Form 10-Q/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2011
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-29709
HARLEYSVILLE SAVINGS FINANCIAL CORPORTION
(Exact name of registrant as specified in its charter)
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Pennsylvania
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23-3028464 |
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.) |
incorporation or organization) |
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271 Main Street, Harleysville, Pennsylvania 19438
(Address of principal executive offices)
(215) 256-8828
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated Filer o
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Non-accelerated filer o
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Smaller reporting company þ |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date:
Common Stock, par value $.01 per share: 3,731,991 shares outstanding as of May 13, 2011
TABLE OF CONTENTS
Explanatory Note
This Form 10-Q/A of Harleysville Savings Financial Corporation (the Company) is being filed to
amend the unaudited consolidated financial statements for the three and six months ended March 31,
2011 included in Item 1 of the Companys Form 10-Q for the quarter ended March 31, 2011 filed on
May 13, 2011 to add a subsequent event footnote to report the death of an officer in April 2011 and
the recognition of a death benefit claim on bank owned life insurance policies of approximately
$960,000 in other income during the quarter ending June 30, 2011.
PART I
Item 1. Financial Statements
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Unaudited Consolidated Statements of Financial Condition
as of March 31, 2011, and September 30, 2010 |
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Unaudited Consolidated Statements of Income for the
Three and Six Months Ended March 31, 2011 and 2010 |
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Unaudited Consolidated Statements of Comprehensive
Income for the Three and Six Months Ended March 31, 2011
and 2010 |
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Unaudited Consolidated Statements of Stockholders
Equity for the Six Months Ended March 31, 2011 and 2010 |
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Unaudited Consolidated Statements of Cash Flows for the
Six Months Ended March 31, 2011 and 2010 |
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Notes to Unaudited Consolidated Financial Statements |
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Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Financial Condition
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March 31, |
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September 30, |
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(In thousands, except share data) |
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2011 |
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2010 |
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Assets |
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Cash and amounts due from depository institutions |
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$ |
4,476 |
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$ |
4,052 |
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Interest bearing deposits |
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19,484 |
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16,138 |
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Total cash and cash equivalents |
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23,960 |
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20,190 |
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Investments and mortgage-backed securities: |
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Available for sale (amortized cost March 31, $10,774; September 30,
$21,401) |
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10,860 |
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21,413 |
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Held to maturity (fair value March 31, $275,116; September 30, $264,448) |
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271,744 |
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256,088 |
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Loans receivable (net of allowance for loan losses |
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March 31, $2,795; September 30, $2,504) |
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501,180 |
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510,093 |
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Accrued interest receivable |
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3,167 |
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3,210 |
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Federal Home Loan Bank stock at cost |
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14,526 |
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16,096 |
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Foreclosed real estate |
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372 |
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186 |
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Office properties and equipment, net |
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12,070 |
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12,158 |
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Prepaid expenses and other assets |
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18,599 |
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17,706 |
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TOTAL ASSETS |
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$ |
856,478 |
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$ |
857,140 |
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Liabilities and Stockholders Equity |
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Liabilities: |
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Deposits |
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$ |
531,272 |
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$ |
528,100 |
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Long-term debt |
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263,632 |
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272,047 |
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Accrued interest payable |
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1,333 |
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1,407 |
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Advances from borrowers for taxes and insurance |
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4,450 |
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1,247 |
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Accounts payable and accrued expenses |
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782 |
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988 |
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Total liabilities |
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801,469 |
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803,789 |
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Commitments and contingencies |
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Stockholders equity: |
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Preferred Stock: $.01 par value;
7,500,000 shares authorized; none issued |
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Common stock: $.01 par value; 15,000,000 shares authorized;
3,921,177 shares issued; outstanding March 31, 2011 3,731,574 shares
September 30, 2010 3,687,409 shares |
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39 |
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39 |
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Additional paid-in capital |
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8,224 |
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8,126 |
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Treasury
stock, at cost (March 31, 2011, 189,603 shares; September 30, 2010, 233,768 shares) |
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(2,777 |
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(3,383 |
) |
Retained earnings partially restricted |
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49,466 |
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48,562 |
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Accumulated other comprehensive income |
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57 |
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7 |
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Total stockholders equity |
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55,009 |
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53,351 |
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
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$ |
856,478 |
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$ |
857,140 |
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See notes to unaudited consolidated financial statements.
page -1-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Income
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For the Three Months Ended |
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For the Six Months Ended |
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March 31, |
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March 31, |
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(In thousands, except per share data) |
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2011 |
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2010 |
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2011 |
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2010 |
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Interest Income: |
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Interest on mortgage loans |
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$ |
4,688 |
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$ |
4,992 |
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$ |
9,491 |
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$ |
10,076 |
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Interest on commercial loans |
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1,246 |
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976 |
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2,482 |
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1,915 |
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Interest on mortgage-backed securities |
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1,329 |
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1,772 |
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2,734 |
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3,677 |
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Interest on consumer and other loans |
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1,008 |
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1,090 |
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2,060 |
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2,227 |
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Interest on other taxable investments |
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803 |
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851 |
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1,534 |
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1,760 |
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Interest on tax-exempt investments |
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216 |
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262 |
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419 |
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543 |
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Dividends on investment securities |
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1 |
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1 |
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2 |
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2 |
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Total interest income |
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9,291 |
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9,944 |
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18,722 |
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20,200 |
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Interest Expense: |
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Interest on deposits |
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1,895 |
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2,273 |
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3,912 |
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4,808 |
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Interest on borrowings |
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2,869 |
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3,152 |
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5,827 |
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6,486 |
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Total interest expense |
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4,764 |
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5,425 |
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9,739 |
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11,294 |
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Net Interest Income |
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4,527 |
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4,519 |
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8,983 |
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8,906 |
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Provision for loan losses |
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175 |
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150 |
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325 |
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300 |
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Net Interest Income after Provision for Loan Losses |
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4,352 |
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4,369 |
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8,658 |
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8,606 |
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Other Income: |
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Customer service fees |
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127 |
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152 |
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264 |
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313 |
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Income on bank-owned life insurance |
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121 |
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121 |
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244 |
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243 |
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Other income |
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184 |
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185 |
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425 |
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404 |
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Total other income |
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432 |
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458 |
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933 |
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960 |
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Other Expenses: |
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Salaries and employee benefits |
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1,895 |
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1,762 |
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3,624 |
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3,431 |
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Occupancy and equipment |
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368 |
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336 |
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714 |
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629 |
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Deposit insurance premiums |
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263 |
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226 |
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489 |
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453 |
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Data processing |
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163 |
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169 |
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330 |
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322 |
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Other |
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651 |
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737 |
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1,345 |
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1,465 |
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Total other expenses |
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3,340 |
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3,230 |
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6,502 |
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6,300 |
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Income before Income Taxes |
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1,444 |
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1,597 |
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3,089 |
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3,266 |
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Income tax expense |
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350 |
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437 |
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779 |
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892 |
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Net Income |
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$ |
1,094 |
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$ |
1,160 |
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$ |
2,310 |
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$ |
2,374 |
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Basic Earnings Per Share |
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$ |
0.29 |
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$ |
0.32 |
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$ |
0.62 |
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$ |
0.65 |
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Diluted Earnings Per Share |
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$ |
0.29 |
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$ |
0.32 |
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$ |
0.62 |
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$ |
0.65 |
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Dividends Per Share |
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$ |
0.19 |
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$ |
0.19 |
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$ |
0.38 |
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$ |
0.38 |
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See notes to unaudited consolidated financial statements.
page -2-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Comprehensive Income
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Three Months Ended |
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March 31, |
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(In thousands) |
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2011 |
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2010 |
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Net Income |
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$ |
1,094 |
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$ |
1,160 |
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Other Comprehensive Income |
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Unrealized (loss) gain on securities available for sale, net of tax (benefit)
expense 2011, ($10); 2010, $28 and reclassifications |
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(20 |
)(1) |
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56 |
(1) |
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Total Comprehensive Income |
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$ |
1,074 |
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$ |
1,216 |
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2011 |
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2010 |
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(1) Disclosure of reclassification amount, net of tax for the three months ended: |
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Net unrealized (loss) gain arising during the three months ended |
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$ |
(30 |
) |
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$ |
84 |
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Reclassification adjustment for net losses (gains) included in net income |
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(30 |
) |
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84 |
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Tax benefit (expense) |
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10 |
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(28 |
) |
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Net unrealized (loss) gain on securities available for sale |
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$ |
(20 |
) |
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$ |
56 |
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Six Months Ended |
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March 31, |
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(In thousands) |
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2011 |
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2010 |
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Net Income |
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$ |
2,310 |
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$ |
2,374 |
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Other Comprehensive Income |
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Unrealized (loss) gain on securities available for sale, net of tax (benefit)
expense 2011, $25; 2010, $29 and reclassifications |
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(50 |
)(1) |
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57 |
(1) |
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Total Comprehensive Income |
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$ |
2,260 |
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$ |
2,431 |
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2011 |
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2010 |
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(1) Disclosure of reclassification amount, net of tax for the three months ended: |
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Net unrealized gain arising during the three months ended |
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$ |
75 |
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$ |
86 |
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Reclassification adjustment for net losses (gains) included in net income |
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|
75 |
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|
86 |
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Tax expense |
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(25 |
) |
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|
(29 |
) |
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Net unrealized gain on securities available for sale |
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$ |
50 |
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$ |
57 |
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|
See notes to unaudited consolidated financial statements.
