Item 2.—Management’s Discussion and Analysis or Plan of Operation
Forward-Looking Statements
This Form 10-QSB contains “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,”
“anticipate,” “should,” “planned,” “estimated,” “potential” and similar expressions that are intended to identify forward-looking statements. Examples of forward-looking statements include, but are
not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not
limited to:
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•
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changes in the real estate market or local economy;
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•
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changes in interest rates;
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•
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changes in laws and regulations to which we are subject; and
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•
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competition in our primary market area.
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Any or all
of our forward-looking statements in this Report and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no
forward-looking statement can be guaranteed. We disclaim any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or
unanticipated events.
General
The Company’s
results of operations depend primarily on its net interest income, which is the difference between the interest income it earns on its loans and investments and the interest it pays on its deposits and other interest-bearing liabilities. Net
interest income is affected by the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on these balances. The Company’s operations are also affected by non-interest income, such as
service fees and gains and losses on sales of securities, the provision for loan losses and non-interest expenses such as salaries and employee benefits, occupancy costs, and other general and administrative expenses. In general, financial
institutions such as the Company are significantly affected by economic conditions, competition, and the monetary and fiscal policies of the federal government. Lending activities are influenced by the demand for and supply of housing, competition
among lenders, interest rate conditions, and funds availability. The Company’s operations and lending activities are principally concentrated in Westchester County, New York, and its operations and earnings are influenced by the economics of
the area in which it operates. Deposit balances and cost of funds are influenced by prevailing market rates on competing investments, customer preferences, and levels of personal income and savings in the Company’s primary market area.
The Company’s net interest income may be affected by market interest rate changes. During the past three years, increases in short-term interest
rates without a corresponding increase in long-term interest rates, resulted in an increase in interest expense and reduction in net interest income. The effect of a flat or inverted interest rate yield curve could decrease the Company’s
ability to reinvest proceeds from loan and investment repayments at higher interest rates. The Company’s cost of funds has increased faster than its yield on loans and investments, due to the longer-term nature of its interest-earning assets
and the current yield curve environment.
In order to grow and diversify in the current yield curve environment, the Company seeks to continue to grow its
multi-family, non-residential, construction, home equity and commercial loans by targeting these markets in Westchester County and surrounding areas as a means to increase the yield on and diversify its loan portfolio, build transactional deposit
account relationships and, depending on market conditions, sell a portion of the fixed-rate residential real estate loans to a third party in order to diversify its loan portfolio, increase fee income and reduce interest rate risk.
10
To the extent the Company increases its investment in construction or development, consumer and commercial loans, which
are considered greater risks than one- to four-family residential loans, The Company’s provision for loan losses may increase to reflect this increased risk, which could cause a reduction in the Company’s income.
Overview
The Company seeks to differentiate itself from its
competition by providing superior, highly personalized and prompt service with competitive fees and rates to its customers. Historically, the Company has been a community-oriented retail savings bank offering residential mortgage loans and
traditional deposit products and, to a lesser extent, commercial real estate, small business and consumer loans in Westchester County, New York, and surrounding areas.
The Company has adopted a strategic plan that focuses on growth in the traditional one- to four-family real estate lending market as well as diversification of the loan portfolio into higher yield multi-family,
non-residential, construction and commercial loan markets. The Company’s strategic plan also calls for increasing deposit relationships and broadening its product lines and services. The Company believes that this business strategy is best for
its long term success and viability, and complements its existing commitment to high quality customer service.
In connection with its overall growth
strategy, The Company seeks to continue to grow its commercial and industrial loan and commercial real estate loan portfolio by targeting commercial businesses in Westchester County and surrounding areas as a means to increase the yield on, and
diversify, its loan portfolio and build transactional deposit account relationships; focus on expanding its retail banking franchise and increasing the number of households served within its market area; and depending on market conditions, sell a
portion of the fixed rate residential real estate loans to a third party, in order to diversify its loan portfolio, increase fee income and reduce interest rate risk.
Comparison of Financial Condition at December 31, 2007 to September 30, 2007
Total assets increased by
$1.8 million, or 1.0%, to $175.3 million at December 31, 2007 from $173.5 million at September 30, 2007. Cash and cash equivalents decreased by $2.5 million, from $17.5 million at September 30, 2007, to $15.0 million at
December 31, 2007. Cash and cash equivalents, investment maturities and borrowing from the Federal Home Loan Bank of NY (“FHLB”) were used to fund additional loans and decreases in deposits.
