Attached files
file | filename |
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EX-32 - EXHIBIT 32 - Hamilton Bancorp, Inc. | ex32.htm |
EX-31.2 - EXHIBIT 31.2 - Hamilton Bancorp, Inc. | ex31-2.htm |
EX-31.1 - EXHIBIT 31.1 - Hamilton Bancorp, Inc. | ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] |
Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended December 31, 2015
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 No. 001-35693
Hamilton Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Maryland |
46-0543309 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
501 Fairmount Avenue, Suite 200, Towson, Maryland |
21286 | |
(Address of Principal Executive Offices) |
Zip Code |
(410) 823-4510
(Registrant’s telephone number)
N/A
(Former name or former address, 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 requirements for the past 90 days.
YES [ X ] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES [ X ] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer [ ] |
Accelerated filer [ ] | |
Non-accelerated filer [ ] |
Smaller reporting company [ X ] | |
(Do not check if smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO [X]
3,417,615 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding as of February 16, 2016.
Hamilton Bancorp, Inc. and Subsidiaries
Form 10-Q
Index
Page | ||||
Part I. Financial Information | ||||
Item 1. |
Financial Statements |
|||
Consolidated Statements of Financial Condition as of December 31, 2015 (unaudited) and March 31, 2015 |
1 | |||
Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2015 and 2014 (unaudited) |
2 | |||
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2015 and 2014 (unaudited) |
3 | |||
Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended December 31, 2015 and 2014 (unaudited) |
4 | |||
Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2015 and 2014 (unaudited) |
5 - 6 | |||
Notes to Consolidated Financial Statements (unaudited) |
7 – 32 | |||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
33 – 53 | ||
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
53 | ||
Item 4. |
Controls and Procedures |
54 | ||
Part II. Other Information | ||||
Item 1. |
Legal Proceedings |
55 | ||
Item 1A. |
Risk Factors |
55 | ||
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
55 | ||
Item 3. |
Defaults upon Senior Securities |
55 | ||
Item 4. |
Mine Safety Disclosures |
55 | ||
Item 5. |
Other Information |
55 | ||
Item 6. |
Exhibits |
55 | ||
Signatures |
56 |
Part I. – Financial Information
Item 1. Financial Statements
HAMILTON BANCORP, INC AND SUBSIDIARY
Consolidated Statements of Financial Condition
December 31, 2015 and March 31, 2015
December 31, |
March 31, |
|||||||
2015 |
2015 |
|||||||
(Unaudited) |
(Audited) |
|||||||
Assets |
||||||||
Assets |
||||||||
Cash and due from banks |
$ | 5,538,454 | $ | 3,294,273 | ||||
Federal funds sold and Federal Home Loan Bank deposit |
7,272,405 | 6,226,976 | ||||||
Interest-bearing deposits in other banks |
16,437,610 | 7,122,639 | ||||||
Cash and cash equivalents |
29,248,469 | 16,643,888 | ||||||
Certificates of deposit held as investment |
3,974,044 | - | ||||||
Investment securities available for sale, at fair value |
77,616,277 | 92,939,751 | ||||||
Federal Home Loan Bank stock, at cost |
1,038,700 | 522,700 | ||||||
Loans held for sale |
155,456 | 581,139 | ||||||
Loans, less allowance for loan losses of $2,015,723 and $1,690,236 |
226,313,352 | 158,594,958 | ||||||
Premises and equipment, net |
4,071,415 | 1,972,348 | ||||||
Foreclosed real estate |
443,015 | 455,575 | ||||||
Accrued interest receivable |
997,778 | 835,940 | ||||||
Bank-owned life insurance |
12,624,031 | 12,359,969 | ||||||
Goodwill |
6,478,860 | 2,664,432 | ||||||
Core deposit intangible |
642,254 | 138,333 | ||||||
Deferred income taxes |
2,931,398 | 1,961,850 | ||||||
Income taxes refundable |
228,920 | - | ||||||
Other assets |
1,492,799 | 1,368,886 | ||||||
Total Assets |
$ | 368,256,768 | $ | 291,039,769 | ||||
Liabilities and Shareholders' Equity |
||||||||
Liabilities |
||||||||
Noninterest-bearing deposits |
$ | 22,332,169 | $ | 16,652,771 | ||||
Interest-bearing deposits |
266,709,116 | 205,666,121 | ||||||
Total deposits |
289,041,285 | 222,318,892 | ||||||
Borrowings |
16,847,192 | 6,000,000 | ||||||
Advances by borrowers for taxes and insurance |
523,482 | 619,028 | ||||||
Other liabilities |
1,202,258 | 1,302,141 | ||||||
Total liabilities |
307,614,217 | 230,240,061 | ||||||
Commitments and Contingencies |
- | - | ||||||
Shareholders' Equity |
||||||||
Common stock, $.01 par value, 100,000,000 shares authorized. Issued: 3,418,113 shares at December 31, 2015 and 3,417,713 shares at March 31, 2015 |
34,181 | 34,177 | ||||||
Additional paid in capital |
31,196,927 | 30,832,815 | ||||||
Retained earnings |
32,542,210 | 32,752,071 | ||||||
Unearned ESOP shares |
(2,369,920 | ) | (2,518,040 | ) | ||||
Accumulated other comprehensive income |
(760,847 | ) | (301,315 | ) | ||||
Total shareholders' equity |
60,642,551 | 60,799,708 | ||||||
