x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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27-258073
|
|
(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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8615 Ridgely’s Choice Drive, Suite 111, Baltimore, Maryland
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21236
|
|
(Address of principal executive offices)
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(Zip Code)
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Not Applicable
|
||
(Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer ¨
|
Accelerated filer ¨ |
Non-accelerated filer ¨
|
Smaller reporting company x |
(Do not check if a smaller reporting company)
|
Page
No.
|
||||
Part I. Financial Information
|
||||
Item 1.
|
Financial Statements (Unaudited)
|
|||
Consolidated Statements of Financial Condition as of June 30, 2011(unaudited) and March 31, 2011 (audited)
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3
|
|||
Consolidated Statements of Operations for the Three Months Ended June 30, 2011 and 2010 (unaudited)
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4
|
|||
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended June 30, 2011 and 2010 (unaudited)
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5
|
|||
Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2011and 2010 (unaudited)
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6
|
|||
Notes to Unaudited Consolidated Financial Statements
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7
|
|||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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21
|
||
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
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27
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||
Item 4.
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Controls and Procedures
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27
|
||
Part II. Other Information
|
||||
Item 1.
|
Legal Proceedings
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27
|
||
Item 1A.
|
Risk Factors
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27
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||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
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28
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||
Item 3.
|
Defaults Upon Senior Securities
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28
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||
Item 4.
|
[Removed and Reserved]
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28
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||
Item 5.
|
Other Information
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28
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||
Item 6.
|
Exhibits
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28
|
||
Signatures
|
June 30,
2011
|
March 31,
2011
|
|||||||
|
(Unaudited)
|
(Audited)
|
||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 13,696,758 | $ | 8,183,156 | ||||
Certificates of deposit
|
484,732 | 482,673 | ||||||
Investment securities available-for-sale
|
49,081,977 | 52,624,969 | ||||||
Federal Home Loan Bank stock, at cost
|
238,500 | 242,500 | ||||||
Loans receivable, net
|
84,647,824 | 86,178,498 | ||||||
Premises and equipment, net
|
3,875,073 | 3,876,969 | ||||||
Ground rents, net
|
446,756 | 453,856 | ||||||
Other real estate owned
|
424,000 | 434,000 | ||||||
Accrued interest receivable
|
418,763 | 440,683 | ||||||
Deferred income taxes
|
98,911 | 208,277 | ||||||
Prepaid expenses and other assets
|
841,426 | 865,201 | ||||||
Total Assets
|
$ | 154,254,720 | $ | 153,990,782 | ||||
Liabilities and Shareholders’ Equity
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Noninterest bearing
|
$ | 5,429,553 | $ | 5,262,091 | ||||
NOW and Money Market
|
8,122,494 | 8,405,771 | ||||||
Savings
|
22,613,642 | 22,521,417 | ||||||
Time
|
103,136,126 | 103,329,077 | ||||||
Total Deposits
|
139,301,815 | 139,518,356 | ||||||
Advances from borrowers for taxes and insurance
|
892,236 | 557,984 | ||||||
Other liabilities
|
292,968 | 275,411 | ||||||
Total Liabilities
|
140,487,019 | 140,351,751 | ||||||
Shareholders’ Equity
|
||||||||
Common Stock, $.01 par value, 10,000,000 shares authorized. Issued: 608,116 shares at June 30, 2011
and March 31, 2011
|
6,081 | 6,081 | ||||||
Additional paid-in capital
|
5,335,052 | 5,335,052 | ||||||
Retained earnings
|
8,807,304 | 8,846,531 | ||||||
Unearned ESOP shares
|
(397,300 | ) | (397,300 | ) | ||||
Accumulated other comprehensive income (loss)
|
16,564 | (151,333 | ) | |||||
Total Shareholders’ Equity
|
13,767,701 | 13,639,031 | ||||||
Total Liabilities and Shareholders’ Equity
|
$ | 154,254,720 | $ | 153,990,782 |
2011
|
2010
|
|||||||
Interest Revenue
|
||||||||
Interest and fees on loans
|
$ | 1,207,179 | $ | 1,272,336 | ||||
Investment securities available-for-sale
|
265,244 | 238,399 | ||||||
Investment securities held-to-maturity
|
0 | 25,579 | ||||||
Interest-bearing deposits
|
7,130 | 11,377 | ||||||
Other
|
7,399 | 6,360 | ||||||
Total Interest Revenue
|
1,486,952 | 1,554,051 | ||||||
Interest Expense
|
||||||||
Interest on deposits:
|
||||||||
Time
|
499,861 | 576,925 | ||||||
Savings
|
14,150 | 13,838 | ||||||
NOW and money market demand accounts
|
8,740 | 12,050 | ||||||
Other interest expense
|
0 | 34 | ||||||
Total Interest Expense
|
522,751 | 602,847 | ||||||
Net Interest Income
|
964,201 | 951,204 | ||||||
Provision for Loan Losses
|
46,000 | 51,359 | ||||||
Net Interest Income after Provision for Loan Losses
|
918,201 | 899,845 | ||||||
Noninterest Revenue
|
||||||||
Gain on sale of investment securities
|
6,661 | 28,919 | ||||||
Other
|
38,053 | 75,035 | ||||||
Total Noninterest Revenue
|
44,714 | 103,954 | ||||||
Noninterest Expenses
|
||||||||
Salaries and employee benefits
|
509,072 | 479,749 | ||||||
Occupancy & equipment expense
|
232,660 | 275,694 | ||||||
Advertising
|
3,592 | 1,813 | ||||||
Professional Services
|
51,913 | 36,046 | ||||||
FDIC premiums and OTS assessments
|
75,404 | 97,302 | ||||||
Data processing
|
54,234 | 53,271 | ||||||
Stationary and postage
|
25,311 | 20,033 | ||||||
Other operating expenses
