XNAS:OSHC Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended June 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: 0-53856

 

OCEAN SHORE HOLDING CO.

(Exact name of registrant as specified in its charter)

 

New Jersey 80-0282446
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

 

1001 Asbury Avenue, Ocean City, New Jersey 08226
(Address of principal executive offices) (Zip Code)

  

(609) 399-0012

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes T 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 T 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. (Check one)

 

Large Accelerated Filer £ Accelerated Filer T
Non-accelerated Filer £ Smaller Reporting Company £
(Do not check if a 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 T

 

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of the latest practicable date:

At August 1, 2012, the registrant had 7,181,843 shares of $0.01 par value common stock outstanding.

 

 
 

 

OCEAN SHORE HOLDING CO.

 

FORM 10-Q

 

INDEX

 

    Page
     
PART I. FINANCIAL INFORMATION  
     
Item 1. Financial Statements  
     
  Unaudited Condensed Consolidated Statements of Financial Condition  
  at June 30, 2012 and December 31, 2011 1
     
  Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for  
  the three and six months ended June 30, 2012 and 2011 2
     
  Unaudited Condensed Consolidated Statements of Cash Flows for the six months  
  ended June 30, 2012 and 2011 3
     
  Notes to Unaudited Condensed Consolidated Financial Statements 4
     
Item 2. Management’s Discussion and Analysis of Financial Condition  
  and Results of Operations 24
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 35
     
Item 4. Controls and Procedures 35
     
PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 35
     
Item 1A. Risk Factors 35
     
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 36
     
Item 6. Exhibits 36
     
SIGNATURES    

 

 
 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

   June 30,   December 31, 
ASSETS  2012   2011 
           
Cash and amounts due from depository institutions  $9,034,758   $6,616,214 
Interest-earning bank balances   164,826,128    149,036,727 
           
Cash and cash equivalents   173,860,886    155,652,941 
           
Investment securities held to maturity
          
(estimated fair value—$5,736,033 at June 30, 2012; $6,147,579 at December 31, 2011)   5,582,189    5,964,393 
Investment securities available for sale          
(amortized cost— $87,412,201 at June 30, 2012; $47,639,832 at December 31, 2011)   86,903,344    46,767,668 
Loans—net of allowance for loan losses of $3,698,032 at June 30, 2012          
and $3,762,295 at December 31, 2011   701,749,954    727,626,278 
Accrued interest receivable:          
Loans   2,470,343    2,550,769 
Investment securities   334,873    294,492 
Federal Home Loan Bank stock—at cost   6,389,800    6,434,800 
Office properties and equipment—net   13,781,524    14,054,679 
Prepaid expenses and other assets   5,780,148    6,768,740 
Real estate owned   572,199    97,500 
Cash surrender value of life insurance   19,195,670    18,812,573 
Net deferred tax asset   4,344,426    4,484,212 
Goodwill   4,629,503    4,544,121 
Other intangible assets   678,000    677,000 
           
TOTAL ASSETS  $1,026,272,859   $994,730,166 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
LIABILITIES:          
Non-interest bearing deposits  $90,339,181   $75,551,232 
Interest bearing deposits   692,011,493    676,903,679 
Advances from Federal Home Loan Bank   110,000,000    110,000,000 
Junior subordinated debenture   15,464,000    15,464,000 
Advances from borrowers for taxes and insurance   4,077,456    3,999,306 
Accrued interest payable   1,138,062    1,146,482 
Other liabilities   7,635,593    6,985,863 
           
Total liabilities   920,665,785    890,050,562 
           
COMMITMENTS AND CONTINGENCIES          
           
STOCKHOLDERS’ EQUITY:          
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued   -    - 
Common stock, $.01 par value, 25,000,000 shares authorized, 7,308,118 shares issued; 7,185,843          
shares outstanding at June 30, 2012; 7,291,643 shares outstanding at  December 31, 2011   73,076    73,076 
Additional paid-in capital   64,614,594    64,408,624 
Retained earnings - partially restricted   46,923,942    45,147,396 
Treasury stock—at cost: 121,747 at June 30, 2012; 15,947 at December 31, 2011
   (1,447,456)   (174,232)
Common stock acquired by employee benefits plans   (3,494,478)   (3,665,478)
Deferred compensation plans trust   (556,014)   (538,982)
Accumulated other comprehensive loss   (506,590)   (570,800)
           
Total stockholders’ equity   105,607,074    104,679,604 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $1,026,272,859   $994,730,166 

 

See notes to unaudited condensed consolidated financial statements.

 

 

1
 

 

 

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2012   2011   2012   2011 
                 
INTEREST AND DIVIDEND INCOME:                    
Taxable interest and fees on loans  $8,732,067   $8,629,480   $17,732,602   $17,184,052 
Taxable interest on mortgage-backed securities   260,972    151,799    426,374    316,435 
Non-taxable interest on municipal securities   17,905    10,473    72,189    21,119 
Taxable interest and dividends on other investment securities   402,289    375,780    793,324    683,654 
                     
Total interest and dividend income   9,413,233    9,167,532    19,024,489    18,205,260 
                     
INTEREST EXPENSE:                    
Interest on deposits   1,105,647    1,494,677    2,321,091    3,060,664 
Interest on borrowings   1,510,333    1,510,333    3,020,667    3,007,765 
                     
Total interest expense   2,615,980    3,005,010    5,341,758    6,068,429 
                     
NET INTEREST INCOME   6,797,253    6,162,522    13,682,731    12,163,831 
                     
PROVISION FOR LOAN LOSSES   253,000    128,035    425,900    202,835 
                     
NET INTEREST INCOME AFTER PROVISION                    
FOR LOAN LOSSES   6,544,253    6,034,487    13,256,831    11,933,996 
                     
OTHER INCOME:                    
Service charges   423,218    394,590    834,067    754,386 
Cash surrender value of life insurance   149,896    130,365    298,098    258,833 
Gain on call of securities
   15,000    -    15,000    10,014 
Other   377,344    336,786    723,283    640,596 
                     
Total other income   965,458    861,741    1,870,448    1,663,829 
                     
OTHER EXPENSE:                    
Salaries and employee benefits   3,050,870    2,568,056    6,180,791    5,180,749 
Occupancy and equipment   1,259,299    1,133,834    2,494,586    2,118,025 
Federal insurance premiums   128,891    186,188    256,584    373,268 
Advertising   130,981    145,457    247,926    251,487 
Professional services   274,285    310,191    526,342    604,638 
Real estate owned expense   582    1,250    3,259    2,499 
Charitable contributions   37,500    36,000    75,000    72,000 
Other operating expenses   508,581    429,210    1,007,505    863,385 
                     
Total other expenses   5,390,989    4,810,186    10,791,993    9,466,051 
                     
INCOME BEFORE INCOME TAXES   2,118,722    2,086,042    4,335,286    4,131,774 
                     
INCOME TAX EXPENSE   822,217    928,525    1,684,343    1,769,671 
                     
NET INCOME  $1,296,505   $1,157,517   $2,650,943   $2,362,103 
                     
Other comprehensive income, net of tax:                    
Unrealized gain (loss) on post retirement life benefit   5,712        (159,311)                 ─ 
Unrealized gain on securities   269,301    164,068    223,520    415,231 
                     
COMPREHENSIVE INCOME  $1,571,518   $1,321,585   $2,715,152   $2,777,334 
                     
Earnings per share, basic:  $0.19   $0.17   $0.39   $0.35 
Earnings per share, diluted:  $0.19   $0.17   $0.39   $0.35 
                     

 

See notes to unaudited condensed consolidated financial statements.

 

 

2
 

 

 

OCEAN SHORE HOLDING CO. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   Six Months Ended June 30, 
   2012   2011 
OPERATING ACTIVITIES:          
   Net income  $2,650,943   $2,362,103 
   Adjustments to reconcile net income to net cash provided by operating activities:          
     Depreciation and amortization   566,135    341,132 
     Provision for loan losses   425,900    202,835 
     Stock based compensation expense   376,970    371,722 
     Gain on call of AFS securities   15,000    (10,014)
     Cash surrender value of life insurance   (298,097)   (258,833)
   Changes in assets and liabilities which provided (used) cash:          
     Accrued interest receivable   40,045    (181,261)
     Prepaid expenses and other assets   973,592    (10,712)
     Accrued interest payable   (8,420)   (10,539)
     Other liabilities   490,419    60,239 
           Net cash provided by operating activities   5,232,487    2,866,672 
INVESTING ACTIVITIES:          
   Principal collected on:          
       Investment securities available for sale   5,780,095    1,903,443 
       Investment securities held to maturity   349,524    295,283 
   Loans originated, net of repayments   25,205,739    (2,422,060)
   Purchases of:          
       Life insurance contracts   (85,000)    
       Loans   (342,000)   (168,000)
       Investment securities held to maturity   (88,000)   (1,000,000)
       Investment securities available for sale   (61,199,502)   (25,005,000)
       Office properties and equipment   (251,158)   (247,933)
   Proceeds from sale/ maturities/ calls of:          
       Federal Home Loan Bank stock   45,000    20,900 
        Investment securities held to maturity   120,000            ─ 
        Investment securities available for sale   15,590,000    724,361 
           Net cash used in investing activities   (14,875,302)   (25,899,006)
FINANCING ACTIVITIES:          
   Increase in deposits   29,937,263    17,854,373 
   Dividends paid   (874,397)   (875,614)
   Purchase of treasury stock   (1,273,224)    
   Purchase of shares by deferred compensation plans trust   (17,032)   (5,347)
   Increase in advances from borrowers for taxes and insurance   78,150    239,974 
           Net cash provided by financing activities   27,850,760    17,213,386 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   18,207,945    (5,818,948)
CASH AND CASH EQUIVALENTS—Beginning of period   155,652,941    110,865,154 
CASH AND CASH EQUIVALENTS—End of period  $173,860,886   $105,046,206 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW          
   INFORMATION—Cash paid during the period for:          
   Interest  $5,393,677   $6,078,967 
   Income Taxes  $1,848,500   $1,890,574 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS          
   Transfers of loans to real estate owned  $474,699   $ 

 

See notes to unaudited condensed consolidated financial statements. 

3
 

 

 

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Financial Statement Presentation - The unaudited condensed consolidated financial statements include the accounts of Ocean Shore Holding Co. (the “Company”) and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements were prepared in accordance with instructions to Form 10-Q, pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC) for interim information, and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations, changes in stockholders’ equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the condensed consolidated financial statements have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2011. The results for the six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2012 or any other period. The Company has evaluated subsequent events through the date of the issuance of its financial statements.


