##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 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
  Large Accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



MIDLAND CAPITAL HOLDINGS CORPORATION
 PAGEPart I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Financial Condition -
March 31, 2008 (unaudited) and June 30, 2007
    
    
    1Consolidated Statements of Earnings -
Three months ended March 31, 2008 and 2007 and
Nine months ended March 31, 2008 and 2007 (unaudited)
    
    
    2Consolidated Statements of Changes in Stockholders Equity -
Nine months ended March 31, 2008 (unaudited)
    
    
    3Consolidated Statements of Cash Flows  Nine months
ended March 31, 2008 and 2007 (unaudited)
    
    
    4Notes to Consolidated Financial Statements
    
    
    5-6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    7-15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15Item 4T. Controls and Procedures
    
    
    15Part II. OTHER INFORMATION
    
    
    16Item 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 2. Changes in Securities
    
    
    16Item 3. Defaults Upon Senior Securities
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    16Item 5. Other Information
    
    
    16Item 6. Exhibits
    
    
    16Index to Exhibits
    
    
    18Exhibit 11Exhibit 31.1Exhibit 32.1




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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
 March 31,
    
    
    June 30,2008
    
    
    2007(Unaudited)AssetsCash and amounts due from depository institutions
    
    $
    1,733,968
    
    
    
    2,224,076Interest-bearing deposits
    
    
    28,249,626
    
    
    
    11,231,760Total cash and cash equivalents
    
    
    29,983,594
    
    
    
    13,455,836Investment securities available for sale, at fair value
    
    
    1,306,250
    
    
    
    21,019,975Mortgage-backed securities, held to maturity
(fair value: March 31, 2008 - $1,294,446;
June 30, 2007 - $1,482,977)
    
    
    1,279,189
    
    
    
    1,474,504Loans receivable (net of allowance for loan
losses: March 31, 2008 - $410,845;
June 30, 2007 - $420,079)
    
    
    81,892,039
    
    
    
    83,844,418Loans receivable held for sale
    
    
    588,469
    
    
    
    1,012,200Stock in Federal Home Loan Bank of Chicago
    
    
    1,148,087
    
    
    
    1,148,087Other investments, available for sale
    
    
    42,434
    
    
    
    106,633Accrued interest receivable
    
    
    334,277
    
    
    
    333,666Office properties and equipment, net
    
    
    1,936,881
    
    
    
    2,071,621Prepaid expenses and other assets
    
    
    486,879
    
    
    
    425,814Total assets
    
    $
    118,998,099
    
    
    
    124,892,754Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    104,134,755
    
    
    
    109,744,662Advance payments by borrowers for taxes and insurance
    
    
    646,169
    
    
    
    998,142Other liabilities
    
    
    362,492
    
    
    
    439,476Total liabilities
    
    
    105,143,416
    
    
    
    111,182,280Stockholders 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 March 31, 2008 and June 30, 2007
    
    
    3,726
    
    
    
    3,726Additional paid-in capital
    
    
    3,395,580
    
    
    
    3,395,580Retained earnings  substantially restricted
    
    
    10,215,631
    
    
    
    10,104,065Accumulated other comprehensive income, net of income taxes
    
    
    239,746
    
    
    
    207,103Total stockholders equity
    
    
    13,854,683
    
    
    
    13,710,474Total liabilities and stockholders equity
    
    $
    118,998,099
    
    
    
    124,892,754
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MIDLAND CAPITAL HOLDINGS CORPORATION  AND SUBSIDIARIES
 
 Consolidated Statements of Earnings (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income:Interest on loans
    
    $
    1,180,964
    
    
    
    1,267,497
    
    
    
    3,647,989
    
    
    
    3,916,335Interest on mortgage-backed securities
    
    
    19,134
    
    
    
    22,415
    
    
    
    59,067
    
    
    
    66,874Interest on investment securities
    
    
    64,807
    
    
    
    268,142
    
    
    
    472,897
    
    
    
    801,994Interest on interest-bearing deposits
    
    
    211,972
    
    
    
    117,366
    
    
    
    594,260
    
    
    
    312,796Dividends on FHLB stock
    
    
    
    
    
    
    9,609
    
    
    
    8,015
    
    
    
    27,892Total interest income
    
    
    1,476,877
    
    
    
    1,685,029
    
    
    
    4,782,228
    
    
    
    5,125,891Interest expense:Interest on deposits
    
    
    527,864
    
    
    
    526,848
    
    
    
    1,647,085
    
    
    
    1,534,700Total interest expense
    
    
    527,864
    
    
    
    526,848
    
    
    
    1,647,085
    
    
    
    1,534,700Net interest income
    
    
    949,013
    
    
    
    1,158,181
    
    
    
    3,135,143
    
    
    