In the three months ended December 31, 2007, securities available for sale and securities held to maturity declined by $2.9 million as investments in U.S.
Government Agency bonds matured.
Loans receivable were $154.3 million and $146.7 million at December 31, 2007 and September 30, 2007,
respectively, representing an increase of $7.6 million, or 5.2%. The increase in loans resulted from originations of one-to four family mortgage loans and non-residential real estate loans. The increase in loans receivable was funded from cash,
investment maturities and FHLB borrowing. While the banking industry has seen increases in loan delinquencies and defaults over the past year, particularly in the subprime sector, the Company has not experienced losses in its loan portfolio due
primarily to its conservative underwriting policies. As of December 31, 2007 and September 30, 2007, the Company had no non-performing loans and the allowance for loan losses was 0.18% of loans outstanding. There were no loans charged off
or recoveries in the quarters ended December 31, 2007 or 2006. While there has been no material shift in the loan portfolio, delinquency levels, loss experience, or other factors affecting the Bank, loans grew by $7.5 million during the quarter
ended December 31, 2007 and as a result, $15,000 was added to the allowance for loan losses.
Deposits decreased by $3.4 million, or 2.9%, from $117.5
million as of September 30, 2007 to $114.1 million as of December 31, 2007. The decrease in deposits resulted from unusually high market interest rates offered by other banks, caused in part by liquidity issues in the marketplace.
FHLB borrowings increased to $35.0 million as of December 31, 2007 from $30.0 million as of September 30, 2007 and were used to fund loan demand
and the decline in deposits. The increase in advance payments by borrowers for taxes and insurance of $797,000, from $366,000 at September 30, 2007 to $1.1 million at December 31, 2007 represents the normal accumulation of these funds
before tax and insurance payments are made on behalf of borrowers.
11
Stockholders’ equity decreased from $24.4 million at September 30, 2007 to $24.0 million at December 31,
2007 as a result of the net loss incurred during the period and the purchase of 28,195 shares of the Company’s common stock to fund the Management Recognition Plan (“MRP”), for $293,000. In January 2008, the trustee of the MRP
completed the purchase of the 54,011 remaining shares for the plan for $563,000.
12
Comparison of Operating Results for the Three Months Ended December 31, 2007 and 2006
General.
The Company incurred a net loss of $130,000 for the three months ended December 31, 2007, compared to a net loss of $13,000 for the three months
ended December 31, 2006. The increase in the net loss primarily reflects an increase in non-interest expenses which was partially offset by an increase in net interest income.
Average Balances, Interest and Average Yields.
The following table sets forth certain information relating to the Company’s average balance sheets and reflects the average annual yield on interest-earning
assets and average annual cost of interest-bearing liabilities, interest earned and interest paid for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of interest-earning assets or
interest-bearing liabilities, respectively, for the periods presented. Average balances are derived from daily balances over the periods indicated. The average balances for loans are net of allowance for loan losses.
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Three Months Ended December 31,
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2007
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2006
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(Dollars in thousands)
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Average
Balance
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Interest
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Rate
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Average
Balance
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Interest
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Rate
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Loans
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$
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150,658
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$
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2,265
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6.01
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%
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$
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98,814
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$
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1,431
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5.79
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%
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Securities
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2,731
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32
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4.69
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%
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18,869
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163
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3.46
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%
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Federal funds sold
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9,661
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111
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4.60
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%
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—
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—
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0.00
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%
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Other interest-earning assets
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4,349
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49
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4.51
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%
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435
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4
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3.68
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%
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Total interest-earning assets
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167,399
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2,457
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5.87
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%
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118,118
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1,598
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5.41
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%
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Non interest-earning assets
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3,437
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4,432
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Total assets
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$
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170,836
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$
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122,550
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Interest-bearing liabilities
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Demand deposits
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9,370
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|
95
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4.06
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%
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|
4,966
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|
43
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3.46
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%
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Savings and club accounts
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41,497
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41
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0.40
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%
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47,178
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47
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0.40
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%
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Certificates of deposit
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54,082
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630
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4.66
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%
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44,300
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|
475
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4.29
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%
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Borrowed money
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30,869
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|
389
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5.04
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%
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|
6,365
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|
83
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5.22
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%
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Total interest-bearing liabilities
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135,818
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1,155
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3.40
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%
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102,809
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|
648
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2.52
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%
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Non interest-bearing deposits
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10,573
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10,937
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Other liabilities
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|
164
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|
|
497
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Total liabilities
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146,555
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114,243
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Total stockholders’ equity
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24,281
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8,307
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Total liabilities and stockholders’ equity
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$
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170,836
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$
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122,550
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Interest rate spread
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$
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1,302
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2.47
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%
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|
|
|
|
$
|
950
|
|
2.89
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%
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Net interest-earning assets/net interest margin
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$
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31,581
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|
|
3.11
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%
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|
$
|
15,309
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|
|
|
3.22
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%
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Ratio of interest earning assets to interest bearing liabilities
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1.23
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|
|
|
|
1.15
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13
Interest Income.
