**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

WASHINGTON, D.C. 20549

 

FORM 10-Q

(Mark One)

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

 

| For the quarterly period ended | June 30, 2009 |
|--------------------------------|---------------|

 

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 0-50969

 

| **ROEBLING FINANCIAL CORP, INC.**                      |
|--------------------------------------------------------|
| (Exact name of Registrant as specified in its charter) |

 

| **New Jersey**                                                  |   | **55-0873295**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of

incorporation or organization) |   | (I.R.S. Employer Identification No.) |

 

| **Route 130 South and Delaware Avenue, Roebling, New Jersey** |   | **08554**  |   |
|---------------------------------------------------------------|--------|------------|--------|
| (Address of principal executive offices)                      |   | (Zip Code) |   |

 

| **(609) 499-9400**                                         |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

 

| **NA**                                                                              |
|-------------------------------------------------------------------------------------|
| (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 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 filing 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such            files).   

|   | o Yes  o 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 o                                              |   | Accelerated filer o         |
|--------|------------------------------------------------------------------------|--------|-----------------------------|
|   | Non-accelerated filer o

(Do not check if a smaller reporting company) |   | Smaller reporting company x |

 

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: August 12, 2009

| Class                       |   | Outstanding      |
|-----------------------------|--------|------------------|
| $.10 par value common stock |   | 1,686,527 shares |

 

----

 

**ROEBLING FINANCIAL CORP, INC.**

**FORM 10-Q**

**FOR THE QUARTER ENDED JUNE 30, 2009**

 

**INDEX**

 

 

|                                                                      |
|---------------------------------------------------------------------------|
|                                                                      |   |   |   | **Page**

**Number** |
|                                                                      |   |   |
| **PART I – FINANCIAL INFORMATION OF ROEBLING FINANCIAL CORP, INC.** |   |   |
| Item 1                                                                    |   | Consolidated Financial Statements and Notes Thereto |   | 1 – 14 |
| Item 2.                                                                   |   | Management’s Discussion and Analysis of Financial

Condition and Results of Operations |   |  

15 – 20 |
| Item 3.                                                                   |   | Quantitative and Qualitative Disclosures About Market Risk |   | 20 |
| Item 4T.                                                                  |   | Controls and Procedures |   | 20 |
|                                                                      |   |   |
| **PART II - OTHER INFORMATION**                                           |   |   |
|                                                                      |   |   |   |   |
| Item 1.                                                                   |   | Legal Proceedings |   | 21 |
| Item 1A.                                                                  |   | Risk Factors |   | 21 |
| Item 2.                                                                   |   | Unregistered Sales of Equity Securities and Use of Proceeds |   | 21 |
| Item 3.                                                                   |   | Defaults upon Senior Securities |   | 21 |
| Item 4.                                                                   |   | Submission of Matters to a Vote of Security Holders |   | 21 |
| Item 5.                                                                   |   | Other Information |   | 21 |
| Item 6.                                                                   |   | Exhibits |   | 22 |
|                                                                      |   |   |
| **SIGNATURES**                                                            |   | 23 |
|                                                                           |  |  |  |  |  |  |

 

 

 

 

----

ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

(Unaudited)

 

(In thousands, except share data)

 

|                                                                                |   | **June 30,** |    | **September 30,** |   |
|-------------------------------------------------------------------------------------|--------|--------------|---------|-------------------|--------|
|                                                                                |   | **2009**     |    | **2008**          |   |
|                                                                                |   |         |    |              |   |   |   |
| **Assets**                                                                          |   |         |    |              |   |   |   |
|                                                                                |   |         |    |              |   |   |   |
| Cash and due from banks                                                             |   | $            | 2,271   |              | $      | 2,513 |   |
| Interest-bearing deposits                                                           |   |         | 1,103   |              |   | 3,842 |   |
| Total cash and cash equivalents                                                     |   |         | 3,374   |              |   | 6,355 |   |
|                                                                                |   |         |    |              |   |   |   |
| Securities available for sale                                                       |   |         | 43,704  |              |   | 32,853 |   |
| Securities held to maturity                                                         |   |         | 166     |              |   | 181 |   |
| Loans receivable, net                                                               |   |         | 120,587 |              |   | 109,474 |   |
| Real estate owned                                                                   |   |         | 306     |              |   | 306 |   |
| Accrued interest receivable                                                         |   |         | 604     |              |   | 675 |   |
| Federal Home Loan Bank of New York stock, at cost                                   |   |         | 895     |              |   | 445 |   |
| Premises and equipment                                                              |   |         | 3,222   |              |   | 3,363 |   |
| Other assets                                                                        |   |         | 1,677   |              |   | 1,014 |   |
| Total assets                                                                        |   | $            | 174,535 |              | $      | 154,666 |   |
|                                                                                |   |         |    |              |   |   |   |
| **Liabilities and Stockholders’ Equity**                                      |   |         |    |              |   |   |   |
|                                                                                |   |         |    |              |   |   |   |
| **Liabilities**                                                                     |   |         |    |              |   |   |   |
|                                                                                |   |         |    |              |   |   |   |
| Deposits                                                                            |   | $            | 141,834 |              | $      | 130,574 |   |
| Borrowed funds                                                                      |   |         | 13,800  |              |   | 5,000 |   |
| Advances from borrowers for taxes and insurance                                     |   |         | 511     |              |   | 444 |   |
| Other liabilities                                                                   |   |         | 1,459   |              |   | 1,340 |   |
| Total liabilities                                                                   |   |         | 157,604 |              |   | 137,358 |   |
|                                                                                |   |         |    |              |   |   |   |
| **Stockholders’ equity**                                                      |   |         |    |              |   |   |   |
|                                                                                |   |         |    |              |   |   |   |
| Serial preferred stock, $0.10 par value; 5,000,000 shares authorized;               |   |         |    |              |   |   |   |
| none issued                                                                         |   |         | — |              |   | — |   |
| Common stock; $0.10 par value; 20,000,000 shares authorized;                        |   |         |    |              |   |   |   |
| 1,718,473 issued                                                                    |   |         | 172     |              |   | 172 |   |
| Additional paid-in-capital                                                          |   |         | 10,389  |              |   | 10,442 |   |
| Treasury stock, at cost; 31,946 shares at June 30, 2009; none at September 30, 2008 |   |         | (190    | )                 |   | — |   |
| Unallocated employee stock ownership plan shares                                    |   |         | (407    | )                 |   | (465 | ) |
| Unallocated restricted stock plan shares                                            |   |         | (103    | )                 |   | (94 | ) |
| Deferred compensation obligation                                                    |   |         | 175     |              |   | 158 |   |
| Stock purchased for deferred compensation plan                                      |   |         | (175    | )                 |   | (158 | ) |
| Retained earnings - substantially restricted                                        |   |         | 6,539   |              |   | 7,297 |   |
| Accumulated other comprehensive income (loss):                                      |   |         |    |              |   |   |   |
| Unrealized gain on securities available for sale, net of tax                        |   |         | 723     |              |   | 175 |   |
| Defined benefit plan, net of tax                                                    |   |         | (192    | )                 |   | (219 | ) |
| Total stockholders’ equity                                                    |   |         | 16,931  |              |   | 17,308 |   |
|                                                                                |   |         |    |              |   |   |   |
| Total liabilities and stockholders’ equity                                    |   | $            | 174,535 |              | $      | 154,666 |   |

 

See notes to unaudited consolidated financial statements.

