0001104659-12-077732.txt : 20121114 0001104659-12-077732.hdr.sgml : 20121114 20121114121602 ACCESSION NUMBER: 0001104659-12-077732 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20121114 DATE AS OF CHANGE: 20121114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Georgetown Bancorp, Inc. CENTRAL INDEX KEY: 0001542299 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-35595 FILM NUMBER: 121202402 BUSINESS ADDRESS: STREET 1: 2 EAST MAIN STREET CITY: GEORGETOWN STATE: MA ZIP: 01833 BUSINESS PHONE: 978-352-8600 MAIL ADDRESS: STREET 1: 2 EAST MAIN STREET CITY: GEORGETOWN STATE: MA ZIP: 01833 10-Q 1 a12-20208_110q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

	For the quarterly period ended September 30, 2012

	OR

___	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: 001-35595

GEORGETOWN BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland				80-0817763
(State or other jurisdiction of				(I.R.S. Employer
incorporation or organization)				Identification No.)

2 East Main Street, Georgetown, MA				01833
(Address of principal executive office)				(Zip Code)

(978) 352-8600

(Registrant’s telephone number, including area code)

None

(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 Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 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
Non-accelerated filer		Smaller reporting company X

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 the registrant’s common stock, as of the latest practicable date: Common Stock, $0.01 par value, 1,940,302 shares outstanding as of November 8, 2012.

Table of Contents

Form 10-Q

GEORGETOWN BANCORP, INC.

Table of Contents

			Page

Part I. Financial Information

Item 1:	Financial Statements

	Consolidated Statements of Financial Condition at September 30, 2012 (unaudited) and December 31, 2011		1

	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)		2

	Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2012 and 2011 (unaudited)		3

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 (unaudited)		4

	Notes to Consolidated Financial Statements		6

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23

Item 3:	Quantitative and Qualitative Disclosures About Market Risk		36

Item 4:	Controls and Procedures		36

Part II. Other Information

Item 1:		Legal Proceedings	36
Item 1A:		Risk Factors	36
Item 2:		Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3:		Defaults upon Senior Securities	36
Item 4:		Mine Safety Disclosures	36
Item 5:		Other Information	37
Item 6:		Exhibits	37

SIGNATURES			38

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PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

-----------------------------------------------------------------------------------

ASSETS

	At		At
	September 30,		December 31,
	2012		2011
	(Unaudited)
	(In thousands)

Cash and due from banks	$	2,066	$	9,598
Short-term investments	24,774		9,485
Total cash and cash equivalents	26,840		19,083

Securities available for sale, at fair value	6,744		4,174
Securities held to maturity, at amortized cost	1,765		2,322
Federal Home Loan Bank stock, at cost	2,861		3,111
Loans held for sale	969		769
Loans, net of allowance for loan losses of $1,751,000 at September 30, 2012 and $1,824,000 at December 31, 2011	163,592		161,120
Premises and equipment, net	3,810		3,882
Accrued interest receivable	601		627
Bank-owned life insurance	2,771		2,696
Other real estate owned	208		30
Prepaid FDIC insurance	254		362
Other assets	1,345		1,199

Total assets	$	211,760	$	199,375

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits	$	152,890	$	151,085
Securities sold under agreements to repurchase	-		573
Long-term Federal Home Loan Bank advances	24,600		25,121
Mortgagors’ escrow accounts	898		730
Accrued expenses and other liabilities	3,267		1,537
Total liabilities	181,655		179,046

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 par value per share: 50,000,000 shares authorized at September 30, 2012 and $0.10 par value per share: 1,000,000 shares authorized at December 31, 2011; none outstanding	-		-
Common Stock, $0.01 par value per share: 100,000,000 shares authorized, 1,940,302 shares issued at September 30, 2012 and $0.10 par value per share: 10,000,000 shares authorized, 2,777,250 shares issued at December 31, 2011	19		278
Additional paid-in capital	20,661		11,496
Retained earnings	10,542		10,010
Accumulated other comprehensive income	191		134
Unearned compensation - ESOP (103,177 shares unallocated at September 30, 2012 and 28,597 shares unallocated at December 31, 2011)	(1,104)		(286)
Unearned compensation - Restricted stock (30,281 shares non-vested at September 30, 2012 and 36,552 shares non-vested at December 31, 2011)	(204)		(167)
Treasury stock, at cost (133,347 shares at December 31, 2011)	-		(1,136)
Total stockholders’ equity	30,105		20,329

Total liabilities and stockholders’ equity	$	211,760	$	199,375

See accompanying notes to consolidated financial statements.