|
49,956 | 40,223 | ||||||
Total Noninterest Expenses
|
1,002,142 | 1,004,131 | ||||||
Loss Before Income Taxes
|
(39,227 | ) | (332 | ) | ||||
Income Tax Expense (Benefit)
|
0 | 0 | ||||||
Net Loss
|
$ | (39,227 | ) | $ | (332 | ) | ||
Basic loss per common share
|
$ | (0.07 | ) | N/A | ||||
Diluted loss per common share
|
$ | (0.07 | ) | N/A |
Accumulated
|
||||||||||||||||||||||||
Additional
|
Unearned
|
Other
|
Total
|
|||||||||||||||||||||
Common
|
Paid-in
|
Retained
|
ESOP
|
Comprehensive
|
Shareholders’
|
|||||||||||||||||||
Stock
|
Capital
|
Earnings
|
Shares
|
Income
|
Equity
|
|||||||||||||||||||
Balance March 31, 2010
|
$ | 0 | $ | 0 | $ | 8,903,565 | $ | 0 | $ | 159,462 | $ | 9,063,027 | ||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||
Net Loss
|
(332 | ) | (332 | ) | ||||||||||||||||||||
Unrealized gain on available-for-sale securities, net of tax effect of $132,544
|
203,478 | 203,478 | ||||||||||||||||||||||
Total comprehensive income
|
203,146 | |||||||||||||||||||||||
Balance June 30, 2010
|
$ | 0 | $ | 0 | $ | 8,903,233 | $ | 0 | $ | 362,940 | $ | 9,266,173 | ||||||||||||
Balance March 31, 2011
|
$ | 6,081 | $ | 5,335,052 | $ | 8,846,531 | $ | (397,300 | ) | $ | (151,333 | ) | $ | 13,639,031 | ||||||||||
Comprehensive income:
|
||||||||||||||||||||||||
Net Loss
|
(39,227 | ) | (39,227 | ) | ||||||||||||||||||||
Unrealized gain on available-for-sale securities, net of tax effect of $109,367
|
167,897 | 167,897 | ||||||||||||||||||||||
Total comprehensive income
|
128,670 | |||||||||||||||||||||||
Balance June 30, 2011
|
$ | 6,081 | $ | 5,335,052 | $ | 8,807,304 | $ | (397,300 | ) | $ | 16,564 | $ | 13,767,701 |
|
2011
|
2010
|
||||||
Cash flows from Operating Activities
|
||||||||
Net loss
|
$ | (39,227 | ) | $ | (332 | ) | ||
Adjustments to reconcile net loss to net cash
|
||||||||
provided by (used in) operating activities:
|
||||||||
Net amortization of investment securities
|
23,573 | 9,158 | ||||||
Decrease in net deferred loan costs
|
7,417 | 4,304 | ||||||
Provision for loan losses
|
46,000 | 51,359 | ||||||
Provision for ground rent losses
|
4,000 | 0 | ||||||
Gain on sale of investment securities
|
(6,661 | ) | (28,919 | ) | ||||
Write-down of OREO
|
10,000 | 0 | ||||||
Depreciation and amortization
|
52,860 | 57,383 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accrued interest receivable
|
21,920 | 8,798 | ||||||
Prepaid expenses and other assets
|
23,775 | (183,667 | ) | |||||
Other liabilities
|
17,557 | (66,697 | ) | |||||
Net Cash provided by (used in) operating activities
|
161,214 | (148,613 | ) | |||||
Cash flows from Investing Activities
|
||||||||
Decrease in loans receivable, net
|
1,477,257 | 91,665 | ||||||
Increase in investment certificates of deposit, net
|
(2,059 | ) | (3,898 | ) | ||||
Activity in held-to-maturity securities:
|
||||||||
Sales
|
0 | 341,420 | ||||||
Maturities and repayments
|
0 | 166,157 | ||||||
Activity in available-for-sale securities:
|
||||||||
Sales
|
8,335,878 | 2,415,955 | ||||||
Maturities, repayments and calls
|
3,361,139 | 4,620,056 | ||||||
Purchases
|
(7,893,674 | ) | (2,502,407 | ) | ||||
Purchase of property and equipment
|
(51,412 | ) | (2,806 | ) | ||||
Proceeds from sale of property and equipment
|
448 | 0 | ||||||
Redemption of FHLB stock
|
4,000 | 0 | ||||||
Proceeds from sale of ground rents
|
3,100 | 0 | ||||||
Net cash provided by investing activities
|
5,234,677 | 5,126,142 | ||||||
Cash flow from Financing Activities
|
||||||||
(Decrease) Increase in deposits, net
|
(216,541 | ) | 3,156,567 | |||||
Increase in advances from borrowers, net
|
334,252 | 385,161 | ||||||
Net cash provided by financing activities
|
117,711 | 3,541,728 | ||||||
Net Change in Cash and Cash Equivalents
|
5,513,602 | 8,519,257 | ||||||
Cash and Cash Equivalents, Beginning of Year
|
8,183,156 | 13,354,975 | ||||||
Cash and Cash Equivalents, End of Year
|
$ | 13,696,758 | $ | 21,874,232 | ||||
Supplemental disclosure:
|
||||||||
Interest paid
|
$ | 521,294 | $ | 598,969 |
Three Months Ended,
June 30, 2011
|
For the Year Ended
March 31, 2011
|
|||||||
Net loss
|
$ | (39,227 | ) | $ | (57,033 | ) | ||
Average common shares outstanding
|
568,386 | 567,037 | ||||||
Earnings per common share, basic
|
$ | (0.07 | ) | $ | (0.10 | ) |
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||||||
June 30, 2011
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. government agencies
|
$ | 9,176,576 | $ | 11,657 | $ | 27,658 | $ | 9,160,575 | ||||||||
Brokered certificates of deposit
|
5,694,083 | 5,931 | 13,385 | 5,686,629 | ||||||||||||
Mortgage-backed securities (Agency)
|
28,070,262 | 259,897 | 206,855 | 28,123,304 | ||||||||||||
Collateralized mortgage obligations (Agency)
|
6,113,703 | 5,452 | 7,686 | 6,111,469 | ||||||||||||
$ | 49,054,624 | $ | 282,937 | $ | 255,584 | $ | 49,081,977 |
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||||||
March 31, 2011
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. government agencies
|
$ | 10,233,047 | $ | 6,989 | $ | 84,729 | $ | 10,155,307 | ||||||||
Brokered certificates of deposit
|
4,785,434 | 5,149 | 13,986 | 4,776,597 | ||||||||||||
Mortgage-backed securities (Agency)
|
33,117,844 | 315,611 | 416,993 | 33,016,462 | ||||||||||||
Collateralized mortgage obligations (Agency)
|
4,475,445 | 18,513 | 7,432 | 4,486,526 | ||||||||||||
Collateralized mortgage obligations (Nonagency)
|
263,109 | 5,872 | 78,904 | 190,077 | ||||||||||||
$ | 52,874,879 | $ | 352,134 | $ | 602,044 | $ | 52,624,969 |
Available-for-Sale
|
||||||||
Amortized
|
Estimated
|
|||||||
Cost
|
Fair Value
|
|||||||
Amounts maturing in:
|
||||||||
One year or less
|
$ | 5,536,026 | $ | 5,541,755 | ||||
After one year through five years
|
6,582,816 | 6,556,329 | ||||||
After five years through ten years
|
1,819,817 | 1,820,388 | ||||||
After ten years
|
932,000 | 928,732 | ||||||
14,870,659 | 14,847,204 | |||||||
Mortgage-backed securities (Agency)
|
28,070,262 | 28,123,304 | ||||||
Collateralized mortgage obligations (Agency)
|
6,113,703 | 6,111,469 | ||||||
$ | 49,054,624 | $ | 49,081,977 |
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
June 30, 2011
|
Estimated
Fair Value
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
Gross
Unrealized
Losses
