Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20429
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2010
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-29709
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
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Pennsylvania
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23-3028464 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
271 Main Street, Harleysville, Pennsylvania 19438
(Address of principal executive offices) (Zip Code)
(215) 256-8828
(Registrants telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports), and (2) has been
subject
to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate
Web site, if any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation
S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was
required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
o Yes þ No
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date:
Common Stock, $.01 Par Value, 3,719,907 shares outstanding as of February 11, 2011
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
Index
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Financial Condition
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December 31, |
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September 30, |
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(In thousands, except share data) |
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2010 |
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2010 |
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Assets |
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|
|
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Cash and amounts due from depository institutions |
|
$ |
4,080 |
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|
$ |
4,052 |
|
Interest bearing deposits |
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21,382 |
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16,138 |
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|
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Total cash and cash equivalents |
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25,462 |
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20,190 |
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|
|
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Investments and mortgage-backed securities: |
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|
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Available for sale (amortized cost December 31, $3,241; September 30, $21,401) |
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3,358 |
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21,413 |
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Held to maturity (fair value December 31, $278,922; September 30, $264,448) |
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274,642 |
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256,088 |
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Loans receivable (net of allowance for loan
losses December 31, $2,639; September 30, $2,504) |
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504,787 |
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510,093 |
|
Accrued interest receivable |
|
|
3,029 |
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|
|
3,210 |
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Federal Home Loan Bank stock at cost |
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15,291 |
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16,096 |
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Foreclosed real estate |
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261 |
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186 |
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Office properties and equipment, net |
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12,152 |
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12,158 |
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Prepaid expenses and other assets |
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17,699 |
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|
17,706 |
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TOTAL ASSETS |
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$ |
856,681 |
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|
$ |
857,140 |
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Liabilities and Stockholders Equity |
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Liabilities: |
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Deposits |
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$ |
531,647 |
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$ |
528,100 |
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Long-term debt |
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265,347 |
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272,047 |
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Accrued interest payable |
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1,380 |
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1,407 |
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Advances from borrowers for taxes and insurance |
|
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3,349 |
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1,247 |
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Accounts payable and accrued expenses |
|
|
754 |
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|
988 |
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Total liabilities |
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802,477 |
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803,789 |
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Commitments and contingencies |
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Stockholders equity: |
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Preferred Stock: $.01 par value;
7,500,000 shares authorized; none issued |
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Common stock: $.01 par value; 15,000,000 shares authorized;
3,921,177 shares issued; outstanding December 31, 2010 3,704,940 shares
September 30, 2010 3,687,409 shares |
|
|
39 |
|
|
|
39 |
|
Additional paid-in capital |
|
|
8,154 |
|
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|
8,126 |
|
Treasury stock, at cost (December 31, 2010, 216,237 shares; September 30, 2010, 233,768 shares) |
|
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(3,143 |
) |
|
|
(3,383 |
) |
Retained earnings partially restricted |
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49,077 |
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|
48,562 |
|
Accumulated other comprehensive income |
|
|
77 |
|
|
|
7 |
|
|
|
|
|
|
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Total stockholders equity |
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54,204 |
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53,351 |
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
|
$ |
856,681 |
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$ |
857,140 |
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|
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See notes to unaudited consolidated financial statements.
page -1-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Income
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For the Three Months Ended |
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December 30, |
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(In thousands, except per share data) |
|
2010 |
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2009 |
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Interest Income: |
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Interest on mortgage loans |
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$ |
4,804 |
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$ |
5,084 |
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Interest on commercial loans |
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1,236 |
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|
938 |
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Interest on mortgage-backed securities |
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1,405 |
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1,905 |
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Interest on consumer and other loans |
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1,052 |
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1,137 |
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Interest on other taxable investments |
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|
731 |
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|
909 |
|
Interest on tax-exempt investments |
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201 |
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282 |
|
Dividends on investment securities |
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1 |
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1 |
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Total interest income |
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9,430 |
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10,256 |
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Interest Expense: |
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Interest on deposits |
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2,018 |
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2,535 |
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Interest on borrowings |
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2,957 |
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|
3,334 |
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Total interest expense |
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4,975 |
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5,869 |
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|
|
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Net Interest Income |
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4,455 |
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|
4,387 |
|
Provision for loan losses |
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150 |
|
|
|
150 |
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|
|
|
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Net Interest Income after Provision for Loan Losses |
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|
4,305 |
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|
|
4,237 |
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Other Income: |
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Customer service fees |
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138 |
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|
161 |
|
Income on bank-owned life insurance |
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123 |
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122 |
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Other income |
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240 |
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219 |
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Total other income |
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501 |
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|
502 |
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Other Expenses: |
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Salaries and employee benefits |
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1,729 |
|
|
|
1,669 |
|
Occupancy and equipment |
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346 |
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|
294 |
|
Deposit insurance premiums |
|
|
226 |
|
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|
227 |
|
Data processing |
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|
167 |
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|
152 |
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Other |
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693 |
|
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|
728 |
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|
Total other expenses |
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3,161 |
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|
3,070 |
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Income before Income Taxes |
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1,645 |
|
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|
1,669 |
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|
|
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Income tax expense |
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429 |
|
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|
455 |
|
|
|
|
|
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|
|
|
|
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Net Income |
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$ |
1,216 |
|
|
$ |
1,214 |
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|
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Basic Earnings Per Share |
|
$ |
0.33 |
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|
$ |
0.33 |
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|
Diluted Earnings Per Share |
|
$ |
0.33 |
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|
$ |
0.33 |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
Dividends Per Share |
|
$ |
0.19 |
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|
$ |
0.19 |
|
|
|
|
|
|
|
|
See notes to unaudited consolidated financial statements.
page -2-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Comprehensive Income
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Three Months Ended |
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|
December 31, |
|
(In thousands) |
|
2010 |
|
|
2009 |
|
Net Income |
|
$ |
1,216 |
|
|
$ |
1,214 |
|
|
Other Comprehensive Income |
|
|
|
|
|
|
|
|
|
Unrealized (loss) gain on securities available for sale, net of tax (benefit)
expense 2010, $35; 2009, $1 and reclassifications |
|
|
70 |
(1) |
|
|
1 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income |
|
$ |
1,286 |
|
|
$ |
1,215 |
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
(1) Disclosure of reclassification amount, net of tax for the three months ended: |
|
|
|
|
|
|
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|
Net unrealized (loss) gain arising during the three months ended |
|
$ |
105 |
|
|
$ |
2 |
|
Reclassification adjustment for net losses (gains) included in net income |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105 |
|
|
|
2 |
|
Tax benefit (expense) |
|
|
(35 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
|
Net unrealized (loss) gain on securities available for sale |
|
$ |
70 |
|
|
$ |
1 |
|
|
|
|
|
|
|
|
See notes to unaudited consolidated financial statements.
page -3-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Stockholders Equity
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|
|
|
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|
|
|
|
|
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|
Common |
|
|
|
|
|
|
|
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|
Retained |
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
Additional |
|
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Earnings- |
|
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Other |
|
|
|
|
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|
Total |
|
|
|
Shares |
|
|
Common |
|
|
Paid-in |
|
|
Partially |
|
|
Comprehensive |
|
|
Treasury |
|
|
Stockholders |
|
(In thousands, except share and per share data) |
|
Outstanding |
|
|
Stock |
|
|
Capital |
|
|
Restricted |
|
|
(Loss) / Income |
|
|
Stock |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 1, 2010 |
|
|
3,687,409 |
|
|
$ |
39 |
|
|
$ |
8,126 |
|
|
$ |
48,562 |
|
|
$ |
7 |
|
|
$ |
(3,383 |
) |
|
$ |
53,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,216 |
|
|
|
|
|
|
|
|
|
|
|
1,216 |
|
Dividends $.19 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(701 |
) |
|
|
|
|
|
|
|
|
|
|
(701 |
) |
Stock option compensation |
|
|
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47 |
|
Treasury stock delivered under reinvestment plan |
|
|
9,913 |
|
|
|
|
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
136 |
|
|
|
149 |
|
Employee options exercised |
|
|
7,618 |
|
|
|
|
|
|
|
(32 |
) |
|
|
|
|
|
|
|
|
|
|
104 |
|
|
|
72 |
|
Change in unrealized holding gain on
available-for-sale securities, net of
reclassification and tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70 |
|
|
|
|
|
|
|
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010 |
|
|
3,704,940 |
|
|
$ |
39 |
|
|
$ |
8,154 |
|
|
$ |
49,077 |
|
|
$ |
77 |
|
|
$ |
(3,143 |
) |
|
$ |
54,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
|
|
|
Retained |
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
Additional |
|
|
Earnings- |
|
|
Other |
|
|
|
|
|
|
Total |
|
|
|
Shares |
|
|
Common |
|
|
Paid-in |
|
|
Partially |
|
|
Comprehensive |
|
|
Treasury |
|
|
Stockholders |
|
(In thousands, except share and per share data) |
|
Outstanding |
|
|
Stock |
|
|
Capital |
|
|
Restricted |
|
|
(Loss) / Income |
|
|
Stock |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 1, 2009 |
|
|
3,627,696 |
|
|
$ |
39 |
|
|
$ |
8,002 |
|
|
$ |
46,329 |
|
|
$ |
(29 |
) |
|
$ |
(4,202 |
) |
|
$ |
50,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,214 |
|
|
|
|
|
|
|
|
|
|
|
1,214 |
|
Dividends $.19 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(689 |
) |
|
|
|
|
|
|
|
|
|
|
(689 |
) |
Stock option compensation |
|
|
|
|
|
|
|
|
|
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35 |
|
Treasury stock delivered under reinvestment plan |
|
|
10,509 |
|
|
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
144 |
|
|
|
139 |
|
Employee options exercised |
|
|
7,083 |
|
|
|
|
|
|
|
(33 |
) |
|
|
|
|
|
|
|
|
|
|
97 |
|
|
|
64 |
|
Change in unrealized holding loss
on available-for-sale securities, net of
reclassification and tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
|
3,645,288 |
|
|
$ |
39 |
|
|
$ |
7,999 |
|
|
$ |
46,854 |
|
|
$ |
(27 |
) |
|
$ |
(3,961 |
) |
|
$ |
50,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited consolidated financial statements.
