607 | (232,289 | ) | 7,712 | (1,693 | ) | 17,995,319 | (233,982 | ) | |||||||||||||||
Corporate securities
|
874,765 | (869 | ) | - | - | 874,765 | (869 | ) | ||||||||||||||||
Equity securities
|
9,100 | (9,400 | ) | - | - | 9,100 | (9,400 | ) | ||||||||||||||||
Total
|
$ | 18,871,472 | $ | (242,558 | ) | $ | 7,712 | $ | (1,693 | ) | $ | 18,879,184 | $ | (244,251 | ) |
Available for Sale
|
Held to Maturity
|
|||||||||||||||
Amortized
|
Fair
|
Amortized
|
Fair
|
|||||||||||||
Cost
|
Value
|
Cost
|
Value
|
|||||||||||||
Due within one year
|
$ | 129 | $ | 130 | $ | - | $ | - | ||||||||
Due after one year through five years
|
10,430,817 | 10,762,967 | - | - | ||||||||||||
Due after five years through ten years
|
5,010,433 | 5,255,790 | 17,077,137 | 17,078,571 | ||||||||||||
Due after ten years
|
9,346,093 | 9,664,720 | 36,438,634 | 36,098,485 | ||||||||||||
Total
|
$ | 24,787,472 | $ | 25,683,606 | $ | 53,515,771 | $ | 53,177,056 |
6.
|
Loans Receivable
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Mortgage Loans:
|
||||||||
One-to-four family
|
$ | 122,528,589 | $ | 119,085,014 | ||||
Multi-family and commercial
|
9,692,532 | 10,272,043 | ||||||
132,221,121 | 129,357,057 | |||||||
Home equity loans
|
2,787,726 | 2,918,492 | ||||||
Home equity lines of credit ("HELOCs")
|
1,959,632 | 2,023,561 | ||||||
Education loans
|
3,063,542 | 3,178,622 | ||||||
Other consumer loans
|
28,640 | 29,062 | ||||||
Non-covered consumer loans purchased
|
1,124,231 | 1,270,117 | ||||||
Covered loans
|
31,396,593 | 32,808,086 | ||||||
172,581,485 | 171,584,997 | |||||||
Less:
|
||||||||
Net deferred loan fees
|
260,187 | 277,627 | ||||||
Allowance for loan losses
|
862,639 | 833,984 | ||||||
Total
|
$ | 171,458,659 | $ | 170,473,386 |
7.
|
Covered Loans
|
At March 31, 2011 (unaudited), and December 31, 2010, the Company had $31.4 million and $32.8 million (net of fair value adjustments) of covered loans (covered under loss share agreements with the FDIC). Covered loans were recorded at fair value pursuant to acquisition accounting guidelines. Purchased loans acquired in a business combination, including loans purchased in our FDIC-assisted transaction, are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan losses.
Upon acquisition, the Company evaluated whether each acquired loan (regardless of size) was within the scope of ASC 310-30. Purchased credit-impaired loans are loans that have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. The carrying value of covered loans acquired with specific evidence of deterioration in credit quality was $1.6 million at March 31, 2011 (unaudited) and December 31, 2010. There were no significant increases or decreases in the expected cash flows of covered loans between December 10, 2010 (the “acquisition date”) and December 31, 2010, or through March 31, 2011 (unaudited). The fair value of purchased credit-impaired loans, on the acquisition date, was determined primarily based on the fair value of loan collateral.
The carrying value of acquired, covered loans without specific evidence of deterioration in credit quality at the time of the acquisition was $29.8 million and $31.2 million at March 31, 2011 (unaudited) and December 31, 2010, respectively. The fair value of loans that were not credit-impaired was determined based on estimates of losses on defaults and other market factors. The Company deemed it appropriate to analogize the accounting guidance under ASC 310-30 to all other loans since (i) the discount recognized for these loans was attributable at least in part to credit quality, and (ii) the Company was unable to identify specific loans within this portfolio for which it was probable at acquisition that the Company would be unable to collect all contractually required payments receivable.
Under U.S. generally accepted accounting principles, fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values become available.