 

 

1

----

 

ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

(Unaudited)

 

(In thousands, except per share data)

 

|                                                                |   | **For the Three Months Ended** |   |
|---------------------------------------------------------------------|--------|--------------------------------|--------|
|                                                                |   | **June 30,**                   |   |
|                                                                |   | **2009**                       |   | **2008** |   |
|                                                                |   |                           |   |   |   |   |   |
| Interest income:                                                    |   |                           |   |   |   |   |   |
| Loans receivable                                                    |   | $                              | 1,633  |   | $ | 1,726 |   |
| Securities                                                          |   |                           | 493    |   |   | 385 |   |
| Other interest-earning assets                                       |   |                           | 14     |   |   | 18 |   |
| Total interest income                                               |   |                           | 2,140  |   |   | 2,129 |   |
|                                                                |   |                           |   |   |   |   |   |
| Interest expense:                                                   |   |                           |   |   |   |   |   |
| Deposits                                                            |   |                           | 678    |   |   | 681 |   |
| Borrowed funds                                                      |   |                           | 120    |   |   | 74 |   |
| Total interest expense                                              |   |                           | 798    |   |   | 755 |   |
|                                                                |   |                           |   |   |   |   |   |
| Net interest income before provision for loan losses                |   |                           | 1,342  |   |   | 1,374 |   |
| Provision for loan losses                                           |   |                           | 850    |   |   | 80 |   |
| Net interest income after provision for loan losses                 |   |                           | 492    |   |   | 1,294 |   |
|                                                                |   |                           |   |   |   |   |   |
| Non-interest income:                                                |   |                           |   |   |   |   |   |
| Loan fees                                                           |   |                           | 37     |   |   | 17 |   |
| Account servicing and other                                         |   |                           | 105    |   |   | 103 |   |
| Gain on sale of loans                                               |   |                           | 20     |   |   | — |   |
| Total non-interest income                                           |   |                           | 162    |   |   | 120 |   |
|                                                                |   |                           |   |   |   |   |   |
| Non-interest expense:                                               |   |                           |   |   |   |   |   |
| Compensation and benefits                                           |   |                           | 641    |   |   | 608 |   |
| Occupancy and equipment                                             |   |                           | 147    |   |   | 155 |   |
| Service bureau and data processing                                  |   |                           | 134    |   |   | 129 |   |
| Federal deposit insurance premiums                                  |   |                           | 138    |   |   | 25 |   |
| Other expense                                                       |   |                           | 246    |   |   | 254 |   |
| Total non-interest expense                                          |   |                           | 1,306  |   |   | 1,171 |   |
|                                                                |   |                           |   |   |   |   |   |
| Income (loss) before income tax (benefit)                           |   |                           | (652   | ) |   | 243 |   |
| Income tax (benefit)                                                |   |                           | (261   | ) |   | 90 |   |
| Net income (loss)                                                   |   |                           | (391   | ) |   | 153 |   |
|                                                                |   |                           |   |   |   |   |   |
| Other comprehensive income (loss), net of tax:                      |   |                           |   |   |   |   |   |
| Unrealized gain (loss) on securities available for sale, net of tax |   |                           | 45     |   |   | (211 | ) |
| Adjustment to minimum pension liability                             |   |                           | 7      |   |   | 2 |   |
| Comprehensive loss                                                  |   |                           | ($339  | ) |   | ($56 | ) |
|                                                                |   |                           |   |   |   |   |   |
| Earnings (loss) per common share:                                   |   |                           |   |   |   |   |   |
| Basic                                                               |   |                           | ($0.24 | ) | $ | 0.09 |   |
| Diluted                                                             |   |                           | ($0.24 | ) | $ | 0.09 |   |
|                                                                |   |                           |   |   |   |   |   |
| Weighted average number of shares outstanding:                      |   |                           |   |   |   |   |   |
| Basic                                                               |   |                           | 1,653  |   |   | 1,660 |   |
| Diluted                                                             |   |                           | 1,653  |   |   | 1,662 |   |

 

See notes to unaudited consolidated financial statements

2

 

 

----

ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

(Unaudited)

 

(In thousands, except per share data)

 

|                                                         |   | **For the Nine Months Ended** |   |
|--------------------------------------------------------------|--------|-------------------------------|--------|
|                                                         |   | **June 30.**                  |   |
|                                                         |   | **2009**                      |   | **2008** |   |
|                                                         |   |                          |   |   |   |   |   |
| Interest income:                                             |   |                          |   |   |   |   |   |
| Loans receivable                                             |   | $                             | 4,885  |   | $ | 5,237 |   |
| Securities                                                   |   |                          | 1,553  |   |   | 1,231 |   |
| Other interest-earning assets                                |   |                          | 33     |   |   | 59 |   |
| Total interest income                                        |   |                          | 6,471  |   |   | 6,527 |   |
|                                                         |   |                          |   |   |   |   |   |
| Interest expense:                                            |   |                          |   |   |   |   |   |
| Deposits                                                     |   |                          | 2,093  |   |   | 2,502 |   |
| Borrowed funds                                               |   |                          | 295    |   |   | 231 |   |
| Total interest expense                                       |   |                          | 2,388  |   |   | 2,733 |   |
|                                                         |   |                          |   |   |   |   |   |
| Net interest income before provision for loan losses         |   |                          | 4,083  |   |   | 3,794 |   |
| Provision for loan losses                                    |   |                          | 1,945  |   |   | 213 |   |
| Net interest income after provision for loan losses          |   |                          | 2,138  |   |   | 3,581 |   |
|                                                         |   |                          |   |   |   |   |   |
| Non-interest income:                                         |   |                          |   |   |   |   |   |
| Loan fees                                                    |   |                          | 72     |   |   | 47 |   |
| Account servicing and other                                  |   |                          | 314    |   |   | 334 |   |
| Gain on sale of loans                                        |   |                          | 29     |   |   | 2 |   |
| Gain on sale of securities                                   |   |                          | 140    |   |   | — |   |
| Total non-interest income                                    |   |                          | 555    |   |   | 383 |   |
|                                                         |   |                          |   |   |   |   |   |
| Non-interest expense:                                        |   |                          |   |   |   |   |   |
| Compensation and benefits                                    |   |                          | 1,930  |   |   | 1,832 |   |
| Occupancy and equipment                                      |   |                          | 439    |   |   | 471 |   |
| Service bureau and data processing                           |   |                          | 409    |   |   | 369 |   |
| Federal deposit insurance premiums                           |   |                          | 219    |   |   | 70 |   |
| Other expense                                                |   |                          | 683    |   |   | 710 |   |
| Total non-interest expense                                   |   |                          | 3,680  |   |   | 3,452 |   |
|                                                         |   |                          |   |   |   |   |   |
| Income (loss) before income tax (benefit)                    |   |                          | (987   | ) |   | 512 |   |
| Income tax (benefit)                                         |   |                          | (414   | ) |   | 186 |   |
| Net income (loss)                                            |   |                          | (573   | ) |   | 326 |   |
|                                                         |   |                          |   |   |   |   |   |
| Other comprehensive income, net of tax:                      |   |                          |   |   |   |   |   |
| Unrealized gain on securities available for sale, net of tax |   |                          | 629    |   |   | 220 |   |
| Reclassification adjustment for gains included in net income |   |                          | (81    | ) |   | — |   |
| Adjustment to minimum pension liability                      |   |                          | 27     |   |   | 5 |   |
| Comprehensive income                                         |   | $                             | 2      |   | $ | 551 |   |
|                                                         |   |                          |   |   |   |   |   |
| Earnings (loss) per common share:                            |   |                          |   |   |   |   |   |
| Basic                                                        |   |                          | ($0.35 | ) | $ | 0.20 |   |
| Diluted                                                      |   |                          | ($0.35 | ) | $ | 0.20 |   |
|                                                         |   |                          |   |   |   |   |   |
| Weighted average number of shares outstanding:               |   |                          |   |   |   |   |   |
| Basic                                                        |   |                          | 1,662  |   |   | 1,658 |   |
| Diluted                                                      |   |                          | 1,662  |   |   | 1,662 |   |

See notes to unaudited consolidated financial statements

 

 

3

----

ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

 

(Unaudited)

(In thousands)

