0000950123-11-062616.txt : 20110629 0000950123-11-062616.hdr.sgml : 20110629 20110629091526 ACCESSION NUMBER: 0000950123-11-062616 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20101231 FILED AS OF DATE: 20110629 DATE AS OF CHANGE: 20110629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEARBORN BANCORP INC /MI/ CENTRAL INDEX KEY: 0000895541 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 383073622 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24478 FILM NUMBER: 11937309 BUSINESS ADDRESS: STREET 1: 22290 MICHIGAN AVE STREET 2: PO BOX 2247 CITY: DEARBORN STATE: MI ZIP: 48123-2247 BUSINESS PHONE: 3132741000 MAIL ADDRESS: STREET 1: 22290 MICHIGAN AVE STREET 2: P O BOX 2247 CITY: DEARBORN STATE: MI ZIP: 48123-2247 11-K 1 k50543e11vk.htm FORM 11-K e11vk
 
 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
     
þ   ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. [NO FEE REQUIRED]
For the fiscal year ended December 31, 2010
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from                      to                     
Commission file number 000-24478
  A.   Full title of the plan and the address of the plan, if different from that of the issuer named below: Fidelity Bank 401(k) plan.
 
  B.   Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office:
DEARBORN BANCORP, INC.
1360 Porter Street
Dearborn, Michigan 48124
 
 

 

 

Fidelity Bank 401(k) Plan
EIN: 38-3127130 PN 001
Accountants’ Report and Financial Statements
December 31, 2010 and 2009

 

 

Fidelity Bank 401(k) Plan
December 31, 2010 and 2009
         
Contents
        
 
        
Report of Independent Registered Public Accounting Firm
     1  
 
        
Financial Statements
        
Statements of Net Assets Available for Benefits
     2  
Statements of Changes in Net Assets Available for Benefits
     3  
Notes to Financial Statements
     4  
 
        
Supplemental Schedules
        
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
     18  
Schedule H, Line 4j — Schedule of Reportable Transactions
     19  

 

 

Report of Independent Registered Public Accounting Firm
Plan Administrator
Fidelity Bank 401(k) Plan
Dearborn, Michigan
We have audited the accompanying statements of net assets available for benefits of Fidelity Bank 401(k) Plan as of December 31, 2010 and 2009, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Fidelity Bank 401(k) Plan as of December 31, 2010 and 2009, and the changes in its net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying supplemental schedules are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
As discussed in Note 8, the Plan changed its method of accounting for notes receivable from participants.
Indianapolis, Indiana
June 29, 2011
Federal Employer Identification Number: 44-0160260

1

 

Independent Accountants’ Report
Plan Administrator
Fidelity Bank 401(k) Plan
Dearborn, Michigan
We have audited the accompanying statements of net assets available for benefits of Fidelity Bank 401(k) Plan as of December 31, 2010 and 2009, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fidelity Bank 401(k) Plan as of December 31, 2010 and 2009, and the changes in its net assets for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying supplemental schedules are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
As discussed in Note 8, the Plan changed its method of accounting for notes receivable from participants.
Indianapolis, Indiana
June 29, 2011
Federal Employer Identification Number: 44-0160260

1A

 

Fidelity Bank 401(k) Plan
Statements of Net Assets Available for Benefits
December 31, 2010 and 2009
                 
            2009  
            (As Adjusted -  
    2010     Note 8)  
     
Assets
                
Investments, at fair value
   $ 6,680,417     $ 4,872,320  
 
            
 
                
Receivables
                
Notes receivable from particpants
     249,666       216,480  
Participant deferrals
     24,211       22,944  
 
            
 
     273,877       239,424  
 
            
 
                
Net Assets Available for Benefits, at Fair Value
     6,954,294       5,111,744  
 
                
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
     (77,163 )     —  
 
            
 
                
Net Assets Available for Benefits
   $ 6,877,131     $ 5,111,744  
 
            
See Notes to Financial Statements

2

 

Fidelity Bank 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2010 and 2009
                 
            2009  
            (As Adjusted -  
    2010     Note 8)  
     
Additions
                
Investment Income
                
Net appreciation in fair value of investments
   $ 1,158,297     $ 241,450  
Interest and dividends
     29,612       24,874  
 