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Mortgage loans:
|
||||||||
One-to-four family
|
$ | 17,761,703 | $ | 18,771,142 | ||||
Multi-family and commercial
|
12,555,532 | 12,783,952 | ||||||
30,317,235 | 31,555,094 | |||||||
Commercial
|
1,079,358 | 1,252,992 | ||||||
Total Loans
|
$ | 31,396,593 | $ | 32,808,086 |
At March 31, 2011
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
30-59
|
60-89 |
Total
|
Investment >
|
|||||||||||||||||||||||||
Days
|
Days
|
90 Days
|
Total Past
|
Loans
|
90 Days and
|
|||||||||||||||||||||||
Past Due
|
Past Due
|
Or Greater
|
Due
|
Current
|
Receivable
|
Accruing
|
||||||||||||||||||||||
Mortgage loans:
|
||||||||||||||||||||||||||||
One-to-four family
|
$ | 733,942 | $ | 367,693 | $ | 739,785 | $ | 1,841,420 | $ | 15,920,283 | $ | 17,761,703 | $ | - | ||||||||||||||
Multi-family and commercial
|
93,823 | 5,106 | 258,956 | 357,885 | 12,197,647 | 12,555,532 | - | |||||||||||||||||||||
Commercial
|
- | - | - | - | 1,079,358 | 1,079,358 | - | |||||||||||||||||||||
Total
|
$ | 827,765 | $ | 372,799 | $ | 998,741 | $ | 2,199,305 | $ | 29,197,288 | $ | 31,396,593 | $ | - |
At December 31, 2010
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
Total
|
Investment >
|
|||||||||||||||||||||||||||
30-59 Days
|
60-89 Days
|
90 Days
|
Total Past
|
Loans
|
90 Days and
|
|||||||||||||||||||||||
Past Due
|
Past Due
|
Or Greater
|
Due
|
Current
|
Receivable
|
Accruing
|
||||||||||||||||||||||
Mortgage loans:
|
||||||||||||||||||||||||||||
One-to-four family
|
$ | 2,056,663 | $ | 123,007 | $ | 206,035 | $ | 2,385,705 | $ | 16,385,437 | $ | 18,771,142 | $ | - | ||||||||||||||
Multi-family and commercial
|
145,487 | - | 178,512 | 323,999 | 12,459,953 | 12,783,952 | - | |||||||||||||||||||||
Commercial
|
- | - | 595,768 | 595,768 | 657,224 | 1,252,992 | - | |||||||||||||||||||||
Total
|
$ | 2,202,150 | $ | 123,007 | $ | 980,315 | $ | 3,305,472 | $ | 29,502,614 | $ | 32,808,086 | $ | - |
As of
March 31, 2011
|
As of
December 31,
2010
|
|||||||
Mortgage loans:
|
||||||||
One-to-four family
|
$ | 739,785 | $ | 305,466 | ||||
Multi-family and commercial
|
258,956 | 178,512 | ||||||
Commercial
|
- | 595,768 | ||||||
$ | 998,741 | $ | 1,079,746 |
8.
|
Allowance for Loan Losses
|
·
|
Levels of and trends in delinquencies
|
·
|
Trends in volume and terms
|
·
|
Trends in credit quality ratings
|
·
|
Changes in management and lending staff
|
·
|
Economic trends
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Allowance at beginning of period
|
$ | 833,984 | $ | 1,115,141 | ||||
Provision (recovery) for loan losses
|
25,766 | (134,484 | ) | |||||
Charge-offs
|
- | - | ||||||
Recoveries
|
2,889 | 1,350 | ||||||
Net charge-offs
|
2,889 | 1,350 | ||||||
Allowance at end of period
|
$ | 862,639 | $ | 982,007 |
At March 31, 2011 | ||||||||||||||||||||||||
Multi-family | ||||||||||||||||||||||||
One-to-
|
and
|
Education
|
||||||||||||||||||||||
Four Family
|
Commercial
|
and Other
|
||||||||||||||||||||||
Real Estate
|
Real Estate
|
Home Equity
|
HELOCs
|
Consumer
|
Total
|
|||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||
Allowance at beginning of period
|
$ | 519,182 | $ | 274,286 | $ | 14,592 | $ | 9,885 | $ | 16,039 | $ | 833,984 | ||||||||||||
Provision (recovery) for loan losses
|
18,707 | 2,631 | (653 | ) | (87 | ) | 5,168 | 25,766 | ||||||||||||||||
Charge-offs
|
- | - | - | - | - | - | ||||||||||||||||||