 

|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    | **Common**       |   |         |   | **Accumulated**   |   |      |    |
|-------------------------------------------|--------|------------|---------|----------------|--------|--------------|--------|-----------------|---------|-----------------|---------|------------------|---------|------------------|--------|--------------|--------|-------------------|--------|-----------|---------|
|                                      |   |       |    | **Additional** |   |         |   | **Unallocated** |    | **Unallocated** |    | **Deferred**     |    | **Stock for**    |   |         |   | **Other**         |   |      |    |
|                                      |   | **Common** |    | **Paid-in**    |   | **Treasury** |   | **ESOP**        |    | **RSP**         |    | **Compensation** |    | **Deferred**     |   | **Retained** |   | **Comprehensive** |   |      |    |
|                                      |   | **Stock**  |    | **Capital**    |   | **Stock**    |   | **Shares**      |    | **Shares**      |    | **Obligation**   |    | **Compensation** |   | **Earnings** |   | **Income (Loss)** |   | **Total** |    |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Balance at September 30, 2008             |   | $          | 172     |           | $      | 10,442       |   | $               | — |            | ($465   | )                | ($94    | )                | $      | 158          |   | ($158             | )      | $         | 7,297   |   |   | ($44 | ) | $ | 17,308 |   |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Net loss for the nine months              |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| ended June 30, 2009                       |   |       | — |           |   | —      |   |            | — |            | — |             | — |             |   | —      |   | —           |   |      | (573    | ) |   | — |   |   | (573 | ) |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Dividends paid on common stock            |   |       | — |           |   | —      |   |            | — |            | — |             | — |             |   | —      |   | —           |   |      | (167    | ) |   | — |   |   | (167 | ) |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Treasury stock purchased                  |   |       | — |           |   | —      |   |            | (190    | )               | — |             | — |             |   | —      |   | —           |   |      | — |   |   | — |   |   | (190 | ) |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Amortization of ESOP shares               |   |       | — |           |   | (17          | )      |            | — |            | 58      |             | — |             |   | —      |   | —           |   |      | — |   |   | — |   |   | 41 |   |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Change in unrealized gain (loss) on       |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| securities available for sale, net of tax |   |       | — |           |   | —      |   |            | — |            | — |             | — |             |   | —      |   | —           |   |      | — |   |   | 548 |   |   | 548 |   |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Deferred compensation plan                |   |       | — |           |   | —      |   |            | — |            | — |             | — |             |   | 17           |   | —           |   |      | — |   |   | — |   |   | 17 |   |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Common stock acquired for                 |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| deferred compensation plan                |   |       | — |           |   | —      |   |            | — |            | — |             | — |             |   | —      |   | (17               | )      |      | — |   |   | — |   |   | (17 | ) |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Common stock acquired by RSP              |   |       | — |           |   | —      |   |            | — |            | — |             | (60     | )                |   | —      |   | —           |   |      | — |   |   | — |   |   | (60 | ) |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Allocation of RSP shares                  |   |       | — |           |   | (32          | )      |            | — |            | — |             | 51      |             |   | —      |   | —           |   |      | — |   |   | — |   |   | 19 |   |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Tax expense of stock benefit plans        |   |       | — |           |   | (4           | )      |            | — |            | — |             | — |             |   | —      |   | —           |   |      | — |   |   | — |   |   | (4 | ) |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Adjustment to mimimum pension             |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| liability, net of tax                     |   |       | — |           |   | —      |   |            | — |            | — |             | — |             |   | —      |   | —           |   |      | — |   |   | 20 |   |   | 20 |   |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Adjustment to apply FASB                  |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Statement No. 158 measurement             |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| date provisions, net of tax               |   |       | — |           |   | —      |   |            | — |            | — |             | — |             |   | —      |   | —           |   |      | (18     | ) |   | 7 |   |   | (11 | ) |
|                                      |   |       |    |           |   |         |   |            |    |            |    |             |    |             |   |         |   |              |   |      |    |   |   |   |   |   |   |   |
| Balance at June 30, 2009                  |   | $          | 172     |           | $      | 10,389       |   |            | ($190   | )               | ($407   | )                | ($103   | )                | $      | 175          |   | ($175             | )      | $         | 6,539   |   | $ | 531 |   | $ | 16,931 |   |

 

See notes to unaudited consolidated financial statements

4

 

 

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ROEBLING FINANCIAL CORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

(In thousands)

 

|                                                                   |   | **For the Nine Months Ended** |    |
|------------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                                   |   | **June 30,**                  |    |
|                                                                   |   | **2009**                      |    | **2008** |   |
| Cash flows from operating activities:                                  |   |                          |    |   |   |   |   |
| Net income (loss)                                                      |   |                          | ($573   | ) | $ | 326 |   |
| Adjustments to reconcile net income to cash provided by                |   |                          |    |   |   |   |   |
| operating activities:                                                  |   |                          |    |   |   |   |   |
| Depreciation                                                           |   |                          | 192     |   |   | 239 |   |
| Amortization of premiums and discounts, net                            |   |                          | 3       |   |   | (17 | ) |
| Amortization of deferred loan fees and costs, net                      |   |                          | (2      | ) |   | (5 | ) |
| Provision for loan losses                                              |   |                          | 1,945   |   |   | 213 |   |
| Gain on sale of securities available for sale                          |   |                          | (140    | ) |   | — |   |
| Gain on sale of loans                                                  |   |                          | (29     | ) |   | (2 | ) |
| Originations of loans held for sale, net of repayments                 |   |                          | (4,410  | ) |   | (1,240 | ) |
| Proceeds from sale of loans held for sale                              |   |                          | 4,439   |   |   | 1,242 |   |
| Loss on disposition of premises and equipment                          |   |                          | 4       |   |   | — |   |
| Increase in other assets                                               |   |                          | (1,037  | ) |   | (83 | ) |
| Decrease in accrued interest receivable                                |   |                          | 71      |   |   | 116 |   |
| Increase in other liabilities                                          |   |                          | 133     |   |   | 45 |   |
| Amortization/allocation of ESOP and RSP                                |   |                          | 60      |   |   | 100 |   |
| Increase in deferred compensation stock obligation                     |   |                          | 17      |   |   | — |   |
| Net cash provided by operating activities                              |   |                          | 673     |   |   | 934 |   |
|                                                                   |   |                          |    |   |   |   |   |
| Cash flows from investing activities:                                  |   |                          |    |   |   |   |   |
| Purchase of securities available for sale                              |   |                          | (26,411 | ) |   | (6,381 | ) |
| Proceeds from sales of securities available for sale                   |   |                          | 3,140   |   |   | — |   |
| Proceeds from payments and maturities of securities available for sale |   |                          | 13,470  |   |   | 9,324 |   |
| Proceeds from payments and maturities of securities held to maturity   |   |                          | 15      |   |   | 49 |   |
| Loan originations, net of principal repayments                         |   |                          | (13,056 | ) |   | (6,974 | ) |
| (Purchase) redemption of Federal Home Loan Bank stock                  |   |                          | (450    | ) |   | 38 |   |
| Purchase of premises and equipment                                     |   |                          | (55     | ) |   | (46 | ) |
| Net cash used in investing activities                                  |   |                          | (23,347 | ) |   | (3,990 | ) |
|                                                                   |   |                          |    |   |   |   |   |
| Cash flows from financing activities:                                  |   |                          |    |   |   |   |   |
| Net increase in deposits                                               |   |                          | 11,260  |   |   | 4,934 |   |
| Net increase (decrease) in short-term borrowed funds                   |   |                          | 800     |   |   | (1,000 | ) |
| Proceeds from (repayment of) long-term borrowed funds                  |   |                          | 8,000   |   |   | (1,000 | ) |
| Increase in advance payments by borrowers for taxes and insurance      |   |                          | 67      |   |   | 20 |   |
| Dividends paid                                                         |   |                          | (167    | ) |   | (165 | ) |
| Purchase of treasury stock                                             |   |                          | (190    | ) |   | — |   |
| Purchase of common shares by RSP                                       |   |                          | (60     | ) |   | — |   |
| Purchase of common shares for deferred compensation plan               |   |                          | (17     | ) |   | — |   |
| Net cash provided by financing activities                              |   |                          | 19,693  |   |   | 2,789 |   |
|                                                                   |   |                          |    |   |   |   |   |
| Net decrease in cash and cash equivalents                              |   |                          | (2,981  | ) |   | (267 | ) |
| Cash and cash equivalents at beginning of period                       |   |                          | 6,355   |   |   | 3,460 |   |
| Cash and cash equivalents at end of period                             |   | $                             | 3,374   |   | $ | 3,193 |   |
|                                                                   |   |                          |    |   |   |   |   |
| **Supplemental Disclosures of Cash Flow Information:**                 |   |                          |    |   |   |   |   |
| Cash paid for:                                                         |   |                          |    |   |   |   |   |
| Interest on deposits and borrowed funds                                |   | $                             | 2,389   |   | $ | 2,736 |   |
| Income taxes                                                           |   |                          | 481     |   |   | 187 |   |
| Transfer of loans to real estate owned                                 |   |                          | — |   |   | 306 |   |