            
Net investment income
     1,187,909       266,324  
 
            
 
                
Interest Income From Participant Loans
     12,269       10,412  
 
            
 
                
Contributions
                
Participants
     725,033       782,680  
Employer
     —       167,399  
Rollovers
     17,266       117,174  
 
            
 
     742,299       1,067,253  
 
            
Total additions
     1,942,477       1,343,989  
 
            
 
                
Deductions
                
Benefit payments
     171,760       155,467  
Adminstrative expenses
     5,330       1,695  
 
            
Total deductions
     177,090       157,162  
 
            
 
                
Net Increase
     1,765,387       1,186,827  
 
                
Net Assets Available for Benefits, Beginning of Year
     5,111,744       3,924,917  
 
            
 
                
Net Assets Available for Benefits, End of Year
   $ 6,877,131     $ 5,111,744  
 
            
See Notes to Financial Statements

3

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
Note 1: Description of the Plan
    The following description of Fidelity Bank 401(k) Plan (Plan) provides only general information. Participants should refer to the Plan Document and Summary Plan Description for a more complete description of the Plan’s provisions, which are available from the Plan Administrator.
General
    The Plan is a defined-contribution plan sponsored by Fidelity Bank (Bank) for the benefit of its employees who have at least six months of service and are age 18 or older. Related employers who also participate in the Plan include Community Bank Audit Services and Dearborn Bancorp. The Plan was effective January 1, 1988 and amended and restated effective January 1, 2002. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Jeffrey L. Karafa and Michael J. Ross are fiduciaries of the Plan. State Street Bank and Trust Company serves as Plan trustee.
Contributions
    Elective deferrals by participants under the 401(k) provisions are based on a percentage of their compensation as defined by the Plan agreement and are subject to certain limitations. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. Employee rollover contributions are also permitted. The Bank may make matching contributions of 50% of employees’ salary deferral amounts on the first 6% of employees’ compensation and profit-sharing contributions. The Bank discontinued the match as of the September 10, 2009 paycheck. Bank profit-sharing contributions are discretionary as determined by the Bank’s Board of Directors. Contributions are subject to certain limitations. Forfeitures are used to reduce Bank contributions.
Participant Investment Account Options
    Investment account options available include pooled separate accounts consisting of various mutual funds and Dearborn Bancorp, Inc. common stock. Each participant has the option of directing his contributions into any of the separate investment accounts and may change the allocation daily. All matching contributions, if approved by Plan management, are invested in the Dearborn Bancorp, Inc. common stock pooled separate account. At December 31, 2010 and 2009, approximately 10% and 4%, respectively, of the Plan’s assets were invested in Dearborn Bancorp, Inc. common stock.

4

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
Participant Accounts
    Each participant’s account is credited with the participant’s contribution, the Bank’s contribution and Plan earnings and is charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefits to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting
    Participants are immediately vested in their voluntary contributions plus earnings thereon. Vesting in the Bank’s contribution portion of their accounts plus earnings thereon is based on years of continuous service. A participant is fully vested after five years of continuous service. The nonvested balance is forfeited upon termination of service. Forfeitures are used to reduce Bank contributions.
Payment of Benefits
    Upon termination of service, a participant may elect to receive a lump-sum amount equal to the value of his account. A participant may receive the portion of his or her account invested in Dearborn Bancorp, Inc. stock as shares of common stock or in cash. At December 31, 2010 and 2009, Plan assets did not include any accounts of terminated or retired participants who have elected to withdraw from the Plan but have not yet been paid.
Participant Loans
    The Plan Document includes provisions authorizing loans from the Plan to active eligible participants. Loans are made to any eligible participant demonstrating a qualifying need. The minimum amount of a loan shall be $1,000. The maximum amount of a participant’s loans is determined by the available loan balance restricted to the lesser of $50,000 or 50% of the participant’s vested account balance. All loans are covered by demand notes and are generally repayable over a period of five years through payroll withholdings unless the participant is paying the loan in full. All loans bear a reasonable rate of interest as determined by the Administrator based on the prevailing interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances.
 
    Notes receivable from participants are reported at the amortized principal balance plus accrued but unpaid interest. Delinquent participant loans are reclassified as distributions based upon the terms of the Plan Document.
Plan Termination
    Although it has not expressed an intention to do so, the Bank has the right under the Plan to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.

