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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2006
 OR
 o
    
    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 1-14343
 MIDLAND CAPITAL HOLDINGS CORPORATION
  Delaware
    
    36-4238089(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification Number)
 8929 S. Harlem Avenue, Bridgeview, Illinois 60455
 (708) 598-9400
 þ o
 o þ
 o þ
  Common Stock, par value $.01
 As of November 14, 2006, the Issuer had
372,600 shares of Common Stock issued and outstanding.




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MIDLAND CAPITAL HOLDINGS CORPORATION
 PAGEPart I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Financial Condition 
September 30, 2006 (unaudited) and June 30, 2006
    
    
    1Consolidated Statements of Earnings  Three Months
Ended September 30, 2006 and 2005 (unaudited)
    
    
    2Consolidated Statements of Changes in Stockholders Equity 
Three Months Ended September 30, 2006 (unaudited)
    
    
    3Consolidated Statements of Cash Flows  Three Months
Ended September 30, 2006 and 2005 (unaudited)
    
    
    4Notes to Consolidated Financial Statements
    
    
    5-6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    7-13Item 3. Controls and Procedures
    
    
    13Part II. OTHER INFORMATION
    
    
    14Item 1. Legal Proceedings
    
    
    14Item 2. Changes in Securities
    
    
    14Item 3. Defaults Upon Senior Securities
    
    
    14Item 4. Submission of Matters to a Vote of Security Holders
    
    
    14Item 5. Other Information
    
    
    14Item 6. Exhibits
    
    
    14Index to Exhibits
    
    
    15Computation of Per Share EarningsCertificationSection 906 Certification




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MIDLAND CAPITAL HOLDINGS CORPORATION  AND SUBSIDIARIES
 
 Part I  FINANCIAL INFORMATION
 
 Consolidated Statements of Financial Condition
 September 30,
    
    
    June 30,2006
    
    
    2006(Unaudited)AssetsCash and amounts due from depository institutions
    
    $
    2,588,163
    
    
    
    2,204,602Interest-bearing deposits
    
    
    5,481,257
    
    
    
    9,055,302Total cash and cash equivalents
    
    
    8,069,420
    
    
    
    11,259,904Investment securities available for sale, at fair value
    
    
    20,938,000
    
    
    
    21,021,975Mortgage-backed securities, held to maturity (fair value: September 30, 2006 - $1,631,035; June 30, 2006 - $1,688,292)
    
    
    1,622,353
    
    
    
    1,684,228Loans
receivable (net of allowance for loan losses: September 30, 2006 - $421,920; June 30, 2006 - $415,666)
    
    
    90,232,094
    
    
    
    91,701,483Loans receivable held for sale
    
    
    398,200
    
    
    
    843,090Stock in Federal Home Loan Bank of Chicago
    
    
    1,148,087
    
    
    
    1,148,087Accrued interest receivable
    
    
    382,218
    
    
    
    370,190Office properties and equipment, net
    
    
    2,195,285
    
    
    
    2,240,702Prepaid expenses and other assets
    
    
    772,584
    
    
    
    547,690Total assets
    
    $
    125,758,241
    
    
    
    130,817,349Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    111,445,203
    
    
    
    115,971,229Advance payments by borrowers for taxes and insurance
    
    
    423,487
    
    
    
    1,127,293Other liabilities
    
    
    424,664
    
    
    
    422,743Total liabilities
    
    
    112,293,354
    
    
    
    117,521,265Stockholders equity:Preferred stock, $.01 par value: authorized
50,000 shares; none outstanding
    
    
    
    
    
    
    Common stock, $.01 par value: authorized 600,000
shares; issued and outstanding 372,600 shares
at September 30, 2006 and June 30, 2006
    
    
    3,726
    
    
    
    3,726Additional paid-in capital
    
    
    3,395,580
    
    
    
    3,395,580Retained earnings  substantially restricted
    
    
    9,896,027
    
    
    
    9,764,211Accumulated other comprehensive income, net of income taxes
    
    
    169,554
    
    
    
    132,567Total stockholders equity
    
    
    13,464,887
    
    
    
    13,296,084Total liabilities and stockholders equity
    
    $
    125,758,241
    
    
    
    130,817,349
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MIDLAND CAPITAL HOLDINGS CORPORATION  AND SUBSIDIARIES
 
 Consolidated Statements of Earnings (Unaudited)
 Three Months EndedSeptember 30,2006
    
    
    2005Interest income:Interest on loans
    
    $
    1,349,977
    
    
    
    1,360,611Interest on mortgage-backed securities
    
    
    21,758
    
    
    
    19,913Interest on investment securities
    
    
    259,544
    
    
    
    121,552Interest on interest-bearing deposits
    
    
    107,597
    
    
    