 

See notes to unaudited consolidated financial statements

 

5

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**ROEBLING FINANCIAL CORP, INC.**

**NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

 

**NOTE 1 - BASIS OF PRESENTATION**

 

The accompanying unaudited consolidated financial statements of Roebling Financial Corp, Inc. (the “Company”) have been prepared in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information presented reflects all            adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of the Company’s management, necessary for a fair statement of results for the interim period. 

 

The results of operations for the three and nine months ended June 30, 2009, are not necessarily indicative of the results to be expected for the year ending September 30, 2009, or any other future interim period. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended September 30, 2008            included in the Company’s Annual Report on Form 10-K.

 

**NOTE 2 – EARNINGS PER SHARE**

 

Basic earnings per share is computed by dividing net income for the period by the weighted average number of shares of common stock outstanding, adjusted for unearned shares of the Employee Stock Ownership Plan (“ESOP”). Diluted earnings per share is computed by adjusting the weighted average number of shares of common stock outstanding to include the effect of outstanding stock options            and compensation grants, if dilutive, using the treasury stock method.

 

The following is a summary of the Company’s earnings per share calculations:

 

 

|                                                                                | **Three Months Ended June 30,** |      |   | **Nine Months Ended June 30,** |     |
|-------------------------------------------------------------------------------------|---------------------------------|-----------|--------|--------------------------------|----------|
|                                                                                | **2009**                        |      |   |                           | **2008** |   |   | **2009** |   |   |   | **2008** |   |
|                                                                                |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                          | $                               | (390,548  | )      |                           |     | $ | 152,973 |   |   | $ | (573,413 | ) |   |   | $ | 326,430 |   |
|                                                                                |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding for computation of basic EPS             |                            | 1,653,316 |   |                           |     |   | 1,660,139 |   |   |   | 1,661,677 |   |   |   |   | 1,657,851 |   |
|                                                                                |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Common-equivalent shares due to the dilutive effect of stock options and RSP awards |                            | —   |   |                           |     |   | 2,237 |   |   |   | — |   |   |   |   | 3,790 |   |
|                                                                                |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares for computation of diluted EPS                       |                            | 1,653,316 |   |                           |     |   | 1,662,376 |   |   |   | 1,661,677 |   |   |   |   | 1,661,641 |   |
|                                                                                |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per common share:                                                          |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                               | $                               | (.24      | )      |                           |     | $ | .09 |   |   | $ | (.35 | ) |   |   | $ | .20 |   |
| Diluted                                                                             |                            | (.24      | )      |                           |     |   | .09 |   |   |   | (.35 | ) |   |   |   | .20 |   |

 

**NOTE 3 – TREASURY STOCK**

 

In February, 2009, the Company approved the repurchase of up to $250,000 of its common stock. In May, 2009, the Company acquired 31,946 shares at a cost of approximately $190,000 or an average of $5.90 per share. 

 

 

6

 

 

----

**NOTE 4 – SECURITIES AVAILABLE FOR SALE**

 

 

|                                   |   | **June 30, 2009** |       |
|----------------------------------------|--------|-------------------|------------|
|                                   |   | **Amortized**     |       | **Gross Unrealized** |   | **Estimated** |   |
|                                   |   | **Cost**          |       | **Gains** |   | **Losses** |   | **Fair Value** |   |
|                                   |   |              |       |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and Agency Securities: |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Due within one year                    |   | $                 | 1,000,000  |   | $ | 11,630 |   | $ | — |   | $ | 1,011,630 |   |
| Due after one year through five years  |   |              | 3,750,000  |   |   | 37,839 |   |   | 1,418 |   |   | 3,786,421 |   |
| Due after five years through ten years |   |              | 1,500,000  |   |   | 4,748 |   |   | — |   |   | 1,504,748 |   |
|                                   |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Marketable Equity Securities           |   |              | 2,888      |   |   | — |   |   | 2,656 |   |   | 232 |   |
|                                   |   |              |       |   |   |   |   |   |   |   |   |   |   |
| Residential Mortgage-backed Securities |   |              | 36,247,155 |   |   | 1,167,397 |   |   | 13,484 |   |   | 37,401,068 |   |
|                                   |   |              |       |   |   |   |   |   |   |   |   |   |   |
|                                   |   | $                 | 42,500,043 |   | $ | 1,221,614 |   | $ | 17,558 |   | $ | 43,704,099 |   |

 

 

|                                   |   | **September 30, 2008** |       |
|----------------------------------------|--------|------------------------|------------|
|                                   |   | **Amortized**          |       | **Gross Unrealized** |   | **Estimated** |   |
|                                   |   | **Cost**               |       | **Gains** |   | **Losses** |   | **Fair Value** |   |
|                                   |   |                   |       |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and Agency Securities: |   |                   |       |   |   |   |   |   |   |   |   |   |   |
| Due within one year                    |   | $                      | 2,735,000  |   | $ | 3,125 |   | $ | 228 |   | $ | 2,737,897 |   |
| Due after one year through five years  |   |                   | 8,500,000  |   |   | 116,919 |   |   | — |   |   | 8,616,919 |   |
| Due after five years through ten years |   |                   | 2,250,000  |   |   | 35,168 |   |   | — |   |   | 2,285,168 |   |
|                                   |   |                   |       |   |   |   |   |   |   |   |   |   |   |
| Marketable Equity Securities           |   |                   | 2,888      |   |   | — |   |   | 2,276 |   |   | 612 |   |
|                                   |   |                   |       |   |   |   |   |   |   |   |   |   |   |
| Residential Mortgage-backed Securities |   |                   | 19,073,150 |   |   | 165,838 |   |   | 26,382 |   |   | 19,212,606 |   |
|                                   |   |                   |       |   |   |   |   |   |   |   |   |   |   |
|                                   |   | $                      | 32,561,038 |   | $ | 321,050 |   | $ | 28,886 |   | $ | 32,853,202 |   |

 

 

For the nine months ended June 30, 2009, proceeds from the sale of securities available for sale totaled approximately $3.1 million, resulting in $140,000 gain on sale. There were no sales of investment securities or mortgage-backed securities during the year ended September 30, 2008. 

 

Provided below is a summary of securities available for sale which were in an unrealized loss position at June 30, 2009 and September 30, 2008. Approximately $5,000 or 18% of the unrealized loss as of September 30, 2008 was comprised of securities in a continuous loss position for twelve months or more. No securities fell into this category as of June 30, 2009. The Company has the ability and intent            to hold these securities until such time as the value recovers or the securities mature. Further, the Company believes the deterioration in value is attributable to changes in market interest rates and not credit quality of the issuer.