|
||||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||||||||||
U.S. Government agencies
|
$ | 3,545,005 | $ | 27,658 | $ | 0 | $ | 0 | $ | 3,545,005 | $ | 27,658 | ||||||||||||
Brokered certificates of deposit
|
2,887,615 | 13,385 | 0 | 0 | 2,887,615 | 13,385 | ||||||||||||||||||
Mortgage-backed securities (Agency)
|
9,832,510 | 206,855 | 0 | 0 | 9,832,510 | 206,855 | ||||||||||||||||||
Collateralized mortgage obligations (Agency)
|
2,059,410 | 7,686 | 0 | 0 | 2,059,410 | 7,686 | ||||||||||||||||||
$ | 18,324,540 | $ | 255,584 | $ | 0 | $ | 0 | $ | 18,324,540 | $ | 255,584 |
June 30, 2011
|
March 31, 2011
|
|||||||
Loans secured by mortgages:
|
||||||||
Residential:
|
||||||||
1-4 Single family
|
$ | 55,743,763 | $ | 57,608,257 | ||||
Multifamily
|
1,648,870 | 1,667,385 | ||||||
Commercial
|
13,618,962 | 12,154,376 | ||||||
Land
|
5,829,766 | 5,566,059 | ||||||
Lines of credit
|
1,795,551 | 1,756,463 | ||||||
Residential construction
|
1,303,304 | 2,175,906 | ||||||
79,940,216 | 80,928,446 | |||||||
Consumer
|
715,310 | 828,925 | ||||||
Commercial
|
4,590,934 | 4,962,980 | ||||||
Total loans receivable
|
85,246,460 | 86,720,351 | ||||||
Net deferred costs
|
86,265 | 93,682 | ||||||
Allowance for loan losses
|
(684,901 | ) | (635,535 | ) | ||||
Loans receivable, net
|
$ | 84,647,824 | $ | 86,178,498 |
Commercial Credit Exposure
|
Commercial,
Not Real Estate Secured
|
Commercial Real Estate
|
||||||||||||||
June 30,
2011
|
March 31,
2011
|
June 30,
2011
|
March 31,
2011
|
|||||||||||||
Grade:
|
||||||||||||||||
Pass
|
$ | 4,534,663 | $ | 4,247,846 | $ | 11,728,334 | $ | 10,926,093 | ||||||||
Special Mention
|
56,271 | 715,134 | 1,890,628 | 1,228,283 | ||||||||||||
Substandard
|
0 | 0 | 0 | 0 | ||||||||||||
Doubtful
|
0 | 0 | 0 | 0 | ||||||||||||
Loss
|
0 | 0 | 0 | 0 | ||||||||||||
$ | 4,590,934 | $ | 4,962,980 | $ | 13,618,962 | $ | 12,154,376 |
Other Credit Exposure
|
Residential Real Estate
Construction and Land
|
Residential Real Estate
Other (1)
|
Consumer
|
|||||||||||||||||||||
June 30,
2011
|
March 31,
2011
|
June 30,
2011
|
March 31,
2011
|
June 30,
2011
|
March 31,
2011
|
|||||||||||||||||||
Grade:
|
||||||||||||||||||||||||
Pass
|
$ | 6,104,648 | $ | 6,903,681 | $ | 58,212,117 | $ | 59,969,972 | $ | 715,310 | $ | 828,925 | ||||||||||||
Special Mention
|
794,120 | 603,782 | 649,209 | 967,829 | 0 | 0 | ||||||||||||||||||
Substandard
|
234,302 | 234,502 | 326,858 | 94,304 | 0 | 0 | ||||||||||||||||||
Doubtful
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Loss
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
$ | 7,133,070 | $ | 7,741,965 | $ | 59,188,184 | $ | 61,032,105 | $ | 715,310 | $ | 828,925 |
(1) Residential real estate other includes 1-4 family residential, multifamily residential and home equity lines of credit.
|
June 30, 2011
|
30-59 Days
Past Due
|
60-89
Days Past
Due
|
90 Days or
More Past Due
and
Nonaccruing
|
Total Past Due
and
Nonaccruing
|
Current
|
Total Loans
|
||||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||||||||||
Residential:
|
||||||||||||||||||||||||
1-4 Single family
|
$ | 6,588 | $ | 141,950 | $ | 0 | $ | 148,538 | $ | 55,595,225 | $ | 55,743,763 | ||||||||||||
Multifamily
|
0 | 0 | 0 | 0 | 1,648,870 | 1,648,870 | ||||||||||||||||||
Commercial
|
390,545 | 0 | 0 | 390,545 | 13,228,417 | 13,618,962 | ||||||||||||||||||
Land
|
0 | 0 | 0 | 0 | 5,829,766 | 5,829,766 | ||||||||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | 1,795,551 | 1,795,551 | ||||||||||||||||||
Residential construction
|
0 | 0 | 0 | 0 | 1,303,304 | 1,303,304 | ||||||||||||||||||
397,133 | 141,950 | 0 | 539,083 | 79,401,133 | 79,940,216 | |||||||||||||||||||
Consumer
|
12,278 | 433 | 0 | 12,711 | 702,599 | 715,310 | ||||||||||||||||||
Commercial
|
0 | 13,709 | 0 | 13,709 | 4,577,225 | 4,590,934 | ||||||||||||||||||
$ | 409,411 | $ | 156,092 | $ | 0 | $ | 565,503 | $ | 84,680,957 | $ | 85,246,460 |
March 31, 2011
|
30-59 Days
Past Due
|
60-89
Days Past
Due
|
90 Days or
More Past
Due and
Nonaccruing
|
Total Past Due
and
Nonaccruing
|
Current
|
Total Loans
|
||||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||||||||||
Residential:
|
||||||||||||||||||||||||
1-4 Single family
|
$ | 707,959 | $ | 0 | $ | 9,137 | $ | 717,096 | $ | 56,891,161 | $ | 57,608,257 | ||||||||||||
Multifamily
|
0 | 0 | 0 | 0 | 1,667,385 | 1,667,385 | ||||||||||||||||||
Commercial
|
393,545 | 0 | 0 | 393,545 | 11,760,831 | 12,154,376 | ||||||||||||||||||
Land
|
0 | 0 | 0 | 0 | 5,566,059 | 5,566,059 | ||||||||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | 1,756,463 | 1,756,463 | ||||||||||||||||||
Residential construction
|
0 | 0 | 0 | 0 | 2,175,906 | 2,175,906 | ||||||||||||||||||
1,101,504 | 0 | 9,137 | 1,110,641 | 79,817,805 | 80,928,446 | |||||||||||||||||||
Consumer
|
891 | 6,535 | 0 | 7,426 | 821,499 | 828,925 | ||||||||||||||||||
Commercial
|
0 | 0 | 0 | 0 | 4,962,980 | 4,962,980 | ||||||||||||||||||
$ | 1,102,395 | $ | 6,535 | $ | 9,137 | $ | 1,118,067 | $ | 85,602,284 | $ | 86,720,351 |
June 30, 2011
|
March 31, 2011
|
|||||||
Nonaccrual loans:
|
||||||||
Residential1-4 Single family
|
$ | 0 | $ | 9,137 | ||||
Allowance for loan losses as a percentage of nonaccrual loans
|
0 | % | 6,955.62 | % | ||||
Foregone interest on nonaccrual loans
|
$ | 0 | $ | 610 |
Unpaid Principal
Balance
|
Related
Allowance
|
Average Unpaid
Principal Balance
|
Interest Income
Recognized
|
|||||||||||||
Impaired loans without a related reserve:
|
||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||
Residential:
|
||||||||||||||||
1-4 Single family
|
$ | 84,722 | $ | 0 | $ | 84,905 | $ | 596 | ||||||||
Multifamily
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Land
|
0 | 0 | 0 | 0 | ||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | ||||||||||||
Residential construction
|
0 | 0 | 0 | 0 | ||||||||||||
84,722 | 0 | 84,905 | 596 | |||||||||||||
Consumer
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Total impaired loans without a related reserve
|
84,722 | 0 | 84,905 | 596 | ||||||||||||
Impaired loans with a related reserve:
|
||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||
Residential:
|
||||||||||||||||
1-4 Single family
|
242,136 | 20,484 | 242,729 | 3,831 | ||||||||||||
Multifamily
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Land