5

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
Note 2: Summary of Significant Accounting Policies
Basis of Accounting
    The accompanying financial statements are prepared on the accrual basis of accounting.
Use of Estimates
    The preparation of 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 net assets and changes in net assets and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Valuation of Investments and Income Recognition
    Quoted market prices, if available, are used to value investments. The amounts shown in Note 3 for securities that have no quoted market prices are estimated fair values. Pooled separate accounts are valued at estimated fair value as provided by Massachusetts Mutual Life Insurance Company (Mass Mutual). The fair value is determined by utilizing quoted market prices of the underlying assets on the last day of the Plan year. The fair value of the guaranteed investment account is calculated by discounting the related cash flows, based on current yields of similar instruments with comparable durations. The account is credited with a minimum guaranteed rate of interest.
 
    Investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan invests in a guaranteed investment account. As required by the FSP, the statement of net assets available for benefits presents the fair value of the guaranteed investment contract as well as the adjustment of the investment from fair value to contract value relating to the investment contracts. The statement of changes in net assets available for benefits is prepared on a contract value basis.
 
    Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Investment Contract With Insurance Company
    The Plan entered into a fully benefit-responsive investment contract with Mass Mutual. Mass Mutual maintains the contributions in a general account. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The guaranteed investment contract issuer is contractually obligated to repay the principal and a specified interest rate guaranteed to the Plan.

6

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
    As described in the previous note, because the guaranteed investment contract is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment contract. Contract value, as reported to the Plan by Mass Mutual, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
 
    There are no reserves against the contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the issuer, but it may not be less than 3 percent. Such interest rates are reviewed on a quarterly basis for resetting.
 
    Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (1) amendments to the plan documents (including complete or partial plan termination or merger with another plan), (2) changes to the plan’s prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the plan sponsor or other plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the plan or (4) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan Administrator does not believe the occurrence of any such value event, which would limit the Plan’s ability to transact at contract value with participants, is probable.
 
    The guaranteed investment contract permits the insurance company to terminate the agreement prior to the scheduled maturity date under certain circumstances.
Plan Tax Status
    The Plan operates under a nonstandardized adoption agreement in connection with a prototype retirement plan and trust/custodial document sponsored by MassMutual Financial Group. This prototype plan document has been filed with the appropriate agency. The Plan has not obtained or requested a determination letter. However, the Plan Administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code and that the Plan was qualified and the related trust was tax-exempt as of the financial statement date. With a few exceptions, the Plan is no longer subject to U.S. federal, state and local or non-U.S income tax examinations by tax authorities for years before 2007.
 
    During 2009, the Plan filed through the Voluntary Fiduciary Correction to correct the late remittance of certain employee contributions that occurred from 2006-2008.
Payment of Benefits
    Benefits are recorded when paid. Distributions are allowed upon retirement, disability, death of the employee and termination of service.

7

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
Risks and Uncertainties
    The Plan provides for various investment options in any combination of mutual funds and stocks. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for plan benefits.
 
    The current economic environment also presents retirement plans with difficult circumstances and challenges, which in some cases have resulted in large declines in the fair value of investments. The financial statements have been prepared using values and information currently available to the Plan.
 
    Given the volatility of current economic conditions, the values of assets recorded in the financial statements could change rapidly, resulting in material future adjustments in investment values that could negatively impact the Plan.
Administrative Expenses
    Administrative expenses may be paid by the Bank or the Plan, at the Bank’s discretion.
Note 3: Investments
    The Plan’s investments are held by an insurance company-administered trust fund. The Plan’s investments (including investments bought, sold and held during the year) appreciated in fair value as follows:
                 
    2010  
    Net        
    Appreciation     Fair Value  
    in Fair Value     at End  
    During Year     of Year  
Pooled separate accounts
                
Dearborn Bancorp, Inc. common stock
   $ 633,589     $ 667,068  
Mutual funds
     524,708       4,858,031  
Guaranteed interest account
     —       1,155,318  
 
            
 
                
 
   $ 1,158,297     $ 6,680,417  
 
            