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GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

-----------------------------------------------------------

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(In thousands, except share and per share data)

Interest and dividend income:
Loans, including fees	$	2,092	$	2,486	$	6,504	$	7,869
Securities	72		87		218		278
Short-term investments	16		-		35		-
Total interest and dividend income	2,180		2,573		6,757		8,147

Interest expense:
Deposits	190		359		703		1,189
Short-term Federal Home Loan Bank advances	-		-		-		7
Long-term Federal Home Loan Bank advances	189		221		624		699
Securities sold under agreements to repurchase	-		1		1		2
Total interest expense	379		581		1,328		1,897

Net interest income	1,801		1,992		5,429		6,250
Provision for loan losses	67		80		162		825
Net interest income, after provision for loan losses	1,734		1,912		5,267		5,425

Non-interest income:
Customer service fees	144		129		411		394
Mortgage banking income, net	424		49		712		159
Income from bank-owned life insurance	26		25		75		74
Net gain on sale of other real estate owned	19		-		19		-
Other	3		-		11		-
Total non-interest income	616		203		1,228		627

Non-interest expenses:
Salaries and employee benefits	1,065		959		3,154		2,918
Occupancy and equipment expenses	228		191		659		576
Data processing expenses	161		115		406		332
Professional fees	96		94		310		303
Advertising expenses	91		35		266		193
FDIC insurance	41		26		118		127
Other general and administrative expenses	276		244		755		681
Total non-interest expenses	1,958		1,664		5,668		5,130

Income before income taxes	392		451		827		922

Income tax provision	148		167		295		326

Net income	$	244	$	284	$	532	$	596

Weighted-average number of common shares outstanding:
Basic	1,835,273		1,907,262		1,890,379		1,903,971
Diluted	1,840,867		1,908,637		1,892,986		1,904,394

Earnings per share:
Basic	$	0.13	$	0.15	$	0.28	$	0.31
Diluted	$	0.13	$	0.15	$	0.28	$	0.31

Comprehensive income:

Net income	$	244	$	284	$	532	$	596

Other comprehensive income, net of tax:
Unrealized gain on securities available for sale	39		40		57		23

Comprehensive income	$	283	$	324	$	589	$	619

See accompanying notes to consolidated financial statements.

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GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

----------------------------------------------------------------------------------------------------------

(unaudited)

							Accumulated
			Additional				Other		Unearned		Unearned
	Common		Paid-in		Retained		Comprehensive		Compensation-		Compensation-		Treasury
	Stock		Capital		Earnings		Income		ESOP		Restricted Stock		Stock		Total
							(In thousands)

Balance at December 31, 2010	$	278	$	11,424	$	8,999	$	120	$	(368)	$	(100)	$	(1,184)	$	19,169

Net income	-		-		596		-		-		-		-		596
Net unrealized loss on securities available for sale, net of related tax effects of $11,000	-		-		-		23		-		-		-		23

Common stock held by ESOP allocated or committed to be allocated (6,144 shares)	-		(19)		-		-		62		-		-		43

Restricted stock granted in connection with equity incentive plan (25,998 shares)	-		169		-		-		-		(169)		-		-

Forfeiture of restricted stock (7,650 shares)	-		(46)		-		-		-		46		-		-

Reissuance of treasury stock (5,796 shares)	-		(50)		-		-		-		-		50		-

Purchase of treasury stock (280 shares)	-		-		-		-		-		-		(2)		(2)

Share based compensation - options	-		18		-		-		-		-		-		18
Share based compensation - restricted stock	-		-		-		-		-		40		-		40

Balance at September 30, 2011	$	278	$	11,496	$	9,595	$	143	$	(306)	$	(183)	$	(1,136)	$	19,887

Balance at December 31, 2011	$	278	$	11,496	$	10,010	$	134	$	(286)	$	(167)	$	(1,136)	$	20,329

Net income	-		-		532		-		-		-		-		532
Net unrealized gain on securities available for sale, net of related tax effects of $32,000	-		-		-		57		-		-		-		57

Reorganization and related stock offering:
Exchange of common stock: 2,777,750 shares at $0.10 par value per share for 1,940,302 shares at $0.01 par value per share	(259)		259		-		-		-		-		-		-

Net proceeds from the issuance of common stock (1,100,000 shares)	-		9,930		-		-		-		-		-		9,930

Common stock acquired by ESOP (88,000 shares)	-		-		-		-		(880)		-		-		(880)