page -4-
Harleysville Savings Financial Corporation
Unaudited Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
(In thousands) |
|
2010 |
|
|
2009 |
|
Operating Activities: |
|
|
|
|
|
|
|
|
Net Income |
|
$ |
1,216 |
|
|
$ |
1,214 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
153 |
|
|
|
124 |
|
Provision for loan losses |
|
|
150 |
|
|
|
150 |
|
Loss on sale of foreclosed real estate |
|
|
|
|
|
|
159 |
|
Amortization of deferred loan fees |
|
|
73 |
|
|
|
17 |
|
Net (accretion) amortization of premiums and discounts |
|
|
(27 |
) |
|
|
32 |
|
Increase in cash surrender value of bank owned life insurance |
|
|
(123 |
) |
|
|
(122 |
) |
Compensation charge on stock options |
|
|
47 |
|
|
|
35 |
|
Changes in assets and liabilities which provided (used) cash: |
|
|
|
|
|
|
|
|
Decrease in accounts payable and accrued expenses |
|
|
(234 |
) |
|
|
(626 |
) |
Decrease (increase) in prepaid expenses and other assets |
|
|
130 |
|
|
|
(2,398 |
) |
Increase (decrease) in accrued interest receivable |
|
|
181 |
|
|
|
(22 |
) |
Decrease in accrued interest payable |
|
|
(27 |
) |
|
|
(48 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
1,539 |
|
|
|
(1,485 |
) |
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
Purchase of mortgage-backed securities held to maturity |
|
|
(8,958 |
) |
|
|
(1,571 |
) |
Purchase of investment securities held to maturity |
|
|
(34,000 |
) |
|
|
(19,000 |
) |
Purchase of investment securities available-for-sale |
|
|
(17,220 |
) |
|
|
(17,838 |
) |
Redemption of FHLB stock |
|
|
805 |
|
|
|
|
|
Proceeds from the sale of investment securities available-for-sale |
|
|
35,345 |
|
|
|
16,389 |
|
Proceeds from maturities of investment securities held to maturity |
|
|
11,000 |
|
|
|
17,075 |
|
Proceeds from sale of foreclosed real estate |
|
|
|
|
|
|
588 |
|
Principal collected on mortgage-backed securities held to maturity |
|
|
13,431 |
|
|
|
10,432 |
|
Principal collected on loans receivable |
|
|
34,477 |
|
|
|
29,361 |
|
Loans originated or acquired |
|
|
(29,469 |
) |
|
|
(34,858 |
) |
Purchases of premises and equipment |
|
|
(147 |
) |
|
|
(961 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
5,264 |
|
|
|
(383 |
) |
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
Net increase in demand deposits, NOW accounts
and savings accounts |
|
|
4,367 |
|
|
|
21,790 |
|
Net decrease in certificates of deposit |
|
|
(820 |
) |
|
|
(2,050 |
) |
Cash dividends |
|
|
(552 |
) |
|
|
(549 |
) |
Repayment of long-term debt |
|
|
(6,700 |
) |
|
|
(11,905 |
) |
Treasury stock delivered under employee stock plans |
|
|
72 |
|
|
|
64 |
|
Net increase in advances from borrowers for taxes and insurance |
|
|
2,102 |
|
|
|
1,961 |
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(1,531 |
) |
|
|
9,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
5,272 |
|
|
|
7,443 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
|
|
20,190 |
|
|
|
9,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR |
|
$ |
25,462 |
|
|
$ |
16,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest (credited and paid) |
|
$ |
5,002 |
|
|
$ |
5,917 |
|
Income taxes |
|
|
490 |
|
|
|
450 |
|
Non cash transfer of loans to real estate owned |
|
|
75 |
|
|
|
|
|
See notes to consolidated financial statements.
page -5-
Harleysville Savings Financial Corporation
Notes to Unaudited Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation The unaudited consolidated financial statements include the accounts of
Harleysville Savings Financial Corporation (the Company) and its subsidiary. Harleysville
Savings Bank (the Bank) is the wholly owned subsidiary of the Company. The accompanying
consolidated financial statements include the accounts of the Company, the Bank, and the Banks
wholly owned subsidiaries, HSB Inc, a Delaware corporation which was formed in order to hold
certain assets, Freedom Financial LLC that allows the Company to offer non deposit products and
HARL LLC that allows the Bank to invest in equity investments. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with
the instructions for Form 10-Q and therefore do not include information or footnotes necessary for
a complete presentation of financial condition, results of operations and cash flows in conformity
with accounting principles generally accepted in the United States of America. However, all
adjustments (consisting only of normal recurring adjustments) which, in the opinion of management,
are necessary for a fair presentation of the consolidated financial statements have been included.
The results of operations for the three months ended December 31, 2010 are not necessarily
indicative of the results which may be expected for the entire fiscal year ending September 30,
2011 or any other period. The financial information should be read in conjunction with the
Companys Annual Report on Form 10-K for the period ended September 30, 2010.
Use of Estimates in Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of income
and expenses during the reporting period. The most significant of these estimates is the allowance
for loan losses, the determination of other-than-temporary impairment on securities and the
valuation of deferred tax assets. Actual results could differ from those estimates.
Reclassifications
Certain amounts in the prior periods financial statements have been reclassified to conform with
the current years classifications. The reclassifications had no effect on net income.
Subsequent Events
The Company has evaluated events and transactions occurring subsequent to the balance sheet date of
December 31, 2010 for items that should potentially be recognized or disclosed in these financial
statements. The evaluation was conducted through the date these financial statements were issued.
page -6-
Recent Accounting Pronouncements In October 2009, the FASB issued Accounting Standards Update
(ASU) 2009-16, Transfers and Servicing (Topic 860) Accounting for Transfers of Financial Assets.
This Update amends the Accounting Standards (Codification) for the issuance of FASB Statement No.
166, Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140. The
amendments in this Update improve financial reporting by eliminating the exceptions for qualifying
special-purpose entities from the consolidation guidance and the exception that permitted sale
accounting for certain mortgage securitizations when a transferor has not surrendered control over
the transferred financial assets. In addition, the amendments require enhanced disclosures about
the risks that a transferor continues to be exposed to because of its continuing involvement in
transferred financial assets. Comparability and consistency in accounting for transferred
financial assets will also be improved through clarifications of the requirements for isolation and
limitations on portions of financial assets that are eligible for sale accounting. This Update is
effective at the start of a reporting entitys first fiscal year beginning after November 15, 2009.
The adoption of this new guidance did not have an impact on our financial position or result of
operations.
In October 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities. This Update amends
the Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No.
46(R). The amendments in this Update replace the quantitative-based risks and rewards calculation
for determining which reporting entity, if any, has a controlling financial interest in a variable
interest entity with an approach focused on identifying which reporting entity has the power to
direct the activities of a variable interest entity that most significantly impact the entitys
economic performance and (1) the obligation to absorb losses of the entity or (2) the right to
receive benefits from the entity. An approach that is expected to be primarily qualitative will be
more effective for identifying which reporting entity has a controlling financial interest in a
variable interest entity. The amendments in this Update also require additional disclosures about
a reporting entitys involvement in variable interest entities, which will enhance the information
provided to users of financial statements. This Update is effective at the start of a reporting
entitys first fiscal year beginning after November 15, 2009. The adoption of this new guidance
did not have an impact on our financial position or result of operations.
The FASB has issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements. This ASU requires some new disclosures and clarifies
some existing disclosure requirements about fair value measurement as set forth in Codification
Subtopic 820-10. The FASBs objective is to improve these disclosures and, thus, increase the
transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10
to now require:
|
|
|
A reporting entity to disclose separately the amounts of significant transfers in and
out of Level 1 and Level 2 fair value measurements and describe the reasons for the
transfers; and |
|
|
|
In the reconciliation for fair value measurements using significant unobservable
inputs, a reporting entity should present separately information about purchases, sales,
issuances, and settlements. |
page -7-
In addition, ASU 2010-06 clarifies the requirements of the following existing disclosures:
|
|
|
For purposes of reporting fair value measurement for each class of assets and
liabilities, a reporting entity needs to use judgment in determining the appropriate
classes of assets and liabilities; and |
|
|
|
A reporting entity should provide disclosures about the valuation techniques and inputs
used to measure fair value for both recurring and nonrecurring fair value measurements. |
ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15,
2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal
years beginning after December 15, 2010, and for interim periods within those fiscal years. Early
adoption is permitted. The adoption of this standard did not have an impact on our financial
position or results of operations.