8

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
                 
    2009  
    (As Adjusted - Note 8)  
    Net        
    Appreciation        
    (Depreciation)     Fair Value  
    in Fair Value     at End  
    During Year     of Year  
Dearborn Bancorp, Inc. common stock
   $ (515,031 )   $ 199,495  
Mutual funds
     756,481       3,882,620  
Guaranteed interest account
     —       790,205  
 
            
 
                
 
   $ 241,450     $ 4,872,320  
 
            
    The fair value of individual investments that represented 5% or more of the Plan’s net assets available for benefits were as follows:
                 
    2010     2009  
Pooled separate accounts
                
Oakmark Equity and Income Fund
   $ 604,160     $ 560,537  
American Funds Growth Fund of America
     911,633       799,282  
Premier Global
     515,957       437,975  
Select Diversified Value Fund
     544,775       395,234  
Select Strategic Bond Fund
     726,747       632,157  
Select Indexed Equity Fund
     —       286,342  
Dearborn Bancorp, Inc. common stock
     667,068       —  
Guaranteed interest account
     1,155,318       790,205  
    Interest and dividends realized on the Plan’s investments for the years ended 2010 and 2009 were $29,612 and $24,874, respectively.
 
    Information on the guaranteed interest account carried at fair value is as follows:
                 
    2010     2009  
Average yield
     3.01 %     3.82 %
Crediting interest rate at December 31
     3.01 %     3.82 %
Fair value
   $ 1,155,318     $ 790,205  

9

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
Note 4: Net Assets by Participant and Nonparticipant-Directed Investments
Information about the net assets and the significant components of the changes in net assets relating to the participant and nonparticipant-directed investments is as follows:
                         
    2010  
            Nonparticipant-        
    Participant     Directed        
    Directed     Employer        
    Funds     Match     Total  
     
Additions
                        
Investment income
                        
Net appreciation in fair value of investments
   $ 912,184     $ 246,113     $ 1,158,297  
Interest and dividends
     29,612       —       29,612  
 
                  
Net investment income
     941,796       246,113       1,187,909  
 
                  
 
                        
Interest Income From Participant Loans
     12,269       —       12,269  
 
                  
 
                        
Contributions
                        
Participants
     725,033       —       725,033  
Rollovers
     17,266       —       17,266  
 
                  
 
     742,299       —       742,299  
 
                  
Total
     1,696,364       246,113       1,942,477  
 
                  
 
                        
Deductions
                        
Benefit payments
     158,090       13,670       171,760  
Transfers
     (56,500 )     56,500       —  
Adminstrative expenses
     3,910       1,420       5,330  
 
                  
Total
     105,500       71,590       177,090  
 
                  
 
                        
Net Increase
     1,590,864       174,523       1,765,387  
 
                        
Net Assets Available for Benefits, Beginning of Year
     5,026,403       85,341       5,111,744  
 
                  
 
                        
Net Assets Available for Benefits, End of Year
   $ 6,617,267     $ 259,864     $ 6,877,131  
 
                  

10

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
                         
    2009  
    (As Adjusted - Note 8)  
            Nonparticipant-        
    Participant-     Directed        
    Directed     Employer        
    Funds     Match     Total  
     
Additions
                        
Investment income
                       
Net appreciation (depreciation) in fair value of investments
   $ 479,018     $ (237,568 )   $ 241,450  
Interest and dividends
     24,874       —       24,874  
 
                  
Net investment income (loss)
     503,892       (237,568 )     266,324  
 
                  
 
                        
Interest Income From Participant Loans
     10,412       —       10,412  
 
                  
 
                        
Contributions
                        
Employer
     —       167,399       167,399  
Participants
     782,680       —       782,680  
Rollovers
     117,174       —       117,174  
 
                  
 
     899,854       167,399       1,067,253  
 
                  
Total additions
     1,414,158       (70,169 )     1,343,989  
 
                  
 
                        
Deductions
                        
Benefit payments
     147,993       7,474       155,467  
Transfers
     4,178       (4,178 )     —  
Adminstrative expenses
     407       1,288       1,695  
 
                  
Total deductions
     152,578       4,584       157,162  
 
                  
 
                        
Net Increase (Decrease)
     1,261,580       (74,753 )     1,186,827  
 
                        
Net Assets Available for Benefits, Beginning of Year
     3,764,823       160,094       3,924,917  
 
