##### Table of Contents



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 December 31, 2005
 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
 þ
 o þ
  Common Stock, par value $.01
 As of February 14, 2006, the Issuer had
372,600 shares of Common Stock issued and outstanding.




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##### 



MIDLAND CAPITAL HOLDINGS CORPORATION
 Part I. FINANCIAL INFORMATION
    
    PAGEItem 1. Financial Statements
Consolidated Statements of Financial Condition 
December 31, 2005 (unaudited) and June 30, 2005
    
    
    1Consolidated
Statements of Earnings  Three months ended December 31, 2005 and 2004 and
Six months ended December 31, 2005 and 2004 (unaudited)
    
    
    2Consolidated
Statements of Changes in Stockholders Equity 
Six months ended December 31, 2005 (unaudited)
    
    
    3Consolidated Statements of Cash Flows  Six months
ended December 31, 2005 and 2004 (unaudited)
    
    
    4Notes to Consolidated Financial Statements
    
    
    5-7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    8-16Item 3. Controls and Procedures
    
    
    16Part II. OTHER INFORMATION
    
    
    17Item 1. Legal Proceedings
    
    
    17Item 2. Changes in Securities
    
    
    17Item 3. Defaults Upon Senior Securities
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17Index to Exhibits
    
    
    18Computation of Per Share EarningsCertificationCertification




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##### Table of Contents



MIDLAND CAPITAL HOLDINGS CORPORATION  AND SUBSIDIARIES
 
 Part I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 Consolidated Statements of Financial Condition
 December 31,
    
    
    June 30,2005
    
    
    2005(Unaudited)AssetsCash and amounts due from depository institutions
    
    $
    3,934,388
    
    
    
    2,640,369Interest-bearing deposits
    
    
    8,910,247
    
    
    
    34,069,224Total cash and cash equivalents
    
    
    12,844,635
    
    
    
    36,709,593Investment securities available for sale, at fair value
    
    
    21,177,712
    
    
    
    1,310,937Mortgage-backed securities, held to maturity (fair value:December 31, 2005 - $1,810,113;June 30, 2005 - $1,938,460)
    
    
    1,799,857
    
    
    
    1,920,221Loans receivable (net of allowance for loan losses:December 31, 2005 - $449,787;June 30, 2005 -$456,550)
    
    
    94,094,233
    
    
    
    94,578,810Loans receivable held for sale
    
    
    145,000
    
    
    
    250,500Stock in Federal Home Loan Bank of Chicago
    
    
    1,148,087
    
    
    
    1,123,500Accrued interest receivable
    
    
    344,569
    
    
    
    367,351Office properties and equipment, net
    
    
    2,216,166
    
    
    
    2,240,391Prepaid expenses and other assets
    
    
    687,687
    
    
    
    477,467Total assets
    
    $
    134,457,946
    
    
    
    138,978,770Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    119,915,333
    
    
    
    124,836,132Advance payments by borrowers for taxes and insurance
    
    
    1,033,184
    
    
    
    1,060,670Other liabilities
    
    
    485,473
    
    
    
    385,286Total liabilities
    
    
    121,433,990
    
    
    
    126,282,088Stockholders 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 December 31, 2005 and June 30, 2005
    
    
    3,726
    
    
    
    3,726Additional paid-in capital
    
    
    3,395,580
    
    
    
    3,395,580Retained earnings  substantially restricted
    
    
    9,444,100
    
    
    
    9,080,803Accumulated other comprehensive income, net of income taxes
    
    
    180,550
    
    
    
    216,573Total stockholders equity
    
    
    13,023,956
    
    
    
    12,696,682Total liabilities and stockholders equity
    
    $
    134,457,946
    
    
    
    138,978,770
  -1-




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MIDLAND CAPITAL HOLDINGS CORPORATIONAND SUBSIDIARIES
 
 Consolidated Statements of Earnings (Unaudited)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest income:Interest on loans
    
    $
    1,348,897
    
    
    