ASU 2010-18, Receivables (Topic 310): Effect of a Loan Modification When the Loan Is Part of a Pool
That Is Accounted for as a Single Asset, codifies the consensus reached in EITF Issue No. 09-I,
Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single
Asset. The amendments to the Codification provide that modifications of loans that are accounted
for within a pool under Subtopic 310-30 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. An entity will continue to be required to consider whether the pool of assets in
which the loan is included is impaired if expected cash flows for the pool change. ASU 2010-18 does
not affect the accounting for loans under the scope of Subtopic 310-30 that are not accounted for
within pools. Loans accounted for individually under Subtopic 310-30 continue to be subject to the
troubled debt restructuring accounting provisions within Subtopic 310-40.
ASU 2010-18 is effective prospectively for modifications of loans accounted for within pools under
Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010.
Early application is permitted. Upon initial adoption of ASU 2010-18, an entity may make a one-time
election to terminate accounting for loans as a pool under Subtopic 310-30. This election may be
applied on a pool-by-pool basis and does not preclude an entity from applying pool accounting to
subsequent acquisitions of loans with credit deterioration. The adoption of this new guidance did
not have an impact on our financial position and results of operations.
ASU 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables
and the Allowance for Credit Losses, will help investors assess the credit risk of a companys
receivables portfolio and the adequacy of its allowance for credit losses held against the
portfolios by expanding credit risk disclosures.
This ASU requires more information about the credit quality of financing receivables in the
disclosures to financial statements, such as aging information and credit quality indicators. Both
new and existing disclosures must be disaggregated by portfolio segment or class. The
disaggregation of information is based on how a company develops its allowance for credit losses
and how it manages its credit exposure.
page -8-
The amendments in this update apply to all public and nonpublic entities with financing
receivables. Financing receivables include loans and trade accounts receivable. However,
short-term trade accounts receivable, receivables measured at fair value or lower of cost or fair
value, and debt securities are exempt from these disclosure amendments.
The effective date of ASU 2010-20 differs for public and nonpublic companies. For public
companies, the amendments that require disclosures as of the end of a reporting period are
effective for periods ending on or after December 15, 2010. The amendments that require
disclosures about activity that occurs during a reporting period are effective for periods
beginning on or after December 15, 2010. For nonpublic companies, the amendments are effective for
annual reporting periods ending on or after December 15, 2011. The Company has provided the
required credit quality disclosures as of the end of this reporting period December 31, 2010.
ASU 2011 01 Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in
Update No. 2010-20. The amendments in this Update temporarily delay the effective date of the
disclosures about troubled debt restructurings in Update 2010-20 for public entities. Under the
existing effective date in Update 2010-20, public-entity creditors would have provided disclosures
about troubled debt restructurings for periods beginning on or after December 15, 2010. The delay
is intended to allow the Board time to complete its deliberations on what constitutes a troubled
debt restructuring. The effective date of the new disclosures about troubled debt restructurings
for public entities and the guidance for determining what constitutes a troubled debt restructuring
will then be coordinated. Currently, that guidance is anticipated to be effective for interim and
annual periods ending after June 15, 2011. The Company is continuing to evaluate the impact that
the adoption of this new guidance will have on our financial statement disclosures.
page -9-
2. INVESTMENT AND MORTGAGE-BACKED SECURITIES
The amortized cost and fair value of the Companys securities gross unrealized gains and losses, as
of December 31, 2010 and September 30, 2010 are as follows:
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gain |
|
|
Losses |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
$ |
355 |
|
|
$ |
82 |
|
|
$ |
(18 |
) |
|
$ |
419 |
|
Collateralized mortgage obligations |
|
|
785 |
|
|
|
53 |
|
|
|
|
|
|
|
838 |
|
U.S. Government money market funds |
|
|
2,101 |
|
|
|
|
|
|
|
|
|
|
|
2,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Available for Sale Securities |
|
$ |
3,241 |
|
|
$ |
135 |
|
|
$ |
(18 |
) |
|
$ |
3,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gain |
|
|
Losses |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
$ |
355 |
|
|
$ |
42 |
|
|
$ |
(54 |
) |
|
$ |
343 |
|
Collateralized mortgage obligations |
|
|
785 |
|
|
|
24 |
|
|
|
|
|
|
|
809 |
|
U.S. Government money market funds |
|
|
20,261 |
|
|
|
|
|
|
|
|
|
|
|
20,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Available for Sale Securities |
|
$ |
21,401 |
|
|
$ |
66 |
|
|
$ |
(54 |
) |
|
$ |
21,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gain |
|
|
Losses |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities- U.S. Government
Sponsored Enterpirses (GSES) |
|
$ |
99,763 |
|
|
$ |
6,076 |
|
|
$ |
|
|
|
$ |
105,839 |
|
Collateralized mortgage obligations |
|
|
26,587 |
|
|
|
210 |
|
|
|
(95 |
) |
|
|
26,702 |
|
Municipal Bonds |
|
|
16,486 |
|
|
|
455 |
|
|
|
(187 |
) |
|
|
16,754 |
|
U.S. Government Agencies |
|
|
131,806 |
|
|
|
326 |
|
|
|
(2,505 |
) |
|
|
129,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment and Mortgage-backed Securities |
|
$ |
274,642 |
|
|
$ |
7,067 |
|
|
$ |
(2,787 |
) |
|
$ |
278,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
(In Thousands) |
|
Cost |
|
|
Gain |
|
|
Losses |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities- U.S. Government
Sponsored Enterpirses (GSES) |
|
$ |
110,732 |
|
|
$ |
6,755 |
|
|
$ |
|
|
|
$ |
117,487 |
|
Collateralized mortgage obligations |
|
|
20,087 |
|
|
|
193 |
|
|
|
(37 |
) |
|
|
20,243 |
|
Municipal Bonds |
|
|
16,462 |
|
|
|
773 |
|
|
|
(47 |
) |
|
|
17,188 |
|
U.S. Government Agencies |
|
|
108,807 |
|
|
|
768 |
|
|
|
(45 |
) |
|
|
109,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment and Mortgage-backed Securities |
|
$ |
256,088 |
|
|
$ |
8,489 |
|
|
$ |
(129 |
) |
|
$ |
264,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
page -10-
A summary of securities with unrealized losses, aggregated by category, at December 31, 2010 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months |
|
|
12 months of longer |
|
|
Total |
|
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
Collateralized mortgage obligations |
|
$ |
5,873 |
|
|
$ |
(76 |
) |
|
$ |
1,421 |
|
|
$ |
(19 |
) |
|
$ |
7,294 |
|
|
$ |
(95 |
) |
Municipal bonds |
|
|
1,807 |
|
|
|
(49 |
) |
|
|
1,400 |
|
|
|
(138 |
) |
|
|
3,207 |
|
|
|
(187 |
) |
U.S. Government Agencies |
|
|
83,881 |
|
|
|
(2,505 |
) |
|
|
|
|
|
|
|
|
|
|
83,881 |
|
|
|
(2,505 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal, debt securities |
|
|
91,561 |
|
|
|
(2,630 |
) |
|
|
2,821 |
|
|
|
(157 |
) |
|
|
94,382 |
|
|
|
(2,787 |
) |
Equity securities |
|
|
|
|
|
|
|
|
|
|
193 |
|
|
|
(18 |
) |
|
|
193 |
|
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities |
|
$ |
91,561 |
|
|
$ |
(2,630 |
) |
|
$ |
3,014 |
|
|
$ |
(175 |
) |
|
$ |
94,575 |
|
|
$ |
(2,805 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010, debt securities in a gross unrealized loss position consisted of 37
securities that at such date had an aggregate depreciation of 2.87% from the Companys amortized
cost basis. Management believes that the estimated fair value of the securities disclosed above is
primarily dependent upon the movement in market interest rates. Management evaluated the length of
time and the extent to which the fair value has been less than cost; the financial condition and
near term prospects of the issuer, including any specific events which may influence the operations
of the issuer. The Company has the ability and intent to hold these securities until maturity and
the Company does not believe it will be required to sell such securities prior to the recovery of
the amortized cost basis. Management does not believe any individual unrealized loss as of
December 31, 2010 represents an other-than-temporary impairment.
As of December 31, 2010, there were two equity securities in an unrealized loss position.
Management evaluated the length of time and the extent to which the market value has been less than
cost; the financial condition and near term prospects of the issuer, including any specific events
which may influence the operations of the issuer such as changes in technology that may impair the
earnings potential of the investment or the discontinuance of a segment of the business that may
effect the future earnings potential. The Company has the ability and intent to hold these
securities until the anticipated recovery of fair value occurs. Management does not believe any
individual unrealized loss of December 31, 2010 represents an other-than-temporary impairment.
A summary of securities with unrealized losses, aggregated by category, at September 30, 2010 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months |
|
|
12 months of longer |
|
|
Total |
|
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
Collateralized mortgage obligations |
|
$ |
8,262 |
|
|
$ |
(4 |
) |
|
$ |
1,530 |
|
|
$ |
(33 |
) |
|
$ |
9,792 |
|
|
$ |
(37 |
) |
Municipal bonds |
|
|
378 |
|
|
|
|
|
|
|
1,494 |
|
|
|
(47 |
) |
|
|
1,872 |
|
|
|
(47 |
) |
U.S. Government Agencies |
|
|
6,955 |
|
|
|
(45 |
) |
|
|
|
|
|
|
|
|
|
|
6,955 |
|
|
|
(45 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal, debt securities |
|
|
15,595 |
|
|
|
(49 |
) |
|
|
3,024 |
|
|
|
(80 |
) |
|
|
18,619 |
|
|
|
(129 |
) |
Equity securities |
|
|
55 |
|
|
|
(3 |
) |
|
|
160 |
|
|
|
(51 |
) |
|
|
215 |
|
|
|
(54 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities |
|
$ |
15,650 |
|
|
$ |
(52 |
) |
|
$ |
3,184 |
|
|
$ |
(131 |
) |
|
$ |
18,834 |
|
|
$ |
(183 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth the stated maturities of the investment and mortgage-backed
securities at December 31, 2010. Money market funds and equity securities are not included in the
table based on lack of maturity.