|
0 | 0 | 0 | 0 | ||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | ||||||||||||
Residential construction
|
234,302 | 71,846 | 234,464 | 3,131 | ||||||||||||
476,438 | 92,330 | 477,193 | 6,962 | |||||||||||||
Consumer
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Total impaired loans with a related reserve
|
476,438 | 92,330 | 477,193 | 6,962 | ||||||||||||
Total impaired loans:
|
||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||
Residential:
|
||||||||||||||||
1-4 Single family
|
326,858 | 20,484 | 327,634 | 4,427 | ||||||||||||
Multifamily
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Land
|
0 | 0 | 0 | 0 | ||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | ||||||||||||
Residential construction
|
234,302 | 71,846 | 234,464 | 3,131 | ||||||||||||
561,160 | 92,330 | 562,098 | 7,558 | |||||||||||||
Consumer
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Total impaired loans
|
$ | 561,160 | $ | 92,330 | $ | 562,098 | $ | 7,558 |
Unpaid Principal
Balance
|
Related
Allowance
|
Average Unpaid
Principal Balance
|
Interest Income
Recognized
|
|||||||||||||
Impaired loans without a related reserve:
|
||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||
Residential:
|
||||||||||||||||
1-4 Single family
|
$ | 94,304 | $ | 0 | $ | 99,211 | $ | 4,502 | ||||||||
Multifamily
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Land
|
0 | 0 | 0 | 0 | ||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | ||||||||||||
Residential construction
|
0 | 0 | 0 | 0 | ||||||||||||
94,304 | 0 | 99,211 | 4,502 | |||||||||||||
Consumer
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Total impaired loans without a related reserve
|
94,304 | 0 | 99,211 | 4,502 | ||||||||||||
Impaired loans with a related reserve:
|
||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||
Residential:
|
||||||||||||||||
1-4 Single family
|
0 | 0 | 0 | 0 | ||||||||||||
Multifamily
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Land
|
0 | 0 | 0 | 0 | ||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | ||||||||||||
Residential construction
|
234,502 | 71,845 | 585,731 | 26,500 | ||||||||||||
234,502 | 71,845 | 585,731 | 26,500 | |||||||||||||
Consumer
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Total impaired loans with a related reserve
|
234,502 | 71,845 | 585,731 | 26,500 | ||||||||||||
Total impaired loans:
|
||||||||||||||||
Loans secured by mortgages:
|
||||||||||||||||
Residential:
|
||||||||||||||||
1-4 Single family
|
94,304 | 0 | 99,211 | 4,502 | ||||||||||||
Multifamily
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Land
|
0 | 0 | 0 | 0 | ||||||||||||
Lines of credit
|
0 | 0 | 0 | 0 | ||||||||||||
Residential construction
|
234,502 | 71,845 | 585,731 | 26,500 | ||||||||||||
328,806 | 71,845 | 684,942 | 31,002 | |||||||||||||
Consumer
|
0 | 0 | 0 | 0 | ||||||||||||
Commercial
|
0 | 0 | 0 | 0 | ||||||||||||
Total impaired loans
|
$ | 328,806 | $ | 71,845 | $ | 684,942 | $ | 31,002 |
Three Months
Ended
June 30, 2011
|
Year Ended
March 31, 2011
|
Three Months
Ended
June 30, 2010
|
||||||||||
Balance - Beginning of Year
|
$ | 635,535 | $ | 605,000 | $ | 605,000 | ||||||
Provision for loan losses
|
46,000 | 234,519 | 51,359 | |||||||||
Recoveries:
|
||||||||||||
Residential 1-4 single family
|
3,366 | 1,641 | 1,641 | |||||||||
Charge Offs:
|
||||||||||||
Residential 1-4 single family
|
0 | (31,810 | ) | 0 | ||||||||
Residential construction
|
0 | (173,815 | ) | 0 | ||||||||
Balance - End of Year
|
$ | 684,901 | $ | 635,535 | $ | 658,000 |
Loans Secured By Mortgages
|
||||||||||||||||||||||||||||||||||||||||
Residential
|
Not Real Estate Secured
|
|||||||||||||||||||||||||||||||||||||||
1-4 Single
Family
|
Multi-
family
|
Commercial
|
Land
|
Lines of
Credit
|
Residential
Construction
|
Consumer
|
Commercial
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 185,114 | $ | 17,417 | $ | 141,331 | $ | 73,355 | $ | 8,441 | $ | 95,779 | $ | 5,848 | $ | 63,745 | $ | 44,505 | $ | 635,535 | ||||||||||||||||||||
Charge-offs
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Recoveries
|
3,366 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,366 | ||||||||||||||||||||||||||||||
Provision
|
31,022 | 791 | 35,728 | 6,545 | 836 | (9,086 | ) | (1,531 | ) | (5,256 | ) | (13,049 | ) | 46,000 | ||||||||||||||||||||||||||
Ending Balance
|
$ | 219,502 | $ | 18,208 | $ | 177,059 | $ | 79,900 | $ | 9,277 | $ | 86,693 | $ | 4,317 | $ | 58,489 | $ | 31,456 | $ | 684,901 | ||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | 20,484 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 71,846 | $ | 0 | $ | 0 | $ | 0 | $ | 92,330 | ||||||||||||||||||||
Collectively evaluated for impairment
|
$ | 199,018 | $ | 18,208 | $ | 177,059 | $ | 79,900 | $ | 9,277 | $ | 14,847 | $ | 4,317 | $ | 58,489 | $ | 31,456 | $ | 592,571 | ||||||||||||||||||||
Loans:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance
|
$ | 55,743,763 | $ | 1,648,870 | $ | 13,618,962 | $ | 5,829,766 | $ | 1,795,551 | $ | 1,303,304 | $ | 715,310 | $ | 4,590,934 | $ | 85,246,460 | ||||||||||||||||||||||
Ending balance:
|
||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | 326,858 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 234,302 | $ | 0 | $ | 0 | $ | 561,160 | ||||||||||||||||||||||
Collectively evaluated for impairment
|
$ | 55,416,905 | $ | 1,648,870 | $ | 13,618,962 | $ | 5,829,766 | $ | 1,795,551 | $ | 1,069,002 | $ | 715,310 | $ | 4,590,934 | $ | 84,685,300 |
June 30, 2011
|
March 31, 2011
|
|||||||
Mortgage loans commitments –fixed rate
|
$ | 1,085,561 | $ | 2,780,080 | ||||
Mortgage loans commitments –variable rate
|
4,723,004 | 4,284,968 | ||||||
Commitments to originate nonmortgage loans
|
0 | 0 | ||||||
Commitments to purchase loans
|
0 | 606,813 | ||||||
Unused equity lines of credit (variable rate)
|
1,878,789 | 1,554,378 | ||||||
Commercial and consumer lines of credit
|
861,770 | 801,645 | ||||||
Standby letters of credit
|
472,708 | 472,708 | ||||||
Total
|
$ | 9,021,832 | $ | 10,500,592 |
|
·
|
Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
|
|
·
|
Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active or by model-based techniques in which all significant inputs are observable in the market.