    1,382,873
    
    
    
    2,709,508
    
    
    
    2,757,642Interest on mortgage-backed securities
    
    
    20,497
    
    
    
    22,475
    
    
    
    40,410
    
    
    
    48,506Interest on investment securities
    
    
    204,715
    
    
    
    18,990
    
    
    
    326,267
    
    
    
    37,979Interest on interest-bearing deposits
    
    
    89,250
    
    
    
    176,954
    
    
    
    267,379
    
    
    
    322,064Dividends on FHLB stock
    
    
    10,686
    
    
    
    16,140
    
    
    
    24,606
    
    
    
    31,871Total interest income
    
    
    1,674,045
    
    
    
    1,617,432
    
    
    
    3,368,170
    
    
    
    3,198,062Interest expense:Interest on deposits
    
    
    390,907
    
    
    
    335,789
    
    
    
    767,106
    
    
    
    682,937Total interest expense
    
    
    390,907
    
    
    
    335,789
    
    
    
    767,106
    
    
    
    682,937Net interest income
    
    
    1,283,138
    
    
    
    1,281,643
    
    
    
    2,601,064
    
    
    
    2,515,125Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net interest income after provision
for loan losses
    
    
    1,283,138
    
    
    
    1,281,643
    
    
    
    2,601,064
    
    
    
    2,515,125Non-interest income:Loan fees and service charges
    
    
    53,966
    
    
    
    71,609
    
    
    
    155,900
    
    
    
    142,624Commission income
    
    
    10,832
    
    
    
    12,991
    
    
    
    21,470
    
    
    
    25,243Profit on sale of loans
    
    
    9,811
    
    
    
    4,148
    
    
    
    19,044
    
    
    
    13,852Profit on sale of other assets
    
    
    
    
    
    
    
    
    
    
    16,286
    
    
    
    Deposit related fees
    
    
    115,892
    
    
    
    106,827
    
    
    
    229,038
    
    
    
    219,850Other income
    
    
    11,518
    
    
    
    12,203
    
    
    
    25,602
    
    
    
    29,593Total non-interest income
    
    
    202,019
    
    
    
    207,778
    
    
    
    467,340
    
    
    
    431,162Non-interest expense:Staffing costs
    
    
    630,568
    
    
    
    667,511
    
    
    
    1,305,209
    
    
    
    1,297,294Advertising
    
    
    16,099
    
    
    
    15,478
    
    
    
    33,005
    
    
    
    33,595Occupancy and equipment expenses
    
    
    162,884
    
    
    
    157,233
    
    
    
    315,510
    
    
    
    321,561Data processing
    
    
    43,763
    
    
    
    48,901
    
    
    
    98,133
    
    
    
    99,250Federal deposit insurance premiums
    
    
    4,176
    
    
    
    5,102
    
    
    
    8,431
    
    
    
    10,260Other
    
    
    243,740
    
    
    
    241,232
    
    
    
    509,266
    
    
    
    467,235Total non-interest expense
    
    
    1,101,230
    
    
    
    1,135,457
    
    
    
    2,269,554
    
    
    
    2,229,195Income before income taxes
    
    
    383,927
    
    
    
    353,964
    
    
    
    798,850
    
    
    
    717,092Income tax provision
    
    
    130,535
    
    
    
    120,348
    
    
    
    271,609
    
    
    
    243,811Net income
    
    $
    253,392
    
    
    
    233,616
    
    
    
    527,241
    
    
    
    473,281Earnings per share (basic)
    
    $
    .68
    
    
    
    .63
    
    
    
    1.42
    
    
    
    1.27Earnings per share (diluted)
    
    $
    .68
    
    
    
    .63
    
    
    
    1.42
    
    
    
    1.27Dividends declared per common share
    
    $
    .22
    
    
    
    .20
    
    
    
    .44
    
    
    