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
Amortized |
|
|
Estimated |
|
(In Thousands) |
|
Cost |
|
|
Fair Value |
|
Available for sale: |
|
|
|
|
|
|
|
|
Due in one year or less |
|
$ |
|
|
|
$ |
|
|
Due after one year through five years |
|
|
|
|
|
|
|
|
Due after five years through ten years |
|
|
|
|
|
|
|
|
Due after ten years |
|
|
785 |
|
|
|
838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
785 |
|
|
$ |
838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity: |
|
|
|
|
|
|
|
|
Due in one year or less |
|
$ |
17,101 |
|
|
$ |
17,158 |
|
Due after one year through five years |
|
|
22,196 |
|
|
|
22,795 |
|
Due after five years through ten years |
|
|
48,657 |
|
|
|
50,143 |
|
Due after ten years |
|
|
186,688 |
|
|
|
188,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
274,642 |
|
|
$ |
278,922 |
|
|
|
|
|
|
|
|
Certain of the Companys investment securities, totaling $9.6 million and $10.3 at December
31, 2010 and September 30, 2010, respectively, were pledged as collateral to secure deposit sweep
accounts and public deposits as required or permitted by law.
page -11-
3. LOANS RECEIVABLE
Loans receivable consist of the following:
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
December 31, 2010 |
|
|
September 30, 2010 |
|
Residential Mortgages |
|
$ |
330,840 |
|
|
$ |
337,888 |
|
Construction |
|
|
5,420 |
|
|
|
4,752 |
|
Lot Loans |
|
|
2,058 |
|
|
|
1,986 |
|
Home Equity |
|
|
88,927 |
|
|
|
90,511 |
|
Commercial Mortgages |
|
|
78,622 |
|
|
|
75,450 |
|
Commercial Business Loans |
|
|
6,598 |
|
|
|
4,327 |
|
Consumer Non-Real Estate |
|
|
1,200 |
|
|
|
1,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
513,665 |
|
|
|
516,894 |
|
Undisbursed portion of loans in process |
|
|
(5,321 |
) |
|
|
(3,426 |
) |
Deferred loan fees |
|
|
(918 |
) |
|
|
(871 |
) |
Allowance for loan losses |
|
|
(2,639 |
) |
|
|
(2,504 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable net |
|
$ |
504,787 |
|
|
$ |
510,093 |
|
|
|
|
|
|
|
|
The total amount of loans being serviced for the benefit of others was approximately
$1,747,000 and $1,762,000 at December 31, 2010 and September 30, 2010, respectively.
The following table presents the classes of the loan portfolio summarized by the aggregate pass
rating and the classified ratings of special mention, substandard and doubtful within the Companys
internal risk rating system as of December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass |
|
|
Special Mention |
|
|
Substandard |
|
|
Doubtful |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
328,225 |
|
|
$ |
|
|
|
$ |
1,974 |
|
|
$ |
641 |
|
|
$ |
330,840 |
|
Construction |
|
|
5,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,420 |
|
Lot Loans |
|
|
2,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,058 |
|
Home Equity |
|
|
88,759 |
|
|
|
|
|
|
|
103 |
|
|
|
65 |
|
|
|
88,927 |
|
Commercial Mortgages |
|
|
76,096 |
|
|
|
2,214 |
|
|
|
|
|
|
|
312 |
|
|
|
78,622 |
|
Commercial Business Loans |
|
|
6,498 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
6,598 |
|
Consumer Non-Real Estate |
|
|
1,194 |
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
1,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
508,250 |
|
|
$ |
2,314 |
|
|
$ |
2,077 |
|
|
$ |
1,024 |
|
|
$ |
513,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes information in regards to impaired loans by loan portfolio
class as of December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded |
|
|
Unpaid Principal |
|
|
|
|
|
|
Average Recorded |
|
|
Interest Income |
|
|
|
Investment |
|
|
Balance |
|
|
Related Allowance |
|
|
Investment |
|
|
Recognized |
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
1,047 |
|
|
$ |
1,047 |
|
|
$ |
|
|
|
$ |
1,050 |
|
|
$ |
10 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
65 |
|
|
|
65 |
|
|
|
|
|
|
|
65 |
|
|
|
|
|
Commercial Mortgages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
1,568 |
|
|
$ |
1,568 |
|
|
$ |
(269 |
) |
|
$ |
1,568 |
|
|
$ |
2 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Equity |
|
|
103 |
|
|
|
103 |
|
|
|
(103 |
) |
|
|
104 |
|
|
|
|
|
Commercial Mortgages |
|
|
312 |
|
|
|
312 |
|
|
|
(127 |
) |
|
|
312 |
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Real Estate |
|
|
6 |
|
|
|
6 |
|
|
|
(6 |
) |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgages |
|
$ |
2,615 |
|
|
$ |
2,615 |
|
|
$ |
(269 |
) |
|
$ |
2,618 |
|
|
$ |
12 |
|
Construction |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Lot Loans |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Home Equity |
|
$ |
168 |
|
|
$ |
168 |
|
|
$ |
(103 |
) |
|
$ |
169 |
|
|
$ |
|
|
Commercial Mortgages |
|
$ |
312 |
|
|
$ |
312 |
|
|
$ |
(127 |
) |
|
$ |
312 |
|
|
$ |
|
|
Commercial Business Loans |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Consumer Non-Real Estate |
|
$ |
6 |
|
|
$ |
6 |
|
|
$ |
(6 |
) |
|
$ |
6 |
|
|
$ |
|
|
page -12-
The loans receivable portfolio is segmented into consumer and commercial loans. Consumer
loans consist of the following classes: residential mortgage loans, construction loans, home equity
loans and other consumer loans. Commercial loans consist of the following classes: commercial
mortgages and commercial business loans. For all classes of loans receivable, the accrual of
interest is discontinued when the contractual payment of principal or interest has become 90 days
past due or management has serious doubts about further collectability of principal or interest,
even though the loan is currently performing. A loan may remain on accrual status if it is in the
process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual
status, unpaid interest credited to income in the current year is reversed and unpaid interest
accrued in prior years is charged against the allowance for loan losses. Interest received on
nonaccrual loans including impaired loans generally is either applied against principal or reported
as interest income, according to managements judgment as to the collectability of principal.
Generally, loans are restored to accrual status when the obligation is brought current, has
performed in accordance with the contractual terms for a reasonable period of time (generally six
months) and the ultimate collectability of the total contractual principal and interest is no
longer in doubt. The past due status of all classes of loans receivable is determined based on
contractual due dates for loan payments.
The allowance for credit losses consists of the allowance for loan losses and the reserve for
unfunded lending commitments. The allowance for loan losses represents managements estimate of
losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction
to loans. The reserve for unfunded lending commitments represents managements estimate of losses
inherent in its unfunded loan commitments and is recorded in other liabilities on the consolidated
balance sheet. The allowance for credit losses is increased by the provision for loan losses, and
decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against
the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.
All, or part, of the principal balance of loans receivable are charged off to the allowance as soon
as it is determined that the repayment of all, or part, of the principal balance is highly
unlikely. Because all identified losses are immediately charged off, no portion of the allowance
for loan losses is restricted to any individual loan or groups of loans, and the entire allowance
is available to absorb any and all loan losses.
The allowance for credit losses is maintained at a level considered adequate to provide for losses
that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of
the allowance. The allowance is based on the Companys past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may affect the borrowers ability to
repay, the estimated value of any underlying collateral, composition of the loan portfolio, current
economic conditions and other relevant factors. This evaluation is inherently subjective as it
requires material estimates that may be susceptible to significant revision as more information
becomes available.
The allowance consists of specific, general and unallocated components. The specific component
relates to loans that are classified as impaired. For loans that are classified as impaired, an
allowance is established when the discounted cash flows (or collateral value or observable market
price) of the impaired loan is lower than the carrying value of that loan. The general component
covers pools of loans by loan class. These pools of loans are evaluated for loss exposure based
upon historical loss rates for each of these categories of loans, adjusted for qualitative factors.
These significant factors may include changes in lending policies and procedures, changes in
existing general economic and business conditions affecting our primary lending areas, credit
quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio,
recent loss experience in particular segments of the portfolio, duration of the current business
cycle and bank regulatory examination results. The applied loss factors are reevaluated quarterly
to ensure their relevance in the current economic environment.
Residential mortgage lending generally entails a lower risk of default than other types of lending.
Consumer loans and commercial real estate loans generally involve more risk of collectability
because of the type and nature of the collateral and, in certain cases, the absence of collateral.
It is the Companys policy to establish specific reserves for losses on delinquent consumer loans and commercial loans
when it determines that losses are probable.
page -13-
An unallocated component is maintained to cover uncertainties that could affect managements
estimate of probable losses. The unallocated component of the allowance reflects the margin of
imprecision inherent in the underlying assumptions used in the methodologies for estimating
specific and general losses in the portfolio.
A loan is considered impaired when, based on current information and events, it is probable that
the Company will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in
determining impairment include payment status, collateral value and the probability of collecting
scheduled principal and interest payments when due. Loans that experience insignificant payment
delays and payment shortfalls generally are not classified as impaired. Management determines the
significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length
of the delay, the reasons for the delay, the borrowers prior payment record and the amount of the
shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan
basis for commercial mortgage and commercial business loans by either the present value of expected
future cash flows discounted at the loans effective interest rate or the fair value of the
collateral if the loan is collateral dependent.
An allowance for loan losses is established for an impaired loan if its carrying value exceeds its
estimated fair value. The estimated fair values of substantially all of the Companys impaired
loans are measured based on the estimated fair value of the loans collateral.
For residential mortgage loans, home equity loans and commercial loans secured by real estate,
estimated fair values are determined primarily through third-party appraisals. When a real estate
secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal
of the real estate is necessary. This decision is based on various considerations, including the
age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the
condition of the property. Appraised values are discounted to arrive at the estimated selling price
of the collateral, which is considered to be the estimated fair value. The discounts also include
estimated costs to sell the property.
For commercial business loans secured by non-real estate collateral, such as accounts receivable,
inventory and equipment, estimated fair values are determined based on the borrowers financial
statements, inventory reports, accounts receivable aging or equipment appraisals or invoices.
Indications of value from these sources are generally discounted based on the age of the financial
information or the quality of the assets.
The allowance calculation methodology includes further segregation of loan classes into risk rating
categories. The borrowers overall financial condition, repayment sources, guarantors and value of
collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies
arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk
ratings include regulatory classifications of special mention, substandard, doubtful and loss.
Loans criticized special mention have potential weaknesses that deserve managements close
attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment
prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize
the liquidation of the debt. They include loans that are inadequately protected by the current
sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans
classified doubtful have all the weaknesses inherent in loans classified substandard with the added
characteristic that collection or liquidation in full, on the basis of current conditions and
facts, is highly improbable. Loans classified as a loss are considered uncollectible and are
charged to the allowance for loan losses. Loan not classified are rated pass. In addition, Federal
regulatory agencies, as an integral part of their examination process, periodically review the
Companys allowance for loan losses and may require the Company to recognize additions to the
allowance based on their judgments about information available to them at the time of their
examination, which may not be currently available to management. Based on managements
comprehensive analysis of the loan portfolio, management believes the current level of the
allowance for loan losses is adequate.
page -14-
The performance and credit quality of the loan porfolio is also monitored by the analyzing the age
of the loans receivable as determined by the length of time a recorded payment is past due. The
following table presents the classes of the loan portfolio summarized by the past due status as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable > |
|
|
|
30-89 Days |
|
|
Greater than |
|
|
|
|
|
|
|
|
|
|
Total Loans |
|
|
90 Days and |
|
|
|
Past Due |
|
|
90 Days |
|
|
Total Past Due |
|
|
Current |
|
|
Receivables |
|
|
Accruing |
|
Residential Mortgages |
|
$ |
2,691 |
|
|
$ |
2,447 |
|
|
$ |
5,138 |
|
|
$ |
325,702 |
|
|
$ |
330,840 |
|
|
$ |
380 |
|
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,420 |
|
|
|
5,420 |
|
|
|
|
|
Lot Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,058 |
|
|
|
2,058 |
|
|
|
|
|
Home Equity |
|
|
57 |
|
|
|
12 |
|
|
|
69 |
|
|
|
88,858 |
|
|
|
88,927 |
|
|
|
12 |
|
Commercial Mortgages |
|
|
|
|
|
|
312 |
|
|
|
312 |
|
|
|
78,310 |
|
|
|
78,622 |
|
|
|
|
|
Commercial Business Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,598 |
|
|
|
6,598 |
|
|
|
|
|
Consumer Non-Real Estate |
|
|
31 |
|
|
|
6 |
|
|
|
37 |
|
|
|
1,163 |
|
|
|
1,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,779 |
|
|
$ |
2,777 |
|
|
$ |
5,556 |
|
|
$ |
508,109 |
|
|
$ |
513,665 |
|
|
$ |
392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents nonaccrual loans by classes of the loan portfolio as of December
31, 2010:
|
|
|
|
|
|
|
2010 |
|
Residential Mortgages |
|
$ |
2,392 |
|
Construction |
|
|
|
|
Lot Loans |
|
|
|
|
Home Equity |
|
|
|
|
Commercial Mortgages |
|
|
312 |
|
Commercial Business Loans |
|
|
|
|
Consumer Non-Real Estate |
|
|
6 |
|
|
|
|
|
Total |
|
$ |
2,710 |
|
|
|
|
|
4. Federal Home Loan Bank Stock
Federal law requires a member institution of the Federal Home Loan Bank (FHLB) to hold stock of
its district FHLB according to a predetermined formula. The restricted stock is carried at cost. In
December 2008, the FHLB of Pittsburgh notified member banks that it was suspending dividend
payments and the repurchase of capital stock. During 2010, the FHLB allowed certain redemptions.
Managements determination of whether these investments are impaired is based on their assessment
of the ultimate recoverability of their cost rather than by recognizing temporary declines in
value. The determination of whether a decline affects the ultimate recoverability of their cost is
influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as
compared to the capital stock amount for the FHLB and the length of time this situation has
persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level
of such payments in relation to the operating performance of the FHLB, and (3) the impact of
legislative and regulatory changes on institutions and, accordingly, on the customer base of the
FHLB.
Management believes no impairment charge is necessary related to the FHLB restricted stock as of
December 31, 2010.
5. DEPOSITS
Deposits are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
December 31, 2010 |
|
|
September 30, 2010 |
|
Non-interest bearing checking accounts |
|
$ |
17,859 |
|
|
$ |
17,015 |
|
NOW accounts |
|
|
27,411 |
|
|
|
21,320 |
|
Interest bearing checking accounts |
|
|
35,156 |
|
|
|
32,577 |
|
Money market demand accounts |
|
|
130,899 |
|
|
|
136,079 |
|
Passbook and club accounts |
|
|
3,772 |
|
|
|
3,739 |
|
Certificate of deposit accounts |
|
|
316,550 |
|
|
|
317,370 |
|
|
|
|
|
|
|
|
Total deposits |
|
$ |
531,647 |
|
|
$ |
528,100 |
|
|
|
|
|
|
|
|
The aggregate amount of certificate accounts in denominations of more than $100,000 at December 31,
2010 and September 30, 2010 amounted to approximately $60.8 million and $59.2 million,
respectively.
6. COMMITMENTS
At December 31, 2010, the following commitments were outstanding:
|
|
|
|
|
|
|
(In thousands) |
|
Letters of credit |
|
$ |
336 |
|
Commitments to originate loans |
|
|
12,800 |
|
Unused portion of home equity lines of credits |
|
|
52,377 |
|
Unused portion of commercial lines of credits |
|
|
7,597 |
|
Undisbursed portion of construction loans in process |
|
|
2,950 |
|
|
|
|
|
|
Total |
|
$ |
76,060 |
|
|
|
|
|
Outstanding letters of credit written are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. The majority of these standby letters of
credit expire within the next twelve months. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending other loan commitments. The Company requires
collateral supporting these letters of credit as deemed necessary. Management believes that the
proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum
potential amount of future payments required under the corresponding guarantees. The current
amount of the liability as of December 31, 2010 for guarantees under standby letters of credit
issued is not material.
page -15-
7. EARNINGS PER SHARE
The following shares were used for the computation of earnings per share:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Basic |
|
|
3,693,373 |
|
|
|
3,633,347 |
|
Diluted |
|
|
3,731,203 |
|
|
|
3,646,284 |
|
The difference between the number of shares used for computation of basic earnings per share and
diluted earnings per share represents the dilutive effect of stock options. There were 248,553
stock options that were anti-dilutive for the three months ended December 31, 2010, respectively.
There were 253,595 stock options that were anti-dilutive for the three month periods ended December
31, 2009, respectively.
8. LONG-TERM DEBT
Advances consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Interest |
|
|
|
|
|
|
Interest |
|
Maturing Period |
|
Amount |
|
|
Rate |
|
|
Amount |
|
|
Rate |
|
|
1 to 12 months |
|
$ |
21,007 |
|
|
|
4.30 |
% |
|
$ |
15,923 |
|
|
|
4.37 |
% |
13 to 24 months |
|
|
43,772 |
|
|
|
4.57 |
% |
|
|
54,440 |
|
|
|
4.50 |
% |
25 to 36 months |
|
|
38,968 |
|
|
|
3.92 |
% |
|
|
35,022 |
|
|
|
4.03 |
% |
37 to 48 months |
|
|
23,941 |
|
|
|
4.31 |
% |
|
|
28,729 |
|
|
|
4.10 |
% |
49 to 60 months |
|
|
18,183 |
|
|
|
3.83 |
% |
|
|
18,356 |
|
|
|
3.83 |
% |
61 to 72 months |
|
|
10,000 |
|
|
|
4.71 |
% |
|
|
10,000 |
|
|
|
4.71 |
% |
73 to 84 months |
|
|
50,000 |
|
|
|
4.43 |
% |
|
|
45,000 |
|
|
|
4.52 |
% |
85 to 120 months |
|
|
59,476 |
|
|
|
4.44 |
% |
|
|
64,577 |
|
|
|
4.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
265,347 |
|
|
|
4.33 |
% |
|
$ |
272,047 |
|
|
|
4.33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank (FHLB) advances are collateralized by Federal Home Loan Bank stock and
substantially all first mortgage loans. The Company has a line of credit with the FHLB of which $0
out of $75.0 million was used at December 31, 2010 and September 30, 2010, respectively. Included
in the table above at December 31, 2010 and September 30, 2010 are convertible advances whereby the
FHLB has the option at a predetermined strike rate to convert the fixed interest rate to an
adjustable rate tied to London Interbank Offered Rate (LIBOR). The Company then has the option
to repay these advances if the FHLB converts the interest rate. These advances are included in the
periods in which they mature. The Company has a total FHLB borrowing capacity of $418.0 million of
which $215.3 was used as of December 31, 2010. In addition, there are four long-term advances from
other financial institutions totaling $50 million that are secured by investment and
mortgage-backed securities.
9. REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to various regulatory capital requirements administered by the
federal banking agencies. Failure to meet minimum capital requirements can initiate certain
mandatory and possibly additional discretionary actions by regulators that, if undertaken,
could have a direct
material effect on the Companies consolidated financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must
meet specific capital guidelines that involve quantitative measures of assets, liabilities and
certain off-balance-sheet items as calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors. Quantitative measures established by regulation to
ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set
forth in the table below) of total Tier 1 capital (as defined in the regulations) to risk weighted
assets (as defined), and of Tier 1 capital (as defined) to assets (as defined).
Management believes, as of December 31, 2010, that the Bank meets all capital adequacy requirements
to which it is subject.
As of December 31, 2010, the most recent notification from the Federal Deposit Insurance
Corporation categorized the Company and the Bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well capitalized, the Bank must maintain
minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table.
There are no conditions or events since that notification that management believes have changed the
Banks category.
The Banks actual capital amounts and ratios are also presented in the table. The Companys capital
ratios are not significantly different than the Banks ratios disclosed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Considered Well |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Adequacy Purposes |
|
|
Action Provisions |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
|
(In thousands) |
|
As of December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital (to assets) |
|
$ |
54,089 |
|
|
|
6.33 |
% |
|
$ |
34,201 |
|
|
|
4.00 |
% |
|
$ |
42,751 |
|
|
|
5.00 |
% |
Tier 1 Capital (to risk weighted assets) |
|
|
54,089 |
|
|
|
11.58 |
% |
|
|
18,678 |
|
|
|
4.00 |
% |
|
|
28,017 |
|
|
|
6.00 |
% |
Total Capital (to risk weighted assets) |
|
|
56,757 |
|
|
|
12.15 |
% |
|
|
37,356 |
|
|
|
8.00 |
% |
|
|
46,695 |
|
|
|
10.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital (to assets) |
|
$ |
53,330 |
|
|
|
6.19 |
% |
|
$ |
34,440 |
|
|
|
4.00 |
% |
|
$ |
43,050 |
|
|
|
5.00 |
% |
Tier 1 Capital (to risk weighted assets) |
|
|
53,330 |
|
|
|
11.35 |
% |
|
|
18,799 |
|
|
|
4.00 |
% |
|
|
28,199 |
|
|
|
6.00 |
% |
Total Capital (to risk weighted assets) |
|
|
55,834 |
|
|
|
11.88 |
% |
|
|
37,599 |
|
|
|
8.00 |
% |
|
|
46,999 |
|
|
|
10.00 |
% |
page -16-
10. FAIR VALUES MEASUREMENTS AND DISCLOSURES
The Company uses fair value measurements to record fair value adjustments to certain assets and
liabilities and to determine fair value disclosures. In accordance with the accounting guidance
adopted by the Company, effective October 1, 2008, the fair value of a financial instrument is the
price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Fair value is best determined
based upon quoted market prices. However, in many instances, there are no quoted market prices for
the Companys various financial instruments. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumption used, including the discount rate and
estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an
immediate settlement of the instrument.
The fair value guidance provides a consistent definition of fair value, which focuses on exit price
in an orderly transaction (that is, not a forced liquidation or distressed sale) between market
participants at the measurement date under current market conditions. If there has been a
significant decrease in the volume and level of activity for the asset or liability, a change in
valuation technique or the use of multiple valuation techniques may be appropriate. In such
instances, determining the price at which willing market participants would transact at the
measurement date under current market conditions depends on the facts and circumstances and
requires the use of significant judgment. The fair value is determined at a reasonable point
within the range that is most representative of fair value under current market conditions.
The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation methods
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy under are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for
identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable either
directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair
value measurement and unobservable (i.e., supported with little or no market activity).
An assets or liabilitys level within the fair value hierarchy is based on the lowest level of
input that is significant to the fair value measurement.
For financial assets measured at fair value on a recurring basis, the fair value measurements by
level within the fair value hierarchy used at December 31, 2010 and September 30, 2010 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant |
|
|
(Level 3) |
|
|
|
|
|
|
|
Active Markets |
|
|
Other |
|
|
Significant |
|
|
|
December 31, |
|
|
for Identical |
|
|
Observable |
|
|
Unobservable |
|
Description |
|
2010 |
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
Investment securities available for sale |
|
$ |
2,520 |
|
|
$ |
2,520 |
|
|
$ |
|
|
|
$ |
|
|
Mortgage-backed securities available for sale |
|
|
838 |
|
|
|
|
|
|
|
838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,358 |
|
|
$ |
2,520 |
|
|
$ |
838 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
|
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant |
|
|
(Level 3) |
|
|
|
|
|
|
|
Active Markets |
|
|
Other |
|
|
Significant |
|
|
|
September 30, |
|
|
for Identical |
|
|
Observable |
|
|
Unobservable |
|
Description |
|
2010 |
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
Investment securities available for sale |
|
$ |
20,604 |
|
|
$ |
20,604 |
|
|
$ |
|
|
|
$ |
|
|
Mortgage-backed securities available for sale |
|
|
809 |
|
|
|
|
|
|
|
809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
21,413 |
|
|
$ |
20,604 |
|
|
$ |
809 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no transfers in and out of Level 1 and Level 2 fair value measurements for the
quarter ended December 31, 2010.
For assets measured at fair value on a nonrecurring basis, the fair value measurements by level
within the fair value hierarchy used at December 31, 2010 and September 30, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using |
|
|
|
|
|
|
|
Quoted Prices |
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
in Active |
|
|
Other |
|
|
Significant |
|
|
|
|
|
|
|
Markets for |
|
|
Observable |
|
|
Unobservable |
|
|
|
December 31, |
|
|
Identical Assets |
|
|
Inputs |
|
|
Inputs |
|
Description |
|
2010 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Impaired Loans |
|
$ |
1,484 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using |
|
|
|
|
|
|
|
Quoted Prices |
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
in Active |
|
|
Other |
|
|
Significant |
|
|
|
|
|
|
|
Markets for |
|
|
Observable |
|
|
Unobservable |
|
|
|
September 30, |
|
|
Identical Assets |
|
|
Inputs |
|
|
Inputs |
|
Description |
|
2010 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Impaired Loans |
|
$ |
186 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following valuation techniques were used to measure fair value of the Companys financial
instruments in the tables above and below:
Cash and Cash Equivalents (Carried at Cost)
The carrying amounts reported in the balance sheet for cash and short-term instruments approximate
those assets fair values.
Securities
The fair value of securities available for sale (carried at fair value) and held to maturity
(carried at amortized cost) are determined by obtaining quoted market prices on nationally
recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical
technique used widely in the industry to value debt securities without relying exclusively on
quoted prices for the specific securities but rather by relying on the securities relationship to
other benchmark quoted prices.
page -17-
Loans Receivable (Carried at Cost)
The fair values of loans are estimated using discounted cash flow analyses, using market rates at
the balance sheet date that reflect the credit and interest rate-risk inherent in the loans.
Projected future cash flows are calculated based upon contractual maturity or call dates, projected
repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently
and with no significant change in credit risk, fair values are based on carrying values.
Impaired loans are those loans which the Company has measured impairment generally based on the
fair value of the loans collateral. Fair value is generally determined based upon independent
third-party appraisals of the properties, or discounted cash flows based upon the expected
proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input
that is significant to the fair value measurements.
Federal Home Loan Bank Stock (Carried at Cost)
The carrying amount of this restricted investment in bank stock approximates fair value, and
considers the limited marketability of such securities.
Accrued Interest Receivable and Payable (Carried at Cost)
The carrying amount of accrued interest receivable and accrued interest payable approximates its
fair value.
Deposit Liabilities (Carried at Cost)
The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook
savings and money market accounts) are, by definition, equal to the amount payable on demand at the
reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit
are estimated using a discounted cash flow calculation that applies interest rates currently being
offered in the market on certificates to a schedule of a aggregated expected monthly maturities on
time deposits.
Borrowings (Carried at Cost)
Fair values of borrowings are estimated using discounted cash flow analysis, based on quoted prices
for new advances with similar credit risk characteristics, terms and remaining maturity. These
prices obtained from this active market represent a market value that is deemed to represent the
transfer price if the liability were assumed by a third party.
Off-Balance Sheet Financial Instruments (Disclosed at Cost)
Fair values for the Companys off-balance sheet financial instruments (lending commitments and
lettersof credit) are based on fees currenctly charged in the market to enter into similar
agreements, taking into account, the remaining terms of the agreements and the counterparies
credit standing. The fair value of these off-balance sheet financial instruments are not considered
material as of December 31, 2010 and September 30, 2010.