Total Liabilities and Shareholders' Equity |
$ | 368,256,768 | $ | 291,039,769 |
The accompanying notes are an integral part of these consolidated financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Consolidated Statements of Operations (Unaudited)
Three and Nine Months Ended December 31, 2015 and 2014
Three Months Ended |
Nine Months Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||
Interest and dividend revenue |
||||||||||||||||
Loans, including fees |
$ | 2,805,851 | $ | 1,827,384 | $ | 6,906,069 | $ | 5,412,607 | ||||||||
U.S. treasuries, government agencies and FHLB stock |
91,940 | 104,905 | 276,415 | 327,264 | ||||||||||||
Municipal and corporate bonds |
31,722 | 36,346 | 94,145 | 105,183 | ||||||||||||
Mortgage-backed securities |
272,751 | 358,987 | 848,181 | 1,137,231 | ||||||||||||
Federal funds sold and other bank deposits |
18,005 | 5,376 | 31,650 | 21,749 | ||||||||||||
Total interest and dividend revenue |
3,220,269 | 2,332,998 | 8,156,460 | 7,004,034 | ||||||||||||
Interest expense |
||||||||||||||||
Deposits |
458,024 | 414,117 | 1,241,457 | 1,273,106 | ||||||||||||
Borrowed funds |
38,191 | 410 | 64,487 | 410 | ||||||||||||
Total interest expense |
496,215 | 414,527 | 1,305,944 | 1,273,516 | ||||||||||||
Net interest income |
2,724,054 | 1,918,471 | 6,850,516 | 5,730,518 | ||||||||||||
Provision for loan losses |
70,000 | (125,000 | ) | 190,000 | 345,000 | |||||||||||
Net interest income after provision for loan losses |
2,654,054 | 2,043,471 | 6,660,516 | 5,385,518 | ||||||||||||
Noninterest revenue |
||||||||||||||||
Service charges |
102,979 | 105,954 | 304,951 | 311,515 | ||||||||||||
Gain on sale of investment securities |
20,497 | 42,471 | 42,212 | 230,645 | ||||||||||||
Gain on sale of loans held for sale |
7,826 | 2,979 | 43,395 | 27,716 | ||||||||||||
Gain on sale of property and equipment |
- | - | 407,188 | (1,832 | ) | |||||||||||
Earnings on bank-owned life insurance |
87,616 | 89,929 | 264,062 | 271,315 | ||||||||||||
Other fees and commissions |
14,675 | 8,095 | 49,194 | 31,528 | ||||||||||||
Total noninterest revenue |
233,593 | 249,428 | 1,111,002 | 870,887 | ||||||||||||
Noninterest expenses |
||||||||||||||||
Salaries |
1,102,598 | 988,583 | 3,018,168 | 2,944,357 | ||||||||||||
Employee benefits |
293,260 | 254,539 | 809,583 | 884,237 | ||||||||||||
Occupancy |
195,155 | 170,401 | 548,817 | 537,526 | ||||||||||||
Advertising |
43,295 | 37,758 | 89,109 | 102,050 | ||||||||||||
Furniture and equipment |
85,077 | 77,286 | 237,752 | 233,381 | ||||||||||||
Data processing |
154,977 | 137,435 | 439,989 | 413,354 | ||||||||||||
Legal services |
52,100 | 44,012 | 110,091 | 153,551 | ||||||||||||
Other professional services |
131,353 | 100,452 | 291,260 | 254,560 | ||||||||||||
Merger related expenses |
196,645 | - | 828,225 | - | ||||||||||||
Deposit insurance premiums |
63,105 | 57,506 | 151,970 | 175,600 | ||||||||||||
Foreclosed real estate expense and losses (gains) |
3,270 | - | 17,157 | (4,964 | ) | |||||||||||
Other operating |
459,817 | 326,462 | 1,114,428 | 967,921 | ||||||||||||
Total noninterest expenses |
2,780,652 | 2,194,434 | 7,656,549 | 6,661,573 | ||||||||||||
Income (loss) before income taxes |
106,995 | 98,465 | 114,969 | (405,168 | ) | |||||||||||
Income tax expense (benefit) |
234,176 | 20,622 | 324,830 | (231,967 | ) | |||||||||||
Net income (loss) |
$ | (127,181 | ) | $ | 77,843 | $ | (209,861 | ) | $ | (173,201 | ) | |||||
Earnings (loss) per common share - basic |
$ | (0.04 | ) | $ | 0.02 | $ | (0.07 | ) | $ | (0.05 | ) | |||||
Earnings (loss) per common share - diluted |
$ | (0.04 | ) | $ | 0.02 | $ | (0.07 | ) | $ | (0.05 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Consolidated Statements of Comprehensive Income (Unaudited)
Three and Nine months Ended December 31, 2015 and 2014
Three Months Ended |
Nine Months Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||
Net income (loss) |
$ | (127,181 | ) | $ | 77,843 | $ | (209,861 | ) | $ | (173,201 | ) | |||||
Other comprehensive income: |
||||||||||||||||
Unrealized gain (loss) on investment securities available for sale |
(801,265 | ) | 1,643,661 | (716,655 | ) | 1,589,832 | ||||||||||
Reclassification adjustment for realized (gain) loss on investment securities available for sale included in net income |
(20,497 | ) | (42,471 | ) | (42,212 | ) | (230,645 | ) | ||||||||
Total unrealized gain (loss) on investment securities available for sale |
(821,762 | ) | 1,601,190 | (758,867 | ) | 1,359,187 | ||||||||||
Income tax expense (benefit) relating to investment securities available for sale |
(324,144 | ) | 631,589 | (299,335 | ) | 536,132 | ||||||||||
Other comprehensive income (loss) |
(497,618 | ) | 969,601 | (459,532 | ) | 823,055 | ||||||||||
Total comprehensive income (loss) |
$ | (624,799 | ) | $ | 1,047,444 | $ | (669,393 | ) | $ | 649,854 |
The accompanying notes are an integral part of these consolidated financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
Nine Months Ended December 31, 2015 and 2014
Accumulated |
||||||||||||||||||||||||
Additional |
Unearned |
other |
Total |
|||||||||||||||||||||
Common |
paid-in |
Retained |
ESOP |
comprehensive |
shareholders' |
|||||||||||||||||||
stock |
capital |
earnings |
shares |
income |
equity |
|||||||||||||||||||
Balance March 31, 2014 |
$ | 35,951 | $ | 32,910,362 | $ | 33,066,380 | $ | (2,666,160 | ) | $ | (1,576,265 | ) | $ | 61,770,268 | ||||||||||
Net loss |
- | - | (173,201 | ) | - | - | (173,201 | ) | ||||||||||||||||
Unrealized loss on available for sale securities, net of tax effect of $536,132 |
- | - | - | - | 823,055 | 823,055 | ||||||||||||||||||
Repurchase of common stock |
(1,798 | ) | (2,500,392 | ) | - | - | - | (2,502,190 | ) | |||||||||||||||
Stock based compensation - options |
- | 156,907 | - | - | - | 156,907 | ||||||||||||||||||
Restricted stock - compensation and activity |
(22 | ) | 154,797 | - | - | - | 154,775 | |||||||||||||||||
ESOP shares allocated for release |
- | 26,907 | - | 148,120 | - | 175,027 | ||||||||||||||||||
Balance December 31, 2014 |
$ | 34,131 | $ | 30,748,581 | $ | 32,893,179 | $ | (2,518,040 | ) | $ | (753,210 | ) | $ | 60,404,641 | ||||||||||
Balance March 31, 2015 |
$ | 34,177 | $ | 30,832,815 | $ | 32,752,071 | $ | (2,518,040 | ) | $ | (301,315 | ) | $ | 60,799,708 | ||||||||||
Net loss |
- | - | (209,861 | ) | - | - | (209,861 | ) | ||||||||||||||||
Unrealized loss on available for sale securities, net of tax effect of $ (299,335) |
- | - | - | - | (459,532 | ) | (459,532 | ) | ||||||||||||||||
Stock based compensation - options |
- | 156,907 | - | - | - | 156,907 | ||||||||||||||||||
Restricted stock - compensation and activity |
4 | 168,995 | - | - | - | 168,999 | ||||||||||||||||||
ESOP shares allocated for release |
- | 38,210 | - | 148,120 | - | 186,330 | ||||||||||||||||||
Balance December 31, 2015 |
$ | 34,181 | $ | 31,196,927 | $ | 32,542,210 | $ | (2,369,920 | ) | $ | (760,847 | ) | $ | 60,642,551 |
The accompanying notes are an integral part of these consolidated financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended December 31, 2015 and 2014
Nine Months Ended |
||||||||
December 31, |
||||||||
2015 |
2014 |
|||||||
Cash flows from operating activities |
||||||||
Interest received |
$ | 8,379,943 | $ | 7,363,035 | ||||
Fees and commissions received |
761,333 | 338,265 | ||||||
Interest paid |
(1,397,455 | ) | (1,273,465 | ) | ||||
Cash paid to suppliers and employees |
(7,160,562 | ) | (6,105,927 | ) | ||||
Origination of loans held for sale |
(4,486,900 | ) | (2,070,500 | ) | ||||
Proceeds from sale of loans held for sale |
4,955,978 | 1,843,150 | ||||||
Income taxes (paid) refund received |
(204,030 | ) | 565,595 | |||||
Net cash provided by operating activities |
848,307 | 660,153 | ||||||
Cash flows from investing activities |
||||||||
Acqusition, net of cash acquired |
(12,723,871 | ) | - | |||||
Proceeds from sale of securities available for sale |
9,985,335 | 9,805,005 | ||||||
Proceeds from maturing and called securities available for sale, including principal pay downs |
14,067,458 | 19,212,112 | ||||||
Proceeds from maturing and called certificates of deposit |
514,510 | - | ||||||
Purchase of investment securities available for sale |
- | (23,242,712 | ) | |||||
Purchase of Federal Home Loan Bank stock |
- | (130,500 | ) | |||||
Loans made, net of principal repayments |
(13,728,071 | ) | (14,117,276 | ) | ||||
Purchase of premises and equipment |
(47,219 | ) | (101,021 | ) | ||||
Proceeds from sale of foreclosed real estate |
11,752 | - | ||||||
Proceeds from sale of premises and equipment |
463,839 | - | ||||||
Net cash used by investing activities |
(1,456,267 | ) | (8,574,392 | ) | ||||
Cash flows from financing activities |
||||||||
Net increase (decrease) in | ||||||||
Deposits |
13,308,083 | (14,979,209 | ) | |||||
Advances by borrowers for taxes and insurance |
(95,546 | ) | (403,674 | ) | ||||
Proceeds from borrowings |
2,000,000 | 3,000,000 | ||||||
Payments of borrowings |
(2,000,000 | ) | - | |||||
Issuance of restricted stock |
4 | - | ||||||
Repurchase of common stock |
- | (2,502,190 | ) | |||||
Net cash provided (used) by financing activities |
13,212,541 | (14,885,073 | ) | |||||
Net increase (decrease) in cash and cash equivalents |
12,604,581 | (22,799,312 | ) | |||||
Cash and cash equivalents at beginning of period |
16,643,888 | 33,073,310 | ||||||
Cash and cash equivalents at end of period |
$ | 29,248,469 | $ | 10,273,998 | ||||
Supplemental Disclosures of Cash Flow Information: |
||||||||
Total cash consideration paid for Fairmount Merger |
$ | 14,192,370 | $ | - | ||||
Less cash acquired |
1,468,499 | - | ||||||
Acquisition, net of cash acquired |
$ | 12,723,871 | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
(Continued)
Nine Months Ended |
||||||||
December 31, |
||||||||
2015 |
2014 |
|||||||
Reconciliation of net income to net cash provided (used) by operating activities |
||||||||
Net loss |
$ | (209,861 | ) | $ | (173,201 | ) | ||
Adjustments to reconcile net income to net cash provided (used) by operating activities |
||||||||
Amortization of premiums on certificates of deposit |
7,043 | - | ||||||
Amortization of premiums on securities |
311,204 | 342,791 | ||||||
Gain on sale of investment securities |
(42,212 | ) | (230,645 | ) | ||||
Amortization of premiums on loans |
25,811 | - | ||||||
Amortization of premium on deposits |
(52,656 | ) | - | |||||
Amortization of premium on borrowings |
(41,955 | ) | - | |||||
Core deposit intangible asset amortization |
38,620 | 25,750 | ||||||
Premises and equipment depreciation and amortization |
200,092 | 191,489 | ||||||
Gain on sale of property and equipment |
(407,188 | ) | 1,832 | |||||
Stock based compensation |
325,902 | 311,682 | ||||||
Provision for loan losses |
190,000 | 345,000 | ||||||
ESOP shares allocated for release |
186,330 | 175,027 | ||||||
Decrease (increase) in |
||||||||
Accrued interest receivable |
(161,838 | ) | 23,742 | |||||
Loans held for sale |
425,683 | (255,066 | ) | |||||
Cash surrender value of life insurance |
(264,062 | ) | (271,315 | ) | ||||
Income taxes refundable and deferred income taxes |
120,800 | 333,628 | ||||||
Other assets |
374,756 | 215,287 | ||||||
Increase (decrease) in |
||||||||
Accrued interest payable |
3,100 | 52 | ||||||
Deferred loan origination fees |
41,263 | (10,479 | ) | |||||
Other liabilities |
(222,525 | ) | (365,421 | ) | ||||
Net cash provided by operating activities |
$ | 848,307 | $ | 660,153 | ||||
Noncash investing activity |
||||||||
Real estate acquired through foreclosure |
$ | - | $ | 12,560 |
The accompanying notes are an integral part of these consolidated financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Form 10-Q
Notes to Consolidated Financial Statements (Unaudited)
December 31, 2015
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Hamilton Bancorp, Inc. (the “Company”) was incorporated on September 7, 2012 to serve as the stock holding company for Hamilton Bank (the “Bank”), a federally chartered savings bank. On October 10, 2012, in accordance with a Plan of Conversion adopted by its Board of Directors and approved by its members, the Bank converted from a mutual savings bank to a stock savings bank and became the wholly owned subsidiary of the Company. In connection with the conversion, the Company sold 3,703,000 shares of common stock at a price of $10.00 per share, through which the Company received proceeds of approximately $35,580,000, net of offering expenses of approximately $1,450,000. In addition, the Bank’s Board of Directors adopted an employee stock ownership plan (the “ESOP”) which subscribed for 8.0% of shares sold in the offering, or 296,240 common shares. The purchase of shares by the ESOP was funded by a loan from the Company.
In accordance with Office of the Comptroller of the Currency (the “OCC”) regulations, upon the completion of the conversion, the Bank restricted retained earnings by establishing a liquidation account. The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after conversion. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.
On September 11, 2015, the Bank acquired all the common stock of Fairmount Bancorp, Inc. (“Fairmount”) in an all cash transaction for $14.2 million.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with instructions for Form 10–Q and Regulation S–X as promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the preceding unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. We derived the balances as of March 31, 2015 from audited financial statements. Operating results for the nine months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2016, or any other period. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2015. Certain amounts from prior period financial statements have been reclassified to conform to the current period’s presentation.
Summary of Significant Accounting Policies
The accounting and reporting policies of Hamilton Bancorp, Inc. and Subsidiary (“Hamilton”) conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and to general practices in the banking industry. The more significant policies follow:
Principles of Consolidation. The accompanying consolidated financial statements include the accounts of the parent company and its wholly owned subsidiary, Hamilton Bank. All significant intercompany balances and transactions have been eliminated in consolidation.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
Nature of Operations. Hamilton Bancorp is a holding company that operates a community bank with five branches in the Baltimore-metropolitan area. Its primary deposit products are certificates of deposit and demand, savings, NOW, and money market accounts. Its primary lending products consist of real estate mortgages, along with commercial and consumer loans. Hamilton Bancorp’s primary source of revenue is derived from loans to customers, who are predominately small and middle-market businesses and middle-income individuals.
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, deferred income tax valuation allowances, the fair value of investment securities and other temporary impairment of investment securities.
Accounting for Certain Loans or Debt Securities Acquired in a Transfer. The loans acquired from the Company’s acquisition of Fairmount on September 11, 2015 (see Note 3 “Acquisition of Fairmount Bancorp, Inc.”) were recorded at fair value at the acquisition date and no separate valuation allowance was established. The initial fair values were determined by management, with the assistance of an independent valuation specialist, based on estimated expected cash flows discounted at appropriate rates. The discount rates were based on market rates for new originations of comparable loans and did not include a separate factor for loan losses as that was included in the estimated cash flows.
Accounting Standards Codification (“ASC”) Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, applies to loans acquired in a transfer with evidence of deterioration of credit quality for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. If both conditions exist, the Company determines whether to account for each loan individually or whether such loans will be assembled into pools based on common risk characteristics such as credit score, loan type, and origination date.
The Company considered expected prepayments and estimated the total expected cash flows, which included undiscounted expected principal and interest. The excess of that amount over the fair value of the loan is referred to as accretable yield. Accretable yield is recognized as interest income on a constant yield basis over the expected life of the loan. The excess of the contractual cash flows over expected cash flows is referred to as nonaccretable difference and is not accreted into income. Over the life of the loan, the Company continues to estimate expected cash flows. Subsequent decreases in expected cash flows are recognized as impairments in the current period through the allowance for loan losses. Subsequent increases in cash flows to be collected are first used to reverse any existing valuation allowance and any remaining increase are recognized prospectively through an adjustment of the loan’s yield over its remaining life.
ASC Topic 310-20, Nonrefundable Fees and Other Costs, was applied to loans not considered to have deteriorated credit quality at acquisition. Under ASC Topic 310-20, the difference between the loan’s principal balance at the time of purchase and the fair value is recognized as an adjustment of yield over the life of the loan.
Allowance for Loan Losses. The allowance for loan losses represents an amount which, in management’s judgment, will be adequate to absorb probable future losses on existing loans. The allowance for loan losses is established, as loan losses are estimated to have occurred, through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Recoveries on previously charged-off loans are credited to the allowance for loan losses.
The allowance for loan losses is increased by provisions charged to income and reduced by charge-offs, net of recoveries. Management’s periodic evaluation of the adequacy of the allowance is based on the Bank’s past loan loss experience, known and inherent risks in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and current economic conditions.
Management considers a number of factors in estimating the required level of the allowance. These factors include: historical loss experience in the loan portfolios; the levels and trends in past-due and nonaccrual loans; the status of nonaccrual loans and other loans identified as having the potential for further deterioration; credit risk and industry concentrations; trends in loan volume; the effects of any changes in lending policies and procedures or underwriting standards; and a continuing evaluation of the economic environment. Management modified the analysis in fiscal 2015 by weighting our net charge-off history to specifically reflect recent changes in the loan portfolio, the commercial lending staff, and our internal credit administration procedures.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
Accumulated Other Comprehensive Income. The Bank records unrealized gains and losses on available for sale securities in accumulated other comprehensive income, net of taxes. Unrealized gains and losses on available for sale securities are reclassified into earnings as the gains or losses are realized upon sale of the securities. The credit component of unrealized losses on available for sale securities that are determined to be other-than-temporarily impaired are reclassified into earnings at the time the determination is made.
Stock Based Compensation. Compensation cost is recognized for stock options and restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.
Pending Merger. On October 12, 2015, Hamilton Bancorp, Inc. (“Hamilton Bancorp”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Hamilton Bancorp, Hamilton Acquisition Corp. II (a wholly owned subsidiary of Hamilton Bancorp) and Fraternity Community Bancorp, Inc. (“Fraternity Community Bancorp”), pursuant to which, among other things, Fraternity Community Bancorp will merge with and into Hamilton Bancorp, with Hamilton Bancorp as the surviving entity, and immediately thereafter, Fraternity Federal Savings & Loan Association will be merged with and into Hamilton Bank with Hamilton Bank as the surviving bank (collectively, the “Merger”).
Under the terms of the Merger Agreement, stockholders of Fraternity Community Bancorp will receive a cash payment equal to nineteen dollars and twenty-five cents ($19.25) for each share of Fraternity Community Bancorp common stock, or an aggregate of approximately $26.5 million.
The transaction has been approved by the Board of Directors of each company and is expected to close in the quarter ending June 30, 2016. Completion of the Merger is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of Fraternity Community Bancorp’s shareholders.
Note 2: New Accounting Pronouncements
Recent Accounting Pronouncements
ASU No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force). The guidance clarifies when an “in substance repossession or foreclosure” occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, such that all or a portion of the loan should be derecognized and the real estate property recognized. ASU 2014-04 states that a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure, or the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amendments of ASU 2014-04 also require interim and annual disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. ASU 2014-04 became effective for interim and annual periods beginning after December 15, 2014, and did not have a significant impact on our financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 is effective on January 1, 2017 and is not expected to have a significant impact on our financial statements.
ASU 2014-11, “Transfers and Servicing (Topic 860).” ASU 2014-11 requires that repurchase-to-maturity transactions be accounted for as secured borrowings consistent with the accounting for other repurchase agreements. In addition, ASU 2014-11 requires separate accounting for repurchase financings, which entails the transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty. ASU 2014-11 requires entities to disclose certain information about transfers accounted for as sales in transactions that are economically similar to repurchase agreements. In addition, ASU 2014-11 requires disclosures related to collateral, remaining contractual term and of the potential risks associated with repurchase agreements, securities lending transactions and repurchase-to-maturity transactions. ASU 2014-11 became effective on April 1, 2015 and did not have a significant impact on our financial statements.
ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Guidance in Topic 718 as it relates to awards with performance conditions that affect vesting should be applied to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. The amendments of ASU 2014-12 became effective on December 15, 2015 and did not have a significant impact on our financial statements.
ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale. ASU 2016-01 will be effective for us on January 1, 2018 and is not expected to have a significant impact on our financial statements.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
Note 3: Acquisition of Fairmount Bancorp, Inc.
On September 11, 2015, Hamilton Bancorp acquired Fairmount Bancorp, Inc. (“Fairmount”), the parent company of Fairmount Bank. Under the terms of the Merger Agreement, shareholders of Fairmount received a cash payment equal to thirty dollars ($30.00) for each share of Fairmount common stock. The total merger consideration was $14.2 million.
In connection with the acquisition, Fairmount Bank was merged with and into Hamilton Bank, with Hamilton bank as the surviving bank. The results of the Fairmount acquisition are included with Hamilton’s results as of and from September 11, 2015.
As required by the acquisition method of accounting, we have adjusted the acquired assets and liabilities of Fairmount to their estimated fair value on the date of acquisition and added them to those of Hamilton Bancorp. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which we have based on level 3 valuation estimates and assumptions that are subject to change, we have allocated the preliminary purchase price for Fairmount as follows:
As recorded by |
|
As recorded by |
||||||||||
Fairmount Bancorp, Inc. |
Fair Value Adjustments |
Hamilton Bancorp, Inc. |
||||||||||
Identifiable assets: |
||||||||||||
Cash and cash equivalents |
$ | 1,468,499 | $ | - | $ | 1,468,499 | ||||||
Certificates of deposit |
4,467,825 | 27,772 | 4,495,597 | |||||||||
Investment securities available for sale |
9,757,177 | - | 9,757,177 | |||||||||
Loans |
55,454,414 | (1,207,017 | ) | 54,247,397 | ||||||||
Allowance For Loan Loss |
(591,070 | ) | 591,070 | - | ||||||||
Premises and equipment |
2,975,587 | (666,997 | ) | 2,308,590 | ||||||||
Core Deposit Intangible |
22,802 | (22,802 | ) | - | ||||||||
Deferred income taxes |
423,258 | 596,675 | 1,019,933 | |||||||||
Other assets |
1,014,673 | - | 1,014,673 | |||||||||
Total identifiable assets |
$ | 74,993,165 | $ | (681,299 | ) | $ | 74,311,866 | |||||
Identifiable liabilities: |
||||||||||||
Non-interest bearing deposits |
909,669 | - | 909,669 | |||||||||
Interest bearing deposits |
52,123,868 | 433,429 | 52,557,297 | |||||||||
Borrowings |
10,500,000 | 389,147 | 10,889,147 | |||||||||
Other liabilities |
120,351 | - | 120,351 | |||||||||
Total identifiable liabilities |
$ | 63,653,888 | $ | 822,576 | $ | 64,476,464 | ||||||
Net tangible assets acquired |
11,339,276 | (1,503,875 | ) | 9,835,401 | ||||||||
Definite lived intangible assets acquired |
- | 542,540 | 542,540 | |||||||||
Goodwill |
- | 3,814,428 | 3,814,428 | |||||||||
Net intangible assets acquired |
- | 4,356,968 | 4,356,968 | |||||||||
Total cash consideration |
$ | 11,339,276 | $ | 2,853,093 | $ | 14,192,369 |
Prior to the end of the measurement period, if information becomes available which indicates the purchase price allocations require adjustments, we will include such adjustments in the purchase price allocation retrospectively.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
Of the total estimated purchase price, we have allocated an estimate of $9.8 million to net tangible assets acquired and we have allocated $543,000 to the core deposit intangible which is a definite lived intangible asset. We have allocated the remaining purchase price to goodwill, which is deductible for income tax purposes. We will amortize the core deposit intangible on a straight-line basis over its estimated useful life of 8 years. We will evaluate goodwill annually for impairment.
Pro Forma Condensed Combined Financial Information. The following schedule includes consolidated statements of operations data for the unaudited pro forma results for the periods ended December 31, 2015 and 2014 as if the Fairmount Bancorp acquisition had occurred as of the beginning of the periods presented.
Nine Months Ended December 31, |
||||||||
2015 |
2014 |
|||||||
Net interest income |
$ | 8,323,913 | $ | 8,160,799 | ||||
Other non-interest revenue |
1,214,209 | 1,041,938 | ||||||
Total revenue | 9,538,122 | 9,202,737 | ||||||
Provision expense |
190,000 | 345,000 | ||||||
Other non-interest expense |
7,858,947 | 8,106,822 | ||||||
Income before income taxes | 1,489,175 | 750,915 | ||||||
Income tax expense |
743,672 | 99,729 | ||||||
Net income | $ | 745,504 | $ | 651,186 | ||||
Basic earnings per share |
$ | 0.24 | $ | 0.20 | ||||
Diluted earnings per share |
$ | 0.24 | $ | 0.20 |
We have not included any provision for loan losses during the period for loans acquired from Fairmount Bancorp. In accordance with accounting for business combinations, we included the credit losses evident in the loans in the determination of the fair value of loans at the date of acquisition and eliminated the allowance for loan losses maintained by Fairmount Bancorp at acquisition date. Also excluded are an estimated $1.3 million in merger related expenses associated with completing the actual acquisition. This expense includes expenses incurred by both the buyer and the seller.
We have presented the pro forma financial information for illustrative purposes only and it is not necessarily indicative of the financial results of the combined companies if we had actually completed the acquisition at the beginning of the periods presented, nor does it indicate future results for any other interim or full year period. Pro forma basic and diluted earnings per common share were calculated using Hamilton Bancorp’s actual weighted average shares outstanding for the periods presented, assuming the acquisition occurred at the beginning of the periods presented.
In connection with the acquisition of Fairmount and the pending acquisition of Fraternity, the Company incurred merger related costs. These expenses were primarily related to legal, other professional services and system conversions. The following table details the expenses included in the consolidated statements of operations for the periods shown.
Three months ended December 31, 2015 |
Nine months ended December 31, 2015 |
|||||||||||||||||||||||
Fairmount |
Fraternity |
Total |
Fairmount |
Fraternity |
Total |
|||||||||||||||||||
Legal |
$ | 3,713 | $ | 64,815 | $ | 68,528 | $ | 247,794 | $ | 185,257 | $ | 433,051 | ||||||||||||
Professional services |
3,117 | 125,000 | 128,117 | 176,786 | 140,173 | 316,959 | ||||||||||||||||||
Data processing |
- | - | - | 48,745 | - | 48,745 | ||||||||||||||||||
Advertising |
- | - | - | 2,779 | - | 2,779 | ||||||||||||||||||
Other |
- | - | - | 26,547 | 144 | 26,691 | ||||||||||||||||||
Total meger related expenses |
$ | 6,830 | $ | 189,815 | $ | 196,645 | $ | 502,651 | $ | 325,574 | $ | 828,225 |
Note 4: Earnings per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Weighted average shares exclude unallocated ESOP shares. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Both the basic and diluted earnings per share for the three and nine months ended December 31, 2015 and 2014 are summarized below:
Three Months ended |
Three Months ended |
Nine months ended |
Nine months ended |
|||||||||||||
December 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||||||||
Net income (loss) |
$ | (127,181 | ) | $ | 77,843 | $ | (209,861 | ) | $ | (173,201 | ) | |||||
Average common shares outstanding - basic |
3,166,470 | 3,146,640 | 3,166,230 | 3,185,558 | ||||||||||||
Average common shares outstanding - diluted |
N/A |
N/A |
N/A |
N/A |
||||||||||||
Income (loss) per common share - basic and diluted |
$ | (0.04 | ) | $ | 0.02 | $ | (0.07 | ) | $ | (0.05 | ) | |||||
Anti-dilutive shares | 42,667 | N/A | 42,667 | N/A |
During the three and nine months ending December 31, 2014, none of the common stock equivalents had vested.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
Note 5: Investment Securities Available for Sale
The amortized cost and fair value of securities at December 31, 2015 and March 31, 2015, are summarized as follows:
Gross |
Gross |
|||||||||||||||
Amortized |
unrealized |
unrealized |
Fair |
|||||||||||||
December 31, 2015 |
cost |
gains |
losses |
value |
||||||||||||
U.S. government agencies |
$ | 15,010,819 | $ | 3,881 | $ | 255,234 | $ | 14,759,466 | ||||||||
Municipal bonds |
2,706,994 | 92,656 | 3,000 | 2,796,650 | ||||||||||||
Corporate bonds |
2,000,000 | - | 136,968 | 1,863,032 | ||||||||||||
Mortgage-backed |
59,154,920 | 99,346 | 1,057,137 | 58,197,129 | ||||||||||||
$ | 78,872,733 | $ | 195,883 | $ | 1,452,339 | $ | 77,616,277 |
Amortized |
unrealized |
unrealized |
Fair |
|||||||||||||
March 31, 2015 |
cost |
gains |
losses |
value |
||||||||||||
U.S. government agencies |
$ | 17,509,211 | $ | 3,363 | $ | 200,627 | $ | 17,311,947 | ||||||||
Municipal bonds |
2,149,114 | 168,016 | - | 2,317,130 | ||||||||||||
Corporate bonds |
2,000,000 | - | 46,736 | 1,953,264 | ||||||||||||
Mortgage-backed |
71,779,015 | 387,015 | 808,620 | 71,357,410 | ||||||||||||
$ | 93,437,340 | $ | 558,394 | $ | 1,055,983 | $ | 92,939,751 |
Proceeds from sales of investment securities were $4,957,280 and $4,486,919 during the three months ended December 31, 2015 and 2014, respectively, with gains of $23,197 and losses of $2,700 for the three months ended December 31, 2015 and gains of $53,047 and losses of $10,576 for the three months ended December 31, 2014.
Proceeds from sales of investment securities were $9,985,335 and $9,805,005 during the nine months ended December 31, 2015 and 2014, respectively, with gains of $95,912 and losses of $53,700 for the nine months ended December 31, 2015 and gains of $241,221 and losses of $10,576 for the nine months ended December 31, 2014.
As of December 31, 2015 and March 31, 2015, all mortgage-backed securities are backed by U.S. Government- Sponsored Enterprises.
As of December 31, 2015 and March 31, 2015, the Company had one pledged security to the Federal Reserve Bank with a book value of $2,000,000 for both periods and a fair value of $1,949,882, and $1,970,080, respectively.
The amortized cost and estimated fair value of debt securities by contractual maturity at December 31, 2015 and March 31, 2015 follow. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
Available for Sale |
||||||||||||||||
December 31, 2015 |
March 31, 2015 |
|||||||||||||||
Amortized |
Fair |
Amortized |
Fair |
|||||||||||||
cost |
value |
cost |
value |
|||||||||||||
Maturing |
||||||||||||||||
Within one year |
$ | 732,054 | $ | 731,559 | $ | 509,211 | $ | 512,574 | ||||||||
Over one to five years |
3,012,739 | 2,987,055 | - | - | ||||||||||||
Over five to ten years |
14,577,740 | 14,221,319 | 19,000,000 | 18,752,637 | ||||||||||||
Over ten years |
1,395,280 | 1,479,215 | 2,149,114 | 2,317,130 | ||||||||||||
Mortgage-backed, in monthly installments |
59,154,920 | 58,197,129 | 71,779,015 | 71,357,410 | ||||||||||||
$ | 78,872,733 | $ | 77,616,277 | $ | 93,437,340 | $ | 92,939,751 |
The following table presents the Company's investments' gross unrealized losses and the corresponding fair values by investment category and length of time that the securities have been in a continuous unrealized loss position at December 31, 2015 and March 31, 2015.
Less than 12 months |
12 months or longer |
Total |
||||||||||||||||||||||
Gross |
Gross |
Gross |
||||||||||||||||||||||
Unrealized |
Fair |
Unrealized |
Fair |
Unrealized |
Fair |
|||||||||||||||||||
December 31, 2015 |
losses |
value |
losses |
value |
losses |
value |
||||||||||||||||||
U.S. government agencies |
$ | 68,806 | $ | 7,451,910 | $ | 186,428 | $ | 6,813,572 | $ | 255,234 | $ | 14,265,482 | ||||||||||||
Municipal bonds |
3,000 | 868,633 | - | - | 3,000 | 868,633 | ||||||||||||||||||
Corporate bonds |
- | - | 136,968 | 1,863,032 | 136,968 | 1,863,032 | ||||||||||||||||||
Mortgage-backed securities |
277,984 | 18,877,162 | 779,153 | 25,557,549 | 1,057,137 | 44,434,711 | ||||||||||||||||||
$ | 349,790 | $ | 27,197,705 | $ | 1,102,549 | $ | 34,234,153 | $ | 1,452,339 | $ | 61,431,858 | |||||||||||||
March 31, 2015 |
||||||||||||||||||||||||
U.S. government agencies |
$ | 11,208 | $ | 3,988,792 | $ | 189,419 | $ | 12,810,581 | $ | 200,627 | $ | 16,799,373 | ||||||||||||
Municipal bonds |
- | - | - | - | - | - | ||||||||||||||||||
Corporate bonds |
46,736 | 1,953,264 | - | - | 46,736 | 1,953,264 | ||||||||||||||||||
Mortgage-backed securities |
187,176 | 9,687,070 | 621,444 | 33,241,821 | 808,620 | 42,928,891 | ||||||||||||||||||
$ | 245,120 | $ | 15,629,126 | $ | 810,863 | $ | 46,052,402 | $ | 1,055,983 | $ | 61,681,528 |
The gross unrealized losses on debt securities are not considered by management to be other-than-temporary impairments. Management has the intent and ability to hold these securities until recovery of their value. In most cases, temporary impairment is caused by market interest rate fluctuations.
HAMILTON BANCORP, INC AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
Note 6: Loans Receivable and Allowance for Loan Losses
Loans receivable, excluding loans held for sale, consist of the following at December 31, 2015 and March 31, 2015:
December 31, 2015 |
March 31, 2015 |
|||||||||||||||||||||||
Legacy (1) |
Acquired |
Total Loans |
% of Total |
Legacy (1) |
% of Total |
|||||||||||||||||||
Real estate loans: |
||||||||||||||||||||||||
One-to four-family: |
||||||||||||||||||||||||
Residential |
$ | 46,675,990 | $ | 22,988,263 | $ | 69,664,253 | 30 | % | $ | 49,864,923 | 31 | % | ||||||||||||
Residential construction |
5,196,931 | 1,616,661 | 6,813,592 | 3 | % | 3,955,702 | 2 | % | ||||||||||||||||
Investor (2) |
12,508,464 | 17,092,234 | 29,600,698 | 13 | % | 12,971,519 | 8 | % | ||||||||||||||||
Commercial |
76,460,241 | 2,925,586 | 79,385,827 | 35 | % | 59,273,398 | 37 | % | ||||||||||||||||
Commercial construction |
1,886,203 | 1,850,747 | 3,736,950 | 2 | % | 2,405,849 | 1 | % | ||||||||||||||||
Total real estate loans |
142,727,829 | 46,473,491 | 189,201,320 | 83 | % | 128,471,391 | 79 | % | ||||||||||||||||
Commercial business |
18,574,241 | 2,683,947 | 21,258,188 | 9 | % | 18,489,603 | 12 | % | ||||||||||||||||
Home equity loans |
12,062,929 | 2,212,783 | 14,275,712 | 6 | % | 12,261,292 | 8 | % | ||||||||||||||||
Consumer |
3,367,363 | 1,200,805 | 4,568,168 | 2 | % | 1,166,155 | 1 | % | ||||||||||||||||
Total Loans |
176,732,362 | 52,571,026 | 229,303,388 |