    178,128Dividends on FHLB stock
    
    
    8,873
    
    
    
    13,920Total interest income
    
    
    1,747,749
    
    
    
    1,694,124Interest expense:Interest on deposits
    
    
    492,674
    
    
    
    376,199Total interest expense
    
    
    492,674
    
    
    
    376,199Net interest income
    
    
    1,255,075
    
    
    
    1,317,925Provision for loan losses
    
    
    
    
    
    
    Net interest income after provision for loan losses
    
    
    1,255,075
    
    
    
    1,317,925Non-interest income:Loan fees and service charges
    
    
    51,166
    
    
    
    101,935Commission income
    
    
    11,594
    
    
    
    10,638Gain on sale of loans
    
    
    26,296
    
    
    
    9,233Deposit related fees
    
    
    94,892
    
    
    
    113,145Gain on sale of other assets
    
    
    
    
    
    
    16,286Other income
    
    
    13,457
    
    
    
    14,084Total non-interest income
    
    
    197,405
    
    
    
    265,321Non-interest expense:Staffing costs
    
    
    657,221
    
    
    
    674,642Advertising
    
    
    17,895
    
    
    
    16,905Occupancy and equipment expenses
    
    
    165,645
    
    
    
    152,625Data processing
    
    
    44,008
    
    
    
    54,370Federal deposit insurance premiums
    
    
    3,704
    
    
    
    4,256Other
    
    
    228,795
    
    
    
    265,526Total non-interest expense
    
    
    1,117,268
    
    
    
    1,168,324Income before income taxes
    
    
    335,212
    
    
    
    414,922Income tax provision
    
    
    113,972
    
    
    
    141,073Net income
    
    $
    221,240
    
    
    
    273,849Earnings per share (basic)
    
    $
    0.59
    
    
    
    0.73Earnings per share (diluted)
    
    $
    0.59
    
    
    
    0.73Dividends declared per common share
    
    $
    0.24
    
    
    
    0.22
  -2-




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MIDLAND CAPITAL HOLDINGS CORPORATION  AND SUBSIDIARIES
 
 Consolidated Statements of Changes in Stockholders Equity (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance at June 30, 2006
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    9,764,211
    
    
    
    132,567
    
    
    
    13,296,084Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    221,240
    
    
    
    
    
    
    
    221,240Other comprehensive
income, net of tax:Unrealized holding gain
during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,987
    
    
    
    36,987Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    221,240
    
    
    
    36,987
    
    
    
    258,227Dividends declared
on common
stock ($0.24 per share)
    
    
    
    
    
    
    
    
    
    
    (89,424
    )
    
    
    
    
    
    
    (89,424
    )Balance at September 30, 2006
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    9,896,027
    
    
    
    169,554
    
    
    
    13,464,887
  -3-




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MIDLAND CAPITAL HOLDINGS CORPORATION  AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows (Unaudited)
 Three Months EndedSeptember 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    221,240
    
    
    
    273,849Adjustments to reconcile net income to net cash from
operating activities:Depreciation
    
    
    56,347
    
    
    
    52,041Net accretion on securities
    
    
    (240,794
    )
    
    
    (102,802
    )Federal Home Loan Bank stock dividend
    
    
    
    
    
    
    (13,900
    )Proceeds from sale of loans held for sale
    
    
    2,115,888
    
    
    
    581,861Origination of loans held for sale
    
    
    (1,654,050
    )
    
    
    (578,500
    )Gain on sale of loans
    
    
    (26,296
    )
    
    
    (9,233
    )Gain on sale of other assets
    
    
    
    
    
    
    (16,286
    )Increase in accrued interest receivable
    
    
    (12,028
    )
    
    
    (4,358
    )Decrease in accrued interest payable
    
    
    (750
    )
    
    
    (653
    )Increase (decrease) in deferred income on loans
    
    
    11,364
    
    
    
    (697
    )Increase in other assets
    
    
    (234,600
    )
    
    
    (204,193
    )Increase in other liabilities
    
    
    2,671
    
    
    
    160,313Net cash provided by operating activities
    
    
    238,992
    
    
    
    137,442Cash flows from investing activities:Proceeds from repayments of mortgage-backed securities,
held to maturity
    
    
    61,875
    
    
    
    59,716Proceeds from maturities of investment securities,
available for sale
    
    
    15,000,000
    
    
    
    Purchase of investment securities, available for sale
    
    
    (14,619,190
    )
    
    
    (19,632,588
    )Loan disbursements
    
    
    (3,044,838
    )
    
    
    (6,891,282
    )Loan repayments
    
    
    4,502,863
    
    
    
    7,110,520Proceeds from sale of other assets
    
    
    