Interest income increased $859,000, or 58.3%, to $2.5 million for the three months ended
December 31, 2007 from $1.6 million for the three months ended December 31, 2006. The increase in interest income was due to increases of $834,000 in interest income from loans and $156,000 in interest on federal funds sold and other
interest earning assets, offset by a $131,000 decrease in interest income from securities.
Interest income from loans increased by $834,000, or 58.3%, to
$2.3 million for the three months ended December 31, 2007 from $1.4 million for the three months ended December 31, 2006. The increase was due to a $51.8 million, or 52.5%, increase in the average balance of loans to $150.7 million in the
three months ended December 31, 2007 from $98.8 million in the three months ended December 31, 2006 and an increase in the average yield to 6.01% from 5.79%, as additions to the loan portfolio were made at interest rates that were higher
than the interest rate on the overall portfolio. The $51.8 million increase in average loan balances includes a $41.2 million increase in the conventional one- to four-family residential mortgage portfolio, a $2.3 million increase in the home equity
category and a $6.2 million increase in commercial real estate loans.
Interest income from securities decreased by $131,000 to $32,000 for the three
months ended December 31, 2007 from $163,000 for the three months ended December 31, 2006. The decrease in interest income from securities was due to maturities of U.S. Government Agency bonds which caused the average balance to decrease
by $16.1 million in the three months ended December 31, 2007 compared to the three months ended December 31, 2006. The impact of the bond maturities was partially offset by an increase in the average yield on securities of 4.69% for the
quarter ended December 31, 2007 and 3.46% for the quarter ended December 31, 2006, as the result of maturities of bonds with lower yields.
Interest income from federal funds sold and other interest earning assets increased by $156,000 from $4,000 in the three months ended December 31, 2006 to $160,000 in the three months ended December 31, 2007. The average balance
of federal funds sold and other interest earning assets was $14.0 million in the three months ended December 31, 2007 with an average yield of 4.57%.
Interest Expense.
Interest expense increased by $507,000, or 78.2%, to $1.2 million in the three month period ended December 31, 2007 compared to $648,000 in the comparable 2006 period. The increase in interest expense resulted
from higher average interest-bearing deposit balances, higher FHLB borrowings and higher interest rates on interest-bearing deposits. The average balance of interest-bearing demand deposits increased from $5.0 million in the quarter ended
December 31, 2006 to $9.4 million in the quarter ended December 31, 2007 as a result of offering higher interest rates to attract deposits in this category. The average balance of savings and clubs decreased by 12.0% to $41.5 million in
the quarter ended December 31, 2007 from $47.2 million in the comparable 2006 period primarily as a result of customers transferring deposits into higher yielding categories. The average balance of certificates of deposit increased from $44.3
million in the quarter ended December 31, 2006 to $54.1 million in 2007 as a result of higher interest rates in this deposit category. FHLB borrowings which were used to fund loan demand were higher in the quarter ended December 31, 2007,
increasing from $6.4 million in the quarter ended December 31, 2006 to $30.9 million in the quarter ended December 31, 2007. The interest rate on these borrowings was lower in the 2007 period, declining from 5.22% in 2006 to 5.04% in 2007.
14
Rate/Volume Analysis.
The following table analyzes the dollar amount of changes in interest income and interest
expense for major components of interest-earning assets and interest-bearing liabilities. It shows the amount of the change in interest income or expense caused by either changes in outstanding balances (volume) or changes in interest rates. The
effect of a change in volume is measured by applying the average rate during the first period to the volume change between the two periods. The effect of changes in rate is measured by applying the change in rate between the two periods to the
average volume during the first period. Changes attributable to both rate and volume which cannot be segregated, have been allocated proportionately to the absolute value of the change due to volume and the change due to rate.