|
|
·
|
Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the Bank’s own estimates about the assumptions that market participants would use to value the asset or liability.
|
June 30, 2011
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Government agencies
|
$ | 3,573,966 | $ | 5,586,609 | $ | 0 | $ | 9,160,575 | ||||||||
Brokered certificates of deposit
|
5,686,629 | 0 | 0 | 5,686,629 | ||||||||||||
Mortgage-backed securities (Agency)
|
1,008,224 | 27,112,549 | 2,531 | 28,123,304 | ||||||||||||
Collateralized mortgage obligations (Agency)
|
1,790,290 | 3,842,141 | 479,038 | 6,111,469 | ||||||||||||
$ | 12,059,109 | $ | 36,541,299 | $ | 481,569 | $ | 49,081,977 |
March 31, 2011
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Government agencies
|
$ | 3,601,607 | $ | 6,553,700 | $ | 0 | $ | 10,155,307 | ||||||||
Brokered certificates of deposit
|
4,776,597 | 0 | 0 | 4,776,597 | ||||||||||||
Mortgage-backed securities (Agency)
|
1,367,178 | 31,646,558 | 2,726 | 33,016,462 | ||||||||||||
Collateralized mortgage obligations (Agency)
|
785,161 | 3,182,752 | 518,613 | 4,486,526 | ||||||||||||
Collateralized mortgage obligations (Nonagency)
|
0 | 190,077 | 0 | 190,077 | ||||||||||||
$ | 10,530,543 | $ | 41,573,087 | $ | 521,339 | $ | 52,624,969 |
For the Three
Months Ended
June 30, 2011
|
For the Year
Ended
March 31, 2011
|
|||||||
Balance at beginning of the period
|
$ | 521,339 | $ | 3,623 | ||||
Total realized and unrealized gains and losses:
|
||||||||
Included in net income
|
0 | 0 | ||||||
Included in other comprehensive income
|
(19,928 | ) | 0 | |||||
Purchases
|
0 | 529,984 | ||||||
Paydowns
|
(19,842 | ) | (12,268 | ) | ||||
Transfers in and/or out of Level 3
|
0 | 0 | ||||||
Balance at the end of the period
|
$ | 481,569 | $ | 521,339 |
June 30, 2011
|
March 31, 2011
|
|||||||||||||||
(dollars in thousands)
|
Carrying
Amount
|
Estimated
Fair Value
|
Carrying
Amount
|
Estimated
Fair Value
|
||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 13,697 | $ | 13,697 | $ | 8,183 | $ | 8,183 | ||||||||
Certificates of deposit
|
485 | 485 | 483 | 483 | ||||||||||||
Investment securities
|
49,082 | 49,082 | 52,625 | 52,625 | ||||||||||||
Loans, net
|
84,648 | 84,732 | 86,178 | 86,250 | ||||||||||||
Total financial assets
|
$ | 147,912 | $ | 147,996 | $ | 147,469 | $ | 147,541 |
June 30, 2011
|
March 31, 2011
|
|||||||||||||||
Carrying
Amount
|
Estimated
Fair Value |
Carrying
Amount
|
Estimated
Fair Value
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Deposits
|
$ | 139,302 | $ | 140,917 | $ | 139,518 | $ | 141,281 | ||||||||
Advanced payments by borrowers for taxes and insurance
|
892 | 892 | 558 | 558 | ||||||||||||
Total financial liabilities
|
$ | 140,194 | $ | 141,809 | $ | 140,076 | $ | 141,839 |
Actual
|
Minimum Requirements
|
To Be Well Capitalized
|
|||||||||||||||||||
(dollars in thousands)
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||
As of June 30, 2011:
|
|||||||||||||||||||||
Total risk-based capital (to risk-weighted assets)
|
$ | 12,543 | 16.9% | $ | 5,950 | 8.0% | $ | 7,437 | 10.0% | ||||||||||||
Tier I capital (to risk-weighted assets)
|
11,943 | 16.1 | N/A | N/A | 4,462 | 6.0 | |||||||||||||||
Tier I capital (to adjusted total assets)
|
11,943 | 7.8 | 6,160 | 4.0 | 7,700 | 5.0 | |||||||||||||||
As of March 31, 2011:
|
|||||||||||||||||||||
Total risk-based capital (to risk-weighted assets)
|
$ | 12,531 | 16.7% | $ | 6,010 | 8.0% | $ | 7,512 | 10.0% | ||||||||||||
Tier I capital (to risk-weighted assets)
|
11,963 | 15.9 | N/A | N/A | 4,507 | 6.0 | |||||||||||||||
Tier I capital (to adjusted total assets)
|
11,963 | 7.8 | 6,157 | 4.0 | 7,696 | 5.0 |
Three Months Ended June 30
|
||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||
Average Balance
|
Interest
|
Yield/ Cost
|
Average Balance
|
Interest
|
Yield/ Cost
|
|||||||||||||||||
Assets:
|
||||||||||||||||||||||
Interest-bearing deposits
|
$ | 11,023,615 | $ | 7,130 | 0.26% | $ | 15,197,510 | $ | 11,377 | 0.30% | ||||||||||||
Investment securities available-for-sale
|
50,634,374 | 265,244 | 2.10% | 32,752,433 | 238,399 | 2.91% | ||||||||||||||||
Investment securities held-to-maturity
|
0 | 0 | 0.00% | 2,233,658 | 25,579 | 4.58% | ||||||||||||||||
Loans receivable, net
|
85,513,551 | 1,207,179 | 5.66% | 90,159,998 | 1,272,336 | 5.66% | ||||||||||||||||
Other interest-earning assets
|
690,668 | 7,399 | 4.30% | 719,773 | 6,360 | 3.54% | ||||||||||||||||
Total interest-earning assets
|
147,862,208 | 1,486,952 | 4.03% | 141,063,372 | 1,554,051 | 4.42% | ||||||||||||||||
Noninterest-earning assets
|
6,800,651 | 6,986,199 | ||||||||||||||||||||
Total assets
|
$ | 154,662,859 | $ | 148,049,571 | ||||||||||||||||||
Liabilities and shareholders’ equity:
|
||||||||||||||||||||||
Time deposits
|
$ | 103,155,909 | 499,861 | 1.94% | $ | 101,101,929 | 576,925 | 2.29% | ||||||||||||||
Savings
|
22,741,275 | 14,150 | 0.25% | 22,633,704 | 13,838 | 0.25% | ||||||||||||||||
NOW and money market accounts
|
8,278,406 | 8,740 | 0.42% | 8,522,704 | 12,050 | 0.57% | ||||||||||||||||
Total interest-bearing deposits
|
134,175,590 | 522,751 | 1.56% | 132,258,377 | 602,813 | 1.83% | ||||||||||||||||
Other interest-bearing liabilities
|
741,493 | 0 | 0.00% | 769,279 | 34 | 0.02% | ||||||||||||||||
Total interest-bearing liabilities
|
134,917,083 | 522,751 | 1.55% | 133,027,616 | 602,847 | 1.82% | ||||||||||||||||
Noninterest-bearing deposits
|
5,573,320 | 5,499,805 | ||||||||||||||||||||
Other noninterest-bearing liabilities
|
377,932 | 467,999 | ||||||||||||||||||||
Total liabilities
|
140,868,335 | 138,995,420 | ||||||||||||||||||||
Total shareholders’ equity
|
13,794,524 | 9,054,151 | ||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 154,662,859 | $ | 148,049,571 | ||||||||||||||||||
Net interest income
|
$ | 964,201 | $ | 951,204 | ||||||||||||||||||
Interest rate spread
|
2.48% | 2.60% | ||||||||||||||||||||
Net interest margin
|
2.62% | 2.70% | ||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities
|
109.59% | 106.04% |
·
|
Average loan balances include nonaccrual loans.
