homeqt123111.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-QT

[  ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ___________________                                                               

or

[X]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
For the transition period from October 1, 2011 to December 31, 2011
 
Commission File Number: 001-33795
 
HOME FEDERAL BANCORP, INC.

(Exact name of registrant as specified in its charter)
 

 
                        Maryland                          68-0666697
(State or other jurisdiction of incorporation  (I.R.S. Employer 
or organization)  Identification Number) 
   
500 12th Avenue South, Nampa, Idaho 83651
(Address of principal executive offices)  (Zip Code) 
   
Registrant’s telephone number, including area code:   (208) 466-4634
                                                                                                                     
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 [X] No [   ]

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 [X] No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer                                 [   ]                   Accelerated filer                                        [X]
Non-accelerated filer                                   [   ]                   Smaller reporting company                      [   ]
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  Common Stock, $.01 par value per share, 15,664,706 shares outstanding as of February 1, 2012.

 
 

 

HOME FEDERAL BANCORP, INC.
FORM 10-QT
TABLE OF CONTENTS
 
 
PART I – FINANCIAL INFORMATION
 
     
 
ITEM 1.  FINANCIAL STATEMENTS
 2
     
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS  
  28 
     
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 42
     
 
ITEM 4. CONTROLS AND PROCEDURES
 43
     
PART II – OTHER INFORMATION  
     
 
ITEM 1. LEGAL PROCEEDINGS
 44
     
 
ITEM 1A. RISK FACTORS
 44
     
 
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 44
     
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 
 44
     
 
ITEM 4. REMOVED AND RESERVED
 44
     
 
ITEM 5. OTHER INFORMATION
 44
     
  ITEM 6.  EXHIBITS    45 
     
 
SIGNATURES
 46
 
 
 
 


 
 

 

Item 1.  Financial Statements

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
           
CONSOLIDATED BALANCE SHEETS
           
(In thousands, except share data) (unaudited)
           
   
December 31,
   
September 30,
 
   
2011
   
2011
 
ASSETS
           
Cash and cash equivalents
  $ 144,293     $ 190,734  
Investments available-for-sale, at fair value
    399,877       380,847  
Loans held for sale
    --       2,088  
Loans and leases receivable, net of allowance for loan and lease losses of $14,171 and $14,365
    449,908       468,213  
Accrued interest receivable
    2,857       2,800  
FDIC indemnification receivable, net
    23,676       33,863  
Bank owned life insurance
    15,450       12,848  
Real estate owned and other repossessed assets
    19,827       23,438  
Federal Home Loan Bank (“FHLB”) stock, at cost
    17,717       17,717  
Property and equipment, net
    31,522       32,743  
Core deposit intangible
    3,086       3,246  
Other assets
    8,221       8,691  
TOTAL ASSETS
  $ 1,116,434     $ 1,177,228  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
LIABILITIES
               
Deposit accounts:
               
Noninterest-bearing demand
  $ 127,553     $ 141,040  
Interest-bearing demand
    249,215       251,347  
Money market
    178,377       177,183  
Savings
    78,492       79,640  
Certificates
    272,462       310,299  
Total deposit accounts
    906,099       959,509  
                 
Advances by borrowers for taxes and insurance
    358       1,333  
Accrued interest payable
    219       249  
Repurchase agreements
    4,913       4,892  
Deferred compensation
    5,871       5,797  
Other liabilities
    7,704       10,794  
Total liabilities
    925,164       982,574  
                 
STOCKHOLDERS’ EQUITY
               
Serial preferred stock, $.01 par value; 10,000,000 authorized; issued and outstanding: none
    --       --  
Common stock, $.01 par value; 90,000,000 authorized; issued
and outstanding:
    157       161  
      Dec. 31, 2011 - 17,512,197 issued; 15,664,706 outstanding
               
      Sep. 30, 2011 - 17,512,197 issued; 16,057,434 outstanding
               
Additional paid-in capital
    143,280       147,057  
Retained earnings
    49,443       48,886  
Unearned shares issued to employee stock ownership plan
    (7,581 )     (7,615 )
Accumulated other comprehensive income
    5,971       6,165  
Total stockholders’ equity
    191,270       194,654  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 1,116,434     $ 1,177,228  

 
See accompanying notes.