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Quarter Ended December 31, 2007
Compared to 2006
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Volume
|
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Rate
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|
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Net
|
|
|
|
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(In thousands)
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Interest-earning assets:
|
|
|
|
|
|
|
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|
|
|
|
|
|
Loans receivable
|
|
$
|
778
|
|
|
$
|
56
|
|
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$
|
834
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Securities
|
|
|
(175
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)
|
|
|
44
|
|
|
|
(131
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)
|
|
Federal funds sold
|
|
|
111
|
|
|
|
—
|
|
|
|
111
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|
|
Other interest-earning assets
|
|
|
44
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|
|
|
1
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total interest-earning assets
|
|
|
758
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|
|
|
101
|
|
|
|
859
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing-liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
44
|
|
|
|
9
|
|
|
|
53
|
|
|
Savings and club accounts
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|
|
(6
|
)
|
|
|
—
|
|
|
|
(6
|
)
|
|
Certificates of deposit
|
|
|
111
|
|
|
|
43
|
|
|
|
154
|
|
|
Borrowed money
|
|
|
309
|
|
|
|
(3
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)
|
|
|
306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
458
|
|
|
|
49
|
|
|
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
300
|
|
|
$
|
52
|
|
|
$
|
352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income.
Net interest income increased $352,000, or 37.0%, to $1.3 million for the three months
ended December 31, 2007 from $950,000 for the three months ended December 31, 2006. Increases in both average interest-earning assets and the yield on those assets in the three months ended December 31, 2007 as compared to 2006 were
offset by increases in the cost of interest-bearing liabilities and increases in average deposit and borrowing balances. The average rate on deposit liabilities rose in response to local market conditions and from the change in the composition of
deposits in 2007 from savings to certificates of deposit.
The federal funds rate increased throughout 2005 and 2006, to 5.25% in June 2006 and remained at
that level until September 2007, at which time it began to decline. The interest rate on 10-year Treasury notes, from which the Company generally prices conventional mortgages, remained relatively flat during the period when the federal funds rate
was increasing. The negative impact on net interest income of the flattening, and at times inverted interest rate yield curve was mitigated by reinvesting the proceeds of maturing lower yielding securities and other interest-earning assets into
higher yielding loans, as well as diversifying the loan portfolio into higher yielding multi-family, non-residential, construction, home equity and commercial real estate loans. Increases in short-term interest rates without a corresponding increase
in long-term interest rates have resulted, and may continue to result in an increase in interest expense and a reduction in net interest income in the future.
15
Provision for Loan Losses.
The allowance for loan losses was $284,000, or 0.18%, of gross loans outstanding at
December 31, 2007 compared to $269,000, or 0.18%, of gross loans outstanding at September 30, 2007. The level of the allowance for loan losses is based on estimates and ultimate losses may vary from these estimates. Management reviews the
level of the allowance for loan losses on a quarterly basis, at a minimum, and establishes the provision for loan losses based on the composition of the loan portfolio, delinquency levels, loss experience, economic conditions, and other factors
related to the collectibility of the loan portfolio. Management regularly evaluates various risk factors related to the loan portfolio, such as type of loan, underlying collateral and payment status, and the corresponding allowance allocation
percentages. While there has been no material shift in the loan portfolio, delinquency levels, loss experience, or other factors affecting the Bank, loans grew by $7.5 million during the quarter ended December 31, 2007 and as a result, $15,000
was added to the allowance for loan losses. The Bank has allocated the allowance for loan losses among categories of loan types as well as classification status at each period end date.
Non-interest Income.
Non-interest income of $129,000 in the three months ended December 31, 2007 was higher than the comparable 2006 amount as a result of fees earned from referring a loan which was
outside the bank’s lending parameters to another lender.
Non-interest Expenses.
Non-interest expenses were $1.6 million and $1.0 million for
the three months ended December 31, 2007 and 2006, respectively, representing an increase of $519,000, or 49.7%. Higher salaries and benefits ($219,000) resulted from additions to staff in lending, compliance and operations, raises and
incentive compensation, and higher benefit costs, including the cost of the employee stock ownership plan and stock based compensation. Higher net occupancy costs ($43,000) resulted from the lease on the new Eastchester branch location which will
open in the spring of 2008. Professional fees were $65,000 in the quarter ended December 31, 2006 and $239,000 in the quarter ended December 31, 2007. The increase resulted from costs associated with preparing the proxy for the special
shareholders meeting, the cost of preparing and filing the first annual report and Form 10-KSB and the cost of the Registration Statement on Form S-8 for the stock option and management recognition programs. Other non-interest expense includes the
cost of proxy solicitation, proxy printing and other costs associated with operating as a public company.
