10-Q 1 a12-20208_110q.htm 10-Q

Table of Contents

 

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

 



Table of Contents

 

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.

 

1



Table of Contents

 

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.

 

2



Table of Contents

 

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.

 

3



Table of Contents

 

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.

 

4



Table of Contents

 

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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Table of Contents

 

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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Table of Contents

 

(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

 

7



Table of Contents

 

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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Table of Contents

 

(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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Table of Contents

 

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.

 

10



Table of Contents

 

(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

 

 

 

 

11



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

 

  $

346