2
 

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(In thousands, except share and per share data) (unaudited)
 
   
Three Months Ended
December 31,
 
   
2011
   
2010
 
Interest and dividend income:
           
Loans and leases
  $ 13,375     $ 9,347  
Investment securities
    2,091       1,684  
Other interest and dividends
    101       213  
Total interest and dividend income
    15,567       11,244  
Interest expense:
               
Deposits
    1,212       2,266  
FHLB advances and other borrowings
    21       664  
Total interest expense
    1,233       2,930  
Net interest income
    14,334       8,314  
Provision for loan losses
    (474 )     3,000  
Net interest income after provision for loan losses
    14,808       5,314  
                 
Noninterest income:
               
Service charges and fees
    2,246       2,459  
Gain on sale of loans
    181       348  
Gain on sale of securities
    590       --  
Gain on sale of fixed assets and repossessed assets
    328       274  
FDIC indemnification recovery
    (515 )     1,996  
Accretion (impairment) of FDIC indemnification asset
    (4,667 )     922  
Other
    206       304  
Total noninterest income
    (1,631 )     6,303  
                 
Noninterest expense:
               
Compensation and benefits
    5,866       7,094  
Occupancy and equipment
    1,476       1,845  
Data processing
    1,023       1,177  
Advertising
    145       213  
Postage and supplies
    287       254  
Professional services
    535       718  
Insurance and taxes
    707       1,049  
Amortization of intangibles
    160       195  
Provision for REO
    482       675  
Other
    335       599  
Total noninterest expense
    11,016       13,819  
                 
Income (loss) before income taxes
    2,161       (2,202 )
                 
Income tax provision (benefit)
    785       (871 )
                 
Net income (loss)
  $ 1,376     $ (1,331 )
                 
Earnings (loss) per common share:
               
Basic
  $ 0.09     $ (0.08 )
Diluted
    0.09       (0.08 )
                 
Weighted average number of shares outstanding:
               
Basic
    14,991,807       15,663,436  
Diluted
    14,991,807       15,663,436  
                 
Dividends declared per share:
  $ 0.055     $ 0.055  

 
See accompanying notes.

3
 

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
 
INCOME (LOSS) (In thousands) (unaudited)
 
   
Three Months Ended
December 31,
 
   
2011
   
2010
 
             
Net income (loss)
  $ 1,376     $ (1,331 )
                 
Other comprehensive income (loss):
               
                 
Change in unrealized holding gain (loss) on investments
   available for sale, net of taxes of $106 and ($1,344),
   respectively
    166       (2,107 )
Adjustment for realized gains on sales of investments,
   net of taxes of  ($230) and $0, respectively
    (360 )     --  
                 
Other comprehensive loss
    (194 )     (2,107 )
Comprehensive income (loss)
  $ 1,182     $ (3,438 )

 
See accompanying notes.

4
 

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except share data) (Unaudited)

    Common Stock    
Additional
   
 
   
Unearned
Shares
Issued to
     
Accumulated
Other
Comprehensive
       
   
Shares
   
Amount
   
Capital
   
Earnings
   
ESOP
   
Income (Loss)
   
Total
 
                                           
Balance at October 1, 2010
    16,687,561     $ 167     $ 152,682     $ 56,942     $ (8,657 )   $ 3,954     $ 205,088  
                                                         
Restricted stock issued, net of forfeitures
    26,169       --                                       --  
ESOP shares committed to be released
                    190               1,042               1,232  
Exercise of stock options
    51,886       1       541                               542  
Share-based compensation
                    855                               855  
Stock repurchase
    (708,182 )     (7 )     (7,413 )                             (7,420 )
Dividends paid ($0.220 per share)
                            (3,427 )                     (3,427 )
Tax adjustments for equity comp. plans
                    202                               202  
                                                         
Net loss
                            (4,629 )                     (4,629 )
Other comprehensive income
                                            2,211       2,211  
                                                         
Balance at September 30, 2011
    16,057,434       161       147,057       48,886       (7,615 )     6,165       194,654  
                                                         
Restricted stock issued, net of forfeitures
    (2,597 )                                             --  
ESOP shares committed to be released
                    1               34               35  
Share-based compensation
                    126                               126  
Stock repurchase
    (390,131 )     (4 )     (3,905 )                             (3,909 )
Dividends paid ($0.055 per share)
                            (819 )                     (819 )
Tax adjustments for equity comp. plans
                    1                               1  
                                                         
Net income
                            1,376                       1,376  
Other comprehensive loss
                                            (194 )     (194 )
                                                         
Balance at December 31, 2011
    15,664,706     $ 157     $ 143,280     $ 49,443     $ (7,581 )   $ 5,971     $ 191,270  


 
See accompanying notes.