    3,591,191Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net interest income after provision
for loan losses
    
    
    949,013
    
    
    
    1,158,181
    
    
    
    3,135,143
    
    
    
    3,591,191Non-interest income:Loan fees and service charges
    
    
    38,750
    
    
    
    55,935
    
    
    
    142,481
    
    
    
    143,076Gain on sale of other investments
    
    
    29,274
    
    
    
    
    
    
    
    96,000
    
    
    
    Commission income
    
    
    27,987
    
    
    
    25,466
    
    
    
    67,939
    
    
    
    47,816Gain on sale of loans
    
    
    6,063
    
    
    
    31,714
    
    
    
    83,177
    
    
    
    82,777Deposit related fees
    
    
    81,292
    
    
    
    75,678
    
    
    
    243,669
    
    
    
    254,114Other income
    
    
    15,093
    
    
    
    14,214
    
    
    
    42,288
    
    
    
    64,673Total non-interest income
    
    
    198,459
    
    
    
    203,007
    
    
    
    675,554
    
    
    
    592,456Non-interest expense:Staffing costs
    
    
    632,475
    
    
    
    643,598
    
    
    
    1,865,671
    
    
    
    1,927,580Advertising
    
    
    12,326
    
    
    
    14,290
    
    
    
    42,326
    
    
    
    49,881Occupancy and equipment expenses
    
    
    173,631
    
    
    
    177,858
    
    
    
    512,973
    
    
    
    513,397Data processing
    
    
    48,511
    
    
    
    52,038
    
    
    
    135,954
    
    
    
    141,470Federal deposit insurance premiums
    
    
    
    
    
    
    3,407
    
    
    
    9,726
    
    
    
    10,725Professional fees
    
    
    22,692
    
    
    
    21,667
    
    
    
    74,304
    
    
    
    73,607Other
    
    
    196,267
    
    
    
    199,578
    
    
    
    594,368
    
    
    
    623,353Total non-interest expense
    
    
    1,085,902
    
    
    
    1,112,436
    
    
    
    3,235,322
    
    
    
    3,340,013Income before income taxes
    
    
    61,570
    
    
    
    248,752
    
    
    
    575,375
    
    
    
    843,634Income tax provision
    
    
    20,915
    
    
    
    84,424
    
    
    
    195,537
    
    
    
    286,579Net income
    
    $
    40,655
    
    
    
    164,328
    
    
    
    379,838
    
    
    
    557,055Earnings per share (basic)
    
    $
    .11
    
    
    
    .44
    
    
    
    1.02
    
    
    
    1.50Earnings per share (diluted)
    
    $
    .11
    
    
    
    .44
    
    
    
    1.02
    
    
    
    1.50Dividends declared per common share
    
    $
    .24
    
    
    
    .24
    
    
    
    .72
    
    
    
    .72
   -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, 2007
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    10,104,065
    
    
    
    207,103
    
    
    
    13,710,474Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    379,838
    
    
    
    
    
    
    
    379,838Other comprehensive
income, net of tax:Unrealized holding gain
during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,643
    
    
    
    32,643Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    379,838
    
    
    
    32,643
    
    
    
    412,481Dividends declared on common
stock ($0.72 per share)
    
    
    
    
    
    
    
    
    
    
    (268,272
    )
    
    
    
    
    
    
    (268,272
    )Balance at March 31, 2008
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    10,215,631
    
    
    
    239,746
    
    
    
    13,854,683
   -3-




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MIDLAND CAPITAL HOLDINGS CORPORATION  AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows (Unaudited)
 Nine Months EndedMarch 31,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    379,838
    
    
    
    557,055Adjustments to reconcile net income to net cash from
operating activities:Depreciation
    
    
    165,567
    
    
    
    168,809Net accretion on securities
    
    
    (416,387
    )
    
    
    (745,744
    )Proceeds from sale of loans held for sale
    
    
    7,000,392
    
    
    
    6,583,274Origination of loans held for sale
    
    
    (6,529,519
    )
    
    
    (5,673,600
    )Gain on sale of loans
    
    
    (83,177
    )
    
    
    (82,777
    )Gain on sale of other investments
    
    
    (96,000
    )
    
    
    (Increase) decrease in accrued interest receivable
    
    
    (611
    )
    
    
    5,070(Decrease) increase in accrued interest payable
    
    
    (2,848
    )
    
    
    912Increase in deferred income on loans
    
    
    12,904
    
    
    
    27,868Increase in other assets
    
    
    (41,847
    )
    
    
    (78,268
    )Decrease in other liabilities
    
    
    (74,136
    )
    
    
    (1,501
    )Net cash provided by operating activities
    
    
    314,176
    
    
    