Use of Estimates in the Preparation of Financial Statements - The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions relate to the allowance for loan losses, deferred income taxes and the fair value measurement for investment securities available for sale. Actual results could differ from those estimates.

 

New Accounting Pronouncements In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-08, Testing Goodwill for Impairment.  This update amends the current guidance on testing goodwill for impairment. Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting unit. If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. This update does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill annually for impairment. In addition, the update does not amend the requirement to test goodwill for impairment between annual tests if events or circumstances warrant; however, it does revise the examples of events and circumstances that an entity should consider. The amendments became effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.  The adoption of this accounting guidance did not have a material impact on the Company’s consolidated financial statements.

 

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income.  This update to comprehensive income guidance requires all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or two separate but consecutive statements.  In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The new accounting guidance was effective beginning January 1, 2012 and was applied retrospectively. The adoption of this update impacted the presentation and disclosure of the Company’s financial statements but did not impact its results of operations, financial position, or cash flows.

 

4
 

 

 

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.  This update to fair value measurement guidance addresses changes to concepts regarding performing fair value measurements including: (i) the application of the highest and best use and valuation premise; (ii) the valuation of an instrument classified in the reporting entity’s shareholders’ equity; (iii) the valuation of financial instruments that are managed within a portfolio; and (iv) the application of premiums and discounts.  This update also enhances disclosure requirements about fair value measurements, including providing information regarding Level 3 measurements such as quantitative information about unobservable inputs, further discussion of the valuation processes used and assumption sensitivity analysis.  The new accounting guidance is effective beginning January 1, 2012.  The adoption of this update impacted the presentation and disclosure of the Company’s financial statements but did not impact its results of operations, financial position, or cash flows.

 

December 2011, the FASB issued ASU No. 2011-12, ASU No. 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.” This update defers the effective date for the part of ASU No. 2011-05 that would have required adjustments of items out of accumulated other comprehensive income to be presented on the components of both net income and other comprehensive income in the financial statements until FASB can adequately evaluate the costs and benefits of this presentation requirement. The new accounting guidance was effective beginning January 1, 2012 and was applied retrospectively. The adoption of this update impacted the presentation and disclosure of the Company’s financial statements but did not impact its results of operations, financial position, or cash flows.

 

In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-lived Intangible Assets for Impairment. This update amends the current guidance on testing indefinite-lived intangible assets for impairment. Under the revised guidance, entities testing indefinite-lived intangible assets for impairment have the option of performing a qualitative assessment before calculating the fair value of the asset. An entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. The amendments are effective for annual and interim indefinite-lived intangible assets impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this accounting guidance did not have a material impact on the Company's consolidated financial statements.

 

5
 

 

 

 

2.  INVESTMENT SECURITIES

 

Investment securities are summarized as follows:

 

   June 30, 2012 
       Gross   Gross   Estimated 
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gain   Loss   Value 
Held to Maturity                    
Debt Securities - Municipal  $3,988,000   $   $   $3,988,000 
US Treasury and government sponsored entity mortgage-backed securities   1,594,189    153,844        1,748,033 
Totals  $5,582,189   $153,844   $   $5,736,033 
                     
Available for Sale                    
Debt securities:                    
Municipal  $830,000   $2,880   $   $832,880 
Corporate   13,454,034    52,491    (1,295,637)   12,210,888 
U.S. Treasury and federal agencies   21,318,887    31,784    (27,787)   21,322,884 
Equity securities   2,596    12,114    (1,933)   12,777 
US treasury and government sponsored entity mortgage-backed securities   51,806,684    752,225    (34,994)   52,523,915 
Totals  $87,412,201   $851,494   $(1,360,351)  $86,903,344 

 

   December 31, 2011 
       Gross   Gross   Estimated 
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gain   Loss   Value 
Held to Maturity                    
Debt Securities - Municipal  $4,020,000   $   $   $4,020,000 
US Treasury and government sponsored entity
mortgage-backed securities
   1,944,393    183,186        2,127,579 
Totals  $5,964,393   $183,186   $   $6,147,579 
                     
Available for Sale                    
Debt securities:                    
Municipal  $830,000   $2,000   $   $832,000 
Corporate   7,700,531    35,450    (1,625,673)   6,110,308 
U.S. Treasury and federal agencies   25,660,016    24,720    (148)   25,684,588 
Equity securities   2,596    11,980    (2,034)   12,542 
US Treasury and government sponsored entity mortgage-backed securities   13,446,689    707,047    (25,506)   14,128,230 
Totals  $47,639,832   $781,197   $(1,653,361)  $46,767,668 

 

The following table provides the gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at June 30, 2012 and December 31, 2011:

 

 

6
 

 

 

 

   June 30, 2012 
   Less Than 12 Months   12 Months or Longer   Total 
       Gross       Gross       Gross 
   Estimated   Unrealized   Estimated   Unrealized   Estimated   Unrealized 
   Fair Value   Loss   Fair Value   Loss   Fair Value   Loss 
Debt securities -                              
U.S. Agencies  $6,254,494   $(27,787)  $   $   $6,254,494   $(27,787)
Corporate   2,981,292    (16,788)   3,424,203    (1,278,850)   6,405,495    (1,295,638)
US treasury and government sponsored entity mortgage-backed securities   7,316,792    (34,993)           7,316,792    (34,993)
Equity securities           663    (1,933)   663    (1,933)
Totals  $16,552,578   $(79,568)  $3,424,866   $(1,280,783)  $19,977,444   $(1,360,351)
                               

 

   December 31, 2011 
   Less Than 12 Months   12 Months or Longer   Total 
       Gross       Gross       Gross 
   Estimated   Unrealized   Estimated   Unrealized   Estimated   Unrealized 
   Fair Value   Loss   Fair Value   Loss   Fair Value   Loss 
Debt securities -                              
U.S. Treasury  $32,797   $(148)  $   $   $32,797   $(148)
Corporate           4,076,639    (1,625,673)   4,076,639    (1,625,673)
US treasury and government sponsored entity mortgage-backed securities   2,685,526    (25,506)           2,685,526    (25,506)
Equity securities           562    (2,034)   562    (2,034)
Totals  $2,718,323   $(25,564)  $4,077,201   $(1,627,707)  $6,795,524   $(1,653,361)

 

Management has reviewed its investment securities as of June 30, 2012 and has determined that all declines in fair value below amortized cost are temporary.

 

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company determines whether the unrealized losses are temporary in accordance with FASB ASC 325-40, when applicable, and FASB ASC 320-10. The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities. Management also evaluates other facts and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost, and near-term prospects of the issuer.

 

Below is a roll forward of the anticipated credit losses on securities for which the Company has recorded other than temporary impairment charges through earnings and other comprehensive income.

 

7
 

 

 

 

   2012   2011 
Credit component of OTTI as of January 1  $3,000,000   $3,000,000 
Additions for credit related OTTI charges on previously unimpaired securities        
Reductions for securities sold during the period        
Reductions for increases in cash flows expected to be collected and recognized over the remaining life of the security        
Additional increases as a result of impairment charges recognized on investments for which an OTTI was previously recognized        
Credit component of OTTI as of June 30,  $3,000,000   $3,000,000 

 

Two pooled trust preferred collateralized debt obligations (“CDOs”) backed by bank trust capital securities have been determined to be other-than-temporarily impaired in 2009 and 2008, due solely to credit related factors. These securities have Fitch credit below investment grade at June 30, 2012. Each of the securities is in the mezzanine levels of credit subordination. The underlying collateral consists of the bank trust capital securities of over 50 institutions. A summary of key assumptions utilized to forecast future expected cash flows on the securities determined to have OTTI were as follows as of June 30, 2012 and 2011:

 

   June 30, 2012  June 30, 2011
Future loss rate assumption per annum  .8% to 1.2%  .8% to 1.2%
Expected cumulative loss percentage  27.8%  27.8%
Cumulative loss percentage to date  37.0% to 33.2%  37.0% to 33.2%
Remaining life   29 years  30 years

 

Corporate Debt Securities - The Company’s investments in the preceding table in corporate debt securities consist of corporate debt securities issued by large financial institutions and single issuer and pooled trust preferred/collateralized debt obligations backed by bank trust preferred capital securities.

 

At June 30, 2012, two single issuer trust preferred securities had been in a continuous unrealized loss position for 12 months or longer. Those securities had aggregate depreciation of 49.8% from the Company’s amortized cost basis. The decline is primarily attributable to depressed pricing of two private placement single issuer trust preferred securities. There has been limited secondary market trading for these types of securities, as a declining domestic economy and increasing credit losses in the banking industry have led to illiquidity in the market for these types of securities. The unrealized loss on these debt securities relates principally to the increased credit spread and a lack of liquidity currently in the financial markets for these types of investments.  These securities were performing in accordance with their contractual terms as of June 30, 2012, and had paid all contractual cash flows since the Company’s initial investment. Management believes these unrealized losses are not other-than-temporary based upon the Company’s analysis that the securities will perform in accordance with their terms and the Company’s intent not to sell these investments for a period of time sufficient to allow for the anticipated recovery of fair value, which may be maturity.  The Company expects recovery of fair value when market conditions have stabilized and that the Company will receive all contractual principal and interest payments related to those investments.

 

United States Treasury, US Federal Agencies and Government Sponsored Enterprise Mortgage-backed Securities - The Company’s investments in the preceding table in United States government sponsored enterprise notes consist of debt obligations of the Federal Home Loan Bank (“FHLB”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Federal National Mortgage Association (“FNMA”). At June 30, 2012 the Company had no agency mortgage-backed securities with unrealized losses for 12 months or longer.

 

The amortized cost and estimated fair value of debt securities available for sale and held to maturity at June 30, 2012 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

 

8
 

 

   June 30, 2012 
   Held to Maturity   Available for Sale Securities 
   Amortized   Estimated   Amortized   Estimated 
   Cost   Fair Value   Cost   Fair Value 
Due within 1 year  $3,988,000   $3,988,000   $   $ 
Due after 1 year through 5 years           6,784,982    6,837,192 
Due after 5 years through 10 years           5,036,606    5,040,190 
Due after 10 years           23,781,333    22,489,270 
Total  $3,988,000   $3,988,000   $35,602,921   $34,366,652 

 

Equity securities had a cost of $2,596 and a fair value of $12,777 as of June 30, 2012. Mortgage-backed securities had a cost of $53,400,873 and a fair value of $54,271,948 as of June 30, 2012.

