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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2016

 

OR

 

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

 

For the transition period from            to          

 

Commission File Number: 001-35595

 

GEORGETOWN BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

Maryland

 

80-0817763

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

2 East Main Street, Georgetown, MA

 

01833

(Address of principal executive office)

 

(Zip Code)

 

(978) 352-8600

(Registrant’s telephone number, including area code)

 

None

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

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 ☒ No☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

 

Accelerated filer ☐

Non-accelerated filer ☐

 

Smaller reporting company ☒

 

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

 

Indicate the number of shares outstanding of the registrant’s common stock, as of the latest practicable date:  Common Stock, $0.01 par value, 1,840,920 shares outstanding as of November 7, 2016.

 

 

 

 


 

Form 10-Q

GEORGETOWN BANCORP, INC.

Table of Contents

 

 

 

    

Page

 

 

 

 

Part I. Financial Information 

 

 

 

 

 

 

 

Financial Statements

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition at September 30, 2016 (unaudited) and December 31, 2015

 

 

 

 

 

 

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2016 and 2015 (unaudited)

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (unaudited)

 

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

 

 

 

 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28 

 

 

 

 

 

Quantitative and Qualitative Disclosures About Market Risk

 

42 

 

 

 

 

 

Controls and Procedures

 

42 

 

 

 

 

Part II. Other Information 

 

 

 

 

 

 

 

Legal Proceedings

 

43 

 

Risk Factors

 

43 

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

43 

 

Defaults upon Senior Securities

 

43 

 

Mine Safety Disclosures

 

43 

 

Other Information

 

43 

 

Exhibits

 

43 

 

 

 

 

SIGNATURES 

 

45 

 

 

 

 

 


 

PART I—FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

 

 

 

 

 

 

 

 

 

At

 

At

 

 

 

September 30,

 

December 31,

 

 

    

2016

    

2015

    

 

 

(Unaudited)

 

 

 

 

 

 

(In thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

3,099

 

$

1,927

 

Short-term investments

 

 

5,907

 

 

5,831

 

Total cash and cash equivalents

 

 

9,006

 

 

7,758

 

 

 

 

 

 

 

 

 

Securities available for sale, at fair value

 

 

18,881

 

 

19,028

 

Securities held to maturity, at amortized cost (fair value of $2,796 at September 30, 2016 and $3,128 at December 31, 2015)

 

 

2,713

 

 

3,112

 

Federal Home Loan Bank stock, at cost

 

 

2,251

 

 

2,933

 

Bankers Bank Northeast stock, at cost

 

 

60

 

 

60

 

Loans held for sale

 

 

204

 

 

 —

 

Loans, net of allowance for loan losses of $2,551 at September 30, 2016 and $2,408 at December 31, 2015

 

 

271,798

 

 

253,983

 

Premises and equipment, net

 

 

4,232

 

 

3,837

 

Accrued interest receivable

 

 

785

 

 

799

 

Bank-owned life insurance

 

 

3,179

 

 

3,101

 

Other assets

 

 

1,861

 

 

1,891

 

 

 

 

 

 

 

 

 

Total assets

 

$

314,970

 

$

296,502

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

240,150

 

$

207,726

 

Short-term Federal Home Loan Bank advances

 

 

13,750

 

 

23,500

 

Long-term Federal Home Loan Bank advances

 

 

24,600

 

 

27,100

 

Mortgagors’ escrow accounts

 

 

1,845

 

 

1,386

 

Due to broker for investment purchase

 

 

 —

 

 

2,505

 

Accrued expenses and other liabilities

 

 

2,185

 

 

2,377

 

Total liabilities

 

 

282,530

 

 

264,594

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock, $0.01 par value per share: 50,000,000 shares authorized at September 30, 2016 and December 31, 2015; none outstanding

 

 

 —

 

 

 —

 

Common stock, $0.01 par value per share: 100,000,000 shares authorized, 1,840,920 shares issued at September 30, 2016 and 1,828,238 shares issued at December 31, 2015

 

 

18

 

 

18

 

Additional paid-in capital

 

 

19,788

 

 

19,402

 

Retained earnings

 

 

13,796

 

 

13,788

 

Accumulated other comprehensive income

 

 

252

 

 

46

 

Unearned compensation - ESOP (74,215 shares unallocated at September 30, 2016 and 79,645 shares unallocated at December 31, 2015)

 

 

(774)

 

 

(835)

 

Unearned compensation - Restricted stock (46,449 shares non-vested at September 30, 2016 and 44,866 shares non-vested at December 31, 2015)

 

 

(640)

 

 

(511)

 

Total stockholders’ equity

 

 

32,440

 

 

31,908

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

314,970

 

$

296,502

 

 

See accompanying notes to consolidated financial statements.

 

1


 

GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

    

2016

    

2015

  

  

2016

    

2015

  

 

 

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

3,029

 

$

2,841

 

 

$

9,067

 

$

8,289

 

Securities

 

 

143

 

 

146

 

 

 

451

 

 

432

 

Short-term investments

 

 

4

 

 

2

 

 

 

15

 

 

5

 

Total interest and dividend income

 

 

3,176

 

 

2,989

 

 

 

9,533

 

 

8,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

485

 

 

270

 

 

 

1,352

 

 

754

 

Short-term Federal Home Loan Bank advances

 

 

14

 

 

14

 

 

 

42

 

 

35

 

Long-term Federal Home Loan Bank advances

 

 

129

 

 

147

 

 

 

412

 

 

448

 

Total interest expense

 

 

628

 

 

431

 

 

 

1,806

 

 

1,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest and dividend income

 

 

2,548

 

 

2,558

 

 

 

7,727

 

 

7,489

 

Provision for loan losses

 

 

67

 

 

111

 

 

 

141

 

 

138

 

Net interest and dividend income, after provision for loan losses

 

 

2,481

 

 

2,447

 

 

 

7,586

 

 

7,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

157

 

 

189

 

 

 

512

 

 

539

 

Mortgage banking income, net

 

 

50

 

 

61

 

 

 

105

 

 

112

 

Gain on sale of SBA loans

 

 

 —

 

 

86

 

 

 

15

 

 

86

 

Income from bank-owned life insurance

 

 

26

 

 

26

 

 

 

78

 

 

76

 

Other

 

 

11

 

 

12

 

 

 

31

 

 

26

 

Total non-interest income

 

 

244

 

 

374

 

 

 

741

 

 

839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

1,407

 

 

1,214

 

 

 

4,282

 

 

3,652

 

Occupancy and equipment expenses

 

 

256

 

 

262

 

 

 

785

 

 

793

 

Data processing expenses

 

 

167

 

 

151

 

 

 

548

 

 

476

 

Professional fees

 

 

170

 

 

123

 

 

 

729

 

 

365

 

Merger related expenses

 

 

136

 

 

 —

 

 

 

136

 

 

 —

 

Advertising expenses

 

 

88

 

 

87

 

 

 

263

 

 

263

 

FDIC insurance

 

 

49

 

 

42

 

 

 

140

 

 

126

 

Other general and administrative expenses

 

 

313

 

 

248

 

 

 

941

 

 

848

 

Total non-interest expenses

 

 

2,586

 

 

2,127

 

 

 

7,824

 

 

6,523

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

139

 

 

694

 

 

 

503

 

 

1,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

 

104

 

 

269

 

 

 

236

 

 

629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

35

 

$

425

 

 

$

267

 

$

1,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

1,765,524

 

 

1,745,431

 

 

 

1,761,257

 

 

1,748,320

 

Diluted

 

 

1,779,120

 

 

1,753,009

 

 

 

1,770,565

 

 

1,756,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

$

0.24

 

 

$

0.15

 

$

0.59

 

Diluted

 

$

0.02

 

$

0.24

 

 

$

0.15

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per share

 

$

0.05

 

$

0.0475

 

 

$

0.1475

 

$

0.1375

 

 

See accompanying notes to consolidated financial statements.

2


 

 

GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

    

2016

    

2015

    

2016

    

2015

  

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

35

 

$

425

 

$

267

 

$

1,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (loss) gain on securities available for sale

 

 

(54)

 

 

236

 

 

318

 

 

56

 

Income tax benefit (provision)

 

 

20

 

 

(83)

 

 

(112)

 

 

(20)

 

Other comprehensive (loss) income, net of tax

 

 

(34)

 

 

153

 

 

206

 

 

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

$

1

 

$

578

 

$

473

 

$

1,074

 

 

See accompanying notes to consolidated financial statements.

 

3


 

GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

Accumulated

    

 

 

    

 

 

    

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Unearned

 

Unearned

 

 

 

 

 

 

Common

 

Paid-in

 

Retained

 

Comprehensive

 

Compensation-

 

Compensation-

 

 

 

 

 

 

Stock

 

Capital

 

Earnings

 

Income

 

ESOP

 

Restricted Stock

 

Total

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2014

 

$

18

 

$

19,245

 

$

12,593

 

$

143

 

$

(918)

 

$

(369)

 

$

30,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

1,038

 

 

 

 

 

 

 

 

1,038

 

Other comprehensive income

 

 

 

 

 

 

 

 

36

 

 

 

 

 

 

36

 

Cash dividends paid ($0.1375 per share)

 

 

 

 

 

 

(240)

 

 

 

 

 

 

 

 

(240)

 

Repurchased stock related to buyback program (17,000 shares)

 

 

 —

 

 

(315)

 

 

 

 

 

 

 

 

 

 

(315)

 

Common stock held by ESOP allocated or committed to be allocated (5,430 shares)

 

 

 

 

37

 

 

 

 

 

 

61

 

 

 

 

98

 

Restricted stock granted in connection with equity incentive plan (20,000 shares)

 

 

 

 

351

 

 

 

 

 

 

 

 

(351)

 

 

 —

 

Purchased stock related to vested restricted stock (3,091 shares)

 

 

 

 

(54)

 

 

 

 

 

 

 

 

 

 

(54)

 

Exercise of stock options (884 shares)

 

 

 —

 

 

11

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

11

 

Share based compensation - options

 

 

 

 

66

 

 

 

 

 

 

 

 

 

 

66

 

Share based compensation - restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

155

 

 

155

 

Excess tax provision from share-based compensation

 

 

 

 

15

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2015

 

$

18

 

$

19,356

 

$

13,391

 

$

179

 

$

(857)

 

$

(565)

 

$

31,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2015

 

$

18

 

$

19,402

 

$

13,788

 

$

46

 

$

(835)

 

$

(511)

 

$

31,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

267

 

 

 —

 

 

 —

 

 

 —

 

 

267

 

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

206

 

 

 —

 

 

 —

 

 

206

 

Cash dividends paid ($0.1475 per share)

 

 

 —

 

 

 —

 

 

(259)

 

 

 —

 

 

 —

 

 

 —

 

 

(259)

 

Common stock held by ESOP allocated or committed to be allocated (5,430 shares)

 

 

 —

 

 

48

 

 

 —

 

 

 —

 

 

61

 

 

 —

 

 

109

 

Restricted stock granted in connection with equity incentive plan (16,500 shares)

 

 

 —

 

 

320

 

 

 —

 

 

 —

 

 

 —

 

 

(320)

 

 

 —

 

Purchased stock related to vested restricted stock (3,818 shares)

 

 

 —

 

 

(74)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(74)

 

Share based compensation - options

 

 

 —

 

 

92

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

92

 

Share based compensation - restricted stock

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

191

 

 

191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2016

 

$

18

 

$

19,788

 

$

13,796

 

$

252

 

$

(774)

 

$

(640)

 

$

32,440

 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

    

2016

    

2015

  

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

267

 

$

1,038

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Provision for loan losses

 

 

141

 

 

138

 

Amortization of securities, net

 

 

106

 

 

99

 

Net change in deferred loan fees and costs

 

 

(102)

 

 

64

 

Depreciation and amortization expense

 

 

314

 

 

290

 

Decrease (increase) in accrued interest receivable

 

 

14

 

 

(73)

 

Income from bank-owned life insurance

 

 

(78)

 

 

(76)

 

Stock-based compensation expense

 

 

392

 

 

319

 

Gain on sale of loans

 

 

(17)

 

 

(122)

 

Loans originated for sale

 

 

(640)

 

 

(2,500)

 

Proceeds from sales of loans

 

 

453

 

 

3,612

 

Net change in other assets and liabilities

 

 

(274)

 

 

1,294

 

Net cash provided by operating activities

 

 

576

 

 

4,083

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Activity in securities available for sale:

 

 

 

 

 

 

 

Maturities, prepayments and calls

 

 

2,401

 

 

1,948

 

Purchases

 

 

(2,038)

 

 

(2,544)

 

Activity in securities held to maturity:

 

 

 

 

 

 

 

Maturities, prepayments and calls

 

 

384

 

 

161

 

Purchases

 

 

(2,494)

 

 

 —

 

Purchase of Federal Home Loan Bank stock

 

 

(240)

 

 

(10)

 

Redemption of Federal Home Loan Bank stock

 

 

922

 

 

 —

 

Purchase of Bankers Bank Northeast stock

 

 

 —

 

 

(60)

 

Loan originations, net

 

 

(2,061)

 

 

(9,454)

 

Principal balance of loans purchased

 

 

(15,793)

 

 

(7,611)

 

Purchase of premises and equipment

 

 

(709)

 

 

(157)

 

Proceeds from sale of premises and equipment

 

 

 —

 

 

77

 

Net cash used by investing activities

 

 

(19,628)

 

 

(17,650)

 

 

(continued)

 

See accompanying notes to consolidated financial statements.

5


 

GEORGETOWN BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(unaudited)

(concluded)

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

    

2016

    

2015

  

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Net change in deposits

 

 

32,424

 

 

11,830

 

Net change in Federal Home Loan Bank advances with maturities of three months or less

 

 

(10,250)

 

 

1,000

 

Proceeds from Federal Home Loan Bank advances with maturities greater than three months

 

 

3,500

 

 

5,000

 

Repayments of Federal Home Loan Bank advances with maturities greater than three months

 

 

(5,500)

 

 

(2,500)

 

Net change in mortgagors’ escrow accounts

 

 

459

 

 

429

 

Repurchase of common stock

 

 

(74)

 

 

(369)

 

Exercise of stock options

 

 

 —

 

 

11

 

Excess tax benefit on share-based compensation

 

 

 —

 

 

15

 

Cash dividends paid on common stock

 

 

(259)

 

 

(240)

 

Net cash provided by financing activities

 

 

20,300

 

 

15,176

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

1,248

 

 

1,609

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

7,758

 

 

4,918

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

9,006

 

$