Merger of Georgetown Bancorp, MHC	-		5		-		-		-		-		-		5

Common stock held by ESOP allocated or committed to be allocated (5,430 shares)	-		(7)		-		-		62		-		-		55

Restricted stock granted in connection with equity incentive plan (12,606 shares)	-		109		-		-		-		(109)		-		-

Forfeiture of restricted stock (1,620 shares)	-		(13)		-		-		-		13		-		-

Reissuance of treasury stock (7,027 shares)	-		(83)		-		-		-		-		83		-

Purchase of treasury stock (986 shares)	-		-		-		-		-		-		(8)		(8)

Retirement of treasury stock	-		(1,061)		-		-		-		-		1,061		-

Share based compensation - options	-		26		-		-		-		-		-		26
Share based compensation - restricted stock	-		-		-		-		-		59		-		59

Balance at September 30, 2012	$	19	$	20,661	$	10,542	$	191	$	(1,104)	$	(204)	$	-	$	30,105

See accompanying notes to consolidated financial statements.

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GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

--------------------------------------------------------------------

(unaudited)

	Nine Months Ended September 30,
	2012		2011
	(In thousands)
Cash flows from operating activities:
Net income	$	532	$	596
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	162		825
Amortization (accretion) of securities, net	10		(5)
Net change in loan fees and costs	(261)		(25)
Depreciation and amortization expense	207		198
Decrease in accrued interest receivable	26		128
Income from bank-owned life insurance	(75)		(74)
Stock-based compensation expense	140		101
Gain on sale of loans	(843)		(214)
Loans originated for sale	(40,394)		(10,517)
Proceeds from sale of loans	41,037		10,665
Gain on sale of other real estate owned	(19)		-
Decrease in prepaid FDIC insurance	108		117
Net change in other assets and liabilities	1,552		(217)
Net cash provided by operating activities	2,182		1,578

Cash flows from investing activities:
Activity in securities available for sale:
Maturities, prepayments and calls	1,658		2,089
Purchases	(4,152)		(983)
Maturities, prepayments and calls of securities held to maturity	560		666
Redemption of Federal Home Loan Bank stock	250		-
Loan originations, net	6,942		10,062
Principal balance of loans purchased	(9,882)		-
Principal balance of portfolio loans sold	314		-
Purchase of premises and equipment	(135)		(132)
Proceeds from sale of other real estate owned	94		-
Net cash (used) provided by investing activities	(4,351)		11,702

(continued)

See accompanying notes to consolidated financial statements.

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GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

--------------------------------------------------------------------

(unaudited)

(concluded)

	Nine Months Ended September 30,
	2012		2011
	(In thousands)
Cash flows from financing activities:
Net change in deposits	1,805		(3,464)
Net change in securities sold under agreements to repurchase	(573)		56
Net change in Federal Home Loan Bank advances with maturities of three months or less	-		(3,500)
Proceeds of Federal Home Loan Bank advances with maturities greater than three months	8,500		-
Repayments of Federal Home Loan Bank advances with maturities greater than three months	(9,021)		(3,046)
Net change in mortgagors’ escrow accounts	168		63
Purchase of vested restricted shares to treasury stock	(8)		(2)
Cash received from Georgetown Bancorp, MHC due to reorganization	5		-
Net proceeds from issuance of common stock	9,050		-
Net cash provided (used) by financing activities	9,926		(9,893)

Net change in cash and cash equivalents	7,757		3,387

Cash and cash equivalents at beginning of period	19,083		3,298

Cash and cash equivalents at end of period	$	26,840	$	6,685

Supplementary information:
Interest paid on deposit accounts	$	706	$	1,187
Interest paid on borrowings	638		721
Income taxes paid	220		557
Loans transferred to other real estate owned	253		-

See accompanying notes to consolidated financial statements.

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GEORGETOWN BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

The accompanying unaudited financial statements of Georgetown Bancorp, Inc., a Maryland corporation, (the “Company”) were prepared in accordance with the instructions for Form 10-Q and with Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three- and nine-month periods ended September 30, 2012 are not necessarily indicative of the results that may be expected for future periods, including the entire fiscal year. These financial statements should be read in conjunction with the financial statements and notes thereto included in the December 31, 2011 Consolidated Financial Statements presented in the Annual Report on Form 10-K of Georgetown Bancorp, Inc., a federal corporation (“Georgetown Federal”) filed with the Securities and Exchange Commission on March 30, 2012. The consolidated financial statements include the accounts of Georgetown Bank (the “Bank”) and its wholly owned subsidiary, Georgetown Securities Corporation, which engages in the buying, selling and holding of securities. All significant inter-company balances and transactions have been eliminated in consolidation. These consolidated financial statements consider events that occurred through the date the consolidated financial statements were issued.