 

3. LOANS RECEIVABLE NET      
       
Loans receivable consist of the following:    

 

   June 30, 2012   December 31, 2011 
Real estate - mortgage:          
One-to-four family residential  $517,510,241   $547,906,420 
Commercial and multi-family   78,757,690    77,072,427 
Total real estate-mortgage   596,267,931    624,978,847 
Real estate - construction:          
Residential   11,622,777    8,057,416 
Commercial   5,106,435    3,790,673 
Total real estate - construction   16,729,212    11,848,089 
Commercial   24,220,859    23,937,050 
Consumer:          
Home equity   64,211,920    66,787,820 
Other consumer loans   867,367    809,965 
Total consumer loans   65,079,287    67,597,785 
Total  loans   702,297,289    728,361,771 
Net deferred loan cost   3,150,697    3,026,802 
Allowance for loan losses   (3,698,032)   (3,762,295)
Net total loans  $701,749,954   $727,626,278 

 

Changes in the allowance for loan losses are as follows:
         
   Six Months Ended June 30, 
   2012   2011 
Balance, beginning of period  $3,762,295   $3,988,076 
Provision for loan loss   425,900    202,835 
Charge-offs   (503,783)   (122,946)
Recoveries   13,620     
Balance, end of period  $3,698,032   $4,067,965 

 

9
 

 

 

The provision for loan losses charged to expense is based upon past loan loss experiences and an evaluation of losses in the current loan portfolio, including the evaluation of impaired loans. The Company established a provision for loan losses of $425,900 for the six months ended June 30, 2012 as compared to $202,835 for the comparable period in 2011. The increase in the provision for loan losses was a result of required reserves for an increase in classified loans.

 

A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant delay or insignificant shortfall in amount of payments does not necessarily result in the loan being identified as impaired. For this purpose, delays less than 90 days generally are considered to be insignificant. As of June 30, 2012 and December 31, 2011, the impairment was measured based on the fair value of the loans’ collateral, adjusted for cost to dispose. Loans collectively evaluated for impairment include residential real estate loans, consumer loans, and smaller balance commercial and commercial real estate loans.

 

Non-performing loans at June 30, 2012 and December 31, 2011 consisted of non-accrual loans that amounted to $4,751,354 and $5,676,819 respectively, and non-accrual troubled debt restructurings of $0 and $805,095, respectively. The reserve for delinquent interest on loans totaled $347,742 and $425,384, at June 30, 2012 and December 31, 2011, respectively.

Non-accrual loans segregated by class of loans are as follows:

   June 30, 2012   December 31, 2011 
Real estate          
One-to-four family residential  $3,039,015   $4,768,395 
Commercial and multi-family   1,229,351    392,146 
Commercial   200,000    318,230 
Consumer   282,988    198,048 
Non-accrual loans   4,751,354    5,676,819 
Troubled debt restructuring, non-accrual       805,095 
Total non-accrual loans  $4,751,354   $6,481,914 

 

 

A rollforward of the Company’s nonaccretable and accretable yield on loans accounted for under ASC 310-30, Loans and Debts Securities Acquired with Deteriorated Credit Quailty, is shown below for the six month period ended June 30, 2012:

 

   Contractual
Receivable
Amount
   Nonaccretable
(Yield)/Premium
   Accretable
(Yield)/Premium
   Carrying
Amount
 
                     
Balance at January 1, 2012  $78,039,662    (3,835,961)   1,284,000    75,487,701 
Principal reductions   (13,076,846)           (13,076,846)
Charge-offs, net   (460,738)   460,738         
Amortization of loan premium           (150,500)   (150,500)
Settlement adjustments       (85,382)       (85,382)
Balance at June 30, 2012  $64,502,078   $(3,460,605)  $1,133,500   $62,174,973 

 

10
 

 

 

An age analysis of past due loans, segregated by class of loans, as of June 30, 2012 and December 31, 2011 is as follows:

 

   30-59 Days Past Due   60-89 Days
Past Due
   Greater Than
90 Days
   Total Past Due   Current   Total Loans Receivable 
June 30, 2012                              
Real Estate                              
1-4 Family Residential  $920,693   $155,855   $3,039,015   $4,115,563   $513,394,678   $517,510,241 
Commercial and Multi-Family   427,118    -    1,229,351    1,656,469    77,101,221    78,757,690 
Construction   -    -    -    -    16,729,212    16,729,212 
Commercial   -    -    200,000    200,000    24,020,859    24,220,859 
Consumer   64,545    74,364    282,988    421,897    64,657,390    65,079,287 
Total  $1,412,356   $230,219   $4,751,354   $6,393,929   $695,903,360   $702,297,289 
                               
December 31, 2011                              
Real Estate                              
1-4 Family Residential  $665,563   $-   $4,768,395   $5,433,958   $542,472,462   $547,906,420 
Commercial and Multi-Family   12,318    -    392,146    404,464    76,667,963    77,072,427 
Construction   -    -    -    -    11,848,089    11,848,089 
Commercial   -    -    318,230    318,230    23,618,820    23,937,050 
Consumer   218,766    198,995    198,048    615,809    66,981,976    67,597,785 
Total  $896,647   $198,995   $5,676,819   $6,772,461   $721,589,310   $728,361,771 

 

Impaired loans are set forth in the following table. No interest income was recognized on impaired loans subsequent to their classification as impaired.

 

   Recorded
Investment
   Unpaid
Principal
Balance
   Related
Allowance
   Average
Recorded Investment
 
June 30, 2012                    
With no related allowance recorded                    
   Real Estate                    
     1-4 Family Residential  $2,158,516   $1,962,203   $-   $196,229 
     Commercial and Multi-Family   1,229,351    1,229,351    -    409,784 
   Commercial   -    -    -    - 
   Consumer   282,988    282,988    -    70,747 
With an allowance recorded                    
   Real Estate                    
     1-4 Family Residential   2,567,197    3,053,774    370,137    285,244 
     Commercial and Multi-Family   -    -    -    - 
   Commercial   200,000    200,000    20,424    200,000 
   Consumer   -    -    -    - 
Total                    
   Real Estate                    
     1-4 Family Residential   4,725,713    5,015,977    370,137    481,473 
     Commercial and Multi-Family   1,229,351    1,229,351    -    409,784 
   Commercial   200,000    200,000    20,424    200,000 
   Consumer   282,988    282,988    -    70,747 
                     
December 31, 2011                    
With no related allowance recorded                    
   Real Estate                    
     1-4 Family Residential  $2,287,176   $2,287,176   $-   $190,598 
     Commercial and Multi-Family   392,146    392,146    -    130,715 
   Commercial   318,230    318,230    -    106,077 
   Consumer   183,937    183,937    -    36,787 
With an allowance recorded                    
   Real Estate                    
     1-4 Family Residential   3,286,313    3,764,871    371,554    328,631 
     Commercial and Multi-Family   -    -    -    - 
   Commercial   -    -    -    - 
   Consumer   14,111    14,111    14,286    14,111 
Total                    
   Real Estate                    
     1-4 Family Residential   5,573,489    6,052,047    371,554    519,229 
     Commercial and Multi-Family   392,146    392,146    -    130,715 
   Commercial   318,230    318,230    -    106,077 
   Consumer   198,048    198,048    14,286    50,898 

 

11
 

 

 

Included in the Company’s loan portfolio are modified commercial loans. Per FASB ASC 310-40, Troubled Debt Restructuring (“TDR”), a modification is one in which the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider, such as providing for a below market interest rate and/or forgiving principal or previously accrued interest; this modification may stem from an agreement or be imposed by law or a court, and may involve a multiple note structure. Generally, prior to the modification, the loans which are modified as a TDR are already classified as non-performing. These loans may only be returned to performing (i.e. accrual status) after considering the borrower’s sustained repayment performance for a reasonable amount of time, generally six months; this sustained repayment performance may include the period of time just prior to the restructuring. The Company entered into four (4) TDR agreements. As of June 30, 2012, the total carrying value of the TDRs were $1,687,000, of which $1,687,000 was performing.

 

Included in impaired loans at June 30, 2012 were two TDRs, which had a specific reserve of $182,800. The following table presents an analysis of the Company’s TDR agreements existing as of June 30, 2012 and December 31, 2011, respectively. 

 

   As of June 30, 2012   As of December 31, 2011 
       Outstanding Recorded Investment       Outstanding Recorded Investment 
   Number of Contracts   Pre-
Modification
   Post-
Modification
   Number of Contracts   Pre-
Modification
   Post-
Modification
 
1-4 Family Residential   4   $1,686,697   $1,686,697    1   $805,095   $805,095 

 

Federal regulations require us to review and classify our assets on a regular basis. In addition, federal banking regulators have the authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified as “loss” is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. When we classify an asset as substandard or doubtful we establish a specific allowance for loan losses. If we classify an asset as loss, we charge off an amount equal to 100% of the portion of the asset classified loss.

 

 

12
 

 

 

The following table presents classified loans by class of loans as of June 30, 2012 and December 31, 2011.

 

   Real Estate                 
   1-4 Family
Residential
   Commercial
and Multi-Family
   Construction   Commercial   Consumer 
   6/30/2012   12/31/2011   6/30/2012   12/31/2011   6/30/2012   12/31/2011   6/30/2012   12/31/2011   6/30/2012   12/30/2011 
Grade:                                                  
Special Mention  $3,538,122   $1,779,742   $3,526,581   $3,518,440   $   $   $767,868   $-   $477,159   $229,156 
Substandard   6,170,500    6,134,849    3,657,683    2,760,244            1,374,905    1,494,731    750,350    538,676 
Doubtful and Loss   -    148,849    -    -            -    -    64,299    - 
    Total  $9,780,622   $8,063,440   $7,184,264   $6,278,684   $   $   $2,142,773   $1,494,731   $1,291,808   $767,832 

 

The following table presents the credit risk profile of loans based on payment activity as of June 30, 2012 and December 31, 2011.

 

   Real Estate                 
   1-4 Family
Residential
   Commercial
and Multi-Family
   Construction   Commercial   Consumer 
   6/30/2012   12/31/2011   6/30/2012   12/31/2011   6/30/2012   12/31/2011   6/30/2012   12/31/2011   6/30/2012   12/30/2011 
Performing  $514,471,226   $542,332,930   $77,528,339   $76,680,281   $16,729,212   $11,848,089   $24,020,859   $23,618,820   $64,796,299   $67,399,737 
Non-Performing   3,039,015    5,573,490    1,229,351    392,146    -    -    200,000    318,230    282,988    198,048 
    Total  $517,510,241   $547,906,420   $78,757,690   $77,072,427   $16,729,212   $11,848,089   $24,220,859   $23,937,050   $65,079,287   $67,597,785 
                                                   

 

13
 

 

 

 

The following table details activity in the allowance for possible loan losses by portfolio segment for the periods ended June 30, 2012 and December 31, 2011. Allocation of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.