                  
 
                        
Net Assets Available for Benefits, End of Year
   $ 5,026,403     $ 85,341     $ 5,111,744  
 
                  

11

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
Note 5: Party-in-Interest Transactions
Party-in-interest transactions include those with fiduciaries or employees of the Plan, any person who provides services to the Plan, an employer whose employees are covered by the Plan, an employee organization whose members are covered by the Plan, a person who owns 50 percent or more of such an employer or employee association, or relatives of such persons.
The Plan paid $5,330 and $1,695 of administrative fees to MassMutual Financial Group during 2010 and 2009. The Bank provides certain administrative services at no cost to the Plan. The 290,536 and 309,994 shares of Dearborn Bancorp, Inc. common stock held by the Plan as of December 31, 2010 and 2009, respectively, represent approximately 3.78% and 4.05% of the Bank’s outstanding share as of December 31, 2010 and 2009, respectively.
Note 6: Fair Value of Plan Assets
ASC Topic 820, Fair Value Measurements, defines fair value as 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. Topic 820 also specifies a fair value hierarchy which requires a plan to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
  Level 1    Quoted prices in active markets for identical assets or liabilities
 
  Level 2    Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
 
  Level 3    Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

12

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
The methods of valuation described below may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying statements of net assets available for benefits, as well as the general classification of such assets pursuant to the valuation hierarchy.
Investments
Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. There are no Level 1 securities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include pooled separate accounts. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include the guaranteed interest account.
Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2010 and 2009.
Pooled separate accounts: Valued at the net asset value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, less its liabilities, and then divided by the number of shares outstanding. The fund allows for daily redemptions and contributions.
Guaranteed investment contract: Valued based on contractual terms of the underlying agreements, providing a daily rate of income accretion.

13

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
The following tables present the fair value measurements of assets recognized in the accompanying statements of net assets available for benefits measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2010 and 2009:
                                 
            2010  
            Fair Value Measurements Using  
            Quoted Prices              
            in Active     Significant        
            Markets for     Other     Significant  
            Identical     Observable     Unobservable  
    Fair     Assets     Inputs     Inputs  
    Value     (Level 1)     (Level 2)     (Level 3)  
     
Pooled separate accounts
                                
Intermediate term bond
   $ 816,190     $ —     $ 816,190     $ —  
Large blend fund
     580,453       —       580,453       —  
Large growth fund
     911,633       —       911,633       —  
Large value fund
     638,672       —       638,672       —  
Mid-cap fund
     226,615       —       226,615       —  
Moderate allocation
     604,160       —       604,160       —  
Retirement income fund
     19,193       —       19,193       —  
Small fund
     256,076       —       256,076       —  
Target date fund
     289,082       —       289,082       —  
World stock fund
     515,957       —       515,957       —  
Dearborn Bancorp common stock
     667,068       —       667,068       —  
Guaranteed interest account
     1,155,318       —       —       1,155,318  
 
                        
 
                                
 
   $ 6,680,417     $ —     $ 5,525,099     $ 1,155,318  
 
                        
                                 
            2009  
            (As Adjusted - Note 8)  
            Fair Value Measurements Using  
            Quoted Prices              
            in Active     Significant        
            Markets for     Other     Significant  
            Identical     Observable     Unobservable  
    Fair     Assets     Inputs     Inputs  
    Value     (Level 1)     (Level 2)     (Level 3)  
     
Pooled separate accounts
                                
Intermediate term bond
   $ 632,157     $ —     $ 632,157     $ —  
Large blend fund
     492,897       —       492,897       —  
Large growth fund
     799,282       —       799,282       —  
Large value fund
     481,830       —       481,830       —  
Mid-cap fund
     159,654       —       159,654       —  
Moderate allocation
     560,537       —       560,537       —  
Retirement income fund
     15,396       —       15,396       —  
Small fund
     195,371       —       195,371       —  
Target date fund
     107,521       —       107,521       —  
World stock fund
     437,975       —       437,975       —  
Dearborn Bancorp common stock
     199,495       —       199,495       —  
Guaranteed interest account
     790,205       —       —       790,205  
 
                        
 
                                
 