5
 
 
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
     
CONSOLIDATED STATEMENTS OF CASH FLOWS
     
(In thousands) (unaudited)
     
   
Three Months Ended
December 31,
 
   
2011
   
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income (loss)
  $ 1,376     $ (1,331 )
Adjustments to reconcile net income (loss) to cash provided by operating activities:
               
Depreciation and amortization
    767       636  
Amortization of core deposit intangible
    160       195  
Impairment (accretion) of FDIC indemnification receivable
    4,667       (922 )
Net amortization of premiums and discounts on investments
    1,916       1,337  
Gain on sale of loans, net
    (181 )     (348 )
Gain on sale of securities available-for-sale, net
    (590 )     --  
Gain on sale of fixed assets and repossessed assets, net
    (328 )     (274 )
ESOP shares committed to be released
    35       336  
Share based compensation expense
    126       196  
Provision for loan losses
    (474 )     3,000  
Valuation provision on real estate and other property owned
    482       675  
Accrued deferred compensation expense, net
    74       73  
Net deferred loan fees
    (11 )     (250 )
Proceeds from sale of loans held for sale
    4,930       13,356  
Originations of loans held for sale
    (2,662 )     (11,136 )
Net increase in cash surrender value of bank owned life insurance
    (102 )     (105 )
Change in assets and liabilities:
               
Interest receivable
    (57 )     (211 )
Other assets
    470       (3,380 )
Interest payable
    (30 )     (53 )
Other liabilities
    (3,089 )     (1,926 )
Net cash provided from (used by) operating activities
    7,479       (132 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Principal repayments, maturities and calls of securities available for sale
    44,905       31,059  
Proceeds from sales of securities available for sale
    27,423       --  
Purchase of securities available for sale
    (93,002 )     (186,860 )
Reimbursement of loan losses under loss share agreement
    5,063       --  
Net decrease in loans
    14,974       41,301  
Proceeds from sales of fixed assets and repossessed assets
    8,488       7,446  
Purchases of property and equipment
    (179 )     (887 )
Purchase of bank-owned life insurance
    (2,500 )     --  
Net cash provided from (used by) investing activities
    5,172       (107,941 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net decrease in deposits
    (53,410 )     (84,050 )
Net decrease in advances by borrowers for taxes and insurance
    (975 )     (4,119 )
Repayment of FHLB borrowings
    --       (6,604 )
Net increase (decrease) in securities sold under obligation to repurchase
    21       (650 )
Proceeds from exercise of stock options
    --       186  
Repurchases of common stock
    (3,909 )     --  
Dividends paid
    (819 )     (870 )
Net cash used by financing activities
    (59,092 )     (96,107 )
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (46,441 )     (204,180 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    190,734       416,426  
CASH AND CASH EQUIVALENTS, END OF PERIOD
  $ 144,293     $ 212,246  

(Continued)

 
 
See accompanying notes.

6
 

 
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
     
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
     
(In thousands) (unaudited)
     
   
Three Months Ended
December 31,
 
   
2011
   
2010
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
           
Cash paid during the period for:
           
Interest
  $ 1,263     $ 2,983  
Taxes
    3,800       (49 )
                 
NONCASH INVESTING AND FINANCING ACTIVITIES:
               
Acquisition of real estate owned and other assets in settlement of loans
  $ 3,881     $ 4,667  
Fair value adjustment to securities available-for-sale, net of taxes
    (194 )     (2,107 )


 
See accompanying notes.

7
 
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 - Basis of Presentation

The consolidated financial statements presented in this transition report include the accounts of Home Federal Bancorp, Inc., a Maryland corporation (the “Company”), and its wholly-owned subsidiary, Home Federal Bank (the “Bank”), which is a state-chartered commercial bank headquartered in Nampa, Idaho.  As used throughout this report, the term the “Company” refers to Home Federal Bancorp and its consolidated subsidiary, unless the context otherwise requires.