(2) Corporate Structure

In conjunction with its reorganization into the mutual holding company structure, on January 5, 2005, the Bank (i) converted to a stock savings bank as the successor to the Bank in its mutual form; (ii) organized Georgetown Federal as a federally-chartered corporation that owns 100% of the common stock of the Bank (in stock form); and (iii) organized Georgetown Bancorp, MHC as a federally-chartered mutual holding company that owned 56.7% of the Common Stock of Georgetown Federal as of June 30, 2012. On November 28, 2011, the Boards of Directors of Georgetown Federal, Georgetown Bancorp, MHC and the Bank each unanimously adopted a Plan of Conversion or Reorganization of the Mutual Holding Company pursuant to which Georgetown Bancorp, MHC undertook a “second-step” conversion and now ceases to exist. The Bank reorganized from a two-tier mutual holding company structure to a fully public stock holding company structure effective July 11, 2012, and, as a result, is now the wholly-owned subsidiary the Company.

As a result of the second-step conversion, all shares and per share amounts in the notes to consolidated financial statements have been restated giving retroactive recognition to the second-step exchange ratio of 0.72014. Options presented under the Company’s 2009 Equity Incentive Plan, common shares held by the Bank’s ESOP and shares of restricted stock before the second-step conversion were also exchanged using the exchange ratio of 0.72014.

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(3) Earnings Per Common Share

The Company has adopted the Earnings Per Share (“EPS”) guidance included in Accounting Standards Codification (“ASC”) 260-10. As presented below, basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. For purposes of computing diluted EPS, the treasury stock method is used.

Treasury shares and unallocated ESOP shares are not deemed outstanding for earnings per share calculations.

Earnings per common share have been computed based on the following.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011

Net income available to common stockholders	$	244,000	$	284,000	$	532,000	$	596,000

Basic common shares:
Weighted average shares outstanding	1,910,017		1,903,980		1,908,847		1,903,200
Less: Weighted average unallocated ESOP shares	(105,025)		(23,041)		(47,909)		(24,512)
Add: Weighted average unvested restricted shares with non-forfeitable dividend rights	30,281		26,323		29,441		25,283
Basic weighted average common shares outstanding	1,835,273		1,907,262		1,890,379		1,903,971

Dilutive potential common shares	5,594		1,375		2,607		423

Diluted weighted average common shares outstanding	1,840,867		1,908,637		1,892,986		1,904,394

Basic earnings per share	$	0.13	$	0.15	$	0.28	$	0.31

Diluted earnings per share	$	0.13	$	0.15	$	0.28	$	0.31

Options to purchase 40,681 shares, representing all outstanding options, were included in the computation of diluted earnings per share for the three and nine month periods ended September 30, 2012. Options to purchase 30,496 shares, representing all outstanding options, were included in the computation of diluted earnings per share for the three and nine month periods ended September 30, 2011.

(4) Recent Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2011-03, “Reconsideration of Effective Control for Repurchase Agreements.” The objective of this ASU is to improve the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. This ASU prescribes when an entity may or may not recognize a sale upon the transfer of financial assets subject to repurchase agreements. The guidance in this ASU is effective for the first interim or annual period beginning on or after December 15, 2011. Early adoption is not permitted. The Company’s adoption of this guidance did not have a material impact on its financial position or results of operation.

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards.” The amendments in this ASU explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. The Company’s adoption of this guidance did not have a material impact on its financial position or results of operation.

In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.” The objective of this ASU is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. Under this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. An entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. An entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the

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statement(s) where the components of net income and the components of other comprehensive income are presented. The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company’s adoption of this guidance did not have a material impact on its financial position or results of operation.

In December 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities.” This ASU is to enhance current disclosures. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The amendments in this ASU are effective for annual periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company does not anticipate that the adoption of this guidance will have a material impact on its financial position or results of operation.

In December 2011, the FASB issued 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.” The amendments in this update defer those changes in ASU 2011-05 that relate to the presentation of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. All other requirements in ASU 2011-05 are not affected by this update. The amendments are effective during interim and annual periods beginning after December 15, 2011. The Company’s adoption of this guidance did not have a material impact on its financial position or results of operation.

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(5) Securities

A summary of securities is as follows.