page -3-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Stockholders Equity
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|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
|
|
|
Retained |
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
Additional |
|
|
Earnings- |
|
|
Other |
|
|
|
|
|
|
Total |
|
|
|
Shares |
|
|
Common |
|
|
Paid-in |
|
|
Partially |
|
|
Comprehensive |
|
|
Treasury |
|
|
Stockholders |
|
(In thousands, except share and per share data) |
|
Outstanding |
|
|
Stock |
|
|
Capital |
|
|
Restricted |
|
|
(Loss) / Income |
|
|
Stock |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 1, 2010 |
|
|
3,687,409 |
|
|
$ |
39 |
|
|
$ |
8,126 |
|
|
$ |
48,562 |
|
|
$ |
7 |
|
|
$ |
(3,383 |
) |
|
$ |
53,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,310 |
|
|
|
|
|
|
|
|
|
|
|
2,310 |
|
Dividends $.38 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,406 |
) |
|
|
|
|
|
|
|
|
|
|
(1,406 |
) |
Stock option compensation |
|
|
|
|
|
|
|
|
|
|
103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103 |
|
Treasury stock delivered under ESOP |
|
|
10,000 |
|
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
137 |
|
|
|
147 |
|
Treasury stock delivered under reinvestment plan |
|
|
20,380 |
|
|
|
|
|
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
280 |
|
|
|
306 |
|
Employee options exercised |
|
|
13,785 |
|
|
|
|
|
|
|
(41 |
) |
|
|
|
|
|
|
|
|
|
|
189 |
|
|
|
148 |
|
Change in unrealized holding gain on
available-for-sale securities, net of
reclassification and tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2011 |
|
|
3,731,574 |
|
|
$ |
39 |
|
|
$ |
8,224 |
|
|
$ |
49,466 |
|
|
$ |
57 |
|
|
$ |
(2,777 |
) |
|
$ |
55,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
|
|
|
Retained |
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
Additional |
|
|
Earnings- |
|
|
Other |
|
|
|
|
|
|
Total |
|
|
|
Shares |
|
|
Common |
|
|
Paid-in |
|
|
Partially |
|
|
Comprehensive |
|
|
Treasury |
|
|
Stockholders |
|
(In thousands, except share and per share data) |
|
Outstanding |
|
|
Stock |
|
|
Capital |
|
|
Restricted |
|
|
(Loss) / Income |
|
|
Stock |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 1, 2009 |
|
|
3,627,696 |
|
|
$ |
39 |
|
|
$ |
8,002 |
|
|
$ |
46,329 |
|
|
$ |
(29 |
) |
|
$ |
(4,202 |
) |
|
$ |
50,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,374 |
|
|
|
|
|
|
|
|
|
|
|
2,374 |
|
Dividends $.38 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,382 |
) |
|
|
|
|
|
|
|
|
|
|
(1,382 |
) |
Stock option compensation |
|
|
|
|
|
|
|
|
|
|
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81 |
|
Treasury stock purchase |
|
|
(5,659 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(77 |
) |
|
|
(77 |
) |
Treasury stock delivered under ESOP |
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137 |
|
|
|
137 |
|
Treasury stock delivered under reinvestment plan |
|
|
20,939 |
|
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
286 |
|
|
|
280 |
|
Employee options exercised |
|
|
7,916 |
|
|
|
|
|
|
|
(38 |
) |
|
|
|
|
|
|
|
|
|
|
109 |
|
|
|
71 |
|
Change in unrealized holding loss
on available-for-sale securities, net of
reclassification and tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57 |
|
|
|
|
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010 |
|
|
3,660,892 |
|
|
$ |
39 |
|
|
$ |
8,039 |
|
|
$ |
47,321 |
|
|
$ |
28 |
|
|
$ |
(3,747 |
) |
|
$ |
51,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited consolidated financial statements.
page -4-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended March 31, |
|
(In thousands) |
|
2011 |
|
|
2010 |
|
Operating Activities: |
|
|
|
|
|
|
|
|
Net Income |
|
$ |
2,310 |
|
|
$ |
2,374 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
309 |
|
|
|
259 |
|
Provision for loan losses |
|
|
325 |
|
|
|
300 |
|
Loss on sale of foreclosed real estate |
|
|
|
|
|
|
159 |
|
Amortization of deferred loan fees |
|
|
126 |
|
|
|
58 |
|
Net (accretion) amortization of premiums and discounts |
|
|
(86 |
) |
|
|
65 |
|
Increase in cash surrender value of bank owned life insurance |
|
|
(244 |
) |
|
|
(243 |
) |
Compensation charge on stock options |
|
|
103 |
|
|
|
81 |
|
Changes in assets and liabilities which provided (used) cash: |
|
|
|
|
|
|
|
|
Decrease in accounts payable and accrued expenses |
|
|
(206 |
) |
|
|
(489 |
) |
Increase in prepaid expenses and other assets |
|
|
(649 |
) |
|
|
(3,277 |
) |
Decrease in accrued interest receivable |
|
|
43 |
|
|
|
108 |
|
Decrease in accrued interest payable |
|
|
(74 |
) |
|
|
(149 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
1,957 |
|
|
|
(754 |
) |
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
Purchase of mortgage-backed securities held to maturity |
|
|
(36,930 |
) |
|
|
(1,571 |
) |
Purchase of investment securities held to maturity |
|
|
(39,228 |
) |
|
|
(50,953 |
) |
Purchase of investment securities available-for-sale |
|
|
(33,114 |
) |
|
|
(30,900 |
) |
Net redemption FHLB stock |
|
|
1,570 |
|
|
|
|
|
Proceeds from the redemption of investment securities available-for-sale |
|
|
43,717 |
|
|
|
33,780 |
|
Proceeds from maturities of investment securities held to maturity |
|
|
36,665 |
|
|
|
40,429 |
|
Proceeds from sale of foreclosed real estate |
|
|
|
|
|
|
588 |
|
Principal collected on mortgage-backed securities held to maturity |
|
|
23,923 |
|
|
|
22,125 |
|
Principal collected on long term loans |
|
|
60,948 |
|
|
|
55,161 |
|
Long term loans originated or acquired |
|
|
(52,672 |
) |
|
|
(68,623 |
) |
Purchases of premises and equipment |
|
|
(221 |
) |
|
|
(1,894 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
4,658 |
|
|
|
(1,858 |
) |
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
Net increase in demand deposits, NOW accounts
and savings accounts |
|
|
9,196 |
|
|
|
44,219 |
|
Net decrease in certificates of deposit |
|
|
(6,024 |
) |
|
|
(19,246 |
) |
Cash dividends |
|
|
(1,090 |
) |
|
|
(1,102 |
) |
Repayment of long-term debt |
|
|
(8,415 |
) |
|
|
(18,648 |
) |
Acquisition of treasury stock |
|
|
|
|
|
|
(77 |
) |
Treasury stock delivered under employee stock plans |
|
|
285 |
|
|
|
208 |
|
Net increase in advances from borrowers for taxes and insurance |
|
|
3,203 |
|
|
|
3,039 |
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(2,845 |
) |
|
|
8,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
3,770 |
|
|
|
5,781 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
|
|
20,190 |
|
|
|
9,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR |
|
$ |
23,960 |
|
|
$ |
15,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest (credited and paid) |
|
$ |
9,813 |
|
|
$ |
11,444 |
|
Income taxes |
|
|
1,020 |
|
|
|
925 |
|
Foreclosed real estate acquired in settlement of loans |
|
|
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities purchased and not settled |
|
$ |
|
|
|
$ |
2,800 |
|
See notes to consolidated financial statements.
page -5-
Harleysville Savings Financial Corporation
Notes to Unaudited Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -The unaudited consolidated financial statements include the accounts of
Harleysville Savings Financial Corporation (the Company) and its subsidiary. Harleysville
Savings Bank (the Bank) is the wholly owned subsidiary of the Company. The accompanying
consolidated financial statements include the accounts of the Company, the Bank, and the Banks
wholly owned subsidiaries, HSB Inc, a Delaware corporation which was formed in order to hold
certain assets, Freedom Financial LLC that allows the Company to offer non deposit products and
HARL LLC that allows the Bank to invest in equity investments. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with
the instructions for Form 10-Q and therefore do not include information or footnotes necessary for
a complete presentation of financial condition, results of operations and cash flows in conformity
with accounting principles generally accepted in the United States of America. However, all
adjustments (consisting only of normal recurring adjustments) which, in the opinion of management,
are necessary for a fair presentation of the consolidated financial statements have been included.
The results of operations for the three and six months ended March 31, 2011 are not necessarily
indicative of the results which may be expected for the entire fiscal year ending September 30,
2011 or any other period. The financial information should be read in conjunction with the
Companys Annual Report on Form 10-K for the period ended September 30, 2010.
Use of Estimates in Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of income
and expenses during the reporting period. The most significant of these estimates is the allowance
for loan losses, the determination of other-than-temporary impairment on securities and the
valuation of deferred tax assets. Actual results could differ from those estimates.
Reclassifications
Certain amounts in the prior periods financial statements have been reclassified to conform with
the current years classifications. The reclassifications had no effect on net income.
Subsequent Events
The Company has evaluated events and transactions occurring subsequent to the balance sheet date of
March 31, 2011 for items that should potentially be recognized or disclosed in these financial
statements. The evaluation was conducted through the date these financial statements were issued.
page -6-
Recent Accounting Pronouncements In October 2009, the FASB issued Accounting Standards Update
(ASU) 2009-16, Transfers and Servicing (Topic 860) Accounting for Transfers of Financial Assets.
This Update amends the Accounting Standards (Codification) for the issuance of FASB Statement No.
166, Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140. The
amendments in this Update improve financial reporting by eliminating the exceptions for qualifying
special-purpose entities from the consolidation guidance and the exception that permitted sale
accounting for certain mortgage securitizations when a transferor has not surrendered control over
the transferred financial assets. In addition, the amendments require enhanced disclosures about
the risks that a transferor continues to be exposed to because of its continuing involvement in
transferred financial assets. Comparability and consistency in accounting for transferred
financial assets will also be improved through clarifications of the requirements for isolation and
limitations on portions of financial assets that are eligible for sale accounting. This Update is
effective at the start of a reporting entitys first fiscal year beginning after November 15, 2009.
The adoption of this new guidance did not have an impact on our financial position or result of
operations.
In October 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities. This Update amends
the Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No.
46(R). The amendments in this Update replace the quantitative-based risks and rewards calculation
for determining which reporting entity, if any, has a controlling financial interest in a variable
interest entity with an approach focused on identifying which reporting entity has the power to
direct the activities of a variable interest entity that most significantly impact the entitys
economic performance and (1) the obligation to absorb losses of the entity or (2) the right to
receive benefits from the entity. An approach that is expected to be primarily qualitative will be
more effective for identifying which reporting entity has a controlling financial interest in a
variable interest entity. The amendments in this Update also require additional disclosures about
a reporting entitys involvement in variable interest entities, which will enhance the information
provided to users of financial statements. This Update is effective at the start of a reporting
entitys first fiscal year beginning after November 15, 2009. The adoption of this new guidance
did not have an impact on our financial position or result of operations.
The FASB has issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements. This ASU requires some new disclosures and clarifies
some existing disclosure requirements about fair value measurement as set forth in Codification
Subtopic 820-10. The FASBs objective is to improve these disclosures and, thus, increase the
transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10
to now require:
|
|
|
A reporting entity to disclose separately the amounts of significant transfers in and
out of Level 1 and Level 2 fair value measurements and describe the reasons for the
transfers; and |
|
|
|
In the reconciliation for fair value measurements using significant unobservable inputs,
a reporting entity should present separately information about purchases, sales, issuances,
and settlements. |
In addition, ASU 2010-06 clarifies the requirements of the following existing disclosures:
|
|
|
For purposes of reporting fair value measurement for each class of assets and
liabilities, a reporting entity needs to use judgment in determining the appropriate
classes of assets and liabilities; and |
|
|
|
A reporting entity should provide disclosures about the valuation techniques and inputs
used to measure fair value for both recurring and nonrecurring fair value measurements. |
page -7-
ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15,
2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal
years beginning after December 15, 2010, and for interim periods within those fiscal years. Early
adoption is permitted. The adoption of this standard did not have an impact on our financial
position or results of operations.
ASU 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables
and the Allowance for Credit Losses, will help investors assess the credit risk of a companys
receivables portfolio and the adequacy of its allowance for credit losses held against the
portfolios by expanding credit risk disclosures.
This ASU requires more information about the credit quality of financing receivables in the
disclosures to financial statements, such as aging information and credit quality indicators. Both
new and existing disclosures must be disaggregated by portfolio segment or class. The
disaggregation of information is based on how a company develops its allowance for credit losses
and how it manages its credit exposure.
The amendments in this update apply to all public and nonpublic entities with financing
receivables. Financing receivables include loans and trade accounts receivable. However,
short-term trade accounts receivable, receivables measured at fair value or lower of cost or fair
value, and debt securities are exempt from these disclosure amendments.
The effective date of ASU 2010-20 differs for public and nonpublic companies. For public
companies, the amendments that require disclosures as of the end of a reporting period are
effective for periods ending on or after December 15, 2010. The amendments that require
disclosures about activity that occurs during a reporting period are effective for periods
beginning on or after December 15, 2010. For nonpublic companies, the amendments are effective for
annual reporting periods ending on or after December 15, 2011. The Company has provided the
required credit quality disclosures as of the end of the reporting periods December 31, 2010 and
March 31, 2011 and disclosures about the activity for the three months ended March 31, 2011.
ASU 2011 01 Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in
Update No. 2010-20. The amendments in this Update temporarily delay the effective date of the
disclosures about troubled debt restructurings in Update 2010-20 for public entities. Under the
existing effective date in Update 2010-20, public-entity creditors would have provided disclosures
about troubled debt restructurings for periods beginning on or after December 15, 2010. The delay
was intended to allow FASB time to complete its deliberations on what constitutes a troubled debt
restructuring. FASB issued this new standard as discussed in the following paragraph. The
effective date of the new disclosures about troubled debt restructurings for public entities is
coordinated with the adoption of this new standard.
In
April 2011 the FASB issued Accounting Standard Update (ASU) No. 2011-02, Receivables (Topic 310):
A Creditors Determination of Whether a Restructuring is a Troubled Debt Restructuring, to clarify
the accounting principles applied to loan modifications. ASU No. 2011-02 was issued to address the
recording of an impairment loss in FASB ASC 310, Receivables. ASU No. 2011-02 adds text to the
scope guidance Section 310-40-15 that is meant to help determine when a lender has granted a
concession on their terms of a loan. The added material also provides criteria that should be used
to help determine when the loan restructuring delays a payment by a length of time that is
considered insignificant and when the borrower is having financial problems. For public companies
the effective date is for fiscal quarters and years that start June 15, 2011, or later with the
retrospective application to the beginning of the fiscal year for loans that are restructured
during the year in which the changes are adopted. The Company is in the process of evaluating the
adoption of this update will have on their financial condition or statement of operations.
page -8-
2. INVESTMENT AND MORTGAGE-BACKED SECURITIES
The amortized cost and fair value of the Companys securities gross unrealized gains and losses, as
of March 31, 2011 and September 30, 2010 are as follows:
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Equity securities |
|
$ |
355 |
|
|
$ |
72 |
|
|
$ |
(31 |
) |
|
$ |
396 |
|
Collateralized mortgage obligations |
|
|
785 |
|
|
|
45 |
|
|
|
|
|
|
|
830 |
|
U.S. Government money market funds |
|
|
9,634 |
|
|
|
|
|
|
|
|
|
|
|
9,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Available for Sale Securities |
|
$ |
10,774 |
|
|
$ |
117 |
|
|
$ |
(31 |
) |
|
$ |
10,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Equity securities |
|
$ |
355 |
|
|
$ |
42 |
|
|
$ |
(54 |
) |
|
$ |
343 |
|
Collateralized mortgage obligations |
|
|
785 |
|
|
|
24 |
|
|
|
|
|
|
|
809 |
|
U.S. Government money market funds |
|
|
20,261 |
|
|
|
|
|
|
|
|
|
|
|
20,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Available for Sale Securities |
|
$ |
21,401 |
|
|
$ |
66 |
|
|
$ |
(54 |
) |
|
$ |
21,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
|
Mortgage-backed securities- U.S.
Government
Sponsored Enterprises (GSEs) |
|
$ |
118,632 |
|
|
$ |
5,559 |
|
|
$ |
(48 |
) |
|
$ |
124,143 |
|
Collateralized mortgage obligations |
|
|
25,224 |
|
|
|
199 |
|
|
|
(4 |
) |
|
|
25,419 |
|
Municipal bonds |
|
|
20,067 |
|
|
|
487 |
|
|
|
(110 |
) |
|
|
20,444 |
|
|
U.S. Government Agencies |
|
|
107,821 |
|
|
|
198 |
|
|
|
(2,909 |
) |
|
|
105,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Held to Maturity Securities |
|
$ |
271,744 |
|
|
$ |
6,443 |
|
|
$ |
(3,071 |
) |
|
$ |
275,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Mortgage-backed securities- U.S.
Government
Sponsored Enterprises (GSEs) |
|
$ |
110,732 |
|
|
$ |
6,755 |
|
|
$ |
|
|
|
$ |
117,487 |
|
Collateralized mortgage obligations |
|
|
20,087 |
|
|
|
193 |
|
|
|
(37 |
) |
|
|
20,243 |
|
Municipal bonds |
|
|
16,462 |
|
|
|
773 |
|
|
|
(47 |
) |
|
|
17,188 |
|
U.S. Government Agencies |
|
|
108,807 |
|
|
|
768 |
|
|
|
(45 |
) |
|
|
109,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Held to Maturity Securities |
|
$ |
256,088 |
|
|
$ |
8,489 |
|
|
$ |
(129 |
) |
|
$ |
264,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
page -9-
A summary of securities with unrealized losses, aggregated by category, at March 31, 2011 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
Less than 12 Months |
|
|
12 Months or Longer |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
Total |
|
|
Unrealized |
|
(In Thousands) |
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
Collateralized mortgage obligations |
|
$ |
7,571 |
|
|
$ |
(4 |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
7,571 |
|
|
$ |
(4 |
) |
Municipal bonds |
|
|
2,944 |
|
|
|
(23 |
) |
|
|
1,451 |
|
|
|
(87 |
) |
|
|
4,395 |
|
|
|
(110 |
) |
U.S. Government Agencies and GSEs |
|
|
102,496 |
|
|
|
(2,957 |
) |
|
|
|
|
|
|
|
|
|
|
102,496 |
|
|
|
(2,957 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal debt securities |
|
|
113,011 |
|
|
|
(2,984 |
) |
|
|
1,451 |
|
|
|
(87 |
) |
|
|
114,462 |
|
|
|
(3,071 |
) |
Equity securities |
|
|
24 |
|
|
|
|
|
|
|
181 |
|
|
|
(31 |
) |
|
|
205 |
|
|
|
(31 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities |
|
$ |
113,035 |
|
|
$ |
(2,984 |
) |
|
$ |
1,632 |
|
|
$ |
(118 |
) |
|
$ |
114,667 |
|
|
$ |
(3,102 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2011, debt securities in a gross unrealized loss position consisted of 45
securities that at such date had an aggregate depreciation of 2.61% from the Companys amortized
cost basis. Management believes that the estimated fair value of the securities disclosed above is
primarily dependent upon the movement in market interest rates. Management evaluated the length of
time and the extent to which the fair value has been less than cost; the financial condition and
near term prospects of the issuer, including any specific events which may influence the operations
of the issuer. The Company has the ability and intent to hold these securities until maturity and
the Company does not believe it will be required to sell such securities prior to the recovery of
the amortized cost basis. Management does not believe any individual unrealized loss as of March
31, 2011 represents an other-than-temporary impairment.
As of March 31, 2011, there were three equity securities in an unrealized loss position.
Management evaluated the length of time and the extent to which the market value has been less than
cost; the financial condition and near term prospects of the issuer, including any specific events
which may influence the operations of the issuer such as changes in technology that may impair the
earnings potential of the investment or the discontinuance of a segment of the business that may
effect the future earnings potential. The Company has the ability and intent to hold these
securities until the anticipated recovery of fair value occurs. Management does not believe any
individual unrealized loss of March 31, 2011 represents an other-than-temporary impairment.
A summary of securities with unrealized losses, aggregated by category, at September 30, 2010 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
Less than 12 Months |
|
|
12 Months or Longer |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
Total |
|
|
Unrealized |
|
(In Thousands) |
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
Collateralized mortgage obligations |
|
$ |
8,262 |
|
|
$ |
(4 |
) |
|
$ |
1,530 |
|
|
$ |
(33 |
) |
|
$ |
9,792 |
|
|
$ |
(37 |
) |
Municipal bonds |
|
|
378 |
|
|
|
|
|
|
|
1,494 |
|
|
|
(47 |
) |
|
|
1,872 |
|
|
|
(47 |
) |
U.S. Government Agencies and GSEs |
|
|
6,955 |
|
|
|
(45 |
) |
|
|
|
|
|
|
|
|
|
|
6,955 |
|
|
|
(45 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal debt securities |
|
|
15,595 |
|
|
|
(49 |
) |
|
|
3,024 |
|
|
|
(80 |
) |
|
|
18,619 |
|
|
|
(129 |
) |
Equity Securities |
|
|
55 |
|
|
|
(3 |
) |
|
|
160 |
|
|
|
(51 |
) |
|
|
215 |
|
|
|
(54 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities |
|
$ |
15,650 |
|
|
$ |
(52 |
) |
|
$ |
3,184 |
|
|
$ |
(131 |
) |
|
$ |
18,834 |
|
|
$ |
(183 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
page -10-
The following table sets forth the stated maturities of the investment and mortgage-backed
securities at March 31, 2011. Money market funds and equity securities are not included in the
table based on lack of maturity.
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
|
Amortized |
|
|
|
|
(In Thousands) |
|
Cost |
|
|
Fair Value |
|
|
Available for sale: |
|
|
|
|
|
|
|
|
Due in one year or less |
|
$ |
785 |
|
|
$ |
830 |
|
Due after one year through five years |
|
|
|
|
|
|
|
|
Due after five years through ten years |
|
|
|
|
|
|
|
|
Due after ten years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
785 |
|
|
$ |
830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity: |
|
|
|
|
|
|
|
|
Due in one year or less |
|
$ |
138,568 |
|
|
$ |
136,400 |
|
Due after one year through five years |
|
|
117,678 |
|
|
|
123,117 |
|
Due after five years through ten years |
|
|
14,672 |
|
|
|
14,658 |
|
Due after ten years |
|
|
826 |
|
|
|
941 |
|
|
|
|
|
|
|
|
Total |
|
$ |
271,744 |
|
|
$ |
275,116 |
|
|
|
|
|
|
|
|
Certain of the Companys investment securities, totaling $9.3 million and $10.3 at March 31,
2011 and September 30, 2010, respectively, were pledged as collateral to secure deposit sweep
accounts and public deposits as required or permitted by law.
3. LOANS RECEIVABLE
Loans receivable consists of the following:
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
March 31, 2011 |
|
|
September 30, 2010 |
|
Residential Mortgages |
|
$ |
332,219 |
|
|
$ |
339,874 |
|
Construction |
|
|
6,129 |
|
|
|
4,752 |
|
Home Equity |
|
|
85,958 |
|
|
|
90,511 |
|
Commercial Mortgages |
|
|
79,203 |
|
|
|
75,450 |
|
Commercial Business Loans |
|
|
6,442 |
|
|
|
4,327 |
|
Consumer Non-Real Estate |
|
|
1,125 |
|
|
|
1,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
511,076 |
|
|
|
516,894 |
|
Undisbursed portion of loans in process |
|
|
(6,129 |
) |
|
|
(3,426 |
) |
Deferred loan fees |
|
|
(972 |
) |
|
|
(871 |
) |
Allowance for loan losses |
|
|
(2,795 |
) |
|
|
(2,504 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable net |
|
$ |
501,180 |
|
|
$ |
510,093 |
|
|
|
|
|
|
|
|
The total amount of loans being serviced for the benefit of others was approximately $1.74
million and $1.76 million at March 31, 2011 and September 30, 2010, respectively.
page -11-
The loans receivable portfolio is segmented into consumer and commercial loans. Consumer loans
consist of the following classes: residential mortgage loans, construction loans, home equity loans
and other consumer loans. Commercial loans consist of the following classes: commercial mortgages
and commercial business loans. For all classes of loans receivable, the accrual of interest is
discontinued when the contractual payment of principal or interest has become 90 days past due or
management has serious doubts about further collectability of principal or interest, even though
the loan is currently performing. A loan may remain on accrual status if it is in the process of
collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status,
unpaid interest credited to income in the current year is reversed and unpaid interest accrued in
prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans
including impaired loans generally is either applied against principal or reported as interest
income, according to managements judgment as to the collectability of principal. Generally, loans
are restored to accrual status when the obligation is brought current, has performed in accordance
with the contractual terms for a reasonable period of time (generally six months) and the ultimate
collectability of the total contractual principal and interest is no longer in doubt. The past due
status of all classes of loans receivable is determined based on contractual due dates for loan
payments.
The allowance for credit losses consists of the allowance for loan losses and the reserve for
unfunded lending commitments. The allowance for loan losses represents managements estimate of
losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction
to loans. The reserve for unfunded lending commitments represents managements estimate of losses
inherent in its unfunded loan commitments and is recorded in other liabilities on the consolidated
balance sheet. The allowance for credit losses is increased by the provision for loan losses, and
decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against
the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.
All, or part, of the principal balance of loans receivable are charged off to the allowance as soon
as it is determined that the repayment of all, or part, of the principal balance is highly
unlikely. Because all identified losses are immediately charged off, no portion of the allowance
for loan losses is restricted to any individual loan or groups of loans, and the entire allowance
is available to absorb any and all loan losses.
The allowance for credit losses is maintained at a level considered adequate to provide for losses
that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of
the allowance. The allowance is based on the Companys past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may affect the borrowers ability to
repay, the estimated value of any underlying collateral, composition of the loan portfolio, current
economic conditions and other relevant factors. This evaluation is inherently subjective as it
requires material estimates that may be susceptible to significant revision as more information
becomes available.
The allowance consists of specific, general and unallocated components. The specific component
relates to loans that are classified as impaired. For loans that are classified as impaired, an
allowance is established when the discounted cash flows (or collateral value or observable market
price) of the impaired loan is lower than the carrying value of that loan. The general component
covers pools of loans by loan class. These pools of loans are evaluated for loss exposure based
upon historical loss rates for each of these categories of loans, adjusted for qualitative factors.
These significant factors may include changes in lending policies and procedures, changes in
existing general economic and business conditions affecting our primary lending areas, credit
quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio,
recent loss experience in particular segments of the portfolio, duration of the current business
cycle and bank regulatory examination results. The applied loss factors are reevaluated quarterly
to ensure their relevance in the current economic environment.
Residential mortgage lending generally entails a lower risk of default than other types of lending.
Other consumer loans and commercial real estate loans generally involve more risk of
collectability because of the type and nature of the collateral and, in certain cases, the absence
of collateral. It is the Companys policy to establish specific reserves for losses on delinquent
consumer loans and commercial loans when it determines that losses are probable.
page -12-
An unallocated component is maintained to cover uncertainties that could affect managements
estimate of probable losses. The unallocated component of the allowance reflects the margin of
imprecision inherent in the underlying assumptions used in the methodologies for estimating
specific and general losses in the portfolio.
A loan is considered impaired when, based on current information and events, it is probable that
the Company will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in
determining impairment include payment status, collateral value and the probability of collecting
scheduled principal and interest payments when due. Loans that experience insignificant payment
delays and payment shortfalls generally are not classified as impaired. Management determines the
significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length
of the delay, the reasons for the delay, the borrowers prior payment record and the amount of the
shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan
basis for loans by either the present value of expected future cash flows discounted at the loans
effective interest rate or the fair value of the collateral if the loan is collateral dependent
An allowance for loan losses is established for an impaired loan if its carrying value exceeds its
estimated fair value. The estimated fair values of substantially all of the Companys impaired
loans are measured based on the estimated fair value of the loans collateral.
For residential mortgage loans, home equity loans and commercial loans secured by real estate,
estimated fair values are determined primarily through third-party appraisals. When a real estate
secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal
of the real estate is necessary. This decision is based on various considerations, including the
age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the
condition of the property. Appraised values are discounted to arrive at the estimated selling price
of the collateral, which is considered to be the estimated fair value. The discounts also include
estimated costs to sell the property.
For commercial business loans secured by non-real estate collateral, such as accounts receivable,
inventory and equipment, estimated fair values are determined based on the borrowers financial
statements, inventory reports, accounts receivable aging or equipment appraisals or invoices.
Indications of value from these sources are generally discounted based on the age of the financial
information or the quality of the assets.
The allowance calculation methodology includes further segregation of loan classes into risk rating
categories. The borrowers overall financial condition, repayment sources, guarantors and value of
collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies
arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk
ratings include regulatory classifications of special mention, substandard, doubtful and loss.
Loans criticized special mention have potential weaknesses that deserve managements close
attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment
prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize
the liquidation of the debt. They include loans that are inadequately protected by the current
sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans
classified doubtful have all the weaknesses inherent in loans classified substandard with the added
characteristic that collection or liquidation in full, on the basis of current conditions and
facts, is highly improbable. Loans classified as a loss are considered uncollectible and are
charged to the allowance for loan losses. Loan not classified are rated pass.
In addition, Federal regulatory agencies, as an integral part of their examination process,
periodically review the Companys allowance for loan losses and may require the Company to
recognize additions to the allowance based on their judgments about information available to them
at the time of their examination, which may not be currently available to management. Based on
managements comprehensive analysis of the loan portfolio, management believes the current level of
the allowance for loan losses is adequate.
page -13-
The following table presents the classes of the loan portfolio summarized by the aggregate
pass rating and the classified ratings of special mention, substandard and doubtful within the
Companys internal risk rating system as of March 31, 2011 and December 31, 2010:
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
Pass |
|
|
Mention |
|
|
Substandard |
|
|
Doubtful |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
329,425 |
|
|
$ |
|
|
|
$ |
2,428 |
|
|
$ |
366 |
|
|
$ |
332,219 |
|
Construction |
|
|
6,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,129 |
|
Home Equity |
|
|
85,746 |
|
|
|
|
|
|
|
147 |
|
|
|
65 |
|
|
|
85,958 |
|
Commercial Mortgages |
|
|
76,760 |
|
|
|
2,211 |
|
|
|
|
|
|
|
232 |
|
|
|
79,203 |
|
Commercial Business Loans |
|
|
6,342 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
6,442 |
|
Consumer Non-Real Estate |
|
|
1,120 |
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
1,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
505,522 |
|
|
$ |
2,311 |
|
|
$ |
2,575 |
|
|
$ |
668 |
|
|
$ |
511,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
Pass |
|
|
Mention |
|
|
Substandard |
|
|
Doubtful |
|
|
Total |
|
|
Residential Mortgages |
|
$ |
330,283 |
|
|
$ |
|
|
|
$ |
1,974 |
|
|
$ |
641 |
|
|
$ |
332,898 |
|
Construction |
|
|
5,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,420 |
|
Home Equity |
|
|
88,759 |
|
|
|
|
|
|
|
103 |
|
|
|
65 |
|
|
|
88,927 |
|
Commercial Mortgages |
|
|
76,096 |
|
|
|
2,214 |
|
|
|
|
|
|
|
312 |
|
|
|
78,622 |
|
Commercial Business Loans |
|
|
6,498 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
6,598 |
|
Consumer Non-Real Estate |
|
|
1,194 |
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
1,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
508,250 |
|
|
$ |
2,314 |
|
|
$ |
2,077 |
|
|
$ |
1,024 |
|
|
$ |
513,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
page -14-
The following table summarizes information in regards to impaired loans by loan portfolio class as
of March 31, 2011 and December 31, 2010 and for the three months then ended:
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid |
|
|
|
|
|
|
Average |
|
|
Interest |
|
|
|
Recorded |
|
|
Principal |
|
|
Related |
|
|
Recorded |
|
|
Income |
|
(In Thousands) |
|
Investment |
|
|
Balance |
|
|
Allowance |
|
|
Investment |
|
|
Recognized |
|
With no related allowance
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
1,130 |
|
|
$ |
1,130 |
|
|
$ |
|
|
|
$ |
846 |
|
|
$ |
9 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
65 |
|
|
|
65 |
|
|
|
|
|
|
|
65 |
|
|
|
|
|
Commercial Mortgages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer NonReal Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
1,664 |
|
|
$ |
1,664 |
|
|
$ |
(317 |
) |
|
$ |
1,653 |
|
|
$ |
2 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
147 |
|
|
|
147 |
|
|
|
(147 |
) |
|
|
118 |
|
|
|
|
|
Commercial Mortgages |
|
|
232 |
|
|
|
232 |
|
|
|
(105 |
) |
|
|
259 |
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer NonReal Estate |
|
|
5 |
|
|
|
5 |
|
|
|
(5 |
) |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
2,794 |
|
|
$ |
2,794 |
|
|
$ |
(317 |
) |
|
$ |
2,499 |
|
|
$ |
11 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
212 |
|
|
|
212 |
|
|
|
(147 |
) |
|
|
183 |
|
|
|
|
|
Commercial Mortgages |
|
|
232 |
|
|
|
232 |
|
|
|
(105 |
) |
|
|
259 |
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer NonReal Estate |
|
|
5 |
|
|
|
5 |
|
|
|
(5 |
) |
|
|
5 |
|
|
|
|
|
page -15-
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid |
|
|
|
|
|
|
Average |
|
|
Interest |
|
|
|
Recorded |
|
|
Principal |
|
|
Related |
|
|
Recorded |
|
|
Income |
|
(In Thousands) |
|
Investment |
|
|
Balance |
|
|
Allowance |
|
|
Investment |
|
|
Recognized |
|
With no related allowance
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
1,047 |
|
|
$ |
1,047 |
|
|
$ |
|
|
|
$ |
1,050 |
|
|
$ |
10 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
65 |
|
|
|
65 |
|
|
|
|
|
|
|
65 |
|
|
|
|
|
Commercial Mortgages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
1,568 |
|
|
$ |
1,568 |
|
|
$ |
(269 |
) |
|
$ |
1,568 |
|
|
$ |
2 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
103 |
|
|
|
103 |
|
|
|
(103 |
) |
|
|
104 |
|
|
|
|
|
Commercial Mortgages |
|
|
312 |
|
|
|
312 |
|
|
|
(127 |
) |
|
|
312 |
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Real Estate |
|
|
6 |
|
|
|
6 |
|
|
|
(6 |
) |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
2,615 |
|
|
$ |
2,615 |
|
|
$ |
(269 |
) |
|
$ |
2,618 |
|
|
$ |
12 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
168 |
|
|
|
168 |
|
|
|
(103 |
) |
|
|
169 |
|
|
|
|
|
Commercial Mortgages |
|
|
312 |
|
|
|
312 |
|
|
|
(127 |
) |
|
|
312 |
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Real Estate |
|
|
6 |
|
|
|
6 |
|
|
|
(6 |
) |
|
|
6 |
|
|
|
|
|
page -16-
The performance and credit quality of the loan portfolio is also monitored by the analyzing the age
of the loans receivable as determined by the length of time a recorded payment is past due. The
following table presents the classes of the loan portfolio summarized by the past due status as of
March 31, 2011 and December 31, 2010:
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable |
|
|
|
|
|
|
|
Greater |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> 90 Days |
|
|
|
30-89 Days Past |
|
|
than 90 |
|
|
Total |
|
|
|
|
|
|
Total Loans |
|
|
and |
|
(In Thousands) |
|
Due |
|
|
Days |
|
|
Past Due |
|
|
Current |
|
|
Receivables |
|
|
Accruing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
4,448 |
|
|
$ |
2,962 |
|
|
$ |
7,410 |
|
|
$ |
324,809 |
|
|
$ |
332,219 |
|
|
$ |
380 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,129 |
|
|
|
6,129 |
|
|
|
|
|
Home Equity |
|
|
10 |
|
|
|
44 |
|
|
|
54 |
|
|
|
85,904 |
|
|
|
85,958 |
|
|
|
44 |
|
Commercial Mortgages |
|
|
2,009 |
|
|
|
232 |
|
|
|
2,241 |
|
|
|
76,962 |
|
|
|
79,203 |
|
|
|
|
|
Commercial Business
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,442 |
|
|
|
6,442 |
|
|
|
|
|
Consumer NonReal
Estate |
|
|
64 |
|
|
|
5 |
|
|
|
69 |
|
|
|
1,056 |
|
|
|
1,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
6,531 |
|
|
$ |
3,243 |
|
|
$ |
9,774 |
|
|
$ |
501,302 |
|
|
$ |
511,076 |
|
|
$ |
424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable |
|
|
|
|
|
|
|
Greater |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> 90 Days |
|
|
|
30-89 Days Past |
|
|
than 90 |
|
|
Total |
|
|
|
|
|
|
Total Loans |
|
|
and |
|
(In Thousands) |
|
Due |
|
|
Days |
|
|
Past Due |
|
|
Current |
|
|
Receivables |
|
|
Accruing |
|
|
Residential Mortgages |
|
$ |
2,691 |
|
|
$ |
2,447 |
|
|
$ |
5,138 |
|
|
$ |
327,760 |
|
|
$ |
332,898 |
|
|
$ |
380 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,420 |
|
|
|
5,420 |
|
|
|
|
|
Home Equity |
|
|
57 |
|
|
|
12 |
|
|
|
69 |
|
|
|
88,858 |
|
|
|
88,927 |
|
|
|
12 |
|
Commercial Mortgages |
|
|
|
|
|
|
312 |
|
|
|
312 |
|
|
|
78,310 |
|
|
|
78,622 |
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,598 |
|
|
|
6,598 |
|
|
|
|
|
Consumer Non-Real Estate |
|
|
31 |
|
|
|
6 |
|
|
|
37 |
|
|
|
1,163 |
|
|
|
1,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,779 |
|
|
$ |
2,777 |
|
|
$ |
5,556 |
|
|
$ |
508,109 |
|
|
$ |
513,665 |
|
|
$ |
392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
page -17-
The following table provides the activity in the allowance for loan losses by loan class for the
three-months ended March 31, 2011 and the balance in the allowance for loan losses at March 31,
2011 disaggregated on the basis of the Companys impairment method by loan class along with the
balance of loans receivable by class disaggregated on the basis of the Companys impairment
methodology.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and for the Three-Months Ended March 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
Consumer |
|
|
|
|
|
|
|
|
|
Residential |
|
|
|
|
|
Home |
|
|
Commercial |
|
|
Business |
|
|
Non-Real |
|
|
|
|
|
|
|
|
|
Mortgages |
|
|
Construction |
|
|
Equity |
|
|
Mortgages |
|
|
Loans |
|
|
Estate |
|
|
Unallocated |
|
|
Totals |
|
|
Beginning Balance, December 31, 2010 |
|
$ |
947 |
|
|
$ |
8 |
|
|
$ |
457 |
|
|
$ |
983 |
|
|
$ |
130 |
|
|
$ |
10 |
|
|
$ |
104 |
|
|
$ |
2,639 |
|
Charge-offs |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
(21 |
) |
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
2 |
|
Provisions |
|
|
60 |
|
|
|
1 |
|
|
|
43 |
|
|
|
(23 |
) |
|
|
(13 |
) |
|
|
4 |
|
|
|
103 |
|
|
|
175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance, March 31, 2011 |
|
$ |
992 |
|
|
$ |
9 |
|
|
$ |
500 |
|
|
$ |
960 |
|
|
$ |
117 |
|
|
$ |
10 |
|
|
$ |
207 |
|
|
$ |
2,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for
impairment |
|
$ |
317 |
|
|
$ |
|
|
|
$ |
147 |
|
|
$ |
105 |
|
|
$ |
|
|
|
$ |
5 |
|
|
$ |
|
|
|
$ |
574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for
impairment |
|
$ |
675 |
|
|
$ |
9 |
|
|
$ |
353 |
|
|
$ |
855 |
|
|
$ |
117 |
|
|
$ |
5 |
|
|
$ |
207 |
|
|
$ |
2,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: |
|
$ |
332,219 |
|
|
$ |
6,129 |
|
|
$ |
85,958 |
|
|
$ |
79,203 |
|
|
$ |
6,442 |
|
|
$ |
1,125 |
|
|
$ |
|
|
|
$ |
511,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for
impairment |
|
$ |
2,794 |
|
|
$ |
|
|
|
$ |
212 |
|
|
$ |
232 |
|
|
$ |
|
|
|
$ |
5 |
|
|
$ |
|
|
|
$ |
3,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for
impairment |
|
$ |
329,425 |
|
|
$ |
6,129 |
|
|
$ |
85,746 |
|
|
$ |
78,971 |
|
|
$ |
6,442 |
|
|
$ |
1,120 |
|
|
$ |
|
|
|
$ |
507,833 |
|
page -18-
The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2011
and December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Residential Mortgages |
|
$ |
2,582 |
|
|
$ |
2,392 |
|
Construction |
|
|
|
|
|
|
|
|
Home Equity |
|
|
|
|
|
|
|
|
Commercial Mortgages |
|
|
232 |
|
|
|
312 |
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
Consumer Non-Real Estate |
|
|
5 |
|
|
|
6 |
|
|
|
|
|
|
|
|
Total |
|
$ |
2,819 |
|
|
$ |
2,710 |
|
|
|
|
|
|
|
|
4. Federal Home Loan Bank Stock
Federal law requires a member institution of the Federal Home Loan Bank (FHLB) to hold stock of
its district FHLB according to a predetermined formula. The restricted stock is carried at cost. In
December 2008, the FHLB of Pittsburgh notified member banks that it was suspending dividend
payments and the repurchase of capital stock. During 2010 and 2011, the FHLB allowed certain
redemptions.
Managements determination of whether these investments are impaired is based on their assessment
of the ultimate recoverability of their cost rather than by recognizing temporary declines in
value. The determination of whether a decline affects the ultimate recoverability of their cost is
influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as
compared to the capital stock amount for the FHLB and the length of time this situation has
persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level
of such payments in relation to the operating performance of the FHLB, and (3) the impact of
legislative and regulatory changes on institutions and, accordingly, on the customer base of the
FHLB.
Management believes no impairment charge is necessary related to the FHLB restricted stock as of
March 31, 2011.
5. DEPOSITS
Deposits are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
March 31, |
|
|
September 31, |
|
|
|
2011 |
|
|
2010 |
|
Non-interest bearing checking accounts |
|
$ |
18,171 |
|
|
$ |
17,015 |
|
Now accounts |
|
|
28,000 |
|
|
|
21,320 |
|
Interest bearing checking accounts |
|
|
35,527 |
|
|
|
32,577 |
|
Money market deposit accounts |
|
|
134,216 |
|
|
|
136,079 |
|
Passbook and club accounts |
|
|
4,012 |
|
|
|
3,739 |
|
Certificate of deposits |
|
|
311,346 |
|
|
|
317,370 |
|
|
|
|
|
|
|
|
Total Deposits |
|
$ |
531,272 |
|
|
$ |
528,100 |
|
|
|
|
|
|
|
|
The aggregate amount of certificate accounts in denominations of $100,000 or more at March 31,
2011 and September 31, 2010 amounted to approximately $64.4 million and $59.2 million,
respectively.
page -19-
6. COMMITMENTS
At March 31, 2011, the following commitments were outstanding:
|
|
|
|
|
|
|
(In thousands) |
|
Letters of credit |
|
$ |
405 |
|
Commitments to originate loans |
|
|
23,265 |
|
Unused portion of home equity lines of credits |
|
|
55,095 |
|
Unused portion of commercial lines of credits |
|
|
6,641 |
|
Undisbursed portion of construction loans in process |
|
|
2,933 |
|
|
|
|
|
Total |
|
$ |
88,339 |
|
|
|
|
|
Outstanding letters of credit written are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. The majority of these standby letters of
credit expire within the next twelve months. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending other loan commitments. The Company requires
collateral supporting these letters of credit as deemed necessary. Management believes that the
proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum
potential amount of future payments required under the corresponding guarantees. The current
amount of the liability as of March 31, 2011 for guarantees under standby letters of credit issued
is not material.
7. EARNINGS PER SHARE
The following shares were used for the computation of earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Basic |
|
|
3,723,236 |
|
|
|
3,654,047 |
|
|
|
3,708,140 |
|
|
|
3,643,583 |
|
Diluted |
|
|
3,758,260 |
|
|
|
3,670,280 |
|
|
|
3,741,864 |
|
|
|
3,658,087 |
|
The difference between the number of shares used for computation of basic earnings per share
and diluted earnings per share represents the dilutive effect of stock options. There were 226,653
stock options that were anti-dilutive for the three months and six months ended March 31, 2011,
respectively. There were 229,583 stock options that were anti-dilutive for the three and six
months periods ended March 31, 2010, respectively.
page -20-
8. LONG-TERM DEBT
Advances consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Interest |
|
|
|
|
|
|
Interest |
|
Maturing Period |
|
Amount |
|
|
Rate |
|
|
Amount |
|
|
Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 to 12 months |
|
$ |
30,688 |
|
|
|
4.43 |
% |
|
$ |
15,923 |
|
|
|
4.37 |
% |
13 to 24 months |
|
|
42,909 |
|
|
|
4.34 |
% |
|
|
54,440 |
|
|
|
4.50 |
% |
25 to 36 months |
|
|
52,651 |
|
|
|
4.15 |
% |
|
|
35,022 |
|
|
|
4.03 |
% |
37 to 48 months |
|
|
3,009 |
|
|
|
3.58 |
% |
|
|
28,729 |
|
|
|
4.10 |
% |
49 to 60 months |
|
|
15,000 |
|
|
|
3.89 |
% |
|
|
18,356 |
|
|
|
3.83 |
% |
61 to 72 months |
|
|
35,000 |
|
|
|
4.86 |
% |
|
|
10,000 |
|
|
|
4.71 |
% |
73 to 84 months |
|
|
55,000 |
|
|
|
4.43 |
% |
|
|
45,000 |
|
|
|
4.52 |
% |
85 to 120 months |
|
|
29,375 |
|
|
|
4.05 |
% |
|
|
64,577 |
|
|
|
4.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
263,632 |
|
|
|
4.33 |
% |
|
$ |
272,047 |
|
|
|
4.33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank (FHLB) advances are collateralized by Federal Home Loan Bank stock and
substantially all first mortgage loans. The Company has a line of credit with the FHLB of which $0
out of $75.0 million was used at March 31, 2011 and September 30, 2010, respectively. Included in
the table above at March 31, 2011 and September 30, 2010 are convertible advances whereby the FHLB
has the option at a predetermined strike rate to convert the fixed interest rate to an adjustable
rate tied to London Interbank Offered Rate (LIBOR). The Company then has the option to repay
these advances if the FHLB converts the interest rate. These advances are included in the periods
in which they mature. The Company has a total FHLB borrowing capacity of $500.3 million of which
$213.6 was used as of March 31, 2011. In addition, there are four long-term advances from other
financial institutions totaling $50 million that are secured by investment and mortgage-backed
securities.
9. REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to various regulatory capital requirements administered by the
federal banking agencies. Failure to meet minimum capital requirements can initiate certain
mandatory and possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Companys financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Banks assets, liabilities and certain
off-balance-sheet items as calculated under regulatory accounting practices. The Banks capital
amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors. Quantitative measures established by regulation to
ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set
forth in the table below) of total Tier 1 capital (as defined in the regulations) to risk weighted
assets (as defined), and of Tier 1 capital (as defined) to assets (as defined). Management
believes, as of March 31, 2011, that the Bank meets all capital adequacy requirements to which it
is subject.
page -21-
As of March 31, 2011, the most recent notification from the Federal Deposit Insurance Corporation
categorized the Company and Bank as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the Bank must maintain minimum total
risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have changed the Banks
category.
The Banks actual capital amounts and ratios are also presented in the table. The Companys
capital ratios are not significantly different than the Banks disclosed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Considered Well |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Adequacy Purposes |
|
|
Action Provisions |
|
(Dollars in Thousands) |
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
At March 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital (to assets) |
|
$ |
54,973 |
|
|
|
6.45 |
% |
|
$ |
34,112 |
|
|
|
4.00 |
% |
|
$ |
42,641 |
|
|
|
5.00 |
% |
Tier 1 Capital (to risk weighted assets) |
|
|
54,973 |
|
|
|
11.75 |
% |
|
|
18,719 |
|
|
|
4.00 |
% |
|
|
28,079 |
|
|
|
6.00 |
% |
Total Capital (to risk weighted assets) |
|
|
57,786 |
|
|
|
12.35 |
% |
|
|
37,439 |
|
|
|
8.00 |
% |
|
|
46,799 |
|
|
|
10.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital (to assets) |
|
$ |
53,330 |
|
|
|
6.19 |
% |
|
$ |
34,440 |
|
|
|
4.00 |
% |
|
$ |
43,050 |
|
|
|
5.00 |
% |
Tier 1 Capital (to risk weighted assets) |
|
|
55,330 |
|
|
|
11.35 |
% |
|
|
18,799 |
|
|
|
4.00 |
% |
|
|
28,199 |
|
|
|
6.00 |
% |
Total Capital (to risk weighted assets) |
|
|
55,834 |
|
|
|
11.88 |
% |
|
|
37,599 |
|
|
|
8.00 |
% |
|
|
46,999 |
|
|
|
10.00 |
% |
10. FAIR VALUE MEASUREMENTS AND DISCLOSURES
The Company uses fair value measurements to record fair value adjustments to certain assets and
liabilities and to determine fair value disclosures. In accordance with accounting guidance, the
fair value of a financial instrument is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement
date. Fair value is best determined based upon quoted market prices. However, in many instances,
there are no quoted market prices for the Companys various financial instruments. In cases where
quoted market prices are not available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by the assumption used,
including the discount rate and estimates of future cash flows. Accordingly, the fair value
estimates may not be realized in an immediate settlement of the instrument.
The fair value guidance provides a consistent definition of fair value, which focuses on exit price
in an orderly transaction (that is, not a forced liquidation or distressed sale) between market
participants at the measurement date under current market conditions. If there has been a
significant decrease in the volume and level of activity for the asset or liability, a change in
valuation technique or the use of multiple valuation techniques may be appropriate. In such
instances, determining the price at which willing market participants would transact at the
measurement date under current market conditions depends on the facts and circumstances and
requires the use of significant judgment. The fair value is determined at a reasonable point
within the range that is most representative of fair value under current market conditions.
page -22-
The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation methods
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy under are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for
identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable either
directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair
value measurement and unobservable (i.e., supported with little or no market activity).
An assets or liabilitys level within the fair value hierarchy is based on the lowest level of
input that is significant to the fair value measurement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant |
|
|
(Level 3) |
|
|
|
|
|
|
|
Active Markets |
|
|
Other |
|
|
Significant |
|
|
|
March 31, |
|
|
for Identical |
|
|
Observable |
|
|
Unobservable |
|
Description |
|
2011 |
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
Equity securities |
|
$ |
396 |
|
|
$ |
396 |
|
|
$ |
|
|
|
$ |
|
|
U.S. Government money market funds |
|
|
9,634 |
|
|
|
9,634 |
|
|
|
|
|
|
|
|
|
Collateralized mortgage obligations |
|
|
830 |
|
|
|
|
|
|
|
830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities |
|
$ |
10,860 |
|
|
$ |
10,030 |
|
|
$ |
830 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
|
|
|
|
|
Active Markets |
|
|
Significant Other |
|
|
Significant |
|
|
|
September 30, |
|
|
for Identical |
|
|
Observable |
|
|
Unobservable |
|
Description |
|
2010 |
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
Equity securities |
|
$ |
343 |
|
|
$ |
343 |
|
|
$ |
|
|
|
$ |
|
|
U.S. Government money market funds |
|
|
20,261 |
|
|
|
20,261 |
|
|
|
|
|
|
|
|
|
Collateralized mortgage obligations |
|
|
809 |
|
|
|
|
|
|
|
809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities |
|
$ |
21,413 |
|
|
$ |
20,604 |
|
|
$ |
809 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no transfers in and out of Level 1 and Level 2 fair value measurements for the quarter
ended March 31, 2011.
page -23-
For financial assets measured at fair value on a recurring basis, the fair value measurements
by level within the fair value hierarchy used at March 31, 2011 and September 30, 2010 are as
follows:
For assets measured at fair value on a nonrecurring basis, the fair value measurements by level
within the fair value hierarchy used at March 31, 2011 and September 30, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
|
|
|
|
|
Active Markets |
|
|
Significant Other |
|
|
Significant |
|
|
|
March 31, |
|
|
for Identical |
|
|
Observable |
|
|
Unobservable |
|
Description |
|
2011 |
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans |
|
$ |
1,474 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|
|
September 30, |
|
|
Active Markets for |
|
|
Observable |
|
|
Unobservable |
|
Description |
|
2010 |
|
|
Identical Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans |
|
$ |
186 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following valuation techniques were used to measure fair value of the Companys financial
instruments in the tables above and below:
Cash and Cash Equivalents (Carried at Cost)
The carrying amounts for cash and cash equivalents approximate those assets fair values.
Securities
The fair value of securities available for sale (carried at fair value) and held to maturity
(carried at amortized cost) are determined by obtaining quoted market prices on nationally
recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical
technique used widely in the industry to value debt securities without relying exclusively on
quoted prices for the specific securities but rather by relying on the securities relationship to
other benchmark quoted prices.
Loans Receivable (Carried at Cost)
The fair values of loans are estimated using discounted cash flow analyses, using market rates at
the balance sheet date that reflect the credit and interest rate-risk inherent in the loans.
Projected future cash flows are calculated based upon contractual maturity or call dates, projected
repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently
and with no significant change in credit risk, fair values are based on carrying values.
Impaired loans are those loans which the Company has measured impairment generally based on the
fair value of the loans collateral. Fair value is generally determined based upon independent
third-party appraisals of the properties, or discounted cash flows based upon the expected
proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input
that is significant to the fair value measurements.
Federal Home Loan Bank Stock (Carried at Cost)
The carrying amount of this restricted investment in bank stock approximates fair value, and
considers the limited marketability of such securities.
page -24-
Accrued Interest Receivable and Payable (Carried at Cost)
The carrying amount of accrued interest receivable and accrued interest payable approximates its
fair value.
Deposit Liabilities (Carried at Cost)
The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook
savings and money market accounts) are, by definition, equal to the amount payable on demand at the
reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit
are estimated using a discounted cash flow calculation that applies interest rates currently being
offered in the market on certificates to a schedule of a aggregated expected monthly maturities on
time deposits.
Borrowings (Carried at Cost)
Fair values of borrowings are estimated using discounted cash flow analysis, based on quoted prices
for new advances with similar credit risk characteristics, terms and remaining maturity. These
prices obtained from this active market represent a market value that is deemed to represent the
transfer price if the liability were assumed by a third party.
Off-Balance Sheet Financial Instruments (Disclosed at Cost)
Fair values for the Companys off-balance sheet financial instruments (lending commitments and
letters of credit) are based on fees currently charged in the market to enter into similar
agreements, taking into account, the remaining terms of the agreements and the counterparties
credit standing. The fair value of these off-balance sheet financial instruments are not considered
material as of March 31, 2011 and September 30, 2010.
The estimated fair value amounts have been determined by the Company using available market
information appropriate valuation methodologies. However, considerable judgment is necessarily
required to interpret the data to develop the estimates.
The carrying amounts and estimated fair values of financial instruments as of March 31, 2011 and
September 30, 2010 are as follows.
page -25-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
September 30, 2010 |
|
|
|
Carrying |
|
|
Estimated Fair |
|
|
Carrying |
|
|
Estimated Fair |
|
(In Thousands) |
|
Amount |
|
|
Value |
|
|
Amount |
|
|
Value |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
23,960 |
|
|
$ |
23,960 |
|
|
$ |
20,190 |
|
|
$ |
20,190 |
|
Securities held to maturity |
|
|
271,744 |
|
|
|
275,116 |
|
|
|
256,088 |
|
|
|
264,448 |
|
Securities available-for-sale |
|
|
10,860 |
|
|
|
10,860 |
|
|
|
21,413 |
|
|
|
21,413 |
|
Loans receivable net |
|
|
501,180 |
|
|
|
519,914 |
|
|
|
510,093 |
|
|
|
530,294 |
|
Federal Home Loan Bank stock |
|
|
14,526 |
|
|
|
14,526 |
|
|
|
16,096 |
|
|
|
16,096 |
|
Accrued interest receivable |
|
|
3,167 |
|
|
|
3,167 |
|
|
|
3,210 |
|
|
|
3,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checking, passbook, club and NOW
deposit accounts |
|
|
85,710 |
|
|
|
85,710 |
|
|
|
74,651 |
|
|
|
74,651 |
|
Money Market deposit accounts |
|
|
134,216 |
|
|
|
134,216 |
|
|
|
136,079 |
|
|
|
136,079 |
|
Certificate of deposit accounts |
|
|
311,346 |
|
|
|
320,146 |
|
|
|
317,370 |
|
|
|
325,881 |
|
Borrowings |
|
|
263,632 |
|
|
|
282,827 |
|
|
|
272,047 |
|
|
|
291,857 |
|
Accrued interest payable |
|
|
1,333 |
|
|
|
1,333 |
|
|
|
1,407 |
|
|
|
1,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off balance sheet financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and
information about the financial instrument. These estimates do not reflect any premium or discount
that could result from offering for sale at one time the Companys entire holdings of a particular
financial instrument. Because no market exists for a significant portion of the Companys financial
instruments, fair value estimates are based on many judgments. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance-sheet financial instruments without
attempting to estimate the value of anticipated future business and the value of assets and
liabilities that are not considered financial instruments. Significant assets and liabilities that
are not considered financial instruments include deferred income taxes and premises and equipment.
In addition, the tax ramifications related to the realization of the unrealized gains and losses
can have a significant effect on fair value estimates and have not been and have not been
considered in the estimate.
11.
SUBSEQUENT EVENT
Due to
the death of an officer of the Bank in April, 2011, the Company will
recognize a net death benefit claim on bank owned life insurance
policies of approximately $960,000 in other income during the third
quarter ending June 30, 2011. Such death benefit proceeds are
non-taxable.
page -26-
PART II
Item 6. Exhibits and Reports on Form 8-K
The following Exhibits are filed as part of this report:
|
|
|
|
|
No. |
|
Description |
|
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 |
|
|
Certification Pursuant to 18 U.S.C Section 1350 |
page -27-
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
Date: May 17, 2011 |
By: |
/s/ Ronald B. Geib
|
|
|
|
Ronald B. Geib |
|
|
|
Chief Executive Officer |
|
|
|
|
Date: May 17, 2011 |
By: |
/s/ Brendan J. McGill
|
|
|
|
Brendan J. McGill |
|
|
|
Executive Vice President and Chief Operating
and Financial Officer |
|
page -28-