|
·
|
For presentation in this table, balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
|
At or for the Three
|
||||||||
Months Ended June 30,
|
||||||||
2011
|
2010
|
|||||||
Allowance for loan losses at beginning of period
|
$ | 635,535 | $ | 605,000 | ||||
Provision for loan losses
|
46,000 | 51,359 | ||||||
Recoveries:
|
||||||||
Loans secured by mortgages:
|
||||||||
Residential:
|
||||||||
1-4 single family
|
3,366 | 1,641 | ||||||
Charge-offs:
|
||||||||
Total charge-offs
|
0 | 0 | ||||||
Net charge-offs
|
(3,366 | ) | (1,641 | ) | ||||
Allowance for loan losses at end of period
|
$ | 684,901 | $ | 658,000 | ||||
Allowance for loan losses to non-performing loans
|
NM
|
76.09 | % | |||||
Allowance for loan losses to total loans outstanding at the end of the period
|
0.80 | % | 0.72 | % | ||||
Net charge-offs (recoveries) to average loans outstanding during the period
|
(0.00 | )% | (0.00 | )% |
(a)
|
Disclosure Controls and Procedures
|
|
The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
|
(b)
|
Changes to Internal Control Over Financial Reporting
|
|
There were no changes in the Company’s internal control over financial reporting during the three months ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
3.1
|
Articles of Incorporation of Madison Bancorp, Inc. (1)
|
3.2
|
Bylaws of Madison Bancorp, Inc. (2)
|
4.0
|
Form of Common Stock Certificate of Madison Bancorp, Inc. (3)
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
32.0
|
Section 1350 Certifications
|
101.0*
|
The following materials from the Company’s Quarterly Report on form 10-Q for the quarter ended June 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated statements of Financial Condition; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Changes in shareholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements, tagged as blocks of text
|
|
*Furnished, not filed.
|
(1)
|
Incorporated herein by reference to exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-167455), as amended, initially filed with the Securities and Exchange Commission on June 11, 2010.
|
(2)
|
Incorporated herein by reference to exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-167455), as amended, initially filed with the Securities and Exchange Commission on June 11, 2010.
|
(3)
|
Incorporated herein by reference to exhibit 4.0 to the Company’s Registration Statement on Form S-1 (File No. 333-167455), as amended, initially filed with the Securities and Exchange Commission on June 11, 2010.
|
MADISON BANCORP, INC.
|
|||
Dated: August 11, 2011
|
By:
|
/s/ Michael P. Gavin
|
|
Michael P. Gavin
|
|||
President and Chief Executive Officer
|
|||
(principal executive)
|
/s/ Paul A. Lovelace
|
|
Paul A. Lovelace
|
|
Senior Vice President and Chief Financial Officer
|
|
(principal financial and accounting officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Madison Bancorp, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Michael P. Gavin
|
|
Michael P. Gavin
|
|
President and Chief Executive Officer
|
|
(principal executive officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Madison Bancorp, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Paul A. Lovelace
|
|
Paul A. Lovelace
|
|
Senior Vice President and Chief Financial Officer
|
|
(principal financial and accounting officer)
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company as of and for the period covered by the Report.
|
By: |
/s/ Michael P. Gavin
|
|
Michael P. Gavin
|
||
President and Chief Executive Officer
|
||
(principal executive officer)
|
By: |
/s/ Paul A. Lovelace
|
|
Paul A. Lovelace
|
||
Senior Vice President and Chief Financial Officer
|
||
(principal financial and accounting officer)
|
Consolidated Statements of Financial Condition (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Mar. 31, 2011
|
---|---|---|
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, Issued | 608,116 | 608,116 |
Document and Entity Information
|
3 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 10, 2011
|
|
Document Information [Line Items] | Â | Â |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Year Focus | 2012 | Â |
Document Fiscal Period Focus | Q1 | Â |
Trading Symbol | MDSN | Â |
Entity Registrant Name | MADISON BANCORP INC | Â |
Entity Central Index Key | 0001492324 | Â |
Current Fiscal Year End Date | --03-31 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Common Stock, Shares Outstanding | Â | 608,116 |
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Allowance for Loan Losses
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Jun. 30, 2011
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Allowance for Loan Losses |
Note 5. Allowance for Loan Losses
The
activity in the allowance for loan losses is as
follows:
The
following table set forth for the three months ended June 30, 2011,
the balance of the allowance for loan losses by portfolio segment,
disaggregated by impairment methodology, which is then further
segregated by amounts evaluated for impairment collectively and
individually. The allowance for loan losses allocated to each
portfolio segment is not necessarily indicative of future losses in
any particular portfolio segment and does not restrict the use of
the allowance to absorb losses in other portfolio
segments.
|
Activities and Summary of Significant Accounting Policies
|
3 Months Ended |
---|---|
Jun. 30, 2011
|
|
Activities and Summary of Significant Accounting Policies |
Note 1. Activities and Summary of Significant Accounting
Policies
Madison
Bancorp, Inc. (Company) was incorporated on May 20, 2010 to be the
holding company for Madison Square Federal Savings Bank (Bank) in
conjunction with the Bank’s plan of conversion from mutual to
stock form of ownership. On October 6, 2010, in
accordance with a Plan of Conversion adopted by its Board of
Directors and approved by its members, the Bank converted from a
mutual savings bank to a stock savings bank and became the wholly
owned subsidiary of the Company. The conversion was
accomplished through the sale and issuance of 608,116 shares of
common stock at a price of $10.00 per share, through which the
Company received proceeds of $5,340,068, net of offering expenses
of $741,092. In connection with the conversion, the
Bank’s Board of Directors adopted an employee stock ownership
plan (ESOP) which subscribed for 7% of the sum of the number of
shares, or 42,568 shares of common stock sold in the
offering. Accordingly, the reported results for the
period since the conversion date relates to the consolidated
holding company. All material intercompany accounts and
transaction have been eliminated in consolidation.