 

   Real Estate             
   1-4 Family
Residential
   Commercial
and
Multi-Family
   Construction   Commercial   Consumer   Total 
June 30, 2012                        
Allowance for credit losses:                              
  Beginning Balance  $2,512,970   $459,987   $97,825   $229,055   $462,458   $3,762,295 
    Charge-offs   (413,655)   -    -    -    (90,128)   (503,783)
    Recoveries   -    -    -    13,620    -    13,620 
    Provision for loan losses   343,153    24,141    20,301    (10,703)   49,008    425,900 
  Ending balance  $2,442,468   $484,128   $118,126   $231,972   $421,338   $3,698,032 
  Ending balance:  individually evaluated for impairment  $370,137   $-   $-   $20,424   $-   $390,561 
  Ending balance:  collectively evaluated for impairment  $2,072,331   $484,128   $118,126   $211,548   $421,338   $3,307,471 
Loan Receivables:                              
  Ending balance  $517,510,241   $78,757,690   $16,729,212   $24,220,859   $65,079,287   $702,297,289 
  Ending balance:  individually evaluated for impairment  $3,039,015   $1,229,351   $-   $200,000   $282,988   $4,751,354 
  Ending balance:  collectively evaluated for impairment  $514,471,226   $77,528,339   $16,729,212   $24,020,859   $64,796,299   $697,545,935 
                               
December 31, 2011                              
Allowance for credit losses:                              
  Beginning Balance  $2,731,325   $281,762   $32,494   $268,411   $674,084   $3,988,076 
    Charge-offs   (558,727)   -    -    (90,694)   (50,904)   (700,325)
    Recoveries   -    -    -    -    1,309    1,309 
    Provision for loan losses   340,372    178,225   $65,331   $51,338   $(162,031)  $473,235 
  Ending balance  $2,512,970   $459,987   $97,825   $229,055   $462,458   $3,762,295 
  Ending balance:  individually evaluated for impairment  $371,554   $-   $-   $-   $14,286   $385,840 
  Ending balance:  collectively evaluated for impairment  $2,141,416   $459,987   $97,825   $229,055   $448,172   $3,376,455 
Loan Receivables:                              
  Ending balance  $547,906,420   $77,072,427   $11,848,089   $23,937,050   $67,597,785   $728,361,771 
  Ending balance:  individually evaluated for impairment  $5,573,490   $392,146   $-   $318,230   $198,048   $6,481,914 
  Ending balance:  collectively evaluated for impairment  $542,332,930   $76,680,281   $11,848,089   $23,618,820   $67,399,737   $721,879,857 

 

14
 

 

 

 

4.  DEPOSITS              
               
Deposits consist of the following major classifications:

 

               
   June 30, 2012  December 31, 2011
       Weighted      Weighted
       Average      Average
   Amount   Interest Rate  Amount   Interest Rate
                 
NOW and other demand deposit accounts  $404,153,165   0.22%  $378,271,640   0.28%
Passbook savings and club accounts   140,702,681   0.29%   130,324,314   0.46%
Subtotal   544,855,846       508,595,954    
Certificates with original maturities:                
   Within one year   78,444,243   0.49%   83,200,428   0.66%
   One to three years   130,398,627   1.53%   135,954,595   1.76%
   Three years and beyond   28,651,958   2.67%   24,703,934   3.10%
Total certificates   237,494,828       243,858,957    
Total  $782,350,674      $752,454,911    

 

The aggregate amount of certificate accounts in denominations of $100,000 or more at June 30, 2012 and December 31, 2011 amounted to $89,983,895 and $90,275,593, respectively.

 

Municipal demand deposit accounts in denominations of $100,000 or more at June 30, 2012 and December 31, 2011 amounted to $116,574,252 and $118,827,074, respectively.

 

5. EARNINGS PER SHARE

 

Basic net income per share is based upon the weighted average number of common shares outstanding, net of any treasury shares, while diluted net income per share is based upon the weighted average number of common shares outstanding, net of any treasury shares, after consideration of the potential dilutive effect of common stock equivalents, based upon the treasury stock method using an average market price for the period, and impact of unallocated Employee Stock Ownership Plan (“ESOP”) shares.

 

The calculated basic and dilutive EPS are as follows:

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2012   2011   2012   2011 
Numerator – Net Income  $1,296,505   $1,157,517   $2,650,943   $2,362,103 
Denominators:                    
    Basic average shares outstanding   6,742,591    6,738,827    6,760,448    6,734,602 
    Effect of dilutive common stock equivalents   54,742    70,250    60,047    70,614 
    Diluted average shares outstanding   6,797,333    6,809,077    6,820,495    6,805,216 
                     
Earnings per share:                    
    Basic  $0.19   $0.17   $0.39   $0.35 
    Diluted  $0.19   $0.17   $0.39   $0.35 

 

At June 30, 2012 and 2011, there were 650,804 and 601,104 outstanding anti-dilutive options, respectively, and 79,200 and 99,000 outstanding dilutive non-vested shares, respectively.

 

6.STOCK-BASED COMPENSATION

 

Stock-based compensation is accounted for in accordance with FASB ASC 718, Compensation – Stock Compensation. The Company establishes fair value for its equity awards to determine their cost. The Company recognizes the related expense for employees over the appropriate vesting period, or when applicable, service period. However, consistent with the stock compensation topic of the FASB Accounting Standards Codification, the amount of stock-based compensation recognized at any date must at least equal the portion of the grant date value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. In accordance with FASB ASC 505-50, Equity-Based Payments to Non-Employees, the compensation expense for non-employees is recognized on the grant date, or when applicable, the service period.  

 

15
 

 

 

 

The Company’s 2005 and 2010 Equity-Based Incentive Plans (the “Equity Plans”) authorizes the issuance of shares of common stock pursuant to awards that may be granted in the form of stock options to purchase common stock (“options”) and awards of shares of common stock (“stock awards”). The purpose of the Equity Plans is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors, advisory directors, employees and other persons to promote the success of the Company. Under the Equity Plan, options expire ten years after the date of grant, unless terminated earlier under the option terms. A committee of non-employee directors has the authority to determine the conditions upon which the options granted will vest. Options are granted at the then fair market value of the Company’s stock.

 

A summary of the status of the Company’s stock options under the Equity Plans as of June 30, 2012 and 2011 and changes during the six months ended June 30, 2012 and 2011 are presented below:

 

   Six Months Ended
June 30, 2012
   Six Months Ended
June 30, 2011
 
   Number
of shares
  

Weighted average

exercise price

   Number
of shares
  

Weighted average

exercise price

 
                 
Outstanding at the beginning of the period   650,804   $11.90    587,504   $11.92 
Granted           13,600   $12.06 
Exercised                
Forfeited                
Outstanding at the end of the period   650,804   $11.90    601,104   $11.92 
Exercisable at the end of the period   389,085   $12.79    329,144   $13.16 
Stock options vested or expected to vest (1)   585,723   $11.90    540,993   $11.92 
      

 

(1) Includes vested shares and nonvested shares after a forfeiture rate, which is based upon historical data, is applied.

 

The following table summarizes all stock options outstanding under the Equity Plan as of June 30, 2012:

 

 

   Options Outstanding 
Date Issued  Number of
Shares
   Weighted Average Exercise Price  Weighted Average
Remaining
Contractual Life
August 10, 2005   294,127   $13.19          3.1 years
November 21, 2006   19,784   $14.78          4.3 years
November 20, 2007   30,665   $11.32          5.3 years
August 18, 2010   239,610   $10.21          8.1 years
March 15, 2011   13,600   $12.06          8.6 years
August 17, 2011   53,018   $11.53          9.1 years
Total   650,804   $11.90          5.7 years

 

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The compensation expense recognized for the three and six months ended June 30, 2012 was $36,750 and $73,500 as compared to $32,484 and $64,968 for the three and six months ended June 30, 2011.

 

At June 30, 2012, there was $615,908 of total unrecognized compensation cost related to options granted under the stock option plans. That cost is expected to be recognized over a weighted average period of 3.1 years.

 

Summary of Non-vested Stock Award Activity:

 

   Six months ended June 30, 2012   Six months ended June 30, 2011 
   Number of
shares
   Weighted avg
grant date fair
value
   Number of
shares
   Weighted avg
grant date fair
value
 
                 
Beginning of period   80,190   $10.32    99,000   $10.21 
Issued            4,950   $12.06 
Forfeited            4,950   $10.21 
Vested   990   $12.06         
Outstanding at June 30, 2012
   79,200   $10.30    99,000   $10.30 

 

The compensation expense recognized for the three and six months ended June 30, 2012 was $51,000 and $102,000 as compared to $51,000 and $99,730 for the three and six months ended June 30, 2011.

 

As of June 30, 2012, there was $631,397 of total unrecognized compensation costs related to nonvested stock awards. That cost is expected to be recognized over a weighted average period of 3.1 years.

 

7.INCOME TAXES

 

Income tax expense was $1,684,343 for an effective tax rate of 38.9% for the six months ended June 30, 2011 compared to $1,769,671 for an effective tax rate of 42.8% for the same period in 2011.

 

Periodic reviews of the carrying amount of deferred tax assets are made to determine if the establishment of a valuation allowance is necessary. If based on the available evidence in future periods, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized, a deferred tax valuation allowance would be established. Consideration is given to all positive and negative evidence related to the realization of the deferred tax assets.

 

Items considered in this evaluation include historical financial performance, expectation of future earnings, the ability to carry back losses to recoup taxes previously paid, length of statutory carryforward periods, experience with operating loss and tax credit carryforwards not expiring unused, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. The evaluation is based on current tax laws as well as expectations of future performance. At June 30, 2012 and December 31, 2011, no valuation allowance has been recorded for any portfolio of the outstanding deferred tax asset.

 

The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated income statement. As of June 30, 2012, the tax years ended December 31, 2008 through 2011 were subject to examination by the Internal Revenue Service, while the tax years ended December 31, 2007 through 2011 were subject to state examination. As of June 30, 2012, the Internal Revenue Service is reviewing the Company’s 2009 tax return.

 

 

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8.STOCKHOLDERS’ EQUITY

 

During the second quarter of 2012, the Board of Directors of the Company declared a cash dividend of $0.06 per share, which was paid on May 25, 2012 to stockholders of record as of the close of business on May 4, 2012.