    
    
    
    16,286Property and equipment expenditures
    
    
    (10,930
    )
    
    
    (51,825
    )Net cash provided by (for) investing activities
    
    
    1,889,780
    
    
    
    (19,389,173
    )Cash flows from financing activities:Deposit account receipts
    
    
    79,945,771
    
    
    
    93,906,798Deposit account withdrawals
    
    
    (84,929,223
    )
    
    
    (97,642,934
    )Interest credited to deposit accounts
    
    
    457,426
    
    
    
    359,301Payment of dividends
    
    
    (89,424
    )
    
    
    (81,972
    )(Decrease) increase in advance payments by borrowers
for taxes and insurance
    
    
    (703,806
    )
    
    
    297,258Net cash provided for financing activities
    
    
    (5,319,256
    )
    
    
    (3,161,549
    )Net change in cash and cash equivalents
    
    
    (3,190,484
    )
    
    
    (22,413,280
    )Cash and cash equivalents at beginning of period
    
    
    11,259,904
    
    
    
    36,709,593Cash and cash equivalents at end of period
    
    $
    8,069,420
    
    
    
    14,296,313Cash paid during the period for:Interest
    
    $
    493,424
    
    
    
    376,852Income taxes
    
    
    85,606
    
    
    
    0
  -4-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
 Note A  Basis of Presentation
  Note B  Principles of Consolidation
  Note C  Earnings Per Share
  Note D  Industry Segments
  Note E  Effect of New Accounting Pronouncements
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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Note E  Effect of New Accounting Pronouncements (continued)
     -6-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS
    GENERAL
    -7-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 FINANCIAL CONDITION
      -8-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 FINANCIAL CONDITION (continued)
  September 30,
    
    
    June 30,2006
    
    
    2006(Dollars in Thousands)Non-Accruing Loans:One-to-four family
    
    $
    252
    
    
    $
    295Multi-family
    
    
    
    
    
    
    Consumer
    
    
    26
    
    
    
    32Commercial business
    
    
    
    
    
    
    Total non-performing loans
    
    $
    278
    
    
    $
    327Foreclosed Assets:One-to-four family
    
    
    
    
    
    
    Total foreclosed assets
    
    
    
    
    
    
    Total non-performing assets
    
    $
    278
    
    
    $
    327Total as a percentage of total assets
    
    
    0.22
    %
    
    
    0.25
    %
  -9-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 FINANCIAL CONDITION (continued)
  Three Months EndedSeptember 30,2006
    
    
    2005(Dollars in Thousands)Balance at beginning of period
    
    $
    416
    
    
    $
    457Charge-offs:One-to-four family loans
    
    
    
    
    
    
    Consumer loans
    
    
    
    
    
    
    1Commercial business loans
    
    
    
    
    
    
    Total charge-offs
    
    
    
    
    
    
    1Recoveries:One-to-four family loans
    
    
    
    
    
    
    Multi-family loans
    
    
    
    
    
    
    Consumer loans
    
    
    6
    
    
    
    2Total recoveries
    
    
    6
    
    
    
    2Net (charge-offs) recoveries
    
    
    6
    
    
    
    1Additions charged to operations
    
    
    
    
    
    
    Balance at end of period
    
    $
    422
    
    
    $
    458Ratio of net charge-offs during the period to
average loans outstanding during the period
    
    
    
    %
    
    
    
    %Ratio of net charge-offs during the period to
average non-performing assets
    
    
    
    %
    
    
    
    %Allowance for loan losses to non-performing loans
    
    
    151.73
    %
    
    
    139.75
    %Allowance for loan losses to total loans
    
    
    0.46
    %
    
    
    0.48
    %
    -10-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 RESULTS OF OPERATIONS
   Interest Income
     -11-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Interest Income (continued)
  Interest Expense
  Provisions for Losses on Loans
  Non-Interest Income
  Non-Interest Expense
  -12-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Income Taxes
  LIQUIDITY AND CAPITAL RESOURCES
     
 Item 3. CONTROLS AND PROCEDURES
   -13-




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MIDLAND CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
 
 PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 2. CHANGES IN SECURITIES
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
  -14-




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INDEX TO EXHIBITS
 ExhibitNumber
    
    Description11
    
    Computation of Per Share Earnings31.1
    
    Rule 13a-14(a)/15d-14(a) Certification32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
  MIDLAND CAPITAL HOLDINGS CORPORATION 
RegistrantDATE:  November 14, 2006
    BY:
    /s/ Paul ZogasPaul ZogasPresident, Chief Executive Officer
and Chief Financial OfficerDATE:  November 14, 2006
    BY:
    /s/ Charles ZogasCharles ZogasExecutive Vice President and
Chief Operating Officer