The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles for interim financial information and are unaudited. All significant intercompany transactions and balances have been eliminated. In the opinion of the Company’s management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the financial condition and results of operations for the interim periods included herein have been made. Operating results for the three month period ended December 31, 2011, are not necessarily indicative of the results that may be expected for future periods.

On January 24, 2012, the Company reported its decision to change its fiscal year end to December 31 from a fiscal year ending on September 30. This change in fiscal year end makes the Company’s and the Bank’s year-end coincide with the regulatory reporting periods now effective with the Company’s reorganization to a bank holding company and the Bank’s conversion to a commercial bank that occurred on May 31, 2011. As a result of the change in fiscal year, the Company is filing this transition report on Form 10-QT covering the transition period from October 1, 2011 to December 31, 2011. The reader should assume any reference the Company makes to a particular year (for example, 2010) in this report applies to the Company’s fiscal year and not the calendar year.

On July 30, 2010, the Bank entered into a purchase and assumption agreement with the FDIC to assume all of the deposits and acquire certain assets of LibertyBank, headquartered in Eugene, Oregon (the “LibertyBank Acquisition”). In August 2009, the Bank entered into a purchase and assumption agreement with the FDIC to assume all of the deposits and certain assets of Community First Bank, headquartered in Prineville, Oregon (the “CFB Acquisition”).  All of the loans purchased in the CFB Acquisition and the majority of loans and leases purchased in the LibertyBank Acquisition are included under the loss sharing agreements with the FDIC and are referred to as “covered loans.”  All real estate owned and repossessed assets (“REO”) acquired in the CFB Acquisition and the LibertyBank Acquisition are also included in the loss sharing agreements and are referred to as “covered REO.”  The covered loans and covered REO are collectively referred to as “covered assets.” Loans and foreclosed and repossessed assets not subject to loss sharing agreements with the FDIC are referred to as “noncovered loans” or “noncovered assets.”

Certain information and note disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted. Therefore, these consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011 (“2011 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on December 14, 2011.

Certain reclassifications have been made to prior year’s financial statements in order to conform to the current year presentation. The reclassifications had no effect on previously reported net income (loss) or equity.

Note 2 - Recent Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-12, Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU 2011-12 defers changes in ASU 2011-05 that relate to the presentation of reclassification adjustments to allow the FASB time to redeliberate whether to require presentation of such adjustments on the face of the financial statements to show the effects of reclassifications out of accumulated other comprehensive income
 
 
 

8
 
 
on the components of net income and other comprehensive income. ASU 2011-12 allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. All other requirements in ASU 2011-05 are not affected by ASU 2011-12.  ASU 2011-12 is effective for annual and interim periods beginning after December 15, 2011 and is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment (Topic 350).  ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. ASU 2011-08 is effective for interim and annual periods beginning after December 15, 2011. Early adoption is permitted. The Company did not early adopt this standard, which is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income (Topic 220). ASU 2011-05 attempts to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. The effective date of ASU 2011-05 will be the first interim or fiscal period beginning after December 15, 2011; however, certain provisions related to the presentation of reclassification adjustments have been deferred by ASU 2011-12, Comprehensive Income (Topic 220)—Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, as discussed above.  The Company adopted this standard effective September 30, 2011, and presented the Consolidated Statements of Comprehensive Income (Loss) as a separate statement rather than part of the Consolidated Statements of Stockholders’ Equity.

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (International Financial Reporting Standards).  This guidance is effective for the first interim or annual period beginning on or after December 15, 2011, and will be applied prospectively beginning in the period of adoption.  The amendments change the wording used to describe requirements for measuring fair value under U.S. GAAP to be more consistent with IFRSs.  The adoption of this guidance is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In April 2011, the FASB issued ASU 2011-03, Reconsideration of Effective Control for Repurchase Agreements (Topic 860). ASU 2011-03 attempts to improve the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before maturity. The effective date of ASU 2011-03 will be the first interim or annual period beginning after December 15, 2011 and should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The Company is evaluating the impact this ASU will have on its financial condition and results of operations.