 

During the second quarter of 2012, the Company repurchased 105,800 treasury shares totaling $1,273,224 at a weighted average per share cost of $12.03.

 

At June 30 2012 the components of Accumulated Other Comprehensive Income are an unrealized holding loss of $159,311 from unrealized loss in the post retirement life benefit and an unrealized holding loss of $346,279 from unrealized net losses on investment securities available for sale.

 

9.FAIR VALUE MEASUREMENTS

 

The Company accounts for fair value measurement in accordance with FASB ASC 820, Fair Value Measurements and Disclosures.  FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  FASB ASC 820 does not require any new fair value measurements. The definition of fair value retains the exchange price notion in earlier definitions of fair value. FASB ASC 820 clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). FASB ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement.  FASB ASC 820 also clarifies the application of fair value measurement in a market that is not active.

 

FASB ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

The Company’s available for sale investment securities, which generally include, U.S. government mortgage backed securities, U. S. Treasury and federal agencies, corporate securities and state and municipal obligations are reported at fair value. These securities are valued by an independent third party. The third party’s evaluations are based on market data. They utilize evaluated pricing models that vary by asset and incorporate available trade, bid and other market information. For securities that do not trade on a daily basis, their pricing applications apply available information such as benchmarking and matrix pricing. The market inputs normally sought in the evaluation of securities include benchmark yields, reported trades, broker/dealer quotes (only obtained from market makers or broker/dealers recognized as market participants), issuer spreads, two-sided markets, benchmark securities, bid, offers and reference data. For certain securities, additional inputs may be used or some market inputs may not be applicable. Inputs are prioritized differently on any given day based on market conditions.

 

U. S. Treasury and federal agencies are evaluated and priced using multi-dimensional relational models and option adjusted spreads. State and municipal obligations are evaluated on a series of matrices including reported trades and material event notices. Mortgage backed securities are evaluated using matrix correlation to treasury or floating index benchmarks, prepayment speeds, monthly payment information and other benchmarks. Other available for sale investments are evaluated using a broker-quote based application, including quotes from issuers.

 

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

 

In addition, the Company is to disclose the fair value measurements for financial assets on both a recurring and non-recurring basis.

 

Those assets at June 30, 2012 which will continue to be measured at fair value on a recurring basis are as follows:

 

   Category Used for Fair Value Measurement 
Assets:  Level 1   Level 2   Level 3 
Securities available for sale:               
U.S. government sponsored entity mortgage-backed securities  $-   $52,523,915   $- 
U.S. Treasury and federal agencies   -    21,322,884    - 
State and municipal obligations   -    832,880    - 
Corporate securities   -    12,210,688    200 
Equity securities   12,777    -    - 
 Totals  $12,777   $86,890,367   $200 

 

Those assets at December 31, 2011 which will continue to be measured at fair value on a recurring basis are as follows:

 

   Category Used for Fair Value Measurement 
Assets:  Level 1   Level 2   Level 3 
Securities available for sale:               
U.S. government sponsored entity mortgage-backed securities  $-   $25,684,588   $- 
U.S. Treasury and federal agencies   -    14,128,230    - 
State and municipal obligations   -    832,000    - 
Corporate securities   -    6,110,108    200 
Equity securities   12,542    -    - 
 Totals  $12,542   $46,754,926   $200 
                

 

In 2008, as a result of general market conditions and the illiquidity in the market for both single issuer and pooled trust preferred securities, management deemed it necessary to shift its market value measurement of each of the securities from quoted prices for similar assets (Level 2) to an internally developed discounted cash flow model (Level 3).  In arriving at the discount rate used in the model for each issue, the Company determined a trading group of similar securities quoted on the New York Stock Exchange or the NASDAQ over the counter market, based upon its review of market data points, such as Moody’s or comparable credit ratings, maturity, price, and yield.  The Company indexed the individual securities within the trading group to a comparable interest rate swap (to maturity) in determining the spread.  The average spread on the trading group was matched with the individual trust preferred issues based on their comparable credit rating which was then used in arriving at the discount rate input to the model.

 

The following provides details of the fair value measurement activity for Level 3 for the six-months ended June 30, 2012 and June 30, 2011:

 

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Fair Value Measurement Activity – Level 3 (only)

 

   Fair Value Measurement Using Significant Unobservable Inputs (Level 3) 
   Trust Preferred Securities   Total 
Balance, January 1, 2012  $200   $200 
Total gains (losses), realized/unrealized:          
Included in earnings (1)        
Included in accumulated other comprehensive loss        
Purchases, maturities, prepayments and call, net        
Transfers into Level 3 (2)        
Balance, June 30, 2012  $200   $200 

(1) Amount included in impairment charge on available for sale securities on Consolidated Statement of Income.

(2) Transfers into Level 3 are assumed to occur at the end of the quarter in which the transfer occurred.

 

Fair Value Measurement Activity – Level 3 (only)

 

   Fair Value Measurement Using Significant Unobservable Inputs (Level 3) 
   Trust Preferred Securities   Total 
Balance, January 1, 2011  $200   $200 
Total gains (losses), realized/unrealized:          
Included in earnings (1)        
Included in accumulated other comprehensive loss        
Purchases, maturities, prepayments and call, net        
Transfers into Level 3 (2)        
Balance, June 30, 2011  $200   $200 

(1) Amount included in impairment charge on available for sale securities on Consolidated Statement of Income.

(2) Transfers into Level 3 are assumed to occur at the end of the quarter in which the transfer occurred.

 

In accordance with the fair value measurement and disclosures topic of the FASB Accounting Standards Codification management assessed whether the volume and level of activity for certain assets have significantly decreased when compared with normal market conditions. Fair value for these securities is obtained from third party broker quotes. The Company evaluated these values to determine that the quoted price is based on current information that reflects orderly transactions or a valuation technique that reflects market participant assumptions by benchmarking the valuation results and assumptions used against similar securities that are more actively traded in order to assess the reasonableness of the estimated fair values. The fair market value estimates we assign to these securities assume liquidation in an orderly fashion and not under distressed circumstances.

 

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans, FHLB stock and loans or bank properties transferred into other real estate owned at fair value on a non-recurring basis.

 

Impaired Loans

 

       Category Used for Fair Value Measurement   Total (Losses) 
   Total  

 Level 1

   Level 2   Level 3   Gains 
June 30, 2012                         
Assets:                         
Impaired loans  $2,572,949   $   $2,572,949   $   $(156,573)
Real estate owned   474,699        474,699        (50,676)
 
                         
June 30, 2011                         
Assets:                         
Impaired loans  $4,186,838   $   $   $4,186,838   $(390,679)
Real estate owned   97,500            97,500     

 

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The Company considers a loan to be impaired when it becomes probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the loan agreement. Under FASB ASC 310, collateral dependent impaired loans are valued based on the fair value of the collateral, which is based on appraisals.  In some cases, adjustments are made to the appraised values for various factors, including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement would be categorized as a Level 3 measurement.  At June 30, 2012, total loans remeasured at fair value were $2,572,949. Such loans were carried at the value of $2,729,522 immediately prior to remeasurement, resulting in the recognition of impairment through earnings for the life of the loans in the amount of $156,573. At June 30, 2011, total loans remeasured at fair value were $4,186,838. Such loans were carried at the value of $4,577,517 immediately prior to remeasurement, resulting in the recognition of impairment through earnings for the life of the loans in the amount of $390,679.

 

Real Estate Owned

Once an asset is determined to be uncollectible, the underlying collateral is repossessed and reclassified to foreclosed real estate and repossessed assets. These assets are carried at lower of cost or fair value of the collateral, less cost to sell. In some cases, adjustments are made to the appraised values for various factors, including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon observable inputs, and therefore, the fair value measurement has been categorized as a Level 2 measurement. At June 30, 2012, total real estate owned remeasured at fair value was $474,699. These properties were carried at the value of $525,375 immediately prior to remeasurement, resulting in the recognition of impairment through earnings in the amount of $50,676. At June 30, 2011, the Company did not have any remeasurement to fair value to its foreclosed real estate and repossessed assets since the original recording. At June 30, 2012 the company had four properties totaling $572,199 as compared to one property at December 31, 2011 totaling $97,500.

 

Fair Value of Financial Instruments

In accordance with FASB ASC 825-10-50-10, the Company is required to disclose the fair value of financial instruments. The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a distressed sale. Fair value is best determined using observable market prices; however, for many of the Company’s financial instruments, no quoted market prices are readily available. In instances where quoted market prices are not readily available, fair value is determined using present value or other techniques appropriate for the particular instrument. These techniques involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange. Different assumptions or estimation techniques may have a material effect on the estimated fair value. The following table summarizes these results:

       Category Used For Fair Value 
June 30, 2012  Carrying Amount   Level 1   Level 2   Level 3 
Assets:                    
Cash and cash equivalents  $173,860,886   $173,860,886   $                  ─   $          ─ 
Investment securities:                    
Held to maturity   5,582,189        5,736,033     
Available for sale   86,903,344    12,777    86,890,367    200 
Loans receivable, net   701,749,954        718,288,346     
Federal Home Loan Bank stock   6,389,800        6,389,800     
                     
Liabilities:                    
NOW and other demand deposit accounts   404,153,165        412,243,165     
Passbook savings and club accounts   140,702,681        147,277,681     
Certificates   237,494,828        240,491,877     
Advances from Federal Home Loan Bank   110,000,000        ─    125,365,044        ─ 
Junior subordinated debenture   15,464,000           ─    12,371,200           ─ 

 

 

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       Category Used For Fair Value 
December 31, 2011    Carrying Amount   Level 1   Level 2   Level 3 
Assets:                    
Cash and cash equivalents  $155,652,941   $155,652,941   $                  ─   $          ─ 
Investment securities:                    
Held to maturity   5,964,393        6,147,579     
Available for sale   46,767,668    12,542    46,754,926    200 
Loans receivable, net   727,626,278        742,868,929     
Federal Home Loan Bank stock   6,434,800        6,434,800     
                     
Liabilities:                    
NOW and other demand deposit accounts   378,271,640        386,987,640     
Passbook savings and club accounts   130,324,313        137,074,313     
Certificates   243,858,957        242,343,751     
Advances from Federal Home Loan Bank   110,000,000        ─    131,036,958        ─ 
Junior subordinated debenture   15,464,000           ─    10,824,800           ─ 

  

Cash and Cash EquivalentsFor cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

 

Investment and Mortgage-Backed SecuritiesFor investment securities, fair values are based on a combination of quoted prices for identical assets in active markets, quoted prices for similar assets in markets that are either actively or not actively traded and pricing models, discounted cash flow methodologies, or similar techniques that may contain unobservable inputs that are supported by little or no market activity and require significant judgment. For investment securities that do not actively trade in the marketplace, (primarily our investment in trust preferred securities of non-publicly traded companies) fair value is obtained from third party broker quotes. The Company evaluates prices from a third party pricing service, third party broker quotes, and from another independent third party valuation source to determine their estimated fair value. These quotes are benchmarked against similar securities that are more actively traded in order to assess the reasonableness of the estimated fair values. The fair market value estimates we assign to these securities assume liquidation in an orderly fashion and not under distressed circumstances. For securities classified as available for sale, the changes in fair value are reflected in the carrying value of the asset and are shown as a separate component of stockholders’ equity.