Recoveries
|
2,889 | - | - | - | - | 2,889 | ||||||||||||||||||
Net charge-offs
|
2,889 | - | - | - | - | 2,889 | ||||||||||||||||||
Allowance at end of period
|
$ | 540,778 | $ | 276,917 | $ | 13,939 | $ | 9,798 | $ | 21,207 | $ | 862,639 | ||||||||||||
Ending Balance
|
$ | 540,778 | $ | 276,917 | $ | 13,939 | $ | 9,798 | $ | 21,207 | $ | 862,639 | ||||||||||||
Ending balance: individually evaluated for impairment
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 540,778 | $ | 276,917 | $ | 13,939 | $ | 9,798 | $ | 21,207 | $ | 862,639 | ||||||||||||
Loans:
|
||||||||||||||||||||||||
Ending Balance
|
$ | 122,528,589 | $ | 9,692,532 | $ | 2,787,726 | $ | 1,959,632 | $ | 4,216,413 | $ | 141,184,892 | ||||||||||||
Ending balance: individually evaluated for impairment
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 122,528,589 | $ | 9,692,532 | $ | 2,787,726 | $ | 1,959,632 | $ | 4,216,413 | $ | 141,184,892 |
At December 31, 2010 | ||||||||||||||||||||||||
Multi-family | ||||||||||||||||||||||||
One-to-
|
and
|
Education
|
||||||||||||||||||||||
Four Family
|
Commercial
|
and Other
|
||||||||||||||||||||||
Real Estate
|
Real Estate
|
Home Equity
|
HELOCs
|
Consumer
|
Total
|
|||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||
Ending Balance
|
$ | 519,182 | $ | 274,286 | $ | 14,592 | $ | 9,885 | $ | 16,039 | $ | 833,984 | ||||||||||||
Ending balance: individually evaluated for impairment
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 519,182 | $ | 274,286 | $ | 14,592 | $ | 9,885 | $ | 16,039 | $ | 833,984 | ||||||||||||
Loans:
|
||||||||||||||||||||||||
Ending Balance
|
$ | 119,085,014 | $ | 10,272,043 | $ | 2,918,492 | $ | 2,023,561 | $ | 3,207,684 | $ | 137,506,794 | ||||||||||||
|
||||||||||||||||||||||||
Ending balance: individually evaluated for impairment
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
|
||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 119,085,014 | $ | 10,272,043 | $ | 2,918,492 | $ | 2,023,561 | $ | 3,207,684 | $ | 137,506,794 |
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Multi-Family
|
Multi-Family
|
|||||||
and Commercial
|
and Commercial
|
|||||||
Real Estate
|
Real Estate
|
|||||||
Pass
|
$ | 6,912,185 | $ | 7,475,825 | ||||
Special Mention
|
2,760,611 | 2,775,251 | ||||||
Substandard
|
19,736 | 20,967 | ||||||
Doubtful
|
- | - | ||||||
Loss
|
- | - | ||||||
Ending Balance
|
$ | 9,692,532 | $ | 10,272,043 |
At March 31, 2011
|
||||||||||||||||||||
One-to-
|
Education
|
Non-covered
Consumer
|
||||||||||||||||||
Four Family
|
Home
|
and Other
|
Loans
|
|||||||||||||||||
Real Estate
|
Equity
|
HELOCs
|
Consumer
|
Purchased
|
||||||||||||||||
Performing
|
$ | 121,749,036 | $ | 2,787,726 | $ | 1,925,332 | $ | 3,011,288 | $ | 1,112,183 | ||||||||||
Nonperforming
|
779,553 | - | 34,300 | 80,894 | 12,048 | |||||||||||||||
Total
|
$ | 122,528,589 | $ | 2,787,726 | $ | 1,959,632 | $ | 3,092,182 | $ | 1,124,231 | ||||||||||
At December 31, 2010
|
||||||||||||||||||||
One-to-
|
Education
|
Non-covered
Consumer
|
||||||||||||||||||
Four Family
|
Home
|
and Other
|
Loans
|
|||||||||||||||||
Real Estate
|
Equity
|
HELOCs
|
Consumer
|
Purchased
|
||||||||||||||||
Performing
|
$ | 118,335,481 | $ | 2,918,492 | $ | 1,976,912 | $ | 2,992,563 | $ | 1,258,908 | ||||||||||
Nonperforming
|
749,533 | - | 46,649 | 215,121 | 11,209 | |||||||||||||||
Total
|