The estimated fair value amounts have been determined by the Company using available market
information appropriate valuation methodologies. However, considerable judgement is necessarily
required to interpret the data to develop the estimates.
The carrying amounts and estimated fair values of financial instruments as of December 31, 2010 and
September 30, 2010 are as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
Carrying |
|
|
Estimated Fair |
|
|
Carrying |
|
|
Estimated Fair |
|
(In Thousands) |
|
Amount |
|
|
Value |
|
|
Amount |
|
|
Value |
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
25,462 |
|
|
$ |
25,462 |
|
|
$ |
20,190 |
|
|
$ |
20,190 |
|
Securitys held to maturity |
|
|
274,642 |
|
|
|
278,922 |
|
|
|
256,088 |
|
|
|
264,448 |
|
Securities available-for-sale |
|
|
3,358 |
|
|
|
3,358 |
|
|
|
21,413 |
|
|
|
21,413 |
|
Loans receivable net |
|
|
504,787 |
|
|
|
516,755 |
|
|
|
510,093 |
|
|
|
530,294 |
|
Federal Home Loan Bank Stock |
|
|
15,291 |
|
|
|
15,291 |
|
|
|
16,096 |
|
|
|
16,096 |
|
Accrued interest receivable |
|
|
3,029 |
|
|
|
3,029 |
|
|
|
3,210 |
|
|
|
3,210 |
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checking, Passbook, Club and NOW
accounts |
|
|
84,198 |
|
|
|
84,198 |
|
|
|
74,651 |
|
|
|
74,651 |
|
Money Market Demand accounts |
|
|
130,899 |
|
|
|
130,899 |
|
|
|
136,079 |
|
|
|
136,079 |
|
Certificate of deposit accounts |
|
|
316,550 |
|
|
|
326,216 |
|
|
|
317,370 |
|
|
|
325,881 |
|
Borrowings |
|
|
265,347 |
|
|
|
286,817 |
|
|
|
272,047 |
|
|
|
291,857 |
|
Accrued interest payable |
|
|
1,380 |
|
|
|
1,380 |
|
|
|
1,407 |
|
|
|
1,407 |
|
|
Off balance sheet financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and
information about the financial instrument. These estimates do not reflect any premium or discount
that could result from offering for sale at one time the Companys entire holdings of a particular
financial instrument. Because no market exists for a significant portion of the Companys financial
instruments, fair value estimates are based on many judgments. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance-sheet financial instruments without
attempting to estimate the value of anticipated future business and the value of assets and
liabilities that are not considered financial instruments. Significant assets and liabilities that
are not considered financial instruments include deferred income taxes and premises and equipment.
In addition, the tax ramifications related to the realization of the unrealized gains and losses
can have a significant effect on fair value estimates and have not been considered in the
estimates.
page -18-
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
This report contains certain forward-looking statements and information relating to the Company
that are based on the beliefs of management as well as assumptions made by and information
currently available to management. In addition, in those and other portions of this document, the
words anticipate, believe, estimate, intend, should and similar expressions, or the
negative thereof, as they relate to the Company or the Companys management, are intended to
identify forward-looking statements. Such statements reflect the current views of the Company with
respect to future-looking events and are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize or should underlying assumptions
prove incorrect, actual results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update these
forward-looking statements.
The Companys business consists of attracting deposits from the general public through a variety of
deposit programs and investing such deposits principally in first mortgage loans secured by
residential properties, commercial loans and commercial lines of credit in the Companys primary
market area. The Company also originates a variety of consumer loans, predominately home equity
loans and lines of credit also secured by residential properties in the Companys primary lending
area. The Company serves its customers through its full-service branch network as well as through
remote ATM locations, the internet and telephone banking.
Critical Accounting Policies and Judgments
The Companys consolidated financial statements are prepared based on the application of certain
accounting policies. Certain of these policies require numerous estimates and strategic or
economic assumptions that may prove inaccurate or subject to variations and may significantly
affect the Companys reported results and financial position for the period or in future periods.
Changes in underlying factors, assumptions, or estimates in any of these areas could have a
material impact on the Companys future financial condition and results of operations. The Company
believes the following critical accounting policies affect its more significant judgments and
estimates used in the preparation of the consolidated financial statements: allowance for loan
losses, and other-than-temporary security impairment.
Allowance for Loan Losses
Analysis and Determination of the Allowance for Loan Losses The allowance for loan losses is a
valuation allowance for probable losses inherent in the loan portfolio. The Company evaluates the
need to establish allowances against losses on loans on a monthly basis. When additional allowances
are necessary, a provision for loan losses is charged to earnings.
Our methodology for assessing the appropriateness of the allowance for loan losses consists of
three key elements: (1) specific allowances for certain impaired loans; (2) a general valuation
allowance on certain identified problem loans; and (3) a general valuation allowance on the
remainder of the loan portfolio. Although we determine the amount of each element of the allowance
separately, the entire allowance for loan losses is available for the entire portfolio.
Specific Allowance Required for Certain Impaired Loans: We establish an allowance for certain
impaired loans for the amounts by which the collateral value, present value of future cash flows or
observable market price are lower than the carrying value of the loan. Under current accounting
guidelines, a loan is defined as impaired when, based on current information and events, it is
probable that a creditor will be unable to collect all amounts due under the contractual terms of
the loan agreement.
General Valuation Allowance on Certain Identified Problem Loans We also establish a general
allowance for classified loans that do not have an individual allowance. We segregate these loans
by loan category and assign allowance percentages to each category based on inherent losses
associated with each type of lending and consideration that these loans, in the aggregate,
represent an above-average credit risk and that more of these loans will prove to be uncollectible
compared to loans in the general portfolio.
General Valuation Allowance on the Remainder of the Loan Portfolio We establish another general
allowance for loans that are not classified to recognize the inherent losses associated with
lending activities, but which, unlike specific allowances, has not been allocated to particular
problem assets. This general valuation allowance is determined by segregating the loans by loan
category and assigning allowance percentages based on our historical loss experience, delinquency
trends and managements evaluation of the collectibility of the loan portfolio. The allowance may
be adjusted for significant factors that, in managements judgment, affect the collectability of
the portfolio as of the evaluation date. These significant factors may include changes in lending
policies and procedures, changes in existing general economic and business conditions affecting our
primary lending areas, credit quality trends, collateral value, loan volumes and concentrations,
seasoning of the loan portfolio, recent loss experience in particular segments of the portfolio,
duration of the current business cycle and bank regulatory examination results. The applied loss
factors are reevaluated quarterly to ensure their relevance in the current economic environment.
page -19-
Other-than-Temporary Impairment of Investment Securities
Securities are evaluated periodically to determine whether a decline in their value is
other-than-temporary. Management utilizes criteria such as the magnitude and duration of the
decline, in addition to the reasons underlying the decline, to determine whether the loss in value
is other-than-temporary. The term other-than-temporary is not intended to indicate that the
decline is permanent, but indicates that the prospects for a near-term recovery of value are not
necessarily favorable, or that there is a lack of evidence to support realizable value equal to or
greater than the carrying value of the investment.
Changes in Financial Position for the Three-Month Period Ended December 31, 2010
Total assets at December 31, 2010 were $856.7 million, a decrease of $459,000 for the three-month
period then ended. The decrease was primarily due to a decrease in loans receivable of
approximately $5.3 million, which was partially offset by an increase in cash and investments of
approximately $5.7 million.
Total deposits increased by $3.5 million to $531.6 million. Advances from borrowers for taxes and
insurance also increased by $2.1 million due to the timing of property tax payments. The increase
was primarily offset by a decrease in borrowings of $6.7 million due to normal repayments for the
period.
Comparisons of Results of Operations for the Three Month Ended December 31, 2010 with the Three
Month Period Ended December 31, 2009
Net Interest Income
Net interest income was $4.5 million for the three-month period ended December 31, 2010 compared to
$4.4 million for the comparable period in 2009. The increase in the net interest income for the
three-month period ended December 31, 2010 when compared to the same period in 2009 can be
attributed to the increase in interest rate spread from 2.09% in 2009 to 2.13% in 2010, and the
difference between the average interest earning assets in relation to the average interest earning
liabilities in comparable periods. Net income remained $1.2 million for the three-month period
ended December 31, 2010 compared to the comparable period in 2009.
Non-Interest Income
Non-interest income slightly decreased to $501,000 for the three-month period ended December 31,
2010 from $502,000 for the comparable period in 2009. The decrease in the three period is
primarily due to a reduction in income on non-deposit products.
Non-Interest Expenses
For the three-month period ended December 31, 2010, non-interest expenses increased by $91,000 or
3.0% to $3.2 million compared to $3.1 million for the same period in 2009. These increased costs
are primarily due to the increase in salary and employee benefits, occupancy and equipment expense
and loan collection expense. Management believes that these are reasonable increases in the cost of
operations after considering the impact of additional expenses related to the Companys commercial
loan department, business banking and opening a new branch. FDIC insurance expense remained
relatively flat, $226,000 for the three-month period ended December 31, 2010 compared to $227,000
for the same period in 2009. The annualized ratio of non-interest expenses to average assets for
the three month periods ended December 31, 2010 and 2009 were 1.48% and 1.47%, respectively.
On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment on each
insured depository institutions assets minus Tier 1 capital as of December 31, 2009. The Banks
special assessment totaling $460,000 was collected on September 30, 2010. Instead of imposing
additional special assessments, the FDIC required all banks to prepay their estimated risk-based
assessment for the fourth quarter of 2009 and for all of 2010, 2011 and 2012 on December 30, 2009.