 

Loans Receivable - NetThe fair value of loans receivable is estimated based on the present value using discounted cash flows based on estimated market discount rates at which similar loans would be made to borrowers and reflect similar credit ratings and interest rate risk for the same remaining maturities.

 

FHLB StockAlthough FHLB stock is an equity interest in an FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. While certain conditions are noted that required management to evaluate the stock for impairment, it is currently probable that the Company will realize its cost basis. Management concluded that no impairment existed as of June 30, 2012. The estimated fair value approximates the carrying amount.

 

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NOW and Other Demand Deposit, Passbook Savings and Club, and Certificates AccountsThe fair value of NOW and other demand deposit accounts and passbook savings and club accounts is the amount payable on demand at the reporting date. The fair value of certificates is estimated by discounting future cash flows using interest rates currently offered on certificates with similar remaining maturities.

 

Advances from FHLBThe fair value was estimated by determining the cost or benefit for early termination of each individual borrowing.

 

Junior Subordinated DebentureThe fair value was estimated by discounting approximate cash flows of the borrowings by yields estimating the fair value of similar issues.

 

The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2012 and December 31, 2011. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since June 30, 2012 and December 31, 2011, and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

 

10.GOODWILL AND INTANGIBLE ASSETS

 

Goodwill totaled $4,629,503 at June 30, 2012 as compared to $4,544,121 at December 31, 2011. An adjustment of $735,488 was made to goodwill during the measurement period, which is now closed, for additional information that was received regarding taxes.  This adjustment was also made to the December 31, 2011 reported balance to retrospectively adjust the provisional amount of goodwill recognized at the acquisition date. Goodwill was not impaired at June 30, 2012 as no impairment indicators have been noted. The Company is in the process of performing its annual goodwill impairment test as of August 1, 2012 and will complete this process during the third quarter.

 

The core deposit intangible totaled $678,000 at June 30, 2012 as compared to $677,000 at December 31, 2011. The core deposit intangible is being amortized over its estimated useful life of approximately 15 years commencing August 1, 2011.

 

11.REAL ESTATE OWNED

 

Summary of Real Estate Owned (“REO”):

 

   2012     2011 
   Residential   Commercial       Residential     
   Property   Property   Total   Property   Total 
                          
Balance, January 1,  $97,500    $              ─   $97,500   $97,500   $97,500 
  Transfers into Real Estate Owned   206,320    268,379    474,699     ─     ─ 
  Sales of Real Estate Owned            ─     ─     ─ 
Balance, June 30,  $303,820   $268,379   $572,199   $97,500   $97,500 
                          

 

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


PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

 

This Quarterly Report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, but rather are statements based on Ocean Shore Holding’s current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.

 

Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets and changes in the quality or composition of the Company’s loan or investment portfolios. Additional factors that may affect our results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2011 under “Item 1A. Risk Factors.” These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Ocean Shore Holding assumes no obligation to update any forward-looking statements.

 

GENERAL

 

Ocean Shore Holding Co. (“Ocean Shore Holding” or the “Company”) is the holding company for Ocean City Home Bank (the “Bank”). The Company’s assets consist of its investment in Ocean City Home Bank and its liquid investments. The Company is primarily engaged in the business of directing, planning, and coordinating the business activities of the Bank.

 

Ocean City Home Bank is a federally chartered savings bank. The Bank operates as a community-oriented financial institution offering a wide range of financial services to consumers and businesses in our market area. The Bank attracts deposits from the general public, small businesses and municipalities and uses those funds to originate a variety of consumer and commercial loans, which we hold primarily for investment.

 

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2012 AND DECEMBER 31, 2011

 

Total assets of the Company increased $31.5 million to $1,026.3 million at June 30, 2012 from $994.7 million at December 31, 2011. Loans receivable, net, decreased $25.9 million, investment and mortgage-backed securities increased $39.8 million and cash and cash equivalents increased by $18.2 million. Asset growth was funded by an increase in deposits of $29.9 million while borrowings were unchanged at $125.5 million.

 

Investments

 

Investments and mortgage-backed securities increased $39.8 million to $92.5 million at June 30, 2012 from $52.7 million at December 31, 2011. The increase was the result of purchases of $61.3 million of agency investments offset by normal repayments, calls and maturities of $21.5 million.

 

Loans

 

Loans receivable, net, decreased $25.9 million to $701.7 million at June 30, 2012 from $727.6 million at December 31, 2011. Loan originations totaled $82.8 million for the six months ended June 30, 2012 compared to $72.6 million originated in the six months ended June 30, 2011. Real estate mortgage loan originations totaled $57.5 million, real estate construction loan originations totaled $9.9 million, consumer loan originations totaled $7.5 million and commercial loan originations totaled $7.9 million for the first half of 2012. Origination activity was offset by $107.8 million of normal loan payments and payoffs.

 

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The following table summarizes changes in the loan portfolio in the six months ended June 30, 2012.

 

   June 30,
2012
   December 31,
2011
   $ change   % change 
   (Dollars in thousands) 
Real estate – mortgage:                    
  One-to-four-family residential  $517,510   $547,906   $(30,396)   (5.5)%
  Commercial and multi-family   78,758    77,073    1,685    2.2 
    Total real estate – mortgage   596,268    624,979    (28,711)   (4.6)
                     
Real estate – construction:                    
  Residential   11,623    8,057    3,566    44.3 
  Commercial   5,106    3,791    1,315    34.7 
    Total real estate – construction   16,729    11,848    4,881    41.2 
                     
Commercial   24,221    23,937    284    1.2 
                     
Consumer                    
  Home equity   64,212    66,788    (2,576)   (3.9)
  Other consumer loans   867    810    57    7.1 
    Total consumer loans   65,079    67,598    (2,519)   (3.7)
                     
    Total  loans   702,297    728,362    (26,065)   (3.6)
                     
Net deferred loan cost   3,151    3,026    125    4.1 
Allowance for loan losses   (3,698)   (3,762)   64    (1.7)
                     
   Net total loans  $701,750   $727,626   $(25,876)   (3.6)%

 

Non-Performing Assets

 

Non-performing assets totaled $5.3 million, or 0.52% of total assets, at June 30, 2012 compared to $6.6 million or 0.66% of total assets at December 31, 2011 and $6.0 million, or 0.90% of total assets, at June 30, 2011. The decrease from December 31, 2011 was the result of a lower balance of non-performing loans replacing higher balance non-performing loans. Non-performing assets consisted of sixteen residential mortgages totaling $3.0 million, three commercial mortgages totaling $1.2 million, one commercial loan totaling $200 thousand, four consumer equity loans totaling $283 thousand and four real estate owned property totaling $572 thousand. Specific reserves were recorded for nine of the loans included above in the amount of $208 thousand at June 30, 2012 as compared to eleven loans with specific reserves of $386 thousand at December 31, 2011. Real estate owned increased three properties and $475 thousand at June 30, 2012 to $572 thousand from December 31, 2011. Net charge-offs totaled $490 thousand in 2012 compared to $123 thousand for the same period in 2011.

 

The allowance for loan losses decreased $64 thousand to $3.7 million, or 0.53% of total net loans, from $3.8 million at December 31, 2011, or 0.52% of total net loans. The decrease in the allowance for loan losses resulted from net charge offs of $490 thousand offset by the provision for the period of $426 thousand. The provision increase was primarily to maintain a reserve level deemed appropriate by management in light of factors such as the level of non-performing loans and the current economic conditions. The loss factors used to calculate the allowance at June 30, 2012 were slightly higher than those used at December 31, 2011 due to increases in delinquencies. At June 30, 2012, the specific allowance on loans individually evaluated for impairment was $391 thousand and the pooled allowance on the remainder of the loan portfolio was $3.3 million as compared to specific allowance on loans individually evaluated for impairment of $386 thousand and pooled allowance on the reminder of the loan portfolio of $3.3 million at December 31, 2011.

 

25
 

 

 

   Six Months Ended June 30, 
   2012   2011 
   (Dollars in thousands) 
Allowance for loan losses:          
Allowance at beginning of period  $3,762   $3,988 
Provision for loan losses   426    203 
           
  Recoveries   14     
  Charge-offs   504    123 
Net (charge-offs) recoveries   (490)   (123)
           
Allowance at end of period  $3,698   $4,068 
Allowance for loan losses as a percent of total loans    0.53%   0.61%
Allowance for loan losses as a percent of
non-performing loans
   77.8%   68.6%

 

   June 30,
2012
   December 31,
2011
 
Nonaccrual loans:  (Dollars in thousands) 
Real estate - residential  $3,039   $4,768 
Real estate - commercial   1,229    392 
Commercial   200    318 
Consumer   283    198 
Total   4,751    5,676 
Troubled debt restructurings - nonaccrual       805 
Total nonaccrual loans   4,751    6,481 
Real estate owned   572    98 
Total non-performing assets  $5,323   $6,579 
           
Total non-performing loans to total loans   0.68%   0.89%
Total non-performing loans to total assets   0.46%   0.65%
Total non-performing assets to total assets   0.52%   0.66%
           

  

Deposits

 

Deposits increased by $29.9 million, or 4.0%, to $782.4 million at June 30, 2012 from $752.5 million at December 31, 2011. Interest bearing demand deposits increased $11.1 million, non-interest bearing checking increased $14.8 million, savings accounts increased by $10.4 million and certificates of deposit decreased by $6.4 million. The Company continued its focus on attracting core deposits, which increased $36.3 million to $544.9 million.

 

The following table summarizes changes in deposits in the six months ended June 30, 2012.