    .40
  -2-




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MIDLAND CAPITAL HOLDINGS CORPORATIONAND SUBSIDIARIES
 
 Consolidated
Statements of Changes in Stockholders Equity (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance at June 30, 2005
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    9,080,803
    
    
    
    216,573
    
    
    
    12,696,682Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    527,241
    
    
    
    
    
    
    
    527,241Other comprehensive
income, net of tax:Unrealized holding loss
during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,023
    )
    
    
    (36,023
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    527,241
    
    
    
    (36,023
    )
    
    
    491,218Dividends declared on common
stock ($0.44 per share)
    
    
    
    
    
    
    
    
    
    
    (163,944
    )
    
    
    
    
    
    
    (163,944
    )Balance at December 31, 2005
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    9,444,100
    
    
    
    180,550
    
    
    
    13,023,956
  -3-




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MIDLAND CAPITAL HOLDINGS CORPORATIONAND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows (Unaudited)
 Six Months EndedDecember 31,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    527,241
    
    
    
    473,281Adjustments to reconcile net income to net cash from
operating activities:Depreciation
    
    
    105,009
    
    
    
    108,060Net accretion on securities
    
    
    (288,766
    )
    
    
    (1,748
    )Federal Home Loan Bank stock dividend
    
    
    (24,587
    )
    
    
    (31,800
    )Proceeds from sale of loans held for sale
    
    
    1,318,782
    
    
    
    987,050Origination of loans held for sale
    
    
    (1,204,400
    )
    
    
    (405,550
    )Gain on sale of loans
    
    
    (19,044
    )
    
    
    (2,196
    )Gain on sale of other assets
    
    
    (16,286
    )
    
    
    Decrease in accrued interest receivable
    
    
    22,782
    
    
    
    21,953Increase in accrued interest payable
    
    
    1,276
    
    
    
    806Decrease in deferred income on loans
    
    
    (1
    )
    
    
    (17,381
    )Increase in other assets
    
    
    (181,502
    )
    
    
    (90,231
    )Increase in other liabilities
    
    
    98,911
    
    
    
    1,685Net cash provided by operating activities
    
    
    339,415
    
    
    
    1,043,929Cash flows from investing activities:Proceeds from repayments of mortgage backed securities,
held to maturity
    
    
    120,364
    
    
    
    684,559Purchase of investment securities, available for sale
    
    
    (19,632,588
    )
    
    
    Loan disbursements
    
    
    (11,892,152
    )
    
    
    (11,817,108
    )Loan repayments
    
    
    12,376,730
    
    
    
    10,001,263Proceeds from sale of other assets
    
    
    16,286
    
    
    
    Property and equipment expenditures
    
    
    (80,784
    )
    
    
    (39,449
    )Net cash provided for investing activities
    
    
    (19,092,144
    )
    
    
    (1,170,735
    )Cash flows from financing activities:Deposit account receipts
    
    
    183,923,004
    
    
    
    193,315,852Deposit account withdrawals
    
    
    (189,571,970
    )
    
    
    (203,590,175
    )Interest credited to deposit accounts
    
    
    728,167
    
    
    
    644,363Payment of dividends
    
    
    (163,944
    )
    
    
    (149,040
    )(Decrease) increase in advance payments by borrowers
for taxes and insurance
    
    
    (27,486
    )
    
    
    72,252Net cash provided for financing activities
    
    
    (5,112,229
    )
    
    
    (9,706,748
    )Net change in cash and cash equivalents
    
    
    (23,864,958
    )
    
    
    (9,833,554
    )Cash and cash equivalents at beginning of period
    
    
    36,709,593
    
    
    
    50,496,629Cash and cash equivalents at end of period
    
    $
    12,844,635
    
    
    
    40,663,075Cash paid during the period for:Interest
    
    $
    765,830
    
    
    
    682,131Income taxes
    
    
    214,361
    
    
    