   $ 4,872,320     $ —     $ 4,082,115     $ 790,205  
 
                        

14

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
    The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying statements of net assets available for benefits using significant unobservable (Level 3) inputs:
         
    Guaranteed  
    Interest  
    Contract  
    Fund  
Balance, January 1, 2009
   $ 427,717  
 
        
Purchases, issuances and settlements, net
     362,488  
 
      
 
        
Balance, December 31, 2009
     790,205  
 
        
Purchases, issuances and settlements, net
     365,113  
 
      
 
        
Balance, December 31, 2010
   $ 1,155,318  
 
      
Note 7: Reconciliation of Financial Statements to Form 5500
    The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2010 and 2009, to Form 5500:
                 
    2010     2009  
Net assets available for benefits per the financial statements
   $ 6,877,131     $ 5,111,744  
Adjustment for participant contribution receivable
     (24,211 )     (22,944 )
Miscellaneous difference related to accrued interest
     —       401  
 
            
 
                
Net assets available for benefits per Form 5500
   $ 6,852,920     $ 5,089,201  
 
            
 
                
                 
    2010     2009  
Net increase in net assets per the financial statements
   $ 1,765,387     $ 1,186,827  
Change in participant contributions receivable
     (1,267 )     (22,944 )
Change in employer contribution receivable
     —       9,058  
Miscellaneous difference related to accrued interest
     —       401  
 
            
 
                
Net increase in net assets per Schedule H of Form 5500
   $ 1,764,120     $ 1,173,342  
 
            
    Form 5500 has been prepared on the cash basis of accounting while this financial statement has been prepared on the accrual basis. There are differences between the financial statements and the Form 5500 related to contribution activity occurring in the last pay period of 2009 and 2010.

15

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
    There is also a difference related to accrued interest on notes receivable from participants on the Form 5500 for 2010 and 2009.
Note 8: Changes in Accounting Principle
    During 2010, the Plan adopted the provisions of ASU 2010-25, Reporting Loans to Participants by Defined Contribution Pension Plans. The ASU requires loans to participants to be reported as notes receivable from Participants at unpaid principal plus accrued but unpaid interest, instead of being reported as a part of investments at fair value as they were under previous guidance.
    The following financial statement line items for fiscal years 2010 and 2009 were affected by the change in accounting principle.
                         
            2010          
    Statement of Net Assets Available for Benefits  
    As Computed     As Computed        
    Under Previous     Under     Effect of  
    Guidance     ASU 2010-25     Change  
     
Investments
   $ 6,930,083     $ 6,680,417     $ (249,666 )
Notes receivable from participants
     —       249,666       249,666  
                         
            2009          
    Statement of Net Assets Available for Benefits  
    As Previously             Effect of  
    Reported     As Adjusted     Change  
     
Investments
   $ 5,088,800     $ 4,872,320     $ (216,480 )
Notes receivable from participants
     —       216,480       216,480  
                         
            2010          
    Statement of Changes in Net Assets Available  
    for Benefits  
    As Computed     As Computed        
    Under Previous     Under     Effect of  
    Guidance     ASU 2010-25     Change  
     
Interest and dividends
   $ 41,881     $ 29,612     $ (12,269 )
Net investment income
     1,200,178       1,187,909       (12,269 )
Interest income from participant loans
     —       12,269       12,269  

16

 

Fidelity Bank 401(k) Plan
Notes to Financial Statements
December 31, 2010 and 2009
                         
            2009          
    Statement of Changes in Net Assets Available  
    for Benefits  
    As Previously             Effect of  
    Reported     As Adjusted     Change  
     
Interest and dividends
   $ 35,286     $ 24,874     $ (10,412 )
Net investment income
     276,736       266,324       (10,412 )
Interest income from participant loans
     —       10,412       10,412  
    Net assets available for benefits were not affected by the adoption of the new guidance.
Note 9: Subsequent Events
    As of June 23, 2011, the value of Dearborn Bancorp, Inc. common stock has declined approximately 34% from the value at December 31, 2010. Plan management has approved an automatic deferral feature for the Plan effective on September 1, 2011.
    Subsequent events have been evaluated through June 29, 2011, which is the date the financial statements were available to be issued.