 

   June 30,   December 31,         
   2012   2011   $ change   % change 
   (Dollars in thousands) 
Non-interest-bearing demand deposits  $90,339   $75,551   $14,788    19.6%
Interest-bearing demand deposits   313,814    302,721    11,093    3.7 
Savings accounts   140,703    130,324    10,379    8.0 
Time deposits   237,495    243,859    (6,364)   (2.6)
     Total  $782,351   $752,455   $29,896    4.0%

 

 

26
 

 

Borrowings

 

Federal Home Loan Bank advances were unchanged at $110.0 million at June 30, 2012 from December 31, 2011. Other borrowings were unchanged at $15.5 million at June 30, 2012 compared to December 31, 2011.

 

Stockholders’ Equity

 

Stockholders’ equity increased $927 thousand to $105.6 million at June 30, 2012, from $104.7 million at December 31, 2011, primarily as a result of net income of $2.7 million offset by treasury stock purchases of $1.3 million and dividends paid of $874 thousand.

 

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011

 

Net income was $1.3 million for the three months ended June 30, 2012 as compared to $1.2 million for the three months ended June 30, 2011. The increase of $139 thousand, or 12.0%, in 2012 from 2011 was due primarily to increases in net interest income and other income offset by increases in other expenses and provision for loan losses.

 

Net income was $2.7 million for the six months ended June 30, 2012 as compared to $2.4 million for the six months ended June 30, 2011. The $289 thousand, or 12.2%, increase in 2012 from 2011 was due primarily to increases in net interest income and other income offset by increases in other expenses and provision for loan losses.

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2012   2011   2012   2011 
   (Dollars in thousands,
except per share data)
   (Dollars in thousands,
except per share data)
 
                 
Net income  $1,297   $1,158   $2,651   $2,362 
Basic and diluted earnings per share  $0.19   $0.17   $0.39   $0.35 
Return on average assets (annualized)   0.50%   0.53%   0.52%   0.54%
Return on average equity (annualized)   4.90%   4.51%   4.99%   4.62%

 

Net Interest Income

 

The following table summarizes changes in interest income and interest expense for the three-month periods ended June 30, 2012 and 2011.

 

   Three Months Ended
June 30,
         
   2012   2011   $ change   % change 
   (Dollars in thousands) 
INTEREST INCOME:                    
Loans  $8,732   $8,629   $103    1.2%
Investment securities   681    538    143    26.6 
           Total interest income  $9,413   $9,167   $246    2.7 
                     
INTEREST EXPENSE:                    
Deposits  $1,106   $1,495   $(389)   (26.0)
Borrowings   1,510    1,510         
           Total interest expense   2,616    3,005    (389)   (12.9)
            Net interest income  $6,797   $6,162   $635    10.3%

 

27
 

 

 

Interest income increased by $246 thousand, or 2.7%, for the quarter ended June 30, 2012 compared to June 30, 2011. The increase resulted from an increase in the average balance of loans and investments offset by a decrease in the average rate earned on loans and investments.

 

Interest expense decreased by $389 thousand, or 12.9%, for the quarter ended June 30, 2012 over the same period last year due to a decrease in the average rate paid on deposits offset by an increase in the average balance of interest-bearing deposits.

 

The interest rate spread and net interest margin of the Company were 3.47% and 3.42% respectively, for the three months ended June 30, 2012, compared to 3.47% and 3.49% for the same period in 2011. The interest rate spread was unchanged as a decrease in the average rate paid on interest-bearing liabilities of 45 basis points offset by a decrease in the rate earned on interest-earning assets of 45 basis points. The decrease in cost of interest bearing liabilities resulted from a decrease in the average rate paid on interest-bearing deposits of 41 basis points offset by an increase in the average balance of interest-bearing deposits of $128.6 million. The decrease in rate on interest earnings assets resulted from decrease in the average rate on loans of 29 basis points and a decrease in the average rate on investments of 156 basis points offset by an increase in the average balance loans of $48.0 million and an increase in the average balance of investments of $40.4 million.

 

The following table summarizes changes in interest income and interest expense for the six-month periods ended June 30, 2012 and 2011.

 

   Six Months Ended
June 30,
     
   2012   2011   $ Change   % Change 
   (Dollars in thousands)     
                 
INTEREST INCOME:                    
Loans  $17,732   $17,184   $548    3.2%
Investment securities   1,292    1,021    271    26.5 
               Total interest income  $19,024   $18,205   $819    4.5 
 
INTEREST EXPENSE:
                    
Deposits  $2,321   $3,061   $(740)   (24.2)
Borrowings   3,020    3,008    12    0.4 
               Total interest expense   5,341    6,069    (728)   (12.0)
               Net interest income  $13,683   $12,136   $1,547    12.7%

 

Interest income increased by $819 thousand, or 4.5%, for the six months ended June 30, 2012 compared to the same period ended June 30, 2011. The increase resulted from an increase in the average balance of loans and investments offset by a decrease in the average rate earned on loans and investments.

 

Interest expense decreased by $728 thousand, or 12.0%, for the six months ended June 30, 2012 over the same period last year due to a decrease in the average rate paid on deposits offset by an increase in the average balance of interest-bearing deposits.

 

The interest rate spread and net interest margin of the Company were 3.53% and 3.47% respectively, for the six months ended June 30, 2012, compared to 3.48% and 3.48% for the same period in 2011. The increase in the interest rate spread of 5 basis points and an unchanged margin resulted from a decrease in the average rate paid on interest-bearing liabilities of 43 basis points offset by a decrease in the rate earned on interest-earning assets of 39 basis points. The decrease in cost of interest bearing liabilities resulted from a decrease in the average rate paid on interest-bearing deposits of 40 basis points offset by an increase in the average balance of interest-bearing deposits of $119.9 million. The decrease in rate on interest earnings assets resulted from decrease in the average rate on loans of 24 basis points and a decrease in the average rate on investments of 184 basis points offset by an increase in the average balance of loans of $54.4 million and an increase in the average balance of investments of $35.3 million.

 

28
 

 

 

The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. The yields and costs are annualized for presentation purposes. For purposes of this table, average balances have been calculated using the average daily balances and nonaccrual loans are only included in average balances. Loan fees are included in interest income on loans and are insignificant. Interest income on loans and investment securities has not been calculated on a tax equivalent basis because the impact would be insignificant.

 

Average Balance Tables                      
   Three Months Ended
June 30, 2012
  Three Months Ended
June 30, 2011
   Average Balance   Interest and Dividends   Yield/
Cost
  Average Balance   Interest and Dividends   Yield/
Cost
Assets:   (Dollars in thousands)        (Dollars in thousands)    
Interest-earning assets:                          
  Loans  $709,651   $8,732   4.92%  $661,680   $8,629   5.22%
  Investment securities   85,765    681   3.18%   45,409    538   4.74%
    Total interest-earning assets   795,416    9,413   4.73%   707,089    9,167   5.19%
Noninterest-earning assets   233,971            171,934         
    Total assets  $1,029,387           $879,023         
                           
Liabilities and equity:                          
  Interest-bearing liabilities:                          
    Interest-bearing demand deposits  $325,802    220   0.27%  $262,258    418   0.64%
    Savings accounts   138,915    102   0.29%   110,178    192   0.70%
    Certificates of deposit   238,830    784   1.31%   202,473    885   1.75%
       Total interest-bearing deposits   703,547    1,106   0.63%   574,909    1,495   1.04%
  FHLB advances   110,000    1,175   4.27%   110,000    1,175   4.27%
  Subordinated debt   15,464    335   8.67%   15,464    335   8.67%
    Total borrowings   125,464    1,510   4.82%   125,464    1,510   4.82%
    Total interest-bearing liabilities   829,011    2,616   1.26%   700,373    3,005   1.72%
  Noninterest-bearing demand accounts   83,371            66,246         
  Other liabilities   11,158            9,636         
    Total liabilities   923,540            776,255         
 Stockholders’ equity   105,847            102,768         
 Total liabilities and stockholders’ equity  $1,029,387           $879,023         
                           
  Net interest income       $6,797           $6,162    
  Interest rate spread            3.47%            3.47%
  Net interest margin            3.42%            3.49%
Average interest-earning assets
to average interest-bearing liabilities
   95.95%           100.96%        

 

29
 

 

 

 

Average Balance Tables  Six Months Ended
June 30, 2012
  Six Months Ended
June 30, 2011
   Average Balance   Interest
and Dividends
   Yield/
Cost
  Average Balance   Interest and Dividends   Yield/
Cost
Assets:  (Dollars in thousands)      (Dollars in thousands)    
Interest-earning assets:                          
  Loans  $714,266   $17,732   4.97%  $659,842   $17,184   5.21%
  Investment securities   73,384    1,292   3.52%   38,073    1,021   5.36%
    Total interest-earning assets   787,650    19,024   4.83%   697,915    18,205   5.22%
Noninterest-earning assets   228,646            178,143         
    Total assets  $1,016,296           $875,958         
                           
Liabilities and equity:                          
Interest-bearing liabilities:                          
  Interest-bearing demand deposits  $318,329   $473   0.30%  $261,955   $850   0.65%
  Savings accounts   135,692    213   0.31%   107,364    399   0.74%
  Certificates of deposit   240,426    1,635   1.36%   205,188    1,812   1.77%
    Total interest-bearing deposits   694,447    2,321   0.67%   574,507    3,061   1.07%
  FHLB advances   110,000    2,350   4.27%   110,000    2,338   4.25%
  Subordinated debt   15,464    670   8.67%   15,464    670   8.67%
    Total borrowings   125,464    3,020   4.81%   125,464    3,008   4.80%
    Total interest-bearing liabilities   819,911    5,341   1.30%   699,971    6,069   1.73%
Noninterest-bearing demand accounts   79,550            64,380         
Other   10,792            9,417         
    Total liabilities   910,253            773,768         
Stockholders’ equity   106,043            102,190         
    Total liabilities and stockholders’ equity  $1,016,296           $875,958         
                           
Net interest income       $13,683           $12,136    
Interest rate spread            3.53%            3.48%
Net interest margin            3.47%            3.48%
Average interest-earning assets
to average interest-bearing liabilities
   96.07%           99.71%        
                           

 

Provision for Loan Losses

 

We review the level of the allowance for loan losses on a monthly basis and establish the provision for loan losses based on the volume and types of lending, delinquency levels, loss experience, the amount of classified loans, economic conditions and other factors related to the collectibility of the loan portfolio. The provision for loan losses was $253 thousand and $426 thousand in the three and six months ended June 30, 2012 compared to $128 thousand and $203 thousand in the three and six months ended June 30, 2011. The provision was primarily to maintain a reserve level deemed appropriate by management in light of factors such as the level of non-performing loans and the current economic environment.

 

30
 

 

 

Other Income

 

The following table summarizes other income for the three months ended June 30, 2012 and 2011 and the changes between the periods.