$ | 119,085,014 | $ | 2,918,492 | $ | 2,023,561 | $ | 3,207,684 | $ | 1,270,117 |
At March 31, 2011
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
Total
|
Investment >
|
|||||||||||||||||||||||||||
30-59 Days
|
60-89 Days
|
90 Days
|
Total Past
|
Loans
|
90 Days and
|
|||||||||||||||||||||||
Past Due
|
Past Due
|
Or Greater
|
Due
|
Current
|
Receivable
|
Accruing
|
||||||||||||||||||||||
One-to-Four Family
|
||||||||||||||||||||||||||||
Real Estate
|
$ | 334,478 | $ | 157,804 | $ | 779,553 | $ | 1,271,835 | $ | 121,256,754 | $ | 122,528,589 | $ | - | ||||||||||||||
Multi-family and
|
||||||||||||||||||||||||||||
Commercial Real Estate
|
- | - | - | - | 9,692,532 | 9,692,532 | - | |||||||||||||||||||||
Home Equity
|
- | - | - | - | 2,787,726 | 2,787,726 | - | |||||||||||||||||||||
HELOCs
|
- | - | 34,300 | 34,300 | 1,925,332 | 1,959,632 | - | |||||||||||||||||||||
Education and Other
|
||||||||||||||||||||||||||||
Consumer
|
49,156 | 28,174 | 80,894 | 158,224 | 2,933,958 | 3,092,182 | - | |||||||||||||||||||||
Non-covered Consumer Loans
|
||||||||||||||||||||||||||||
Puchased
|
66,921 | 2,474 | 12,048 | 81,443 | 1,042,788 | 1,124,231 | - | |||||||||||||||||||||
Total
|
$ | 450,555 | $ | 188,452 | $ | 906,795 | $ | 1,545,802 | $ | 139,639,090 | $ | 141,184,892 | $ |
At December 31, 2010
|
||||||||||||||||||||||||||||
Recorded
|
||||||||||||||||||||||||||||
30-59 | 60-89 |
Total
|
Investment >
|
|||||||||||||||||||||||||
Days
|
Days
|
90 Days
|
Total Past
|
Loans
|
90 Days and
|
|||||||||||||||||||||||
Past Due
|
Past Due
|
Or Greater
|
Due
|
Current
|
Receivable
|
Accruing
|
||||||||||||||||||||||
One-to-Four Family
|
||||||||||||||||||||||||||||
Real Estate
|
$ | 389,875 | $ | 741,652 | $ | 749,533 | $ | 1,881,060 | $ | 117,203,954 | $ | 119,085,014 | $ | - | ||||||||||||||
Multi-family and
|
||||||||||||||||||||||||||||
Commercial Real Estate
|
20,967 | - | - | 20,967 | 10,251,076 | 10,272,043 | - | |||||||||||||||||||||
Home Equity
|
- | - | - | - | 2,918,492 | 2,918,492 | - | |||||||||||||||||||||
HELOCs
|
- | - | 46,649 | 46,649 | 1,976,912 | 2,023,561 | - | |||||||||||||||||||||
Education and Other
|
||||||||||||||||||||||||||||
Consumer
|
66,274 | 24,397 | 215,121 | 305,792 | 2,901,892 | 3,207,684 | - | |||||||||||||||||||||
Non-covered Consumer Loans
|
||||||||||||||||||||||||||||
Puchased
|
3,254 | 1,756 | 11,209 | 16,219 | 1,253,898 | 1,270,117 | - | |||||||||||||||||||||
Total
|
$ | 480,370 | $ | 767,805 | $ | 1,022,512 | $ | 2,270,687 | $ | 136,506,224 | $ | 138,776,911 | $ |
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
One-to-four family mortgage
|
$ | 779,553 | $ | 749,533 | ||||
HELOCs
|
34,300 | 46,649 | ||||||
Education and Other Consumer
|
80,894 | 215,121 | ||||||
Non-covered Consumer Loans Purchased
|
12,048 | 11,209 | ||||||
Total
|
$ | 906,795 | $ | 1,022,512 |
9.
|
Deposits
|
March 31, 2011
|
December 31, 2010
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Non-interest-bearing demand
|
$ | 8,646,837 | 3.98 | % | $ | 8,806,067 | 3.68 | % | ||||||||
NOW accounts
|
12,843,778 | 5.91 | 14,767,387 | 6.16 | ||||||||||||
Money market deposit
|
53,537,846 | 24.64 | 56,768,776 | 23.70 | ||||||||||||
Savings
|
29,904,113 | 13.76 | 29,523,229 | 12.32 | ||||||||||||
Time deposits
|
112,379,200 | 51.71 | 129,840,353 | 54.14 | ||||||||||||
Total
|
$ | 217,311,774 | 100.00 | % | $ | 239,705,812 | 100.00 | % |
10.