In
accordance with Office of Thrift Supervision (“OTS”)
regulations governing the conversion, upon the completion of the
conversion, the Bank restricted retained earnings by establishing a
liquidation account. The liquidation account will be
maintained for the benefit of eligible account holders who continue
to maintain their accounts at the Bank after
conversion. The liquidation account will be reduced
annually to the extent that eligible account holders have reduced
their qualifying deposits. Subsequent increases will not
restore an eligible account holder’s interest in the
liquidation account. In the event of a complete
liquidation of the Bank, and only in such event, each account
holder will be entitled to receive a distribution from the
liquidation account in an amount proportionate to the adjusted
qualifying account balances then held. The Bank may not
pay dividends if those dividends would reduce equity capital below
the required liquidation account amount.
Madison
Square Federal Savings Bank was incorporated in 1870 under the laws
of the State of Maryland. The Bank is a federally
chartered savings bank engaged in banking and related services
primarily in the Baltimore Metropolitan area.
Summary of Significant Accounting Policies
The
foregoing consolidated financial statements are unaudited; however
in the opinion of management we have included all adjustments
(comprising only normal recurring accruals) necessary for a fair
presentation of the results of the interim period. We
derived the balances as of March 31, 2011 from audited financial
statements. These statements should be read in
conjunction with Madison Bancorp’s financial statements and
accompanying notes included in Madison Bancorp’s Form 10-K
for the year ended March 31, 2011. We have made no
significant changes to Madison Bancorp’s accounting policies
as disclosed in the Form 10-K.
The
accounting and reporting policies of Madison Bancorp, Inc. and
Subsidiaries (collectively “Madison”) conform to
accounting principles generally accepted in the United States of
America (“U.S. GAAP”) and to general practices in the
banking industry. The more significant policies
follow:
Principles of Consolidation. The accompanying
consolidated financial statements include the accounts of the
parent company and its wholly owned subsidiary, Madison Square
Federal Savings Bank and its wholly owned subsidiary, Madison
Financial Services Corporation (MFSC). MFSC is engaged
in the business of insurance brokerage services primarily in the
Baltimore area. All significant intercompany balances
and transactions have been eliminated in
consolidation.
Reclassifications. Certain prior year amounts
have been reclassified to conform to current period
classifications. The reclassifications had no effect on
net loss, or the net change in cash and cash equivalents and are
not material to previously issued financial
statements.
Use of
Estimates. The preparation
of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and the accompanying
notes. Actual results could differ significantly from
those estimates. Material estimates that are
particularly susceptible to significant change in the near term
relate to the determination of the allowance for loan losses,
deferred income tax valuation allowances, the fair value of
investment securities and other than temporary impairment of
investment securities.
Subsequent Events. We
evaluated subsequent events after June 30, 2011 through August 10,
2011, the date this report was available to be
issued. No significant subsequent events were identified
which would affect the presentation of the financial
statements.
Recently Adopted Accounting Guidance
In
June 2011, the FASB issued ASU No. 2011-05, “Comprehensive
Income (Topic 220)-Presentation of Comprehensive Income”
amended disclosure guidance related to comprehensive
income. The amendment requires that all nonowner changes
in shareholders’ equity be presented in either a single
continuous statement of comprehensive income or in two separate but
consecutive statements. The amendment also requires
entities to present, on the face of the financial statements,
reclassification adjustments for items that are reclassified from
other comprehensive income to net income in the statement or
statements where components of new income and the components of
other comprehensive income are presented. The option to present
components of other comprehensive income as part of the
consolidated statement of changes in shareholders’ equity was
eliminated. The amendments in this update are effective for fiscal
years, and interim periods within those years, beginning after
December 15, 2011. Adoption of this guidance is not expected to
have a material impact on our consolidated results of operations or
financial condition.
In
April 2011, the FASB issued ASU No. 2011-02, “Receivables
(Topic 310)-A Creditor’s Determination of Whether a
Restructuring Is a Troubled Debt Restructuring” amended
accounting and disclosure guidance relating to a creditor’s
determination of whether a restructuring is a troubled debt
restructuring. The amendments clarify the guidance on a
creditor’s evaluation of whether it has granted a concession
and whether a debtor is experiencing financial difficulties. The
amendments are effective for the first interim or annual period
beginning on or after June 15, 2011 and should be applied
retrospectively to the beginning of the annual period of adoption.
As a result of the application of the amendments, receivables
previously measured under loss contingency guidance that are newly
considered impaired should be disclosed, along with the related
allowance for credit losses, as of the end of the period of
adoption. For purposes of measuring impairment of those
receivables, an entity should apply the amendments prospectively
for the first interim or annual period beginning on or after June
15, 2011. The deferred credit risk disclosure guidance issued in
July 2010 relating to troubled debt restructurings will now be
effective for interim and annual periods beginning on or after June
15, 2011. Adoption of this guidance has not had a material impact
on our consolidated results of operations or financial
condition.
In July 2010, FASB issued ASU No. 2010-20,
“Receivables (Topic 310)-Disclosures about the Credit Quality
of Financing Receivables and the Allowance for Credit Losses”
requires entities to provide disclosures designed to facilitate
financial statement users’ evaluation of (i) the nature of
credit risk inherent in the entity’s portfolio of financing
receivables, (ii) how that risk is analyzed and assessed in
arriving at the allowance for credit losses, and (iii) the changes
and reasons for those changes in the allowance for credit
losses. Disclosures must be disaggregated by portfolio
segment, the level at which an entity develops and documents a
systemic method for determining its allowance for credit losses,
and class of financing receivable, which is generally a
disaggregation of portfolio segment. The required
disclosures include, among other things, a carry forward of the
allowance for credit losses as well as information about modified,
impaired, nonaccrual and past due loans, and credit quality
indicators. ASU 2010-20 will become effective for
financial statements as of March 31, 2011 as it relates to
disclosures required as of the end of the reporting
period. Disclosures that relate to activity during a
reporting period will be required for financial statements that
include periods beginning on January 1, 2011. Refer to
“Note 4.
Loans” and “Note
5. Allowance for Loan Losses” for the required
disclosures.
In
April 2010, FASB issued ASU 2010-18, Receivables (Topic 310)-Effect
of a Loan Modification When the Loan Is Part of a Pool That Is
Accounted for as a Single Asset — a consensus of the FASB
Emerging Issues Task Force. As a result of the
amendments in this ASU, modifications of loans that are accounted
for within a pool do not result in the removal of those loans from
the pool even if the modification of those loans would otherwise be
considered a troubled debt restructuring. This ASU was
effective for modifications occurring in the first interim or
annual period ending on or after July 15, 2010. The
amendments are to be applied prospectively. In addition,
upon initial adoption of the guidance in this ASU, an entity may
make a one-time election to terminate accounting for loans as a
pool under Subtopic 310-30. Adoption of this guidance
has not had a material impact on our consolidated results of
operations or financial condition.