 

 

 

 

7

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|                                   |   | **June 30, 2009**  |      |
|----------------------------------------|--------|--------------------|-----------|
|                                   |   | **Under One Year** |      | **One Year or More** |   |
|                                   |   |               |      | **Gross** |   |   |   | **Gross** |   |
|                                   |   | **Estimated**      |      | **Unrealized** |   | **Estimated** |   | **Unrealized** |   |
|                                   |   | **Fair Value**     |      | **Loss** |   | **Fair Value** |   | **Loss** |   |
|                                   |   |               |      |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and Agency Securities  |   | $                  | 748,582   |   | $ | 1,418 |   | $ | — |   | $ | — |   |
| Marketable Equity Securities           |   |               | 232       |   |   | 2,656 |   |   | — |   |   | — |   |
| Residential Mortgage-backed Securities |   |               | 2,409,570 |   |   | 13,484 |   |   | — |   |   | — |   |
|                                   |   |               |      |   |   |   |   |   |   |   |   |   |   |
| Total available for sale               |   | $                  | 3,158,384 |   | $ | 17,558 |   | $ | — |   | $ | — |   |

 

 

|                                   |   | **September 30, 2008** |      |
|----------------------------------------|--------|------------------------|-----------|
|                                   |   | **Under One Year**     |      | **One Year or More** |   |
|                                   |   |                   |      | **Gross** |   |   |   | **Gross** |   |
|                                   |   | **Estimated**          |      | **Unrealized** |   | **Estimated** |   | **Unrealized** |   |
|                                   |   | **Fair Value**         |      | **Loss** |   | **Fair Value** |   | **Loss** |   |
|                                   |   |                   |      |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and Agency Securities  |   | $                      | 734,772   |   | $ | 228 |   | $ | — |   | $ | — |   |
| Marketable Equity Securities           |   |                   | 612       |   |   | 2,276 |   |   | — |   |   | — |   |
| Residential Mortgage-backed Securities |   |                   | 3,502,241 |   |   | 21,298 |   |   | 1,319,413 |   |   | 5,084 |   |
|                                   |   |                   |      |   |   |   |   |   |   |   |   |   |   |
| Total available for sale               |   | $                      | 4,237,625 |   | $ | 23,802 |   | $ | 1,319,413 |   | $ | 5,084 |   |

 

 

**NOTE 5 – SECURITIES HELD TO MATURITY**

 

|                                    |   | **June 30,** |    |   | **September 30,** |   |
|-----------------------------------------|--------|--------------|---------|--------|-------------------|--------|
|                                    |   | **2009**     |    |   | **2008**          |   |
|                                    |   |         |    |   |              |   |   |   |
| Residential Mortgage-backed Securities: |   |         |    |   |              |   |   |   |
| Amortized cost                          |   | $            | 166,629 |   |              | $      | 180,818 |   |
| Gross unrealized gains                  |   |         | 1,994   |   |              |   | 2,779 |   |
| Gross unrealized losses                 |   |         | (160    | )      |              |   | (1,437 | ) |
|                                    |   |         |    |   |              |   |   |   |
| Estimated fair value                    |   | $            | 168,463 |   |              | $      | 182,160 |   |

 

 

**NOTE 6 – BENEFIT PLANS**

 

Stock Option Plan

 

The Company has stock option plans (“Plans”) which authorized the issuance of up to 168,746 shares upon the exercise of stock options that may be awarded to officers, directors, key employees, and other persons providing services to the Company. Shares issued on the exercise of options may be authorized but unissued shares, treasury shares or shares acquired on the open market. The options            granted under the Plans constitute either Incentive Stock Options or Non-Incentive Stock Options. The options are granted at an exercise price equal to the fair market value of the Company’s common stock on the date of grant and expire not more than 10 years after the date of grant. At June 30, 2009, there were 16,434 shares remaining for future option awards.

 

8

 

 

----

The following table summarizes activity under the Plans for the nine months ended June 30, 2009:

 

 

|                           |   |          |   | **Weighted** |   |
|--------------------------------|--------|---------------|--------|--------------|--------|
|                           |   |          |   | **Average**  |   |
|                           |   | **Number**    |   | **Exercise** |   |
|                           |   | **of Shares** |   | **Price**    |   |
| Outstanding September 30, 2008 |   | 112,456       |   | $            | 10.896 |   |
| Forfeited                      |   | (6,214        | )      |         | 3.595  |   |
|                           |   |          |   |         |   |   |
| Outstanding June 30, 2009      |   | 106,242       |   | $            | 11.302 |   |

 

The following table summarizes all options outstanding as of June 30, 2009, all of which are exercisable:

 

|          |   |         |   | **Weighted**    |      |
|---------------|--------|--------------|--------|-----------------|-----------|
|          |   |         |   | **Average**     |      |
|          |   |         |   | **Remaining**   |      |
| **Number**    |   | **Exercise** |   | **Contractual** |      |
| **of Shares** |   | **Price**    |   | **Life**        |      |
| 54,642        |   | $10.000      |   |            | 6.6 years |   |
| 51,600        |   | 12.725       |   |            | 7.2 years |   |
|          |   |         |   |            |      |   |
| 106,242       |   | $11.323      |   |            | 6.9 years |   |

 

 

On October 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised), (“SFAS 123(R)”), Share-Based Payment. SFAS 123(R) replaces SFAS No. 123 and supersedes Accounting Principles Board Opinion No. 25 (“APB 25”), Accounting for Stock Issued to Employees. Under SFAS 123(R), compensation cost is recognized prospectively for new and modified awards            over the related vesting period of such awards. Results for prior periods have not been restated. Prior to October 1, 2006, the Company accounted for these Plans under the recognition and measurement principles of APB 25 and related interpretations using the intrinsic value method. In accordance with APB 25, no compensation cost related to these Plans was reflected in net income prior to fiscal 2007, as all options granted under the Plans had an exercise price equal to the market            value of the underlying common stock on the grant date. No stock option expense was recorded in the nine months ended June 30, 2009 or 2008 because all options were fully vested prior to fiscal 2007.

 

Restricted Stock Plan

 

The Company has restricted stock plans (“Plans”) which provide for the award of shares of restricted stock to directors, officers and employees. The Plans provide for the purchase of 67,496 shares of common stock in the open market to fund such awards. All of the Common Stock to be purchased by the Plans is purchased at the fair market value on the date of purchase. Awards under the Plans            are made in recognition of expected future services to the Company by its directors, officers, and key employees responsible for implementation of the policies adopted by the Company’s Board of Directors and as a means of providing a further retention incentive. Compensation expense on Plan shares is recognized over the vesting periods based on the market value of the stock on the date of grant. Recipients of awards receive compensation payments equal to dividends paid prior            to the date of vesting within 30 days of each dividend payment date. As of June 30, 2009, there were 20,403 shares remaining for future awards. Compensation expense for the Plans was approximately $6,000 and $24,000, respectively, for the three and nine-month periods ended June 30, 2009, compared to $5,000 and $36,000 for the same 2008 periods.

 

 

 

 

 

 

9

----

The following table summarizes changes in unvested shares for the nine months ended June 30, 2009:

 

|                           |   |          |   | **Weighted**   |   |
|--------------------------------|--------|---------------|--------|----------------|--------|
|                           |   |          |   | **Average**    |   |
|                           |   | **Number**    |   | **Grant Date** |   |
|                           |   | **of Shares** |   | **Fair Value** |   |
| Outstanding September 30, 2008 |   | 5,289         |   | $              | 11,082 |   |
| Granted                        |   | 6,257         |   |           | 5,750  |   |
| Forfeited                      |   | (3,115        | )      |           | 8,800  |   |
|                           |   |          |   |           |   |   |
| Outstanding June 30, 2009      |   | 8,431         |   | $              | 7,968  |   |

 

For the nine months ended June 30, 2009, 6,257 shares were awarded with a grant date fair value of $5.75 per share. The awards vest 20% on the date of grant and 20% each of the next four years. 

 

Employee Stock Ownership Plan

 

Effective upon the consummation of the Bank’s initial stock offering, an Employee Stock Ownership Plan ("ESOP") was established for all eligible employees who have completed a twelve-month period of employment with the Bank and at least 1,000 hours of service, and have attained the age of 21. The ESOP used $156,800 in proceeds from a term loan to purchase 62,149 shares of Bank common stock            during the stock offering. In fiscal 2004, the ESOP purchased 72,861 shares of common stock in the second-step conversion with the proceeds of a $776,000 loan from the Company, which has a 10-year term and an interest rate of 4.75%. $47,000 of the proceeds was used to pay off the prior outstanding debt.