Income Tax Expense (Benefit).
The income
tax benefit was $19,000 in the three month period ended December 31, 2007 compared to $3,000 in the comparable 2006 period. The tax provision (benefit) is recorded based on pretax income (loss), at the statutory rate for federal tax purposes
and the higher of the statutory rate or minimum tax rate for state purposes. The effective tax rate in the three month periods ended December 31, 2007 and 2006 was different than the statutory rate as a result of providing for New York State
minimum taxes.
Management of Market Risk
As a
financial institution, the Company’s primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on a significant portion of its assets and
liabilities. Fluctuations in interest rates will also affect the market value of all interest-earning assets, other than those which possess a short-term maturity. Interest rates are highly sensitive to factors that are beyond the Company’s
control, including general economic conditions, inflation, changes in the slope of the interest rate yield curve, monetary and fiscal policies of the federal government and the regulatory policies of government authorities. Due to the nature of the
Company’s operations, it is not subject to foreign currency exchange or commodity price risk. Instead, the Company’s real estate loan portfolio, concentrated in Westchester County, New York, is subject to the risks associated with the
economic conditions prevailing in its market area.
The primary goals of the Company’s interest rate management strategy are to determine the
appropriate level of risk given the business strategy and then manage that risk so as to reduce the exposure of the Company’s net interest income to fluctuations in interest rates. Historically, the Company’s lending activities have been
dominated by one- to four-family real estate mortgage loans. The primary source of funds has been deposits which have substantially shorter terms to maturity than the loan portfolio, and as a result, the Company has employed certain strategies to
manage the interest rate risk inherent in the asset/liability mix, including but not limited to limiting terms of fixed rate one- to four-family mortgage loan originations which are retained in the Company’s portfolio, emphasizing investments
with short- and intermediate-term maturities of less than five years and borrowing term funds from FHLB.
16
In addition, the actual amount of time before mortgage loans are repaid can be significantly impacted by changes in
mortgage prepayment rates and market interest rates. Mortgage prepayment rates will vary due to a number of factors, including the regional economy in the area where the underlying mortgages were originated, seasonal factors, demographic variables
and the assumability of the underlying mortgages. However, the major factors affecting prepayment rates are prevailing interest rates, related mortgage refinancing opportunities and competition. The Company monitors interest rate sensitivity so that
it can make adjustments to its asset and liability mix on a timely basis.
Net Interest Income at Risk
The Company uses a simulation model to monitor interest rate risk. This model reports the net interest income and net economic value at risk under different interest rate
environments. Specifically, an analysis is performed of changes in net interest income assuming changes in interest rates, both up and down, from current rates over the three-year period following the current financial statements.
The changes in interest income and interest expense due to changes in interest rates reflect the interest sensitivity of the Company’s interest earning assets and
interest bearing liabilities. For example, in a rising interest rate environment, the interest income from an adjustable-rate mortgage will increase depending on its re-pricing characteristics while the interest income from a fixed rate loan would
not increase until it was repaid and loaned out at a higher interest rate.
The table below sets forth the changes in net interest income, as of
September 30, 2007, the latest information available, that would result from various basis point changes in interest rates over a twelve-month period.
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Interest Rates
In Basis Points
(Rate
Shock)
|
|
Net Interest Income
|
|
|
|
Amount
|
|
Dollar
Change
|
|
|
Percent
Change
|
|
|
|
|
(Dollars in Thousands)
|
|
|
300
|
|
$
|
5,199
|
|
$
|
(121
|
)
|
|
-2.3
|
%
|
|
200
|
|
|
5,243
|
|
|
(77
|
)
|
|
-1.4
|
%
|
|
100
|
|
|
5,286
|
|
|
(34
|
)
|
|
-0.6
|
%
|
|
0
|
|
|
5,320
|
|
|
—
|
|
|
0.0
|
%
|
|
-100
|
|
|
5,352
|
|
|
32
|
|
|
0.6
|
%
|
|
-200
|
|
|
5,330
|
|
|
10
|
|
|
0.2
|
%
|
|
-300
|
|
|
5,247
|
|
|
(73
|
)
|
|
-1.4
|
%
|
Liquidity and Capital Resources
The Company is required to maintain levels of liquid assets sufficient to ensure the Company’s safe and sound operation. Liquidity is the ability to meet current and future financial obligations of a short-term
nature. The Company adjusts its liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The
Company also adjusts its liquidity level as appropriate to meet its asset/liability objectives.