In April 2011, FASB issued ASU 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.  ASU 2011-02 clarifies when a loan modification or restructuring is considered a troubled debt restructuring.  This guidance became effective for the first interim or annual period beginning on or after June 15, 2011, and was adopted by the Company effective October 1, 2011.  The adoption of this guidance did not have a material effect on the Company’s Consolidated Financial Statements.
 
 
 

9
 

Note 3 - Earnings (Loss) Per Share

The Company has granted stock compensation awards with non-forfeitable dividend rights, which are considered participating securities. Accordingly, earnings (loss) per share (“EPS”) is computed using the two-class method as required by ASC 260-10-45. Basic EPS is computed by dividing net income (or loss) allocated to common stock by the weighted average number of common shares outstanding during the period which excludes the participating securities. Diluted EPS includes the dilutive effect of additional potential common shares from stock compensation awards, but excludes awards considered participating securities. ESOP shares are not considered outstanding for EPS until they are committed to be released. The following table presents the computation of basic and diluted EPS for the periods indicated (in thousands, except share and per share data):

   
Three Months Ended
December 31,
 
   
2011
   
2010
 
             
Net income (loss)
  $ 1,376     $ (1,331 )
Allocated to participating securities
    (11 )     (14 )
                 
Net income (loss) allocated to common shareholders
  $ 1,365     $ (1,317 )
                 
Weighted average common shares outstanding, including
   shares considered participating securities
    15,116,327       15,830,261  
Less:  Average participating securities
    (124,520 )     (166,825 )
Weighted average shares
    14,991,807       15,663,436  
Net effect of dilutive restricted stock
    --       --  
                 
Weighted average shares and common stock equivalents
    14,991,807       15,663,436  
                 
Income (loss) per common share:
               
Basic
  $ 0.09     $ (0.08 )
Diluted
    0.09       (0.08 )
                 
Options excluded from the calculation due to their anti-
   dilutive effect on EPS
    895,529       886,381  

 
Note 4 - Investment securities

Investment securities available-for-sale consisted of the following at the dates indicated (dollars in thousands):

   
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Fair Value
   
Percent of
Total
 
December 31, 2011
                             
Obligations of U.S. Government-sponsored enterprises (“GSE”)
  $ 65,345     $ 650     $ (11 )   $ 65,984       16.5 %
Obligations of states and political subdivisions
    20,850       992       (33 )     21,809       5.4  
Corporate note, FDIC-guaranteed
    1,005       2       --       1,007       0.3  
Mortgage-backed securities, GSE-issued
    302,539       8,480       (253 )     310,766       77.7  
Mortgage-backed securities, private label
    357       --       (46 )     311       0.1  
                                         
Total
  $ 390,096     $ 10,124     $ (343 )   $ 399,877       100.0 %
                                         
September 30, 2011
                                       
Obligations of U.S. GSE
  $ 81,751     $ 581     $ (29 )   $ 82,303       21.6 %
Obligations of states and political subdivisions
    14,855       750       --       15,605       4.1  
Corporate note, FDIC-guaranteed
    1,008       3       --       1,011       0.3  
Mortgage-backed securities, GSE-issued
    272,765       8,908       (70 )     281,603       73.9  
Mortgage-backed securities, private label
    369       --       (44 )     325       0.1  
                                         
Total
  $ 370,748     $ 10,242     $ (143 )   $ 380,847       100.0 %

 
 
 

10
 
 
For the quarter ended December 31, 2011, proceeds from sales of securities available-for-sale amounted to $27.4 million.  Gross realized gains on these sales totaled $573,000, while gross realized losses totaled $0.  Additionally, we had $8.0 million of securities called at a gain of $17,000.  We did not sell any securities during the quarter ended December 31, 2010.