 

Shares purchased with the loan proceeds were initially pledged as collateral for the loans and are held in a suspense account for future allocation among participants. Contributions to the ESOP and shares released from the suspense account are in an amount proportional to the loan repayment. Shares are allocated among the participants on the basis of compensation, as described by the ESOP, in the year            of allocation.

 

The ESOP is accounted for in accordance with Statement of Position 93-6, "Accounting for Employee Stock Ownership Plans," which was issued by the American Institute of Certified Public Accountants in November 1993. Accordingly, the ESOP shares pledged as collateral are reported as unallocated ESOP shares in the statements of financial condition. As shares are committed to be released from collateral,            the Bank reports compensation expense equal to the current market price of the shares, and the shares become outstanding for basic net income per common share computations. ESOP compensation expense was approximately $13,000 and $41,000, respectively, for the three and nine-month periods ended June 30, 2009, compared to $21,000 and $69,000 for the same 2008 periods.

 

Directors Consultation and Retirement Plan

 

Effective October 1, 2008, the Company adopted the measurement date provisions of Statement of Financial Accounting Standards (“SFAS”) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, an amendment of Financial Accounting Standards Board (“FASB”) Statement Nos. 87, 88, 106, and 132(R). SFAS No. 158 requires employers            to measure the funded status of plans as of the date of its year-end statement of financial position, rather than an earlier date. As a result, the Company changed the measurement date to September 30 from July 1. The adjustment to initially apply the measurement date provisions of SFAS No. 158 resulted in a reduction of retained earnings and an increase in other comprehensive income of $18,000 and $7,000, respectively.

 

**NOTE 7 – FAIR VALUE MEASUREMENTS**

 

On October 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements," (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements. SFAS 157 clarifies that fair value is the exit price that would be            received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, rather than an entry price that would be 

 

10

 

 

----

paid to acquire an asset or liability. SFAS 157 establishes a fair value hierarchy that distinguishes between assumptions developed based on market data obtained from independent sources (observable inputs), and assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy levels are summarized as follows:

 

|   | Level 1:             | Quoted prices in active markets for identical assets or liabilities.     |
|--------|----------------------|--------------------------------------------------------------------------|
|        |                      |                                                                          |
|        | Level 2:             | Quoted prices for similar assets or liabilities in active market;        |
|        |                      | quoted prices for identical or similar assets or liabilities in inactive |
|        |                      | markets; or observable market data.                                      |
|        |                      |                                                                          |
|        | Level 3:   | Unobservable inputs where there is little, if any, market activity  |
|        |                      | and that are developed based on the best information available           |
|        |                      |  under the circumstances.                                           |

 

Determination of the appropriate level within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement. Assets and liabilities as of June 30, 2009 measured at fair value, segregated by fair value hierarchy level, are summarized below:

 

| (Dollars in thousands)        | Level 1 |   | Level 2 |    | Level 3 |                                          | Level 4 |
|-------------------------------|---------|--------|---------|---------|---------|-----------------------------------------------|---------|
|                          |    |   |    |    |    |                                          |    |
| Securities available for sale | $       | --     |    | $43,704 |    | $       -- |    | $43,704 |
| Impaired loans                |    | --     |    | --      |    | 4,472                                         |    | 4,472 |
| Real estate owned             |         | --     |    | --      |    | 306                                           |    | 306 |

 

A loan is deemed to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are evaluated at the time they are identified as impaired and, if collateral-dependent, are valued at the lower of the recorded investment or the fair value of the collateral. The value of real estate is generally based            on the appraised value, adjusted for costs to sell. If a valuation adjustment is required, a specific allowance is established, with a transfer from the general valuation allowance. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly. Impaired loans had outstanding balances of $5,777,000 and $392,000 at June 30, 2009 and September 30, 2008, respectively, with valuation allowances of $1,145,000 and $44,000,            respectively. At June 30, 2009, impaired loans of $5.6 million had associated valuation allowances of $1,145,000, while $158,000 in impaired loans had no valuation allowances. The $392,000 balance at September 30, 2008 represented one loan with a $44,000 valuation allowance. The average balance of impaired loans outstanding was $3.7 million and $1.9 million for the three and nine months ended June 30, 2009. There were no impaired loans outstanding for the three or nine months ended            June 30, 2008. No interest income was recognized on impaired loans during the three or nine months ended June 30, 2009 or 2008.

 

Real estate owned represents one property that was written down to fair value less estimated costs to sell, based on the appraised value at the time of foreclosure, during the year ended September 30, 2008. No additional impairment was recorded during the nine months ended June 30, 2009.

 

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115.” This statement permits an entity to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses will be recognized in earnings at each subsequent reporting date on items            for which the fair value option has been elected. The fair value option 1) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method, 2) is irrevocable (unless a new election date occurs) and 3) is applied only to entire instruments and not to portions of instruments. The statement is effective for the Company on October 1, 2008. Application of this standard did not have a material impact on the Company’s            financial position, results of operations or cash flows. 

 

**NOTE 8 - FAIR VALUES OF FINANCIAL INSTRUMENTS**

 

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein:

 

 

 

11

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Cash and Cash Equivalents and Certificates of Deposit

 

The carrying amounts of cash and short-term instruments approximate their fair value. 

 

Investment and Mortgage-Backed Securities

 

Fair values for securities, excluding restricted equity securities, are based on quoted market prices. The carrying values of restricted equity securities approximate fair values. 

 

Loans Receivable

 

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for commercial real estate and            commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. 

 

Deposit Liabilities

 

The fair value of demand deposits, savings deposits and money market accounts are the amounts payable on demand. The fair values of certificates of deposit are based on the discounted value of contractual cash flows. The discount rate was estimated using the rate currently offered for deposits of similar remaining maturities.

 

Short-Term Borrowings

 

The carrying amounts of federal funds purchased, and other short-term borrowings maturing within 90 days approximate their fair values. Fair values of other short-term borrowings are estimated using discounted cash flow analyses based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. 

 

Long-Term Debt

 

The fair value of long-term debt is estimated using discounted cash flow analysis based on the current incremental borrowing rates for similar types of borrowing arrangements. 

 

Accrued Interest Receivable

 

The carrying amounts of accrued interest approximate their fair values. 

 

Federal Home Loan Bank of New York Stock

 

Federal Home Loan Bank of New York stock is valued at cost.

 

Off-Balance-Sheet Instruments

 

In the ordinary course of business the Company has entered into off-balance-sheet financial instruments consisting of commitments to extend credit. Such financial instruments are recorded in the financial statements when they are funded. Their fair value would approximate fees currently charged to enter into similar agreements.

 

 

12

 

 

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The carrying values and estimated fair values of financial instruments are as follows (in thousands):

 

|                          | **June 30, 2009** |
|-------------------------------|-------------------|
|                          | **Carrying**      |   | **Fair** |
|                          | **Amount**        |   | **Value** |
|                          |              |   |   |   |   |
| Financial Assets              |              |   |   |   |   |
|                          |              |   |   |   |   |
| Cash and cash equivalents     | $                 | 3,374 |   | $ | 3,374 |
| Securities available for sale |              | 43,704 |   |   | 43,704 |
| Securities held to maturity   |              | 166 |   |   | 168 |
| Loans receivable              |              | 120,587 |   |   | 123,482 |
| Accrued interest receivable   |              | 604 |   |   | 604 |
| FHLB stock                    |              | 895 |   |   | 895 |
|                          |              |   |   |   |   |
| Financial Liabilities         |              |   |   |   |   |
|                          |              |   |   |   |   |
| Deposits                      |              | 141,834 |   |   | 143,843 |
| Borrowed funds                |              | 13,800 |   |   | 14,101 |

 

 

The fair value estimates are made at a discrete point in time based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties            and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Further, the foregoing estimates may not reflect the actual amount that could be realized if all or substantially all of the financial instruments were offered for sale.