|
Life Insurance and Retirement Plans
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Components of net periodic benefit cost:
|
||||||||
Service cost
|
$ | 31,039 | $ | 14,852 | ||||
Interest cost
|
223,751 | 23,212 | ||||||
Net periodic benefit cost
|
$ | 54,790 | $ | 38,064 |
11.
|
Fair Value Measurements
|
March 31, 2011
|
||||||||||||||||
Level I
|
Level II
|
Level III
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Available for Sale
|
||||||||||||||||
Mortgage-backed securities
|
$ | - | $ | 14,824,885 | $ | - | $ | 14,824,885 | ||||||||
Corporate securities
|
- | 10,858,721 | - | 10,858,721 | ||||||||||||
Equity securities - financial services
|
- | 10,200 | - | 10,200 | ||||||||||||
Total
|
$ | - | $ | 25,693,806 | $ | - | $ | 25,693,806 |
December 31, 2010
|
||||||||||||||||
Level I
|
Level II
|
Level III
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Available for Sale
|
||||||||||||||||
Mortgage-backed securities
|
$ | - | $ | 16,539,264 | $ | - | $ | 16,539,264 | ||||||||
Corporate securities
|
- | 10,801,899 | - | 10,801,899 | ||||||||||||
Equity securities - financial services
|
- | 9,100 | - | 9,100 | ||||||||||||
Total
|
$ | - | $ | 27,350,263 | $ | - | $ | 27,350,263 |
12.
|
Fair Value Disclosure
|
March 31, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||||||
Financial assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 8,033,156 | $ | 8,033,156 | $ | 54,004,549 | $ | 54,004,549 | ||||||||
Investment securities
|
||||||||||||||||
Available for sale
|
25,693,806 | 25,693,806 | 27,350,263 | 27,350,263 | ||||||||||||
Held to maturity
|
53,515,771 | 53,177,056 | 26,127,630 | 26,075,142 | ||||||||||||
Net loans receivable
|
171,458,659 | 176,462,621 | 170,473,386 | 178,676,219 | ||||||||||||
Accrued interest receivable
|
1,099,970 | 1,099,970 | 1,073,223 | 1,073,223 | ||||||||||||
FDIC indemnification asset
|
5,408,461 | 5,408,461 | 5,397,192 | 5,397,192 | ||||||||||||
Federal Home Loan Bank stock
|
3,292,300 | 3,292,300 | 3,465,600 | 3,465,600 | ||||||||||||
Bank-owned life insurance
|
4,157,636 | 4,157,636 | 4,140,267 | 4,140,267 | ||||||||||||
Financial liabilities:
|
||||||||||||||||
Deposits
|
$ | 217,311,776 | $ | 219,079,418 | $ | 239,705,812 | $ | 241,401,576 | ||||||||
FHLB advances - short-term
|
5,000,000 | 5,000,000 | - | - | ||||||||||||
FHLB advances - long-term
|
26,520,025 | 30,841,224 | 28,426,193 | 29,900,092 | ||||||||||||
Advances by borrowers for taxes and insurance
|
717,901 | 717,901 | 1,005,753 | 1,005,753 | ||||||||||||
Accrued interest payable
|
100,775 | 100,775 | 103,534 | 103,534 |
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Three Months Ended
|
||||||||
March
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands)
|
||||||||
Interest and dividend income:
|
||||||||
Loans receivable
|
$ | 2,230 | $ | 2,112 | ||||
Investment securities
|
569 | 459 | ||||||
Other interest and dividend income
|
4 | 1 | ||||||
Total interest and dividend income
|
2,803 | 2,572 | ||||||
Interest Expense:
|
||||||||
Deposits
|
673 | 741 | ||||||
FHLB advances - short-term
|
3 | - | ||||||
FHLB advances - long-term
|
191 | 206 | ||||||
Advances by borrowers for taxes and insurance
|
6 | 7 | ||||||
Total interest expense
|
873 | 954 | ||||||
Net interest income
|
$ | 1,930 | $ | 1,618 |
Three Months Ended
|
||||||||||||||||
March 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Average
|
Yield/
|
Average
|
Yield/
|
|||||||||||||
Balance
|
Cost
|
Balance
|
Cost
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Interest-earning assets:
|
||||||||||||||||
Loans
|
$ | 173,976 | 5.13 | % | $ | 150,556 | 5.61 | % | ||||||||