The Bank pre-paid $3,100,000 which is included in other assets and will be amortized over 36
months.
page -20-
Income Taxes
The Company made provisions for income taxes of $429,000 for the three-month period ended December
31, 2010, compared to $455,000 for the comparable periods in 2009. These provisions are based on
the levels of pre-tax income, adjusted primarily for tax-exempt interest income on investments.
In evaluating our ability to recover deferred tax assets, management considers all available
positive and negative evidence, including our past operating results and our forecast of future
taxable income. In determining future taxable income, management makes assumptions for the amount
of taxable income, the reversal of temporary differences and the implementation of feasible and
prudent tax planning strategies. These assumptions require us to make judgments about our future
taxable income and are consistent with the plans and estimates we use to manage our business. Any
reduction in estimated future taxable income may require us to record a valuation allowance against
our deferred tax assets. An increase in the valuation allowance would result in additional income
tax expense in the period and could have a significant impact on our future earnings.
Liquidity and Capital Recourses
For a financial institution, liquidity is a measure of the ability to fund customers needs for
loans and deposit withdrawals. Harleysville Savings Bank regularly evaluates economic conditions
in order to maintain a strong liquidity position. One of the most significant factors considered
by management when evaluating liquidity requirements is the stability of the Banks core deposit
base. In addition to cash, the Bank maintains a portfolio of short-term investments to meet its
liquidity requirements. Harleysville Savings also relies upon cash flow from operations and other
financing activities, generally short-term and long-term debt. Liquidity is also provided by
investing activities including the repayment and maturity of loans and investment securities as
well as the management of asset sales when considered necessary. The Bank also has access to and
sufficient assets to secure lines of credit and other borrowings in amounts adequate to fund any
unexpected cash requirements.
As of December 31, 2010, the Company had $76.1 million in commitments to fund loan originations,
disburse loans in process and meet other obligations. Management anticipates that the majority of
these commitments will be funded within the next six months by means of normal cash flows and new
deposits.
The Company invests excess funds in overnight deposits and other short-term interest-earning
assets, which provide liquidity to meet lending requirements. The Company also has available
borrowings with the Federal Home Loan Bank of Pittsburgh up to the Companys maximum borrowing
capacity, which was $418.0 million at December 31, 2010 of which $215.3 was outstanding at December
31, 2010.
The Banks net income for the three months ended December 31, 2010 is $1.2 million which is the
same as the comparable period in 2009. The Banks stockholders equity to $54.2 million or 6.33%
of total assets. This amount is well in excess of the Banks minimum regulatory capital
requirement.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
The Company has instituted programs designed to decrease the sensitivity of its earnings to
material and prolonged increases in interest rates. The principal determinant of the exposure of
the Companys earnings to interest rate risk is the timing difference between the repricing or
maturity of the Companys interest-earning assets and the repricing or maturity of its
interest-bearing liabilities. If the maturities of such assets and liabilities were perfectly
matched, and if the interest rates borne by its assets and liabilities were equally flexible and
moved concurrently, neither of which is the case, the impact on net interest income of rapid
increases or decreases in interest rates would be minimized. The Companys asset and liability
management policies seek to decrease the interest rate sensitivity by shortening the repricing
intervals and the maturities of the Companys interest-earning assets. Although management of the
Company believes that the steps taken have reduced the Companys overall vulnerability to increases
in interest rates, the Company remains vulnerable to material and prolonged increases in interest
rates during periods in which its interest rate sensitive liabilities exceed its interest rate
sensitive assets. The authority
and responsibility for interest rate management is vested in the Companys Board of Directors. The
Chief Executive Officer implements the Board of Directors policies during the day-to-day
operations of the Company.
page -21-
Each month, the Chief Financial Officer (CFO) presents the Board of Directors with a report,
which outlines the Companys asset and liability gap position in various time periods. The gap
is the difference between interest- earning assets and interest-bearing liabilities which mature or
reprice over a given time period.
The CFO also meets weekly with the Companys other senior officers to review and establish policies
and strategies designed to regulate the Companys flow of funds and coordinate the sources, uses
and pricing of such funds. The first priority in structuring and pricing the Companys assets and
liabilities is to maintain an acceptable interest rate spread while reducing the effects of changes
in interest rates and maintaining the quality of the Companys assets.
The following table summarizes the amount of interest-earning assets and interest-bearing
liabilities outstanding as of December 31, 2010, which are expected to mature, prepay or reprice in
each of the future time periods shown. Except as stated below, the amounts of assets or
liabilities shown which mature or reprice during a particular period were determined in accordance
with the contractual terms of the asset or liability. Adjustable and floating-rate assets are
included in the period in which interest rates are next scheduled to adjust rather than in the
period in which they are due and fixed-rate loans and mortgage-backed securities are included in
the periods in which they are anticipated to be repaid.
The passbook accounts, negotiable order of withdrawal (NOW) accounts, interest bearing accounts,
and money market deposit accounts, are included in the Over 5 Years categories based on
managements beliefs that these funds are core deposits having significantly longer effective
maturities based on the Companys retention of such deposits in changing interest rate
environments.
Generally, during a period of rising interest rates, a positive gap would result in an increase in
net interest income while a negative gap would adversely affect net interest income. Conversely,
during a period of falling interest rates, a positive gap would result in a decrease in net
interest income while a negative gap would positively affect net interest income. However, the
following table does not necessarily indicate the impact of general interest rate movements on the
Companys net interest income because the repricing of certain categories of assets and
liabilities is discretionary and is subject to competitive and other pressures. As a result,
certain assets and liabilities indicated as repricing within a stated period may in fact reprice at
different rate levels.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
1 to 3 |
|
|
3 to 5 |
|
|
Over 5 |
|
|
|
|
(In thousands) |
|
or less |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Total |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans |
|
$ |
47,925 |
|
|
$ |
55,788 |
|
|
$ |
44,651 |
|
|
$ |
184,534 |
|
|
$ |
332,898 |
|
Commercial loans |
|
|
36,241 |
|
|
|
9,309 |
|
|
|
25,279 |
|
|
|
14,391 |
|
|
|
85,220 |
|
Mortgage-backed securities |
|
|
53,209 |
|
|
|
37,728 |
|
|
|
18,488 |
|
|
|
17,763 |
|
|
|
127,188 |
|
Consumer and other loans |
|
|
67,205 |
|
|
|
12,575 |
|
|
|
5,700 |
|
|
|
10,067 |
|
|
|
95,547 |
|
Investment securities and other investments |
|
|
71,374 |
|
|
|
32,971 |
|
|
|
28,405 |
|
|
|
54,735 |
|
|
|
187,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
275,954 |
|
|
|
148,371 |
|
|
|
122,523 |
|
|
|
281,490 |
|
|
|
828,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passbook and Club accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,772 |
|
|
|
3,772 |
|
NOW and checking accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,567 |
|
|
|
62,567 |
|
Consumer Money Market Deposit accounts |
|
|
51,569 |
|
|
|
|
|
|
|
|
|
|
|
58,296 |
|
|
|
109,865 |
|
Business Money Market Deposit accounts |
|
|
15,775 |
|
|
|
|
|
|
|
|
|
|
|
5,259 |
|
|
|
21,034 |
|
Certificate accounts |
|
|
171,671 |
|
|
|
86,985 |
|
|
|
57,894 |
|
|
|
|
|
|
|
316,550 |
|
Borrowed money |
|
|
26,671 |
|
|
|
84,218 |
|
|
|
37,235 |
|
|
|
117,223 |
|
|
|
265,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
265,686 |
|
|
|
171,203 |
|
|
|
95,129 |
|
|
|
247,117 |
|
|
|
779,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repricing GAP during the period |
|
$ |
10,268 |
|
|
$ |
(22,832 |
) |
|
$ |
27,394 |
|
|
$ |
34,373 |
|
|
$ |
49,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative GAP |
|
$ |
10,268 |
|
|
$ |
(12,564 |
) |
|
$ |
14,830 |
|
|
$ |
49,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of GAP during the period to total assets |
|
|
1.20 |
% |
|
|
-2.67 |
% |
|
|
3.20 |
% |
|
|
4.01 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of cumulative GAP to total assets |
|
|
1.20 |
% |
|
|
-1.47 |
% |
|
|
1,73 |
% |
|
|
5.74 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
page -22-
|
|
|
Item 4. |
|
Controls and Procedures |
Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial
Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by
this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer
have concluded that our disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the Securities Exchange
Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SECs rules and regulations and
are operating in an effective manner.
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and
15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
page -23-
Part II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. (Removed and Reserved)
Item 5. Other information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
|
|
|
|
|
No. |
|
31.1 |
|
|
Certification of Chief Executive Officer |
|
|
|
|
|
|
31.2 |
|
|
Certification of Chief Operating and
Finance Officer |
|
|
|
|
|
|
32.0 |
|
|
Section 1350 Certification of Chief
Executive Officer and Chief Operating
and Finance Officer |
page -24-
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
|
|
Date: February 11, 2011 |
By: |
/s/ Ronald B. Geib
|
|
|
|
Ronald B. Geib |
|
|
|
Chief Executive Officer |
|
|
|
|
Date: February 11, 2011 |
By: |
/s/ Brendan J. McGill
|
|
|
|
Brendan J. McGill |
|
|
|
Executive Vice President
Chief Operating and Financial Officer |
|
page -25-