17

 

Supplemental Schedules

 

Fidelity Bank 401(k) Plan
Employer Identification Number: 38-3127130 Plan Number: 001
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
December 31, 2010
                         
    (c)             (e)  
(a)(b)   Description of     (d)     Current  
Identity of Issuer   Investment     Cost     Value  
 
Common Stock
                        
*Dearborn Bancorp, Inc.
   290,536 shares   $ 1,261,779     $ 667,068  
 
                    
 
                        
Massachusetts Mutual Life Insurance Company
                        
*Guaranteed investment contract
     3.20 %     1,078,155       1,155,318  
 
                    
 
                        
Pooled Separate Accounts
                        
*Select Small Cap Growth Equity Fund (W&R
   349 shares     57,716       68,997  
*Select Indexed Equity Fund
   2,963 shares     277,452       306,140  
*Thornburg International Value Fund
   2,059 shares     244,146       274,313  
*Invesco Trimark Small Companies
   1,112 shares     93,680       124,471  
*Columbia Small Cap Value II Fund
   641 shares     52,598       62,608  
*Select Diversified Value Fund
   5,018 shares     552,599       544,775  
*American Funds Growth Fund of America
   8,341 shares     867,800       911,633  
*Select Strategic Bond Fund
   5,572 shares     624,511       726,747  
*Pioneer Cullen Value Fund
   876 shares     88,149       93,897  
*Premier Global
   3,901 shares     468,014       515,957  
*Prudential Jennson Mid Cap Growth Fund
   126 shares     18,252       20,186  
*T. Rowe Price Retirement Income Fund
   174 shares     16,350       19,193  
*T. Rowe Price Retirement 2010 Fund
   156 shares     14,056       16,675  
*Oakmark Equity and Income Fund
   4,696 shares     545,535       604,160  
*T. Rowe Price Retirement 2020 Fund
   1,560 shares     140,008       160,722  
*Invesco Mid Cap Core Equity Fund
   923 shares     162,258       186,117  
*T. Rowe Price Retirement 2030 Fund
   864 shares     76,841       86,462  
*T. Rowe Price Retirement 2040 Fund
   245 shares     21,540       24,426  
*T. Rowe Price Retirement 2050 Fund
   7 shares     736       797  
*Babson Premium Core Bond Fund
   486 shares     86,697       89,443  
*Perkins Mid Cap Value Fund
   174 shares     18,949       20,312  
 
                    
 
             4,427,887       4,858,031  
 
                    
 
                        
*Participant Loans
   4.25% to 8.25%     249,666       249,666  
 
                    
 
           $ 7,017,487     $ 6,930,083  
 
                    
* Party-in-interest
                        

18

 

Fidelity Bank 401(k) Plan
Employer Identification Number: 38-3127130 Plan Number: 001
Schedule H, Line 4j — Schedule of Reportable Transactions
Year Ended December 31, 2010
                                                                 
                                    (f)             (h)        
                                    Expenses             Current Value        
(a)         (c)     (d)     (e)     Incurred     (g)     of Asset on        
Identity of Party     (b)   Purchase     Selling     Lease     With     Cost of     Transaction     (i)  
Involved     Identity   Price     Price     Rental     Transaction     Asset     Date     Net Loss  
 
Issuer  
Dearborn common stock
                                                        
       
Purchases
   $ 167,377                             $ 167,377     $ 167,377          
       
Sales
           $ 333,560                       447,345       333,560     $ (113,785 )

19

 

SIGNATURES
     The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees of the Fidelity Bank 401(k) Plan have caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  FIDELITY BANK 401(K) PLAN
 		  
  By:   /s/ Jeffrey L. Karafa    
    Jeffrey L. Karafa   
Date: June 29, 2011

 

 

Exhibit Index
23.1   Consent of Independent Registered Public Accounting Firm — BKD, LLP

EX-23.1 2 k50543exv23w1.htm EX-23.1 exv23w1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 for Dearborn Bancorp, Inc. (Registration No. 333-136667) of our report dated June 29, 2011 with respect to the 2010 financial statements and supplemental schedules of Fidelity Bancorp 401(k) Plan, which report is included in the 2010 Annual Report on Form 11-K for the year ended December 31, 2010.
BKD, llp
Indianapolis, Indiana
June 29, 2011