The fair value of impaired securities, the amount of unrealized losses and the length of time these unrealized losses existed for the periods indicated were as follows (in thousands):

   
Less Than 12 Months
   
12 Months or Longer
   
Total
 
   
Fair Value
   
Unrealized Losses
   
Fair Value
   
Unrealized Losses
   
Fair Value
   
Unrealized Losses
 
December 31, 2011
                                   
Obligations of U.S. GSE
  $ 1,739     $ (11 )   $ --     $ --     $ 1,739     $ (11 )
Obligations of states and political subdivisions
    2,802       (33 )     --       --       2,802       (33 )
Mortgage-backed securities, GSE-issued
    38,732       (245 )     4,010       (8 )     42,742       (253 )
Mortgage-backed securities, private label
    --       --       311       (46 )     311       (46 )
                                                 
Total
  $ 43,273     $ (289 )   $ 4,321     $ (54 )   $ 47,594     $ (343 )
                                                 
September 30, 2011
                                               
Obligations of U.S. GSE
  $ 8,159     $ (22 )   $ 2,454     $ (7 )   $ 10,613     $ (29 )
Mortgage-backed securities, GSE-issued
    13,654       (70 )     10       --       13,664       (70 )
Mortgage-backed securities, private label
    --       --       325       (44 )     325       (44 )
                                                 
Total
  $ 21,813     $ (92 )   $ 2,789     $ (51 )   $ 24,602     $ (143 )

Management has evaluated these securities and has determined that the decline in fair value is not other than temporary. These securities have contractual maturity dates and management believes it is reasonably probable that principal and interest balances on these securities will be collected based on the performance, underwriting, credit support and vintage of the loans underlying the securities. However, continued deteriorating economic conditions may result in degradation in the performance of the loans underlying these securities in the future. The Company has the ability and intent to hold these securities for a reasonable period of time for a forecasted recovery of the amortized cost. The Company does not intend to sell these securities and it is not likely that the Company would be required to sell securities in an unrealized loss position before recovery of its cost basis.

The contractual maturities of investment securities available-for-sale are shown below (in thousands). Expected maturities may differ from the contractual maturities of such securities because borrowers have the right to prepay obligations without prepayment penalties.

   
December 31, 2011
   
September 30, 2011
 
   
Amortized
Cost
   
Fair Value
   
Amortized
Cost
   
Fair Value
 
                         
Due within one year
  $ 13,418     $ 13,455     $ 8,401     $ 8,421  
Due after one year through five years
    23,982       24,175       53,779       54,058  
Due after five years through ten years
    12,457       13,046       8,827       9,229  
Due after ten years
    37,343       38,124       26,607       27,211  
                                 
Mortgage-backed securities
    302,896       311,077       273,134       281,928  
                                 
    Total
  $ 390,096     $ 399,877     $ 370,748     $ 380,847  
 

 
 
 

11
 
As of December 31, and September 30, 2011, the Bank pledged investment securities for the following obligations (in thousands):

   
December 31, 2011
   
September 30, 2011
 
   
Amortized
Cost
   
Fair
 Value
   
Amortized
Cost
   
Fair
 Value
 
                         
FHLB borrowing line of credit
  $ 33,782     $ 36,460     $ 36,752     $ 39,838  
Federal Reserve Bank
    1,787       1,874       1,986       2,128  
Repurchase agreements
    7,458       7,858       8,218       8,604  
Deposits of municipalities and public units
    15,499       16,513       17,329       18,191  
Total
  $ 58,526     $ 62,705     $ 64,285     $ 68,761  
 
Note 5 - Loans Receivable and Allowance for Loan Losses

Loans receivable are summarized by collateral type as follows (dollars in thousands):

   
December 31, 2011
   
September 30, 2011
 
   
Amount
   
Percent
of Gross
   
Amount
   
Percent
of Gross
 
Real estate:
                       
One-to-four family residential
  $ 118,867       25.6 %   $ 125,640       26.0 %
Multifamily residential
    17,572       3.8       18,418       3.8  
Commercial
    206,215       44.3       205,929       42.6  
Total real estate
    342,654       73.7       349,987       72.4  
                                 
Real estate construction:
                               
One-to-four family residential
    9,355       2.0       9,054       1.9  
Multifamily residential
    --       --       111       --  
Commercial and land development
    16,928       3.6       16,174       3.3  
Total real estate construction
    26,283       5.6       25,339       5.2  
                                 
Consumer:
                               
Home equity
    47,192       10.2       48,901       10.1  
Automobile
    946       0.2       980       0.2  
Other consumer
    4,580       1.0       5,473       1.2  
Total consumer
    52,718       11.4       55,354       11.5  
                                 