 

In addition, the fair value estimates were based on existing on-and-off balance sheet financial instruments without attempting to value the anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets and liabilities include real estate owned, premises and equipment,            and advances from borrowers for taxes and insurance. In addition, the tax ramifications related to the realization of the unrealized gains and losses have a significant effect on fair value estimates and have not been considered in any of the estimates.

 

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. The lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.

 

**NOTE 9 – SUBSEQUENT EVENTS**

 

The Company has considered wither any events or transactions occurring after June 30, 2009 would require recognition or disclosure in the financial statements as of or for the three or nine-month periods ended June 30, 2009. Such evaluation was made through August 14, 2009, the date the financial statements are being issued. No such subsequent events were identified. 

 

**NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS**

 

In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This Staff Position provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Fair Value Measurements, when the volume and level of activity for            the asset or liability have significantly 

 

 

 

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decreased. It also includes guidance on identifying circumstances that indicate a transaction is not orderly. This FSP is effective for interim and annual reporting periods ending after June 15, 2009. Its adoption did not have a material impact on our financial condition or results of operations.

 

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. This Staff Position amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements.            This FSP is effective for interim and annual reporting periods ending after June 15, 2009. Its adoption did not have a material impact on our financial condition or results of operations.

 

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”. This FSP amends FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments”, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual            financial statements. This FSP also amends APB No. 28, “Interim Financial Reporting”, to require such disclosures in summarized financial information at interim reporting periods. This FSP is effective for interim reporting periods ending after June 15, 2009. The required interim period disclosures are provided beginning with the June 30, 2009 consolidated financial statements.

 

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS No. 165”).  SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  In particular, SFAS No. 165 sets forth: (1) the period            after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet            date.  SFAS No. 165 is effective for interim and annual financial periods ending after June 15, 2009.  The adoption of SFAS No. 165 did not have a material impact on the Company’s financial position or results of operations.

 

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140” (“SFAS No. 166”).  The FASB issued SFAS No. 166 to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a            transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets.  The FASB undertook this project to address (1) practices that have developed since the issuance of FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (“SFAS            No. 140”), that are not consistent with the original intent and key requirements of SFAS No. 140 and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors.  SFAS No. 166 must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009,            for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter.  Earlier application is prohibited.  SFAS No. 166 must be applied to transfers occurring on or after the effective date.  Additionally, the disclosure provisions of SFAS No. 166 should be applied to transfers that occurred both before and after the effective date of SFAS No. 166.  The Company does not expect the            adoption of SFAS No. 166 will have a material impact on its financial condition or results of operations.

 

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards CodificationTMand the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” (“SFAS No. 168”).  The FASB Accounting Standards CodificationTM(“Codification”) will become the source of authoritative generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities.  Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  On the effective date of SFAS No. 168, the            Codification will supersede all then-existing non-SEC accounting and reporting standards.  All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative.  SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The FASB believes that the issuance of SFAS No. 168 will not change GAAP.

 

 

 

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**ROEBLING FINANCIAL CORP, INC.**

 

| **ITEM 2.** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|-------------------------------------------------------------------------------------------------|

 

**General**

 

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion, the words “believes”, “anticipates”, “contemplates”, “expects”, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain            risks and uncertainties which could cause actual results to differ materially from those projected. Those risks and uncertainties include changes in interest rates, the ability to control costs and expenses, the impact of our new branches, new legislation and regulations, and general economic conditions. The Company does not undertake and specifically disclaims any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to            reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

 

The Company's business is conducted primarily through its wholly-owned subsidiary, Roebling Bank (the "Bank"). References to the Company or Registrant refer to the consolidated entity which includes the main operating company, the Bank, unless the context indicates otherwise.

 

**Overview**

 

At June 30, 2009, the Company had total assets, deposits, borrowings and stockholders’ equity of $174.5 million, $141.8 million, $13.8 million and $16.9 million, respectively. For the three months ended June 30, 2009, the Company reported a net loss of $391,000, or $.24 per diluted share, compared to net income of $153,000, or $.09 per diluted share, for the same period in            2008. For the nine months ended June 30, 2009, the Company reported a net loss of $573,000, or $.35 per diluted share, compared to net income of $326,000, or $.20 per diluted share, for the same period in 2008. The net loss for the three and nine month periods reflect significant provisions for loan losses due to an increase in non-performing loans, as well as the Federal Deposit Insurance Corporation’s special assessment, assessed on all insured institutions based on June 30,            2009 data. 

 

**Supervisory Agreement**

 

On June 17, 2009, the Bank entered into a supervisory agreement with the Office of Thrift Supervision (“OTS”), the Bank’s primary federal regulator, which restricts the Bank’s ability to engage in certain lending activities and requires the Bank to take various corrective actions. As a result of the supervisory agreement, the Bank became subject to certain            regulations, which limit future asset growth and increase the Bank’s supervisory expenses. 

The supervisory agreement prohibits the Bank from making non-residential real estate loans, commercial loans, construction loans and loans secured by non-owner-occupied residential property (“investor loans”) or purchasing any loan participation without the prior written non-objection of the OTS except for loans originated pursuant to legally binding commitments            existing as of March 31, 2009, renewals or modifications of loans of $500,000 or less secured by properties in the Bank’s local lending area and originations of one-to-four family construction loans secured by property in the Bank’s local lending area under binding sale contracts to an owner-occupant with permanent financing. The agreement further requires the Bank to adopt a plan for reducing its concentrations in non-residential real estate loans, investor loans,            participation loans and construction loans and for reducing criticized assets. The Bank must also adopt a new loan loss allowance policy and correct loan underwriting and credit administration weakness cited in the most recent examination report. Finally, the agreement prohibits the Bank from taking brokered deposits without prior OTS approval. The supervisory agreement will remain in effect until modified, suspended or terminated by the OTS.

 

 

 

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            As a result of the supervisory agreement, the Bank has also become subject to certain OTS regulations that prohibit it from increasing its total assets during any quarter in excess of an amount equal to net interest credited on deposits for the quarter without OTS approval. The Bank will also be assessed at a higher rate by the            OTS for examinations and supervision and by the FDIC for federal deposit insurance.

 

**Changes in Financial Condition**

 

Total assets increased by $19.9 million, or 12.8%, to $174.5 million at June 30, 2009, from $154.7 million at September 30, 2008. This increase is primarily attributable to an $11.1 million increase in the loans receivable, net, portfolio and a $10.9 million increase in investment securities, partially offset by a $3.0 million decrease in cash and cash equivalents. Loans            receivable, net, increased by 10.2%, to $120.6 million at June 30, 2009 from $109.5 million at September 30, 2008. The change in the loan portfolio is largely attributable to an increase of $15.2 million in the one-to-four family residential portfolio, as borrowers took advantage of low interest rates and refinanced, partially offset by a decrease of $2.1 million in the construction loan portfolio and a $1.8 million increase in the allowance for loan losses. Securities available for            sale increased by 33.0%, to $43.7 million at June 30, 2009 from $32.9 million at September 30, 2008. Investment securities totaling $26.4 million were purchased during the nine months ended June 30, 2009, while payments and maturities on investment securities totaled $13.5 million and securities totaling $3.0 million were sold. The investment securities purchased were all issued or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae, and the majority are adjustable rate            mortgage-backed securities. These transactions added balance sheet growth by taking advantage of market opportunities to enhance earnings with minimal anticipated credit, interest-rate or liquidity risk. Funding for the increase in the loan and investment portfolios was provided from deposits, which increased by $11.3 million; borrowed funds, which increased by $8.8 million; and the $3.0 million decrease in cash and cash equivalents. The increase in deposits is primarily            attributable to the money market deposit accounts, which increased by $9.7 million. $5.0 million of that increase was from a short-term municipal deposit. Stockholders’ equity decreased $377,000 to $16.9 million at June 30, 2009 from $17.3 million at September 30, 2008. The decrease was primarily attributable to a net loss of $573,000, dividends paid of $167,000 and $190,000 for treasury stock purchased, partially offset by an increase in unrealized gain on securities            available for sale, net of tax, of $548,000.