    218,069
  -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
  -5-




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Note E  Effect of New Accounting Pronouncements (continued)
     -6-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Note E  Effect of New Accounting Pronouncements (continued)
   -7-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS
    GENERAL
   -8-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 GENERAL (continued)
  FINANCIAL CONDITION
     -9-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 FINANCIAL
CONDITION (continued)
  December 31,
    
    
    June 30,2005
    
    
    2005(Dollars in Thousands)Non-Accruing Loans:One-to-four family
    
    $
    197
    
    
    $
    316Multi-family
    
    
    
    
    
    
    Consumer
    
    
    65
    
    
    
    64Commercial business
    
    
    
    
    
    
    Total non-performing loans
    
    $
    262
    
    
    $
    380Foreclosed Assets:One-to-four family
    
    
    
    
    
    
    Total foreclosed assets
    
    
    
    
    
    
    Total non-performing assets
    
    $
    262
    
    
    $
    380Total as a percentage of total assets
    
    
    0.19
    %
    
    
    0.27
    %
  -10-




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##### Table of Contents



MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 FINANCIAL CONDITION (continued)
  Six Months EndedDecember 31,2005
    
    
    2004(Dollars in Thousands)Balance at beginning of period
    
    $
    457
    
    
    $
    460Charge-offs:One-to-four family loans
    
    
    
    
    
    
    Consumer loans
    
    
    9
    
    
    
    1Commercial business loans
    
    
    
    
    
    
    Total charge-offs
    
    
    9
    
    
    
    1Recoveries:One-to-four family loans
    
    
    
    
    
    
    Multi-family loans
    
    
    
    
    
    
    Consumer loans
    
    
    2
    
    
    
    Total recoveries
    
    
    2
    
    
    
    Net (charge-offs) recoveries
    
    
    (7
    )
    
    
    (1
    )Additions charged to operations
    
    
    
    
    
    
    Balance at end of period
    
    $
    450
    
    
    $
    459Ratio of net charge-offs during the period to
average loans outstanding during the period
    
    
    .01
    %
    
    
    .01
    %Ratio of net charge-offs during the period to
average non-performing assets
    
    
    2.29
    %
    
    
    .56
    %Allowance for loan losses to non-performing loans
    
    
    171.95
    %
    
    
    190.78
    %Allowance for loan losses to total loans
    
    
    0.48
    %
    
    
    0.48
    %
   -11-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 FINANCIAL CONDITION (continued)
  RESULTS OF OPERATIONS
     Interest Income
  -12-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Interest Income (continued)
      -13-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Interest Income (continued)
     Interest Expense
   -14-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Provisions for Losses on Loans
  Non-Interest Income
   Non-Interest Expense
   Income Taxes
  -15-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Income Taxes (continued)
  LIQUIDITY AND CAPITAL RESOURCES
     
 Item 3. CONTROLS AND PROCEDURES
   -16-




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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
  I.
    
    Election of Directors 
    
    
    
    
    
    351,641 shares voted, as follows:Michael J. Kukanza:
    
    
    
    
    
    351,641 votes FOR; -0- votes WITHHELD.Richard Taylor:
    
    
    
    
    
    351,641 votes FOR; -0- votes WITHHELD.
 II.
    
    Ratification of the appointment of Cobitz, VandenBerg & Fennessy as auditors for the Company for the fiscal year ending June 30, 2006  351,641 shares voted, as follows:FOR:
    
    

    
    
    
    351,541AGAINST:
    
    

    
    
    
    100ABSTAIN:
    
    

    
    
    
    -0-
 
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
  -17-




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INDEX TO EXHIBITS
 Exhibit
Number
    
    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
 -18-




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SIGNATURES
  MIDLAND CAPITAL
HOLDINGS CORPORATION RegistrantDATE: February 14, 2006
    
    BY:
    
    /s/ Paul ZogasPaul ZogasPresident, Chief Executive Officerand Chief Financial OfficerDATE: February 14, 2006
    
    BY:
    
    /s/ Charles ZogasCharles ZogasExecutive Vice President andChief Operating Officer