Commercial business
    40,953       8.8       49,777       10.3  
Leases
    2,159       0.5       2,821       0.6  
Gross loans
    464,767       100.0 %     483,278       100.0 %
                                 
Deferred loan fees
    (688 )             (700 )        
Allowance for loan losses
    (14,171 )             (14,365 )        
                                 
Loans receivable, net
  $ 449,908             $ 468,213          

The following tables present loans at their recorded investment; therefore, the balances in the tables below may differ from the loan portfolio table above. Recorded investment includes the unpaid principal balance or the carrying amount of loans plus accrued interest less charge offs and net deferred loan fees. Accrued interest on loans was $1.3 million and $1.2 million as of December 31, 2011 and September 30, 2011, respectively.
 
 
 

12
 

Delinquent and nonaccrual loans. The following tables present the recorded investment in nonperforming loans and an aging of performing loans by class as of December 31, 2011 and September 30, 2011 (in thousands):

   
December 31, 2011
 
   
Nonperforming Loans
                         
   
Nonaccrual
   
Past Due 90
or More
Days,
Still Accruing
   
Total
   
Loans
Delinquent
30-59 Days
   
Loans
Delinquent
60-89 Days
   
Loans Not
Past Due
   
Total
Loans
 
Noncovered loans
                                         
Real estate:
                                         
One-to-four family residential
  $ 5,446     $ --     $ 5,446     $ 1,435     $ 149     $ 96,307     $ 103,337  
Multifamily residential
    --       --       --       --       --       13,184       13,184  
Commercial real estate
    7,601       --       7,601       --       --       137,480       145,081  
Total real estate
    13,047       --       13,047       1,435       149       246,971       261,602  
                                                         
Real estate construction:
                                                       
One-to-four family residential
    415       --       415       --       --       7,921       8,336  
Multifamily residential
    --       --       --       --       --       --       --  
Commercial real estate
    1,132       --       1,132       --       --       8,778       9,910  
Total real estate construction
    1,547       --       1,547       --       --       16,699       18,246  
                                                         
Consumer:
                                                       
Home equity
    676       --       676       55       114       33,894       34,739  
Automobile
    --       --       --       --       --       665       665  
Other consumer
    2       --       2       6       8       3,620       3,636  
Total consumer
    678       --       678       61       122       38,179       39,040  
                                                         
Commercial business
    422       --       422       --       --       5,796       6,218  
Leases
    --       --       --       --       --       257       257  
                                                         
Total noncovered loans
    15,694       --       15,694       1,496       271       307,902       325,363  
                                                         
Covered loans
                                                       
Real estate:
                                                       
One-to-four family residential
    753       --       753       --       --       14,880       15,633  
Multifamily residential
    1,372       --       1,372       --       --       3,016       4,388  
Commercial real estate
    5,934       --       5,934       --       --       55,200       61,134  
Total real estate
    8,059       --       8,059       --       --       73,096       81,155  
                                                         
Real estate construction:
                                                       
One-to-four family residential
    666       --       666       --       --       353       1,019  
Multifamily residential
    --       --       --       --       --       --       --  
Commercial real estate
    1,341       --       1,341       311       --       5,366       7,018  
   Total real estate construction
    2,007       --       2,007       311       --       5,719       8,037  
                                                         
Consumer:
                                                       
Home equity
    209       --       209       --       --       12,405       12,614  
Automobile
    --       --       --       --       --       281       281  
Other consumer
    5       --       5       --       --       973       978  
Total consumer
    214       --       214       --       --       13,659       13,873  
                                                         
Commercial business
    160       --       160       --       --       34,844       35,004  
Leases
    --       --       --       --       --       1,902       1,902  
                                                         
Total covered loans
    10,440       --       10,440       311       --       129,220       139,971  
Total gross loans
  $ 26,134     $ --     $ 26,134     $ 1,807     $ 271     $ 437,122     $ 465,334  

 
 

13
 

   
September 30, 2011
 
   
Nonperforming Loans
                         
   
Nonaccrual
   
Past Due 90
or More
Days, Still Accruing
   
Total
   
Loans
Delinquent
30-59 Days
   
Loans
Delinquent
60-89 Days
   
Loans Not
Past Due
   
Total
Loans
 
Noncovered loans
                                         
Real estate: