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EX-32 - CERTIFICATIONS - Roebling Financial Corp, Inc.ex-32.htm
EX-31 - CERTIFICATIONS OF CEO AND CFO - Roebling Financial Corp, Inc.ex-31.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
(Mark One)
X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                                                March 31, 2011               

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 0-50969

ROEBLING FINANCIAL CORP, INC.
(Exact name of Registrant as specified in its charter)

New Jersey
 
55-0873295
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)

Route 130 South and Delaware Avenue, Roebling, New Jersey
 
08554
 
(Address of principal executive offices)
 
(Zip Code)
 

(609) 499-9400
(Registrant’s telephone number, including area code)

NA
(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   X      No   __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).¨ Yes  ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer o
(Do not check if a smaller reporting company)
 
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ___  No   X_   

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: May 10, 2011


Class
 
Outstanding
$.10 par value common stock
 
1,686,527 shares

 
 

 


 ROEBLING FINANCIAL CORP, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2011

INDEX

 

       
  Page
Number
         
PART I - FINANCIAL INFORMATION OF ROEBLING FINANCIAL CORP, IN
 
         
Item 1.
 
Consolidated Financial Statements and Notes Thereto
 
1 – 16
Item 2.
 
Management’s Discussion and Analysis of Financial
   
     
Condition and Results of Operations
 
17 - 21
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk
 
21
Item 4.
 
Controls and Procedures
 
21
         
PART II - OTHER INFORMATION
   
         
Item 1.
 
Legal Proceedings
 
22
Item 1A.
 
Risk Factors
 
22
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds
 
22
Item 3.
 
Defaults upon Senior Securities
 
22
Item 4.
 
Reserved
 
22
Item 5.
 
Other Information
 
22
Item 6.
 
Exhibits
 
23
         
SIGNATURES
 
24

 
 
 

 
 
ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(Unaudited)
 
(In thousands, except share data)
 
 
           
   
March 31,
   
September 30,
 
   
2011
   
2010
 
             
Assets
           
             
Cash and due from banks
  $ 875     $ 908  
Interest-bearing deposits
    3,734       5,111  
     Total cash and cash equivalents
    4,609       6,019  
                 
Securities available for sale
    41,361       40,593  
Securities held to maturity
    118       127  
Loans receivable, net
    111,743       111,967  
Real estate owned
    880       749  
Accrued interest receivable
    513       504  
Federal Home Loan Bank of New York stock, at cost
    723       746  
Premises and equipment
    3,170       3,224  
Other assets
    2,967       2,829  
     Total assets
  $ 166,084     $ 166,758  
                 
Liabilities and Stockholders' Equity
               
                 
Liabilities
               
                 
Deposits
  $ 138,397     $ 138,769  
Borrowed funds
    9,500       10,000  
Advances from borrowers for taxes and insurance
    524       456  
Other liabilities
    1,509       1,417  
     Total liabilities
    149,930       150,642  
                 
Stockholders' equity
               
                 
Serial preferred stock, $0.10 par value; 5,000,000 shares authorized;
         
  none issued
    -       -  
Common stock; $0.10 par value; 20,000,000 shares authorized;
         
  1,718,473 issued
    172       172  
Additional paid-in-capital
    10,331       10,348  
Treasury stock; 31,946 shares, at cost
    (190 )     (190 )
Unallocated employee stock ownership plan shares
    (271 )     (310 )
Unallocated restricted stock plan shares
    (94 )     (93 )
Deferred compensation obligation
    261       240  
Stock purchased for deferred compensation plan
    (261 )     (240 )
Retained earnings - substantially restricted
    5,808       5,502  
Accumulated other comprehensive income (loss):
               
  Unrealized gain on securities available for sale, net of tax
    517       813  
  Defined benefit plan, net of tax
    (119 )     (126 )
     Total stockholders' equity
    16,154       16,116  
                 
     Total liabilities and stockholders' equity
  $ 166,084     $ 166,758  
                 
 
See notes to unaudited consolidated financial statements.

 
1

 
 
ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
(Unaudited)
 
(In thousands, except per share data)
    For the Three Months Ended  
    March 31,  
   
2011
   
2010
 
             
Interest income:
           
   Loans receivable
  $ 1,390     $ 1,553  
   Securities
    327       384  
   Other interest-earning assets
    9       12  
        Total interest income
    1,726       1,949  
                 
Interest expense:
               
   Deposits
    387       482  
   Borrowed funds
    50       88  
        Total interest expense
    437       570  
                 
Net interest income before provision for loan losses
    1,289       1,379  
Provision for loan losses
    0       325  
        Net interest income after provision for loan losses
    1,289       1,054  
                 
Non-interest income:
               
   Loan fees
    22       17  
   Account servicing and other
    94       100  
   Gain on sale of loans
    3       1  
        Total non-interest income
    119       118  
                 
Non-interest expense:
               
   Compensation and benefits
    578       567  
   Occupancy and equipment
    129       136  
   Service bureau and data processing
    131       135  
   Federal deposit insurance premiums
    80       76  
   Real estate owned expense, net
    10       301  
   Other expense
    228       239  
        Total non-interest expense
    1,156       1,454  
                 
        Income (loss) before income tax (benefit)
    252       (282 )
Income tax (benefit)
    85       (121 )
        Net income (loss)
    167       (161 )
                 
Other comprehensive income (loss), net of tax:
               
   Unrealized loss on securities available for sale, net of tax
    (55 )     (66 )
   Adjustment to minimum pension liability
    4       4  
Comprehensive income (loss)
  $ 116     $ (223 )
                 
Earnings (loss) per common share:
               
  Basic
  $ 0.10     $ (0.10 )
  Diluted
  $ 0.10     $ (0.10 )
                 
Weighted average number of shares outstanding:
               
  Basic
    1,653       1,644  
  Diluted
    1,653       1,644  
 
See notes to unaudited consolidated financial statements.

 
2

 

 
ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
(Unaudited)
 
(In thousands, except per share data)
 
    For the Six Months Ended  
    March 31,  
   
2011
   
2010
 
             
Interest income:
           
   Loans receivable
  $ 2,826     $ 3,166  
   Securities
    651       800  
   Other interest-earning assets
    22       24  
        Total interest income
    3,499       3,990  
                 
Interest expense:
               
   Deposits
    808       1,027  
   Borrowed funds
    106       192  
        Total interest expense
    914       1,219  
                 
Net interest income before provision for loan losses
    2,585       2,771  
Provision for loan losses
    50       750  
        Net interest income after provision for loan losses
    2,535       2,021  
                 
Non-interest income:
               
   Loan fees
    44       38  
   Account servicing and other
    195       208  
   Gain on sale of loans
    11       3  
        Total non-interest income
    250       249  
                 
Non-interest expense:
               
   Compensation and benefits
    1,157       1,149  
   Occupancy and equipment
    248       277  
   Service bureau and data processing
    260       273  
   Federal deposit insurance premiums
    160       158  
   Real estate owned expense, net
    28       331  
   Other expense
    459       509  
        Total non-interest expense
    2,312       2,697  
                 
        Income (loss) before income tax (benefit)
    473       (427 )
Income tax (benefit)
    167       (185 )
        Net income (loss)
    306       (242 )
                 
Other comprehensive income (loss), net of tax:
               
   Unrealized gain (loss) on securities available for sale, net of tax
    (296 )     (82 )
   Adjustment to minimum pension liability
    7       8  
Comprehensive income (loss)
  $ 17     $ (316 )
                 
Earnings (loss) per common share:
               
  Basic
  $ 0.19     $ (0.15 )
  Diluted
  $ 0.19     $ (0.15 )
                 
Weighted average number of shares outstanding:
               
  Basic
    1,652       1,643  
  Diluted
    1,652       1,643  
 
See notes to unaudited consolidated financial statements.
 

 
3

 
 
ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 
(Unaudited)
 
(In thousands)

 
                                                     Accumulated        
                                       
Common
           Other        
           Additional            Unallocated      Unallocated      Deferred      Stock for            Comprehensive        
   
Common
Stock
   
Paid-in
Capital
   
Treasury
Stock
   
ESOP
Shares
   
RSP
Shares
   
Compensation
Obligation
   
Deferred
Compensation
   
Retained
Earnings
   
Income
(Loss)
   
Total
 
                                                             
Balance at September 30, 2010
  $ 172     $ 10,348     $ (190 )   $ (310 )   $ (93 )   $ 240     $ (240 )   $ 5,502     $ 687     $ 16,116  
                                                                                 
Net income for the six months
                                                                       
  ended March 31, 2011
    -       -       -       -       -       -       -       306       -       306  
                                                                                 
Amortization of ESOP shares
    -       (18 )     -       39       -       -       -       -       -       21  
                                                                                 
Change in unrealized gain (loss)
 
 
                                                                 
  on securities available for sale,                                                                                
  net of tax
    -       -       -       -       -       -       -       -       (296 )     (296 )
                                                                                 
Deferred compensation plan
    -       -       -       -       -       21       -       -       -       21  
                                                                                 
Common stock acquired for
                                                                         
  deferred compensation plan
    -       -       -       -       -       -       (21 )     -       -       (21 )
                                                                                 
Allocation of RSP shares
    -       5       -       -       (1 )     -       -       -       -       4  
                                                                                 
Tax expense of stock benefit
  plans
    -       (4 )     -       -       -       -       -       -       -       (4 )
                                                                                 
Adjustment to mimimum pension
                                                                 
  liability, net of tax
    -       -       -       -       -       -       -       -       7       7  
                                                                                 
Balance at March 31, 2011
  $ 172     $ 10,331     $ (190 )   $ (271 )   $ (94 )   $ 261     $ (261 )   $ 5,808     $ 398     $ 16,154  
 
                                                 
 
See notes to unaudited consolidated financial statements.
 

 
4

 
 
ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)
 
(In thousands)

 
    For the Six Months Ended  
    March 31,  
   
2011
   
2010
 
             
Cash flows from operating activities:
           
   Net income (loss)
  $ 306     $ (242 )
  Adjustments to reconcile net income (loss) to cash provided by (used in)                
     operating activities:
               
         Depreciation
    63       89  
         Amortization of premiums and discounts, net
    22       37  
         Amortization of deferred loan fees and costs, net
    13       7  
         Provision for loan losses
    50       750  
         Provision for losses on REO
    19       246  
         (Gain) loss on sale of real estate owned, net
    (1 )     17  
         Originations of loans held for sale, net of repayments
    (3,842 )     (714 )
         Gain on sale of loans
    (11 )     (3 )
         Proceeds from sale of loans held for sale
    4,359       717  
         (Decrease) increase in other assets
    51       (1,956 )
         (Increase) decrease in accrued interest receivable
    (9 )     31  
         Increase in other liabilities
    102       30  
         Amortization/allocation of ESOP and RSP
    25       24  
         Increase in deferred compensation stock obligation
    21       42  
                   Net cash provided by (used in) operating activities
    1,168       (925 )
                 
Cash flows from investing activities:
               
    Purchase of securities available for sale
    (10,028 )     (9,041 )
    Proceeds from payments and maturities of securities available for sale
    8,745       10,703  
    Proceeds from payments and maturities of securities held to maturity
    9       10  
    Net (increase) decrease in loans
    (1,059 )     2,485  
    Proceeds from sale of real estate owned
    566       347  
    Redemption (purchase) of Federal Home Loan Bank stock
    23       (135 )
    Purchase of premises and equipment
    (10 )     (72 )
                   Net cash (used in) provided by investing activities
    (1,754 )     4,297  
                 
Cash flows from financing activities:
               
    Net decrease in deposits
    (372 )     (6,587 )
    Net increase in short-term borrowed funds
    500       7,000  
    Repayment of long-term borrowed funds
    (1,000 )     (4,000 )
    Increase (decrease) in advance payments by borrowers for taxes
               
       and insurance
    69       (4 )
    Purchase of common shares for deferred compensation plan
    (21 )     (42 )
                   Net cash used in financing activities
    (824 )     (3,633 )
                 
    Net decrease in cash and cash equivalents
    (1,410 )     (261 )
    Cash and cash equivalents at beginning of period
    6,019       4,074  
    Cash and cash equivalents at end of period
  $ 4,609     $ 3,813  
                 
Supplemental Disclosures of Cash Flow Information:
               
    Cash paid for:
               
        Interest on deposits and borrowed funds
  $ 915     $ 1,217  
         Income taxes
    99       -  
                 
    Transfer of loans to real estate owned
    714       691  
 
See notes to unaudited consolidated financial statements.
 
5

 

 
 ROEBLING FINANCIAL CORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Roebling Financial Corp, Inc. (the “Company”) have been prepared in accordance with the instructions for Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  However, such information presented reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of the Company’s management, necessary for a fair statement of results for the interim period.

The results of operations for the three and six months ended March 31, 2011, are not necessarily indicative of the results to be expected for the year ending September 30, 2011, or any other future interim period.  The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended September 30, 2010 included in the Company’s Annual Report on Form 10-K.

NOTE 2 – EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by the weighted average number of shares of common stock outstanding, adjusted for unearned shares of the Employee Stock Ownership Plan (“ESOP”).  Diluted earnings per share is computed by adjusting the weighted average number of shares of common stock outstanding to include the effect of outstanding stock options and compensation grants, if dilutive, using the treasury stock method.

The following is a summary of the Company’s earnings per share calculations:
 
   
Three Months Ended
   
Six Months Ended
 
      March 31,       March 31,  
   
2011
   
2010
   
2011
   
2010
 
                         
Net income (loss)
  $ 166,891     $ (160,696 )   $ 306,089     $ (241,879 )
                                 
Weighted average common shares
                               
  outstanding for computation of
                               
  basic EPS (1)
    1,653,357       1,644,206       1,652,213       1,643,063  
                                 
Common-equivalent shares due to
                               
  the dilutive effect of stock options
                               
  and RSP awards
    -       -       -       -  
                                 
Weighted-average common shares
                               
  for computation of diluted EPS
    1,653,357       1,644,206       1,652,213       1,643,063  
                                 
Earnings (loss) per common share:
                               
   Basic
  $ 0.10     $ (0.10 )   $ 0.19     $ (0.15 )
   Diluted
    0.10       (0.10 )     0.19       (0.15 )
                                 
(1) Excludes unallocated ESOP shares
                               
 
NOTE 3 – TREASURY STOCK

In February, 2009, the Company approved the repurchase of up to $250,000 of its common stock.  In May, 2009, the Company acquired 31,946 shares at a cost of approximately $190,000 or an average of $5.90 per share.
 
 
6

 
 
NOTE 4 – SECURITIES AVAILABLE FOR SALE
 
      March 31, 2011  
   
Amortized
      Gross Unrealized    
Estimated
 
   
Cost
   
Gains
   
Losses
   
Fair Value
 
                         
Investment Securities
                       
   U.S. Government and Agency Securities:
                       
      Due after one year through five years
  $ 4,000,000     $ 14,790     $ 22,370     $ 3,992,420  
      Due after five years through ten years
    11,999,395       18,550       248,315       11,769,630  
                                 
   Marketable Equity Securities
    2,888       -       2,732       156  
                                 
   Residential Mortgage-backed Securities
    24,497,994       1,147,640       46,872       25,598,762  
                                 
    $ 40,500,277     $ 1,180,980     $ 320,289     $ 41,360,968  
                                 
 

      September 30, 2010  
   
Amortized
      Gross Unrealized    
Estimated
 
   
Cost
   
Gains
   
Losses
   
Fair Value
 
                         
Investment Securities
                       
   U.S. Government and Agency Securities:
                       
      Due after one year through five years
  $ 4,000,000     $ 33,440     $ -     $ 4,033,440  
      Due after five years through ten years
    10,748,648       55,347       2,810       10,801,185  
                                 
   Marketable Equity Securities
    2,888       -       2,780       108  
                                 
   Residential Mortgage-backed Securities
    24,487,924       1,270,228       -       25,758,152  
                                 
    $ 39,239,460     $ 1,359,015     $ 5,590     $ 40,592,885  
 
There were no sales of investment securities or mortgage-backed securities during the six months ended March 31, 2011.

The following tables provide a summary of securities available for sale which were in an unrealized loss position at March 31, 2011 and September 30, 2010.  Approximately $2,700 or 1% and $2,800 or 50% of the unrealized loss as of March 31, 2011 and September 30, 2010, respectively, was comprised of securities in a continuous loss position for twelve months or more.  The unrealized losses on the government and agency and mortgage-backed debt securities are caused primarily by changes in market interest rates.  The Company does not intend to sell these securities and it is not likely that we would be required to sell them before recovery of the amortized cost basis.

 
7

 
 
    March 31, 2011  
      Under One Year     One Year or More  
                         
         
Gross
         
Gross
 
   
Estimated
   
Unrealized
   
Estimated
   
Unrealized
 
   
Fair Value
   
Loss
   
Fair Value
   
Loss
 
                         
U.S. Government and Agency Securities
  $ 9,728,710     $ 270,685     $ -     $ -  
Marketable Equity Securities
    -       -       156       2,732  
Residential Mortgage-backed Securities
    1,948,311       46,872       -       -  
                                 
        Total available for sale
  $ 11,677,021     $ 317,557     $ 156     $ 2,732  
 
 
    September 30, 2010  
      Under One Year     One Year or More  
                         
         
Gross
         
Gross
 
   
Estimated
   
Unrealized
   
Estimated
   
Unrealized
 
   
Fair Value
   
Loss
   
Fair Value
   
Loss
 
                         
U.S. Government and Agency Securities
  $ 1,997,190     $ 2,810     $ -     $ -  
Marketable Equity Securities
    -       -       108       2,780  
                                 
        Total available for sale
  $ 1,997,190     $ 2,810     $ 108     $ 2,780  
                                 
 
NOTE 5 – SECURITIES HELD TO MATURITY
 
   
March 31,
   
September 30,
 
   
2011
   
2010
 
             
Residential Mortgage-backed Securities:
           
   Amortized cost
  $ 118,079     $ 127,306  
   Gross unrealized gains
    4,957       5,191  
   Gross unrealized losses
    -       (21 )
                 
   Estimated fair value
  $ 123,036     $ 132,476  
  
NOTE 6 – LOANS RECEIVABLE, NET

In July, 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses (“Update”).  This Update provides for additional disclosures to be used to assess an entity’s credit risk exposures and evaluate the adequacy of its allowance for credit losses.  Existing disclosures are expanded on a disaggregated basis, by portfolio segment and class of receivable.  Additional disclosures are required for aging of receivables and credit quality factors.

The Company has segmented its loans into three portfolio segments of residential, commercial purpose and consumer.  It has further disaggregated these segments into additional classes of loans.  The residential portfolio segment includes loans to consumers, secured by one-to-four family residential properties that are generally owner-occupied.  This portfolio segment includes two classes, mortgage loans and home equity loans.  Commercial purpose loans are one segment and one class of receivable.  These are loans made to individuals and businesses for business purposes.  They are generally collateralized by commercial real estate, residential properties (one-to-four or multifamily), land or business assets, and may be provided for permanent or construction financing.    The consumer
 
 
8

 
 
portfolio segment includes non-mortgage loans to individuals for consumer purposes.  They are further categorized into three classes, including account loans, unsecured loans and other loans.  The following table reflects the aging and accrual status of our loan portfolio by portfolio segment and class as of March 31, 2011:
 
 
Past Due
     
Total
         
 
30-59
 
60-89
 
90+
         
Loans
       
90+ and
(In thousands)
 Days
 
 Days
 
 Days
 
 Total
 
 Current
 
 Receivable
 
 Non-accrual
 Accruing
                                 
Residential:
                               
  Mortgage
 $         504
 
 $             -
 
 $         349
 
 $         853
 
 $    54,959
 
 $    55,812
   
 $         349
 
 $             -
  Home equity
            160
 
              31
 
            126
 
            317
 
       27,813
 
       28,130
   
            126
 
                -
Commercial purpose
              38
 
                -
 
         4,510
 
         4,548
 
       26,066
 
       30,614
   
         4,319
 
            190
Consumer:
                               
  Account loans
                -
 
                -
 
                -
 
                -
 
              78
 
              78
   
                 -
 
                -
  Unsecured
                -
 
                -
 
                -
 
                -
 
              78
 
              78
   
                 -
 
                -
  Other
 -
 
 -
 
 -
 
                -
 
            120
 
            120
   
 -
 
 -
 
 $         702
 
 $           31
 
 $      4,985
 
 $      5,718
 
 $  109,114
 
 $  114,832
   
 $      4,794
 
 $         190
  
The activity in the allowance for loan losses, by portfolio segment, is as follows:
 
   
For the Six Months Ended March 31, 2011
 
         
Commercial
                   
(In thousands)
 
Residential
   
Purpose
   
Consumer
   
Unallocated
   
Total
 
                               
Beginning balance
  $ 484     $ 2,664     $ 18     $ 42     $ 3,208  
Provision for loan losses
    (113 )     193       (14 )     (16 )     50  
Charge-offs
    (80 )     (71 )     -       -       (151 )
Recoveries
    -       8       -       -       8  
Ending Balance
  $ 291     $ 2,794     $ 4     $ 26     $ 3,115  
 
As of March 31, 2011, the ending allowance balance where the related loans are evaluated for impairment:
 
         
Commercial
                   
(In thousands)
 
Residential
   
Purpose
   
Consumer
   
Unallocated
   
Total
 
                               
Individually
  $ 27     $ 1,882     $ -     $ -     $ 1,909  
Collectively
    264       912       4       26       1,206  
     Total
  $ 291     $ 2,794     $ 4     $ 26     $ 3,115  
 
As of March 31, 2011, the related loan balance where the loans are evaluated for impairment:
 
         
Commercial
                   
(In thousands)
 
Residential
   
Purpose
   
Consumer
         
Total
 
                               
Individually
  $ 236     $ 5,062     $ -             $ 5,298  
Collectively
    83,706       25,552       276               109,534  
     Total
  $ 83,942     $ 30,614     $ 276             $ 114,832  
 
 
9

 

Additional information about impaired loans, by portfolio segment and class as of March 31, 2011, is as follows:
 
                     
For the Three Months Ended
   
For the Six Months Ended
 
   
As of March 31, 2011
   
March 31, 2011
   
March 31, 2011
 
         
Unpaid
         
Average
   
Interest
   
Average
   
Interest
 
   
Recorded
   
Principal
   
Related
   
Recorded
   
Income
   
Recorded
   
Income
 
(In thousands)
 
Investment
   
Balance
   
Allowance
   
Investment
   
Recognized
   
Investment
   
Recognized
 
                                           
With no related allowance:
                                         
   Residential
                                         
     Mortgage
  $ 32     $ 32     $ -     $ 31     $ -     $ 31     $ -  
     Home equity
    97       97       -       65       -       51       -  
  Commercial purpose
    2,243       2,243       -       1,396       2       1,336       4  
      2,372       2,372       -       1,492       2       1,418       4  
                                                         
With a related allowance:
                                                       
   Residential
                                                       
     Mortgage
    107       107       27       415       -       526       -  
     Home equity
    -       -       -       -       -       -       -  
  Commercial purpose
    2,819       2,819       1,882       2,821       -       2,907       2  
      2,926       2,926       1,909       3,236       -       3,433       2  
                                                         
Total:
                                                       
   Residential
                                                       
     Mortgage
    139       139       27       446       -       557       -  
     Home equity
    97       97       -       65       -       51       -  
  Commercial purpose
    5,062       5,062       1,882       4,217       2       4,243       6  
     Total impaired
  $ 5,298     $ 5,298     $ 1,909     $ 4,728     $ 2     $ 4,851     $ 6  
 
The average balance of impaired loans outstanding for the three and six months ended March 31, 2010 was $4.9 million and $5.0 million, respectively.  Interest income of $10,000 and $13,000 was recognized on impaired loans during the three and six months ended March 31, 2010, respectively.

One of the primary methods we use as an indicator of the credit quality of our residential and commercial purpose portfolios is the regulatory classification system.  For the consumer portfolio segment, payment performance is our primary indicator of credit quality.  The following table reflects the credit quality indicators by portfolio segment and class, as of March 31, 2011:
 
Credit Risk Profile by Classification:
             
   
Residential
   
Commercial
 
(In thousands)
 
Mortgage
   
Home Equity
   
Purpose
 
                   
Pass
  $ 53,958     $ 27,960     $ 20,095  
Special mention
    1,716       44       2,179  
Substandard
    111       126       6,458  
Doubtful
    -       -       -  
Loss
    27       -       1,882  
   Total
  $ 55,812     $ 28,130     $ 30,614  
                         
Credit Risk Profile by Performance:
                 
   
Consumer
 
   
Account
                 
(In thousands)
 
Loans
   
Unsecured
   
Other
 
                         
Performing
  $ 78     $ 78     $ 120  
Non-performing
    -       -       -  
   Total
  $ 78     $ 78     $ 120  

 
10

 
 
NOTE 7 – BENEFIT PLANS

Stock Option Plan

The Company has stock option plans (“Plans”) which authorize the issuance of up to 168,746 shares upon the exercise of stock options that may be awarded to officers, directors, key employees, and other persons providing services to the Company.  Shares issued on the exercise of options may be authorized but unissued shares, treasury shares or shares acquired on the open market.  The options granted under the Plans constitute either Incentive Stock Options or Non-Incentive Stock Options.  The options are granted at an exercise price equal to the fair market value of the Company’s common stock on the date of grant and expire not more than 10 years after the date of grant.  At March 31, 2011, there were 16,434 shares remaining for future option awards.

There was no activity under the Plans for the six months ended March 31, 2011.  The following table summarizes all options outstanding as of March 31, 2011, all of which are exercisable:
 
Number
   
Exercise
 
Remaining
of Shares
   
Price
 
Contractual Life
           
  54,642     $ 10.000  
4.8 years
  48,600       12.725  
5.4 years
               
  103,242     $ 11.283  
5.1 years
 
No stock option expense was recorded in the six months ended March 31, 2011 or 2010 because all options were previously fully vested.

Restricted Stock Plan

The Company has restricted stock plans (“Plans”) which provide for the award of shares of restricted stock to directors, officers and employees.  The Plans provide for the purchase of 67,496 shares of common stock in the open market to fund such awards.  All of the Common Stock to be purchased by the Plans is purchased at the fair market value on the date of purchase.  Awards under the Plans are made in recognition of expected future services to the Company by its directors, officers, and key employees responsible for implementation of the policies adopted by the Company’s Board of Directors and as a means of providing a further retention incentive.  Compensation expense on Plan shares is recognized over the vesting periods based on the market value of the stock on the date of grant.  Recipients of awards receive compensation payments equal to dividends paid prior to the date of vesting within 30 days of each dividend payment date.  As of March 31, 2011, there were 21,404 shares remaining for future awards.  Compensation expense for the Plans was approximately $3,300 and $7,900, respectively, for the three and six-month periods ended March 31, 2011, compared to $4,600 and $8,400 for the same 2010 periods.

The following table summarizes changes in unvested shares for the six months ended March 31, 2011:
 
         
Weighted
 
         
Average
 
   
Number
   
Grant Date
 
   
of Shares
   
Fair Value
 
             
Outstanding September 30, 2010
    4,912     $ 7.665  
Granted
    -       -  
Vested
    (2,116 )     8.613  
Forfeited
    -       -  
                 
Outstanding March 31, 2011
    2,796     $ 6.948  
 
 
11

 

Employee Stock Ownership Plan

Effective upon the consummation of the Bank’s initial stock offering, an Employee Stock Ownership Plan ("ESOP") was established for all eligible employees who have completed a twelve-month period of employment with the Bank and at least 1,000 hours of service, and have attained the age of 21.  The ESOP used $156,800 in proceeds from a term loan to purchase 62,149 shares of Bank common stock during the stock offering.  In fiscal 2004, the ESOP purchased 72,861 shares of common stock in the second-step conversion with the proceeds of a $776,000 loan from the Company, which has a 10-year term and an interest rate of 4.75%.  $47,000 of the proceeds was used to pay off the prior outstanding debt.

Shares purchased with the loan proceeds were initially pledged as collateral for the loans and are held in a suspense account for future allocation among participants.  Contributions to the ESOP and shares released from the suspense account are in an amount proportional to the loan repayment. Shares are allocated among the participants on the basis of compensation, as described by the ESOP, in the year of allocation.

The ESOP is accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 718.  The ESOP shares pledged as collateral are reported as unallocated ESOP shares in the statements of financial condition.  As shares are committed to be released from collateral, the Bank reports compensation expense equal to the current market price of the shares, and the shares become outstanding for basic net income per common share computations. ESOP compensation expense was approximately $10,800 and $20,500, respectively, for the three and six-month periods ended March 31, 2011, compared to $8,600 and $20,300 for the same 2010 periods.

NOTE 8 – FAIR VALUE MEASUREMENTS

On October 1, 2008, the Company adopted the FASB guidance on fair value measurements, codified into ASC Topic 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The guidance applies to other accounting pronouncements that require or permit fair value measurements.  ASC Topic 820 clarifies that fair value is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, rather than an entry price that would be paid to acquire an asset or liability. It also establishes a fair value hierarchy that distinguishes between  assumptions developed based on market data obtained from independent sources (observable inputs), and assumptions developed based on the best information available in the circumstances (unobservable inputs).  The fair value hierarchy levels are summarized as follows:

Level 1:
Quoted prices in active markets for identical assets or liabilities.
 
Level 2:
Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or observable market data.

Level 3:
Unobservable inputs where there is little, if any, market activity and that are developed based on the best information available under the circumstances.

Determination of the appropriate level within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

 
12

 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
   
(Dollars in thousands)
 
March 31, 2011
                       
   Securities available for sale:
                       
       U.S. government and agency securities
  $ -     $ 15,762     $ -     $ 15,762  
       Mortgage-backed securities
    -       25,599       -       25,599  
                                 
September 30, 2010
                               
   Securities available for sale:
                               
       U.S. government and agency securities
  $ -     $ 14,835     $ -     $ 14,835  
       Mortgage-backed securities
    -       25,758       -       25,758  
 
Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy level, are summarized below:
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
   
(Dollars in thousands)
 
March 31, 2011
                       
    Impaired loans
  $ -     $ -     $ 1,016     $ 1,016  
    Real estate owned
    -       -       880       880  
                                 
September 30, 2010
                               
    Impaired loans
  $ -     $ -     $ 2,400     $ 2,400  
    Real estate owned
    -       -       749       749  
 
A loan is deemed to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Loan impairment is measured based on discounted cash flows or collateral value.  If a valuation adjustment is required, a specific allowance is established, with a transfer from the general valuation allowance.  Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly.

Real estate owned represents properties that have been acquired in foreclosure or by deed-in-lieu of foreclosure.   The assets are written down to fair value less estimated costs to sell at the time of foreclosure.  Fair value is based on the appraised value, which may be adjusted based on management’s review and market conditions.  Subsequent valuations are periodically performed and if the value has declined, an allowance would be established with a charge to operations.  Additional impairments on REO properties of $8,300 and $19,000, respectively, were recorded during the three and six months ended March 31, 2011 as a provision for REO losses, compared to $246,000 for each of the same 2010 periods.

NOTE 9 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein:

Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate their fair value.

Investment and Mortgage-Backed Securities

Fair values for securities, excluding restricted equity securities, are based on quoted market prices.  The carrying values of restricted equity securities approximate fair values.
 
 
13

 

Loans Receivable

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values.  Fair values for certain mortgage loans and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics.  Fair values for commercial real estate and commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Deposit Liabilities

The fair value of demand deposits, savings deposits and money market accounts are the amounts payable on demand. The fair values of certificates of deposit are based on the discounted value of contractual cash flows.  The discount rate was estimated using the rate currently offered for deposits of similar remaining maturities.

Short-Term Borrowings

The carrying amounts of federal funds purchased and other short-term borrowings maturing within 90 days approximate their fair values.  Fair values of other short-term borrowings are estimated using discounted cash flow analyses based on the Company's current incremental borrowing rates for similar types of borrowing arrangements.

Long-Term Debt

The fair value of long-term debt is estimated using discounted cash flow analysis based on the current incremental borrowing rates for similar types of borrowing arrangements.

Accrued Interest Receivable

The carrying amounts of accrued interest approximate their fair values.

Federal Home Loan Bank of New York Stock

Federal Home Loan Bank of New York stock is valued at cost.

Off-Balance-Sheet Instruments

In the ordinary course of business the Company has entered into off-balance-sheet financial instruments consisting of commitments to extend credit.  Such financial instruments are recorded in the financial statements when they are funded. Their fair value would approximate fees currently charged to enter into similar agreements.
 
 
14

 

The carrying values and estimated fair values of financial instruments are as follows (in thousands):
 
   
March 31, 2011
   
September 30, 2010
 
   
Carrying
   
Fair
   
Carrying
   
Fair
 
   
Amount
   
Value
   
Amount
   
Value
 
                         
Financial Assets
                       
                         
Cash and cash equivalents
  $ 4,609     $ 4,609     $ 6,019     $ 6,019  
Securities available for sale
    41,361       41,361       40,593       40,593  
Securities held to maturity
    118       123       127       132  
Loans receivable
    111,743       115,016       111,967       118,333  
Accrued interest receivable
    513       513       504       504  
FHLB stock
    723       723       746       746  
                                 
Financial Liabilities
                               
                                 
Deposits
    138,397       140,136       138,769       141,321  
Borrowed funds
    9,500       9,796       10,000       10,412  
 
The fair value estimates are made at a discrete point in time based on relevant market information and information about the financial instruments.  Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.  Further, the foregoing estimates may not reflect the actual amount that could be realized if all or substantially all of the financial instruments were offered for sale.

In addition, the fair value estimates were based on existing on-and-off balance sheet financial instruments without attempting to value the anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Other significant assets and liabilities that are not considered financial assets and liabilities include real estate owned, premises and equipment, and advances from borrowers for taxes and insurance.  In addition, the tax ramifications related to the realization of the unrealized gains and losses have a significant effect on fair value estimates and have not been considered in any of the estimates.

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments.  The lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.

NOTE 10 – SUBSEQUENT EVENTS

The Company has considered whether any events or transactions occurring after March 31, 2011 would require recognition or disclosure in the financial statements as of or for the three or six-month periods ended March 31, 2011.  No such subsequent events were identified.

NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS

In January, 2011 the FASB issued Accounting Standards Update (“ASU”) No. 2011-01, Receivables (Topic 310):  Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.  Under the effective date in ASU 2010-20, public-entity creditors would have provided disclosures about troubled debt restructurings for periods beginning on or after December 15, 2010.  The new disclosures are now anticipated to be effective for interim and annual periods ending after June 15, 2011.  ASU 2011-01 does not defer the effective date of the other disclosure requirements of ASU 2010-20.
 
 
15

 
 
In April, 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.  This update provides additional guidance to help creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring.  It also provides for disclosure of previously deferred information for interim and annual periods beginning on or after June 15, 2011.


 
16

 


ROEBLING FINANCIAL CORP, INC.


ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements.  When used in this discussion, the words “believes”, “anticipates”, “contemplates”, “expects”, and similar expressions are intended to identify forward-looking statements.  Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected.   Those risks and uncertainties include changes in interest rates, the ability to control costs and expenses, the impact of our new branches, new legislation and regulations, and general economic conditions.  The Company does not undertake and specifically disclaims any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

           The Company's business is conducted primarily through its wholly-owned subsidiary, Roebling Bank (the "Bank"). References to the Company or Registrant refer to the consolidated entity which includes the main operating company, the Bank, unless the context indicates otherwise.

Overview

At March 31, 2011, the Company had total assets, deposits, borrowings and stockholders’ equity of $166.1 million, $138.4 million, $9.5 million and $16.2 million, respectively.  For the three months ended March 31, 2011, the Company reported net income of $167,000, or $.10 per diluted share, compared to a net loss of $161,000, or $(.10) per diluted share, for the same period in 2010.  For the six months ended March 31, 2011, the Company reported net income of $306,000, or $.19 per diluted share, compared to a net loss of $242,000, or $(.15) per diluted share, for the same period in 2010.  The increased earnings are primarily attributable to a decrease in the provisions for loan and REO losses, which totaled $8,000 and $69,000 for the three and six months ended March 31, 2011, respectively, compared to $571,000 and $996,000 for the same 2010 periods.

Changes in Financial Condition

Total assets decreased by $674,000, or .4%, to $166.1 million at March 31, 2011, from $166.8 million at September 30, 2010.  This decrease is primarily attributable to a $1.4 million decrease in cash and cash equivalents, partially offset by a $759,000 increase in investment securities.    Deposits decreased by $372,000, or .3%, while borrowed funds decreased by $500,000, to $9.5 million at March 31, 2011 from $10.0 million at September 30, 2010.   Stockholders’ equity increased by $38,000, to $16.2 million at March 31, 2011 from $16.1 million at September 30, 2010.  The change was primarily attributable to net income of $306,000, partially offset by a $296,000 decrease in the net unrealized gain on securities available for sale.

Results of Operations

Net Interest Income.   For the three-months ended March 31, 2011, the Company reported net interest income before provision for loan losses of $1,289,000, compared to $1,379,000 for the same period in 2010.  The decrease in net interest income was the result of a decrease in interest income of $223,000, partially offset by a decrease in interest expense of $133,000.  The interest rate spread was 3.00% for the three months ended March 31, 2011 compared to 3.22% for the three months ended March 31, 2010, while the net interest margin was 3.28% for the 2011 period compared to 3.53% for the 2010 period.  For the six-month period ended March 31, 2011, the Company reported net interest income before provision for loan losses of $2,585,000, compared to $2,771,000 for the six months ended March 31, 2010.  The interest rate spread was 2.98% for the six months ended March 31, 2011 compared to 3.17% for the six months ended March 31, 2010, while the net interest margin was 3.27% for the 2011 period compared to 3.50% for the 2010 period.  The Company’s spread and margin decreased for the three and six
 
 
17

 
 
months ended March 31, 2011 compared to the same 2010 period, as the average yield on total interest-earning assets decreased by more than the average cost of funds.  The ratio of average interest-earning assets to average interest-bearing liabilities increased to 124.7% and 124.4%, respectively, for the three and six months ended March 31, 2011 from 120.8% and 121.1% for the same 2010 periods.

The average balance of total interest-earning assets for the three months ended March 31, 2011 increased by $1.2 million compared to the three months ended March 31, 2010, while the average yield decreased to 4.41% from 5.01%.  The decrease in total interest income of $223,000 for the three months ended March 31, 2011 is comprised of a decrease in interest income of $163,000 on loans receivable and a decrease of $60,000 in interest income on investment securities and other interest-earning assets.  Average loan receivable balances decreased by $3.3 million for the three months ended March 31, 2011 compared to the same 2010 period, while the average yield decreased to 4.95% from 5.37%.  The average balance of loans decreased as repayment levels on loans exceeded origination volume.  The decrease in loan yields is attributable to both a shift in the portfolio composition as well as residential mortgage and home equity loan refinances to lower rates.  The makeup of the loan portfolio has shifted, with a greater percentage of loans in residential mortgages and a lesser percentage in commercial purpose loans as well as a shift to home equity lines of credit from fixed rate home equity loans.  For the three months ended March 31, 2011, the average balance of securities and other interest-earning assets increased by $4.5 million compared to the same 2010 period, while the average yield decreased to 3.04% from 3.97%.  The average balance in investment securities increased primarily due to the reinvestment of funds generated by net loan repayments and the growth in deposits.  The shift to investments from loans has also contributed to the decline in the average yield on interest-earning assets.

The average balance of total interest-earning assets for the six months ended March 31, 2011 decreased by $10,000 compared to the six months ended March 31, 2010 while the average yield decreased to 4.43% from 5.05%. The decrease in total interest income of $491,000 for the six months ended March 31, 2011 is comprised of a decrease in interest income of $340,000 on loans receivable and a decrease of $151,000 in interest income from securities and other interest-earning assets.  Average loan receivable balances decreased by $5.1 million for the six months ended March 31, 2011 compared to the same 2010 period, while the average yield decreased to 5.03% from 5.38%.  For the six months ended March 31, 2011, the average balance of securities and other interest-earning assets increased by $5.1 million compared to the same 2010 period, while the average yield decreased to 2.96% from 4.08%.

The average balance of interest-bearing liabilities decreased by $3.0 million for the three months ended March 31, 2011 compared to same 2010 period, while the average cost decreased to 1.41% from 1.79%.  The decrease in total interest expense of $133,000 for the three months ended March 31, 2011 is comprised of a $95,000 decrease in interest expense on deposits and a $38,000 decrease in interest expense on borrowings.  Average interest-bearing deposit balances increased by $2.1 million with a decrease in the average cost to 1.32% for the three months ended March 31, 2011, compared to 1.68% for the same 2010 period, while average borrowings decreased by $5.1 million, with a decrease in the average cost to 2.69% from 2.79%.

The average balance of interest-bearing liabilities decreased by $3.4 million for the six months ended March 31, 2011 compared to same 2010 period, while the average cost decreased to 1.45% from 1.88%.  The decrease in total interest expense of $305,000 for the six months ended March 31, 2011 is comprised of a $219,000 decrease in interest expense on deposits and an $86,000 decrease in interest expense on borrowings.  Average interest-bearing deposit balances increased by $1.7 million with a decrease in the average cost to 1.36% for the six months ended March 31, 2011, compared to 1.75% for the same 2010 period, while average borrowings decreased by $5.1 million, with a decrease in the average cost to 2.93% from 3.10%.

Provision for Loan Losses.   The provision for loan losses was $0 and $50,000, respectively, for the three and six month periods ended March 31, 2011, compared to $325,000 and $750,000 for the same periods in 2010.   Charge-offs of $151,000 and $726,000 were recorded during the six months ended March 31, 2011 and 2010, respectively.  At March 31, 2011, the allowance for loan losses was $3,115,000 (2.71% of the loan portfolio and 62.49% of non-performing loans) compared to $3,208,000 (2.79% of the loan portfolio and 65.32% of non-performing loans) at September 30, 2010.  Non-performing loans, consisting of non-accrual loans and accruing loans more than 90 days delinquent, were $5.0 million or 4.34% of total loans at March 31, 2011, compared to $4.9 million or 4.26% at September 30, 2010 and $5.4 million or 4.63% of total loans at March 31, 2010.  Management
 
 
 
18

 
 
continually monitors and adjusts the allowance for loan losses based upon its analysis of the loan portfolio.  This analysis includes an evaluation of known and inherent risks in the loan portfolio, past loss experience, current economic conditions, industry loss reserve levels, adverse situations which may affect the borrower, the estimated value of any underlying collateral and other relevant factors.  However, there can be no assurance that additions to the allowance for loan losses will not be required in future periods or that actual losses will not exceed estimated amounts. See also Note 6 – Loans Receivable, Net.
 
Activity in the allowance for loan losses is summarized as follows:
 
    Three Months Ended     Six Months Ended  
     March 31,      March 31,  
   
2011
   
2010
   
2011
   
2010
 
                         
Balance - beginning
  $ 3,187,052     $ 2,867,881     $ 3,207,851     $ 2,919,597  
Provision for loan losses
    -       325,000       50,000       750,000  
Charge-offs
    (79,985 )     (249,586 )     (150,889 )     (726,356 )
Recoveries
    7,623       204       7,728       258  
                                 
Balance - ending
  $ 3,114,690     $ 2,943,499     $ 3,114,690     $ 2,943,499  
 
Non-interest Income.  Total non-interest income was essentially flat for the three and six months ended March 31, 2011 compared to the same 2010 period, increasing by $1,000 in both periods.  Loan fees increased in both periods from increased late charges paid and loan servicing fees collected.  Gain on sale of loans increased due to an increase in the volume of loans sold as a result of a strong refinance market in fiscal 2011.  Account servicing and other fees decreased in both periods, primarily due to lower non-sufficient and uncollected fund fees.

Non-interest Expense.   Non-interest expense decreased $298,000, or 20.5%, to $1,156,000 for the three months ended March 31, 2011, from $1,454,000 for the same period in 2010, and decreased $385,000, or 14.3%, to $2,312,000 for the six months ended March 31, 2011, compared to the same 2010 period, with decreases reflected in most reporting line items.  The components of non-interest expense which experienced the most significant changes were decreases in real estate owned expense and other expense.  Real estate owned expense decreased by $291,000 and $303,000, respectively, for the three and six months ended March 31, 2011 compared to the same 2010 periods, while other expense decreased by $11,000 and $50,000 in the same periods.  The decrease in real estate expense is attributable to a lower level of provisions for losses on our REO properties and decreased holding costs.  Other expense decreased primarily due to lower legal, collection and servicing costs on non-performing loans.

Income Taxes.  The Company recorded income tax expense of $85,000 and a tax benefit of $121,000 for the three months ended March 31, 2011 and 2010, respectively, reflecting an effective tax rate of 33.7% and tax benefit rate of 42.9%, respectively.  For the six months ended March 31, 2011 and 2010, the Company recorded tax expense of $167,000 and a tax benefit of $185,000, respectively, reflecting an effective tax rate of 35.3% and 43.3%, respectively.  The variance in effective tax rates is due to permanent book / tax differences.
 
 
19

 

Liquidity and Regulatory Capital Compliance

On March 31, 2011, the Bank was in compliance with its regulatory capital requirements as follows:
 
(Dollars in thousands)
 
Amount
   
Ratio
 
             
Tangible capital
  $ 13,961       8.45 %
Tangible capital requirement
    2,478       1.50 %
Excess over requirement
  $ 11,483       6.95 %
                 
Core capital
  $ 13,961       8.45 %
Core capital requirement
    6,609       4.00 %
Excess over requirement
  $ 7,352       4.45 %
                 
Risk-based capital
  $ 15,166       15.31 %
Risk-based capital requirement
    7,923       8.00 %
Excess over requirement
  $ 7,243       7.31 %
 
The Company anticipates that it will have sufficient funds available to meet its current commitments.  As of March 31, 2011, the Bank had outstanding commitments to fund loans of $1.8 million and commitments on unused lines of credit of $12.5 million.  Certificates of deposit scheduled to mature in one year or less as of March 31, 2011 totaled $39.8 million. Based on historical deposit withdrawals and outflows, and on internal monthly deposit reports monitored by management, management believes that a majority of such deposits will remain with the Company.

Additional Key Operating Ratios
 
             
   
At or for the Three Months
 
   
Ended March 31,
 
   
2011 (1)
   
2010 (1)
 
Earnings (loss) per common share (2):
           
Basic
  $ 0.10     $ (0.10 )
Diluted
  $ 0.10     $ (0.10 )
Return on average assets (1)
    0.40 %     (0.38 )%
Return on average equity (1)
    4.15 %     (3.98 )%
Interest rate spread (1)
    3.00 %     3.22 %
Net interest margin (1)
    3.28 %     3.53 %
Non-interest expense to average assets (1)
    2.79 %     3.46 %
Non-performing assets to total assets
    3.53 %     3.99 %
Non-performing loans to total loans
    4.34 %     4.63 %
Book value per share (3)
  $ 9.58     $ 9.47  
 
     
(1)
The ratios for the three month periods presented are annualized.
(2)
The average number of shares outstanding during the three months ended March 31, 2011
 
was 1,653,357 basic and diluted.  The average number of shares outstanding during the three
 
months ended March 31, 2010 was 1,644,206 basic and diluted.
(3)
There were 1,686,527 shares outstanding at March 31, 2011 and March 31, 2010.

 
20

 
 

   
For the Six Months
 
   
Ended March 31,
 
   
2011 (1)
   
2010 (1)
 
Earnings (loss) per common share (2):
           
Basic
  $ 0.19     $ (0.15 )
Diluted
  $ 0.19     $ (0.15 )
Return on average assets (1)
    0.37 %     (0.29 )%
Return on average equity (1)
    3.79 %     (2.99 )%
Interest rate spread (1)
    2.98 %     3.17 %
Net interest margin (1)
    3.27 %     3.50 %
Non-interest expense to average assets (1)
    2.79 %     3.20 %
 
     
(1)
The ratios for the six month periods presented are annualized.
(2)
The average number of shares outstanding during the six months ended March 31, 2011 was
 
1,652,213 basic and diluted.  The average number of shares outstanding during the six months
 
ended March 31, 2010 was 1,643,063 basic and diluted.
  
ITEM 3.                      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable as the Company is a smaller reporting company.
 
ITEM 4.                      CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.  The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report.  Based on this evaluation, the Company's principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b) Changes in internal control over financial reporting.  During the period under report, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
 
 
21

 


ROEBLING FINANCIAL CORP, INC.

Part II


ITEM 1.
LEGAL PROCEEDINGS

There are various claims and lawsuits in which the Company or the Bank are periodically involved, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank’s business.  In the opinion of management, no material loss is expected from any of such pending claims or lawsuits.
 
ITEM 1A.
RISK FACTORS
 
Not applicable as the Company is a smaller reporting company.

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*
(d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs*
 
January 1 through 31
 
 
   100 **
 
$4.85
         -
 
63,412
 
February 1 through 28
 
 
       -
 
       -
 
         -
 
63,412
 
 
March 1 through 31
 
 
       -
 
       -
 
         -
 
63,412
 
 
Total
 
 
  100
 
$4.85
 
         -
 
 
 
*
The Company announced the repurchase of up to approximately 85,500 shares on December 13, 2005 and 47,000 shares for the RSP on January 31, 2006.
 
 
**
Represents shares purchased for the Deferred Compensation Plan.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES

Not applicable
 
ITEM 4.
RESERVED
 
ITEM 5.
OTHER INFORMATION

Not applicable

 
22

 



 
ITEM 6.
EXHIBITS
 
 
List of Exhibits:

3.1  
Certificate of Incorporation*
3.2  
Bylaws**
4.0  
Form of Stock Certificate***
10.1  
Directors Consultation and Retirement Plan*******
10.2  
Stock Option Plan****
10.3  
Restricted Stock Plan****
10.4  
Employment Agreement between Janice A. Summers and Roebling Bank********
10.5  
Employment Agreement between Frank J. Travea, III and Roebling Bank********
10.6  
Roebling Financial Corp, Inc. 2006 Stock Option Plan*****
10.7  
Roebling Bank 2006 Restricted Stock Plan*****
10.8  
Directors Change in Control Severance Plan******
10.9  
Directors Deferred Compensation Agreement between John J. Ferry and Roebling Bank*******
10.10  
Directors Deferred Compensation Agreement between George N. Nyikita and Roebling Bank*******
10.11  
Directors Deferred Compensation Agreement between Mark V. Dimon and Roebling Bank********
10.12  
Supervisory Agreement, dated June 17, 2009*********
     31       Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer and Chief Financial Officer
     32       Section 1350 Certification

*
 
Incorporated herein by reference to the Company’s Form 8-A (File No. 0-59069) filed with the Commission on September 30, 2004.
**
 
Incorporated herein by reference to the Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 2005.
***
 
Incorporated herein by reference to the Company’s Registration Statement on Form SB-2 (File No. 333-116312) filed with the Commission on June 9, 2004.
****
 
Incorporated herein by reference to Company’s Registration Statement on Form S-8 (File No. 333- 119839) filed with the Commission on October 20, 2004.
*****
 
Incorporated herein by reference to Company’s Registration Statement on Form S-8 (File No. 333- 132059) filed with the Commission on February 27, 2006.
******
 
Incorporated herein by reference to the Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 2008.
*******
 
Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended  December 31, 2008.
********
 
Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.
*********
 
Incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Commission on June 18, 2009.

 
 
23

 


ROEBLING FINANCIAL CORP, INC.

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.



     
ROEBLING FINANCIAL CORP, INC.
 
         
Date:
May 13, 2011
 
By:
/s/ Frank J. Travea, III
       
Frank J. Travea, III
       
President and Chief Executive Officer
       
(Principal Executive Officer)
         
         
Date:
May 13, 2011
 
By:
/s/ Janice A. Summers
        Janice A. Summers
       
Senior Vice President, Chief Operating Officer and
       
Chief Financial Officer
       
(Principal Financial and Accounting Officer)

 24