Investment securities
|
71,837 | 3.17 | 43,808 | 4.19 | ||||||||||||
Other interest-earning assets
|
24,676 | 0.07 | 7,655 | 0.05 | ||||||||||||
Total interest-earning assets
|
270,489 | 4.20 | % | 202,019 | 5.16 | % | ||||||||||
Noninterest-earning assets:
|
15,933 | 14,716 | ||||||||||||||
Allowance for Loan Losses
|
(792 | ) | (1,114 | ) | ||||||||||||
Total assets
|
$ | 285,630 | $ | 215,621 | ||||||||||||
Liabilities and equity:
|
||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||
Interest-bearing demand deposits
|
$ | 13,121 | 0.62 | % | $ | 11,230 | 0.65 | % | ||||||||
Money market deposits
|
55,561 | 0.66 | 32,779 | 1.22 | ||||||||||||
Savings accounts
|
29,874 | 0.45 | 29,782 | 0.60 | ||||||||||||
Time deposits
|
118,241 | 1.82 | 80,562 | 2.86 | ||||||||||||
Total interest-bearing deposits
|
216,797 | 1.26 | % | 154,353 | 1.95 | % | ||||||||||
FHLB advances - short-term
|
1,778 | 0.68 | - | - | ||||||||||||
FHLB advances - long-term
|
27,398 | 2.83 | 29,084 | 2.87 | ||||||||||||
Advances by borrowers for taxes and insurance
|
1,024 | 2.38 | 1,300 | 2.18 | ||||||||||||
Total interest-bearing liabilities
|
246,997 | 1.43 | % | 184,737 | 2.09 | % | ||||||||||
Noninterest-bearing liabilities:
|
11,309 | 6,776 | ||||||||||||||
Total liabilities
|
258,306 | 191,513 | ||||||||||||||
Retained earnings
|
27,324 | 24,108 | ||||||||||||||
Total liabilities and retained earnings
|
$ | 285,630 | $ | 215,621 | ||||||||||||
Interest rate spread
|
2.77 | % | 3.07 | % | ||||||||||||
Net yield on interest-bearing assets
|
2.89 | % | 3.25 | % | ||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities
|
109.51 | % | 109.35 | % |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands)
|
||||||||
Service fees on deposit accounts
|
$ | 30 | $ | 19 | ||||
Earnings on bank-owned life insurance
|
17 | 24 | ||||||
Investment securities gains, net
|
- | 294 | ||||||
Gain on sale of loans, net
|
- | 26 | ||||||
Rental income
|
73 | 73 | ||||||
Accretion of FDIC indemnification asset
|
11 | - | ||||||
Other
|
50 | 52 | ||||||
Total
|
$ | 181 | $ | 488 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands)
|
||||||||
Compensation and employee benefits
|
$ | 1,101 | $ | 871 | ||||
Occupancy and equipment
|
353 | 264 | ||||||
Federal deposit insurance premiums
|
92 | 149 | ||||||
Data processing expense
|
151 | 68 | ||||||
Professional fees
|
94 | 93 | ||||||
Other
|
305 | 622 | ||||||
Total
|
$ | 2,096 | $ | 2,067 |
Item 3.
|
Quantitative and Qualitative Disclosure About Market Risk
|
Item 4.
|
Controls and Procedures
|
PART II.
|
OTHER INFORMATION
|
Item 6.
|
Exhibits
|
3.1
|
Charter of Polonia Bancorp (1)
|
3.2
|
Bylaws of Polonia Bancorp (2)
|
4.0
|
Stock Certificate of Polonia Bancorp (1)
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
32.0
|
Section 1350 Certifications
|
(1)
|
Incorporated by reference into this document from the Exhibits filed with the Securities and Exchange Commission on the Registration Statement on Form SB-2, and any amendments thereto, Registration No. 333-135643.
|
(2)
|
Incorporated herein by reference to Exhibit 3.1 to the current report on Form 8-K filed with the Securities and Exchange Commission on January 22, 2009 (file no. 000-52667).
|
POLONIA BANCORP
|
|||
Date: March
14, 2012
|
By:
|
/s/ Anthony J. Szuszczewicz
|
|
Anthony J. Szuszczewicz
|
|||
President and Chief Executive Officer
|
|||
(principal executive officer)
|
POLONIA BANCORP
|
|||
Date: March
14, 2012
|
By:
|
/s/ Paul D. Rutkowski
|
|
Paul D. Rutkowski
|
|||
Chief Financial Officer and Treasurer
|
|||
(principal financial and accounting officer)
|