    761,098Cash flows from investing activities:Proceeds from repayments of mortgage backed securities,
held to maturity
    
    
    195,315
    
    
    
    166,568Proceeds from maturities of investment securities,
available for sale
    
    
    30,000,000
    
    
    
    35,000,000Purchase of investment securities, available for sale
    
    
    (9,757,333
    )
    
    
    (34,117,174
    )Loan disbursements
    
    
    (7,669,608
    )
    
    
    (7,242,854
    )Loan repayments
    
    
    9,609,083
    
    
    
    13,547,420Proceeds from sale of other investments
    
    
    97,104
    
    
    
    Property and equipment expenditures
    
    
    (30,827
    )
    
    
    (24,979
    )Net cash provided by investing activities
    
    
    22,443,734
    
    
    
    7,328,981Cash flows from financing activities:Deposit account receipts
    
    
    223,970,741
    
    
    
    233,524,306Deposit account withdrawals
    
    
    (231,123,752
    )
    
    
    (240,633,213
    )Interest credited to deposit accounts
    
    
    1,543,104
    
    
    
    1,417,195Payment of dividends
    
    
    (268,272
    )
    
    
    (268,272
    )Decrease in advance payments by borrowers for taxes
and insurance
    
    
    (351,973
    )
    
    
    (427,647
    )Net cash provided for financing activities
    
    
    (6,230,152
    )
    
    
    (6,387,631
    )Net change in cash and cash equivalents
    
    
    16,527,758
    
    
    
    1,702,448Cash and cash equivalents at beginning of period
    
    
    13,455,836
    
    
    
    11,259,904Cash and cash equivalents at end of period
    
    $
    29,983,594
    
    
    
    12,962,352Cash paid during the period for:Interest
    
    $
    1,649,933
    
    
    
    1,533,788Income taxes
    
    
    212,569
    
    
    
    262,456
   -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
 
 Item 2. 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)
  March 31,
    
    
    June 30,2008
    
    
    2007(Dollars in Thousands)Non-Accruing Loans:One-to-four family
    
    $
    1,086
    
    
    $
    484Multi-family
    
    
    
    
    
    
    Consumer
    
    
    66
    
    
    
    27Commercial business
    
    
    
    
    
    
    Total non-performing loans
    
    $
    1,152
    
    
    $
    511Foreclosed Assets:One-to-four family
    
    
    
    
    
    
    Total foreclosed assets
    
    
    
    
    
    
    Total non-performing assets
    
    $
    1,152
    
    
    $
    511Total as a percentage of total assets
    
    
    0.97
    %
    
    
    0.41
    %
   -9-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 FINANCIAL CONDITION (continued)
  Nine Months EndedMarch 31,2008
    
    
    2007(Dollars in Thousands)Balance at beginning of period
    
    $
    420
    
    
    $
    416Charge-offs:One-to-four family loans
    
    
    
    
    
    
    Multi-family loans
    
    
    
    
    
    
    Consumer loans
    
    
    9
    
    
    
    Total charge-offs
    
    
    9
    
    
    
    Recoveries:One-to-four family loans
    
    
    
    
    
    
    Multi-family loans
    
    
    
    
    
    
    Consumer loans
    
    
    
    
    
    
    6Total recoveries
    
    
    
    
    
    
    6Net recoveries (charge-offs)
    
    
    (9
    )
    
    
    6Additions charged to operations
    
    
    
    
    
    
    Balance at end of period
    
    $
    411
    
    
    $
    422Ratio of net charge-offs during the period to
average loans outstanding during the period
    
    
    .01
    %
    
    
    
    %Ratio of net charge-offs during the period to
average non-performing assets
    
    
    1.23
    %
    
    
    
    %Allowance for loan losses to non-performing loans
    
    
    35.66
    %
    
    
    50.61
    %Allowance for loan losses to total loans
    
    
    0.50
    %
    
    
    0.49
    %
     -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)
        -12-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Interest Income (continued)
   Interest Expense
   Provisions for Losses on Loans
   -13-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 Non-Interest Income
   Non-Interest Expense
   Income Taxes
    -14-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 LIQUIDITY AND CAPITAL RESOURCES
     
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4T. CONTROLS AND PROCEDURES
    -15-




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MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES
 
 PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 1A. RISK FACTORS
  
 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
   -16-




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SIGNATURES
  MIDLAND
CAPITAL HOLDINGS CORPORATION
RegistrantDATE: May 14, 2008
    
    BY:
    
    /s/ Paul Zogas

Paul Zogas
President, Chief Executive Officer
and Chief Financial OfficerDATE: May 14, 2008
    
    BY:
    
    /s/ Charles Zogas

Charles Zogas
Executive Vice President and
Chief Operating Officer
  -17-




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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
 -18-