The Company’s primary sources of funds are deposits,
brokered certificates of deposit, amortization and prepayments of loans, FHLB advances and loans, maturities of investment securities and funds provided from operations. While scheduled loan and mortgage-backed securities amortization and maturing
investment securities are a relatively predictable source of funds, deposit flow and loan and mortgage-backed securities prepayments are greatly influenced by market interest rates, economic conditions and competition. The Company’s liquidity,
represented by cash and cash equivalents and investment securities, is a product of its operating, investing and financing activities.
17
Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally
invested in short-term investments, such as Federal funds and other interest earning assets. If the Company requires funds beyond its ability to generate them internally, borrowing agreements exist with the FHLB which provide an additional source of
funds. At December 31, 2007, The Company had $35.0 million in loans from the FHLB and an available line of credit of $31.7 million.
In the three
months ended December 31, 2007, net cash provided from operating activities was $335,000, compared to net cash used of $345,000 in the comparable 2006 period. In the three months ended December 31, 2007, the net loss of $130,000 was offset
by non-cash expenses of $115,000 and changes in accrued interest receivable, and changes in other assets and other liabilities of $350,000.
In the three
months ended December 31, 2007 and 2006, investing activities used $4.9 million and $1.1 million of cash, respectively. In the 2007 period, maturities of U.S. Government bonds provided cash of $2.9 million and loan growth used $7.6 million of
cash. In the 2006 period, maturities of U.S. Government bonds provided cash of $2.5 million and loan growth used $3.4 million of cash.
Net cash provided
by financing activities was $2.1 million and $2.4 million in the three month periods ended December 31, 2007 and 2006, respectively. In the 2007 period, decreases in deposits used $3.4 million of cash and borrowings from FHLB provided $5.0
million of cash. In the 2006 period, higher deposits provided cash of $1.1 million.
The Company anticipates that it will have sufficient funds available
to meet its current loan and other commitments. As of December 31, 2007, the Company had cash and cash equivalents of $15.0 million and securities of $1.7 million. At December 31, 2007, the Company has outstanding commitments to originate
loans of $12.9 million and $9.2 million of undisbursed funds from approved lines of credit, principally under a homeowners’ equity line of credit lending program. Certificates of deposit scheduled to mature in one year or less at
December 31, 2007, totaled $45.5 million. Management believes that, based upon its experience and the Company’s deposit flow history, a significant portion of such deposits will remain with the Company.
The Company had an unused overnight line of credit and an unused one month overnight repricing line of credit commitment with the Federal Home Loan Bank of New York
totaling $31.7 million, which expire on July 31, 2008.
The following table sets forth the Bank’s capital position at December 31, 2007,
compared to the minimum regulatory capital requirements:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
For Capital Adequacy
Purposes
|
|
|
To be Well Capitalized
under Prompt Corrective
Action Provisions
|
|
|
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
|
|
|
(Dollars in Thousands)
|
|
|
December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital (to risk-weighted assets)
|
|
$
|
15,900
|
|
17.17
|
%
|
|
$
|
³
7,407
|
|
|
³
8.00
|
%
|
|
$
|
³
9,258
|
|
|
³
10.00
|
%
|
|
Core (Tier 1) capital (to risk-weighted assets)
|
|
|
15,616
|
|
16.87
|
|
|
|
—
|
|
|
—
|
|
|
|
³
5,555
|
|
|
³
6.00
|
|
|
Core (Tier 1) capital (to total assets)
|
|
|
15,616
|
|
9.00
|
|
|
|
³
6,939
|
|
|
³
4.00
|
|
|
|
³
8,674
|
|
|
³
5.00
|
|
|
Tangible capital (to total assets)
|
|
|
15,616
|
|
9.00
|
|
|
|
³
2,602
|
|
|
³
1.50
|
|
|
|
—
|
|
|
—
|
|
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are material to investors.
18