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)

At September 30, 2012

Securities available for sale

Residential mortgage-backed securities	$	6,447	$	297	$	-	$	6,744

Securities held to maturity

Residential mortgage-backed securities	$	1,765	$	163	$	-	$	1,928

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)

At December 31, 2011

Securities available for sale

Government-sponsored enterprise obligations	$	502	$	1	$	-	$	503
Residential mortgage-backed securities	3,464		207		-		3,671

Total securities available for sale	$	3,966	$	208	$	-	$	4,174

Securities held to maturity

Residential mortgage-backed securities	$	2,322	$	184	$	-	$	2,506

All residential mortgage-backed securities have been issued by government-sponsored enterprises.

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The amortized cost and estimated fair value of debt securities by contractual maturity at September 30, 2012 are as follows. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In thousands)

Residential mortgage-backed securities	$	6,447	$	6,744	$	1,765	$	1,928

There were no sales of securities for the three and nine months ended September 30, 2012 and 2011.

There were no securities with gross unrealized losses at September 30, 2012 and December 31, 2011.

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(6) Loans and Servicing

Loans

A summary of loans is as follows.

	At September 30, 2012			At December 31, 2011
	Amount		Percent	Amount		Percent
	(Dollars in thousands)

Residential loans:
One-to-four family	$	81,566	49.46%	$	62,613	38.46%
Home equity loans and lines of credit	15,876		9.63	17,118		10.51
Total residential mortgage loans	97,442		59.09	79,731		48.97

Commercial loans:
One-to-four family investment property	9,305		5.64	10,816		6.64
Multi-family real estate	9,486		5.75	13,037		8.01
Commercial real estate	26,889		16.30	25,399		15.60
Commercial business	6,686		4.05	10,137		6.23
Total commercial loans	52,366		31.74	59,389		36.48

Construction loans:
One-to-four family	7,104		4.31	11,941		7.33
Multi-family	7,138		4.33	10,656		6.55
Non-residential	451		0.27	629		0.39
Total construction loans	14,693		8.91	23,226		14.27

Consumer	435		0.26	451		0.28

Total loans	164,936		100.00%	162,797		100.00%

Other items:
Net deferred loan costs	407			147
Allowance for loan losses	(1,751)			(1,824)

Total loans, net	$	163,592		$	161,120

Table of Contents

An analysis of the allowance for loan losses at September 30, 2012 and December 31, 2011 is below. For additional information please refer to Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Residential				Commercial								Construction
	One-to-four family		Home equity loans and lines of credit		One-to-four family investment property		Multi-family real estate		Commercial real estate		Commercial business		One-to-four family		Multi-family		Non- residential		Consumer		Total
	(In thousands)
At September 30, 2012

Allowance for loan losses

Beginning Balance	$	346	$	341	$	59	$	98	$	400	$	234	$	228	$	98	$	11	$	9	$	1,824
Charge-offs	(144)		-		-		-		-		(11)		(191)		-		-		(31)		(377)
Recoveries	137		-		-		-		-		-		-		-		-		5		142
Provision	21		(82)		(8)		(27)		248		(99)		113		(32)		1		27		162
Ending Balance	$	360	$	259	$	51	$	71	$	648	$	124	$	150	$	66	$	12	$	10	$	1,751

Ending balance:
individually evaluated for impairment	$	109	$	13	$	-	$	-	$	264	$	-	$	-	$	-	$	-	$	-	$	386

Ending balance:
collectively evaluated for impairment	$	251	$	246	$	51	$	71	$	384	$	124	$	150	$	66	$	12	$	10	$	1,365

Loans

Ending Balance	$	81,566	$	15,876	$	9,305	$	9,486	$	26,889	$	6,686	$	7,104	$	7,138	$	451	$	435	$	164,936

Ending balance:
individually evaluated for impairment	$	837	$	77	$	-	$	-	$	2,425	$	-	$	767	$	-	$	-	$	-	$	4,106

Ending balance:
collectively evaluated for impairment	$	80,729	$	15,799	$	9,305	$	9,486	$	24,464	$	6,686	$	6,337	$	7,138	$	451	$	435	$	160,830

At December 31, 2011

Allowance for loan losses

Beginning Balance	$	233	$	320	$	60	$	106	$	431	$	304	$	93	$	83	$	6	$	15	$	1,651
Charge-offs	-		(741)		-		-		(10)		(3)		-		-		-		(34)		(788)
Recoveries	9		-		-		-		-		1		-		-		-		2		12
Provision	104		762		(1)		(8)		(21)		(68)		135		15		5		26		949
Ending Balance