In March 2010, FASB issued ASU No. 2010-11,
“Derivatives and Hedging (Topic 815)-Scope Exception Related
to Embedded Credit Derivatives” clarifies that the only form
of an embedded credit derivative that is exempt from embedded
derivative bifurcation requirement are those that relate to the
subordination of one financial instrument to
another. Entities that have contracts containing an
embedded credit derivative feature in a form other than
subordination may need to separately account for the embedded
credit derivative feature. The provisions of ASU 2010-11
became effective on July 1, 2010. This standard did
not have a material impact on our consolidated results of
operations or financial position.
|
Commitments and Financial Instruments with Off-Balance-Sheet Credit Risk
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Commitments and Financial Instruments with Off-Balance-Sheet Credit Risk |
Note 7. Commitments and Financial Instruments with
Off-Balance-Sheet Credit Risk
In
the normal course of business, the Bank has various outstanding
commitments and contingent liabilities that are not reflected in
the accompanying financial statements. Loan commitments
and lines of credit are agreements to lend to a customer as long as
there is no violation of any condition to the
contract. Mortgage loan commitments generally have fixed
interest rates, fixed expiration dates, and may require payment of
a fee. Other loan commitments generally have fixed
interest rates. Commitments to purchase loans do not
represent future cash requirements, as it is unlikely all loans
will be closed prior to the expiration of the
commitment. Lines of credit generally have variable
interest rates. Such lines do not represent future cash
requirements because it is unlikely that all customers will draw
upon their lines in full at any time. Letters of credit
are commitments issued to guarantee the performance of a customer
to a third party.
The
Bank’s maximum exposure to credit loss in the event of
nonperformance by the customer is the contractual amount of the
credit commitment. Loan commitments, lines of credit,
and letters of credit are made on the same terms, including
collateral, as outstanding loans. Management is not
aware of any accounting loss to be incurred by funding these loan
commitments.
The
Bank had outstanding firm commitments to originate, fund or
purchase loans as follows:
|
Fair Value Measurements
|
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Jun. 30, 2011
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Fair Value Measurements |
Note 8. Fair Value Measurements
Accounting
guidance defines fair value to be 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. These standards have also established a
three-level hierarchy for fair value measurements based upon the
inputs to the valuation of an asset or liability.
Investment
securities available-for-sale are the only financial assets
measured at fair value on a recurring basis. As of June
30, 2011 and March 31, 2011, the fair values were measured using
the following methodologies:
The
following table represents a roll-forward of the amounts for the
three months ended June 30, 2011 and the year ended March 31, 2011,
for financial instruments classified by Madison within Level 3 of
the valuation hierarchy.
The
Bank measures its other real estate owned, on a nonrecurring basis,
at fair value less cost to sell. As of June 30, 2011,
the $424,000 of fair value of other real estate owned was based on
offers and/or appraisals. Cost to sell the real estate
was based on standard market factors. The Bank has
categorized its foreclosed real estate as level three. The
Bank does not measure the fair value of its other financial assets
or liabilities on a recurring or nonrecurring basis.
The
estimated fair values of financial instruments are as
follows:
The
following methods and assumptions were used to estimate the fair
value disclosures for financial instruments as of June 30, 2011 and
March 31, 2011:
Cash and cash equivalents: The amounts reported at cost
approximate the fair value of these assets.
Certificates of deposit: The amounts reported at cost
approximate the fair value of these assets.
Investment securities: The fair values are based
on the quoted market values or values of securities with similar
rates and terms. The fair values are provided to the
Bank by a third party.
Loans, net: We estimate the fair value of loans by
discounting future cash flows using current rates for which we
would make similar loans to borrowers with similar credit
histories.
Deposits: The fair value of demand deposits and savings
accounts is the amount payable on demand. We estimate the fair
value of fixed maturity certificates of deposit using the rates
currently offered for deposits of similar remaining
maturities.
Advanced payments by borrowers for taxes and insurance: The
amounts reported at cost approximate the fair value of these
assets.
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Borrowings
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3 Months Ended |
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Jun. 30, 2011
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Borrowings |
Note 6. Borrowings
At June 30, 2011, we had the ability to borrow
a total of approximately $30.8 million from the Federal Home Loan
Bank of Atlanta and we have a $2.4 million line of credit with a
large financial institution. The FHLB borrowing requires
us to pledge mortgage loans as collateral and the line of credit
requires us to pledge brokered CD’s or US Government Agency
securities. At June 30, 2011, we had no Federal Home
Loan Bank advances outstanding or borrowings on the line of credit.
The rates on both borrowing lines will be determined at the time of
an advance.
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Consolidated Statement of Changes in Shareholders' Equity (Parenthetical) (USD $)
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3 Months Ended | |
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Jun. 30, 2011
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Jun. 30, 2010
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Unrealized gain on available for sale securities, tax effect | $ 109,367 | $ 132,544 |
Supplemental Disclosure for Earnings per Share
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3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Supplemental Disclosure for Earnings per Share |
Note 2. Supplemental Disclosure for Earnings per
Share
When
presented, basic earnings per share are computed by dividing income
available to common shareholders’ by the weighted average
number of common shares outstanding for the
period. Diluted earnings per share reflect the potential
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the
earnings of the entity. Because the mutual to stock
conversion was not completed until October 6, 2010, per share
earnings data is not meaningful for prior comparative periods and
therefore is not presented. The calculation of weighted
average common shares outstanding for the year ended March 31, 2011
is based on the period from October 6, 2010, the date of the
conversion stock issuance, through March 31, 2011.
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Investment Securities
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Jun. 30, 2011
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Investment Securities |
Note 3. Investment Securities
The
amortized cost and estimated fair value of investment securities at
June 30, 2011 and March 31, 2011 are summarized as
follows:
The
bank has arranged for a line of credit for liquidity to meet
expected and unexpected cash needs with a large financial
institution. Any advances would be collateralized by the
broker certificates of deposit and various U.S. Government Agency
securities. As of June 30, 2011 and March 31, 2011, there were no
borrowings or securities pledged under this line of
credit.
The
following is a summary of contractual maturities of securities
available-for-sale as of June 30, 2011:
Proceeds
from sales of investment securities were $8.3 million and $2.7
million during the three months ended June 30, 2011 and 2010,
respectively with gains of $164,000 and losses of $157,000 for the
three months ended June 30, 2011 and gains of $74,000 and losses of
$45,000 for the three months ended June 30, 2010.
The
following table presents Madison’s investments’ gross
unrealized losses and the corresponding fair values by investment
category and length of time that the securities have been in a
continuous unrealized loss position, at June 30, 2011.
The
gross unrealized losses are not considered by management to be
other-than-temporary impairments. Management has the
intent and ability to hold these securities until
maturity. In most cases, temporary impairment is caused
by market interest rate fluctuations.
|
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