 

   Three Months Ended June 30,     
   2012   2011   % Change 
   (Dollars in thousands)     
OTHER INCOME:               
                
Service charges  $423   $395    7.1%
Cash surrender value of life insurance   150    130    15.4 
Other   392    337    16.3 
       Total other income  $965   $862    12.0%

 

Other income increased $103 thousand, or 12.0%, to $965 thousand for the three-month period ended June 30, 2012 from the same period in 2011. The increase in service charges income of $28 thousand resulted from higher service charges collected on deposit accounts. The increase in cash surrender value of life insurance income of $20 thousand resulted from an increase in the balance in the policies. Other income increased $55 thousand primarily from increased debit card commissions received.

 

The following table summarizes other income for the six months ended June 30, 2012 and 2011 and the changes between the periods.

 

   Six Months Ended June 30,     
   2012   2011   % Change 
   (Dollars in thousands)     
OTHER INCOME:               
                
Service charges  $834   $754    10.6%
Cash surrender value of life insurance   298    259    15.1 
Other   738    651    13.4 
               Total other income  $1,870   $1,664    12.4%

 

Other income increased $206 thousand, or 12.4%, to $1.9 million for the six-month period ended June 30, 2012 from the same period in 2011. The increase in service charges income of $80 thousand resulted from higher service charges collected on deposit accounts. The increase in cash surrender value of life insurance income of $39 thousand resulted from an increase in the balance in the policies. Other income increased $87 thousand primarily from increased debit card commissions received.

 

Other Expense

 

The following table summarizes other expense for the three months ended June 30, 2012 and 2011 and the changes between periods.

 

31
 

 

 

   Three Months Ended June 30,     
   2012   2011   % Change 
OTHER EXPENSE:  (Dollars in thousands)     
             
Salaries and employee benefits  $3,051   $2,568    18.8%
Occupancy and equipment   1,259    1,134    11.0 
Federal insurance premiums   129    186    (30.7)
Advertising   131    145    (10.0)
Professional services   274    310    (11.6)
Real estate owned expense   1    1     
Other operating expense   546    466    17.2 
       Total other expense  $5,391   $4,810    12.1%

 

Other expenses increased $581 thousand, or 12.1%, to $5.4 million for the three-month period ended June 30, 2012 from the same period in 2011. Costs associated with locations added from the 2011 acquisition of Select Bank totaled $329,000 for the second quarter of 2012. Additionally, increases in salaries and benefits, occupancy and equipment and other expenses of $324,000 were offset by decreases in FDIC insurance and marketing expenses of $72,000 for the second quarter of 2012.

 

The following table summarizes other expense for the six months ended June 30, 2012 and 2011 and the changes between the periods.

 

   Six Months Ended June 30,     
   2012   2011   % Change 
   (Dollars in thousands)     
OTHER EXPENSE:               
                
Salaries and employee benefits  $6,181   $5,181    19.3%
Occupancy and equipment   2,495    2,118    17.8 
Federal insurance premiums   257    373    (31.1)
Advertising   248    251    (1.2)
Professional services   526    605    (13.1)
Real estate owned expense   3    3     
Other operating expense   1,082    935    15.7 
               Total other expense  $10,792   $9,466    14.0%

 

Other expenses increased $1.3 million, or 14.0%, to $10.8 million for the six-month period ended June 30, 2012 from the same period in 2011. Costs associated with locations added from the 2011 acquisition of Select Bank totaled $650,000 for the first six months of 2012. Additionally, increases in salaries and benefits, occupancy and equipment and other expenses of $770,000 were offset by decreases in FDIC insurance and marketing expenses of $120,000 and first six months of 2012.

 

Income Taxes

 

Income taxes decreased $107 thousand to $822 thousand for an effective tax rate of 38.8% for the three months ended June 30, 2012, compared to $929 thousand for an effective tax rate of 42.8% from the same period in 2011. The decrease in the tax rate was a result of a higher tax rate in 2011 due to nondeductible merger expenses.

 

Income taxes decreased $85 thousand to $1.7 million for an effective tax rate of 38.9% for the six months ended June 30, 2012, compared to $1.8 million for an effective tax rate of 42.8% from the same period in 2011. The decrease in the tax rate was a result of a higher tax rate in 2011 due to nondeductible merger expenses.

 

 

32
 

 

 

Liquidity and Capital Resources

 

Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of investment securities and borrowings from the Federal Home Loan Bank of New York. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

 

We regularly adjust our investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities and (4) the objectives of our asset/liability management policy.

 

Our most liquid assets are cash and cash equivalents and interest-bearing deposits. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At June 30, 2012, cash and cash equivalents totaled $173.9 million. Securities classified as available-for-sale whose market value exceeds our cost, which provide additional sources of liquidity, totaled $66.9 million at June 30, 2012. In addition, at June 30, 2012, we had the ability to borrow a total of approximately $268.4 million from the Federal Home Loan Bank of New York.

 

At June 30, 2012, we had $63.1 million in loan commitments outstanding, which included $16.2 million in undisbursed loans, $28.1 million in unused home equity lines of credit and $18.8 million in commercial lines and letters of credit. Certificates of deposit due within one year of June 30, 2012 totaled $145.6 million, or 61.3% of certificates of deposit. We believe, however, based on past experience that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

 

At June 30, 2012, the Bank exceeded all of its regulatory capital requirements with Tier 1 leverage capital of $97.3 million, or 9.60% of total adjusted assets, which is above the required level of $40.5 million or 4.0%; Tier 1 risk based capital of $97.3 million, or 19.46% of total adjusted assets which is above the required level of $20.0 million or 4.0%; and total risk-based capital of $100.6 million, or 20.13% of risk-weighted assets, which is above the required level of $40.0 million or 8.0%. The Bank is considered a “well-capitalized” institution under the applicable prompt corrective action regulations.

 

MARKET RISK MANAGEMENT

 

Net Interest Income Simulation Analysis

 

We analyze our interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income simulation. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.

 

Simulation analysis is only an estimate of our interest rate risk exposure at a particular point in time. We continually review the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities.

 

 

33
 

 

The following table reflects changes in estimated net interest income only for the Company:

 

   At March 31, 2012
Percentage Change in Estimated
Net Interest Income Over
   12 Months  24 Months
    
200 basis point increase in rates  9.56%  13.75%
100 basis point decrease in rates  N/M  N/M

 

The 200 and 100 basis point change in rates in the above table is assumed to occur evenly over the following 12 and 24-month periods. Based on the scenario above, net interest income would be positively affected (within our internal guidelines) in the 12-month and 24-month periods if rates rose by 200 basis points. In addition, a decline in rates by 100 basis points in both the 12- and 24-month periods has been determined by management as not possible and therefore deemed not measurable.

 

Economic Value of Equity Analysis

 

In addition to a net interest income simulation analysis, we use an interest rate sensitivity analysis to review our level of interest rate risk. This analysis measures interest rate risk by computing changes in economic value of equity of our cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. Economic value of equity (EVE) represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market risk sensitive instruments in the event of a sudden and sustained 50 to 300 basis point increase or a sustained 50 to 100 basis point decrease in market interest rates with no effect given to any steps that we might take to counter the effect of that interest rate movement. We measure interest rate risk by modeling the changes in net portfolio value over a variety of interest rate scenarios. The following table presents the change in our net portfolio value at March 31, 2012 that would occur in the event of an immediate change in interest rates based on management’s assumptions, with no effect given to any steps that we might take to counteract that change.

 

   Economic Value of Equity
(Dollars in Thousands)
   Economic Value of Equity
as % of
Portfolio Value of Assets
 
Basis Point (“bp”)
Change in Rates
  $ Amount   $ Change   % Change   EVE Ratio   Change 
300 bp  110,986   (24,673)   (18.19)   11.71   (150.39)bp 
200   121,160    (14,499)   (10.69)   12.42    (79.65)
100   129,208    (6,451)   (4.76)   12.89    (32.00)
50   132,543    (3,117)   (2.30)   13.06    (14.96)
0   135,659            13.21     
(50)   134,792    (867)   (0.64)   13.00    (21.53)
(100)   138,281    2,622    1.93    13.23    1.73 

 

The Company uses certain assumptions in assessing its interest rate risk. These assumptions relate to interest rates, loan prepayment rates, deposit decay rates, and the market values of certain assets under differing interest rate scenarios, among others. As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, expected rates of prepayments on loans and early withdrawals from certificates could deviate significantly from those assumed in calculating the table.

 

34
 

 

 

OFF-BALANCE SHEET ARRANGEMENTS

 

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit.

 

For the three months and six ended June 30, 2012 and June 30, 2011, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

The information required by this item is included in Item 2 of this report under “Market Risk Management.”

 

Item 4. Controls and Procedures

 

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

There have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

 

Item 1A. Risk Factors

 

There have been no material changes in the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

 

35
 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

 

Period  (a)
Total number of Shares (or Units) Purchased
  (b)
Average Price Paid per Share
(or Unit)
  (c)
Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs (1)
  (d)
Maximum Number (or Appropriate Dollar Value) of Shares (or units) that May Yet Be Purchased Under the Plans or Programs
Month #1
April 1, 2012
through
April 30, 2012
        365,000
 
Month #2
May 1, 2012
through
May 31, 2012
  75,700  $12.01  75,700  289,300
 
Month #3
June 1, 2012
through
June 30, 2012
  30,100  $12.10  30,100  259,200
             
Total            

_______________

  (1) On March 20, 2012, the Company’s Board of Directors approved the repurchase of up to 365,000 shares of the Company’s common stock.

 

Item 3. Defaults Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosure

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

  31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
     
  31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
     
  32.0 Section 1350 Certification of Chief Executive Officer and Chief Financial Office.
     
  101.0 The following materials from the Ocean Shore Holding Co. Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Financial Condition, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes.

 

36
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

   OCEAN SHORE HOLDING CO.
  (Registrant)
   
   
Date:  August 9, 2012 /s/ Steven E. Brady
  Steven E. Brady
  President and Chief Executive Officer
   
   
Date:  August 9, 2012 /s/ Donald F. Morgenweck
  Donald F. Morgenweck
  Chief Financial Officer and Senior Vice President

 

37

XNAS:OSHC Ocean Shore Holding Co Quarterly Report 10-Q Filling

Ocean Shore Holding Co XNAS:OSHC Stock - Get Quarterly Report SEC Filing of Ocean Shore Holding Co XNAS:OSHC stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

XNAS:OSHC Quarterly Report 10-Q Filing - 6/30/2012
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