 

**Results of Operations**

 

*Net Interest Income.*For the three-months ended June 30, 2009, the Company reported net interest income before provision for loan losses of $1,342,000, which represents a decrease of $32,000 or 2.3% over the same period in 2008. The decrease in net interest income was the result of an increase in interest expense of $43,000, which more than offset an            increase in interest income of $11,000. The interest rate spread was 2.79% for the three months ended June 30, 2009 compared to 3.20% for the three months ended June 30, 2008, while the net interest margin was 3.24% for the 2009 period compared to 3.79% for the 2008 period. For the nine-month period ended June 30, 2009, the Company reported net interest income before provision for loan losses of $4,083,000, compared to $3,794,000 for the nine months ended June 30, 2008, an increase            of $289,000, or 7.6%. The interest rate spread was 2.91% for the nine months ended June 30, 2009 compared to 2.84% for the nine months ended June 30, 2008, while the net interest margin was 3.39% for the 2009 period compared to 3.49% for the 2008 period. The Company’s spread and margin declined for the three months ended June 30, 2009 compared to the same 2008 period, as the average yield on total interest-earning assets decreased by more than the average cost of funds.            

 

The average balance of total interest-earning assets for the three months ended June 30, 2009 increased by $20.8 million compared to the three months ended June 30, 2008, while the average yield decreased to 5.18% from 5.89%. The increase in total interest income of $11,000 for the three months ended June 30, 2009 is comprised of an increase of $104,000 in interest income from            securities and other interest-earning assets, partially offset by a decrease in interest income of $93,000 on loans receivable. Average loan receivable balances increased by $10.1 million for the three months ended June 30, 2009 compared to the same 2008 period, while the average yield decreased to 5.37% from 6.19%. The decline in yield is due to the decline in portfolio rates as adjustable-rate loans repriced downwards, new loans came into the portfolio at lower rates, reflecting            lower market rates, and non-performing loans increased. For the three months ended June 30, 2009, the average balance of securities increased by $10.4 million compared to the same 2008 period, while the average yield decreased to 4.77% from 4.98%.

 

 

 

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The average balance of total interest-earning assets for the nine months ended June 30 2009 increased by $16.3 million compared to the nine months ended June 30, 2008, while the average yield decreased to 5.39% from 6.04%. The decrease in total interest income of $56,000 for the nine months ended June 30, 2009 is comprised primarily of a decrease in interest income of $352,000 on            loans receivable, partially offset by an increase of $296,000 in interest income from securities and other interest-earning assets. Average loan receivable balances increased by $7.1 million for the nine months ended June 30, 2009 compared to the same 2008 period, while the average yield decreased to 5.63% from 6.41%. For the nine months ended June 30, 2009, the average balance of securities increased by $8.6 million compared to the same 2008 period, while the average yield            increased to 4.93% from 4.90%.

 

The average balance of interest-bearing liabilities increased by $21.1 million for the three months ended June 30, 2009 compared to same 2008 period, while the average cost decreased to 2.39% from 2.69%. The increase in total interest expense of $43,000 for the three months ended June 30, 2009 is comprised of a $46,000 increase in interest expense on borrowings, partially offset by            a $3,000 decrease in interest expense on deposits. Average interest-bearing deposit balances increased by $13.4 million with a decrease in the average cost to 2.28% for the three months ended June 30, 2009, compared to 2.59% for the same 2008 period, while average borrowings increased by $7.6 million, with a decrease in the average cost to 3.24% from 4.13%.

 

The average balance of interest-bearing liabilities increased by $14.8 million for the nine months ended June 30, 2009 compared to same 2008 period, while the average cost decreased to 2.47% from 3.20%. The decrease in total interest expense of $345,000 for the nine months ended June 30, 2009 is comprised of a $409,000 decrease in interest expense on deposits, partially offset by a            $64,000 increase in interest expense on borrowings. Average interest-bearing deposit balances increased by $8.3 million with a decrease in the average cost to 2.43% for the nine months ended June 30, 2009, compared to 3.12% for the same 2008 period, while average borrowings increased by $6.5 million, with a decrease in the average cost to 2.87% from 4.25%.

 

*Provision for Loan Losses.*The provision for loan losses was $850,000 and $1,945,000, respectively, for the three and nine month periods ended June 30, 2009, compared to $80,000 and $213,000 for the same periods in 2008. Charge-offs of $110,000 were recorded during the nine months ended June 30, 2009, $109,000 of which was on the short payoff of two            non-performing construction loans and one non-performing loan secured by a single family residence. For the nine months ended June 30, 2008, charge-offs of $72,000 were recorded to write down a piece of land which we had acquired by deed in lieu of foreclosure. At June 30, 2009, the allowance for loan losses was $2,791,000 (2.26% of the loan portfolio) compared to $956,000 (.87% of the loan portfolio) at September 30, 2008. The increase in the allowance is due to an increase in the            amount of delinquent and substandard loans, which the Company believes is a reflection of the deteriorating economy and declining real estate values. Non-performing loans were $7.9 million or 6.4% of total loans at June 30, 2009, compared to $922,000 or .83% at September 30, 2008. $6.3 million of the increase is attributable to five loans. One of the loans is a $1.7 million participation in a delinquent condominium construction loan. The project has experienced delays and pre-sales            have not met expectations. Although the borrower had been working with us, he has not been able to come up with a viable plan and we are now proceeding with foreclosure. Two of the loans totaling $1.8 million are in default, have the same guarantor and are collateralized by multiple single-family residences. Foreclosure is anticipated on these properties. The fourth loan is a $1.2 million participation in a loan secured by a residential condominium. The borrower has defaulted and we            are now in the process of foreclosure. The fifth loan has an outstanding balance of $1.6 million and is secured by an industrial building containing office and warehouse space. The borrower is experiencing financial difficulties and is delinquent, but is still making payments. Management continually monitors and adjusts the allowance for loan losses based upon its analysis of the loan portfolio. This analysis includes an evaluation of known and inherent risks in the loan portfolio,            past loss experience, current economic conditions, industry loss reserve levels, adverse situations which may affect the borrower, the estimated value of any underlying collateral and other relevant factors. However, there can be no assurance that additions to the allowance for loan losses will not be required in future periods or that actual losses will not exceed estimated amounts. 

 

 

 

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Activity in the allowance for loan losses is summarized as follows:

 

|                        | **Three Months Ended June 30,** |      |   | **Nine Months Ended June 30,** |     |
|-----------------------------|---------------------------------|-----------|--------|--------------------------------|----------|
|                        | **2009**                        |      |   |                           | **2008** |   |   | **2009** |   |   |   | **2008** |   |
|                        |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance – beginning   | $                               | 1,964,329 |   |                           |     | $ | 810,687 |   |   | $ | 955,687 |   |   |   | $ | 749,736 |   |
|                        |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision charged to income |                            | 850,000   |   |                           |     |   | 80,000 |   |   |   | 1,945,000 |   |   |   |   | 212,500 |   |
|                        |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-offs                 |                            | (23,346   | )      |                           |     |   | -- |   |   |   | (109,704 | ) |   |   |   | (71,549 | ) |
|                        |                            |      |   |                           |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance – ending      | $                               | 2,790,983 |   |                           |     | $ | 890,687 |   |   | $ | 2,790,983 |   |   |   | $ | 890,687 |   |

 

*Non-interest Income.*Non-interest income increased $42,000, or 35.0%, to $162,000 for the three months ended June 30, 2009 and increased $172,000, or 44.9%, to $555,000 for the nine months ended June 30, 2009 compared to the same 2008 periods. The majority of the increase in non-interest income for the nine-month periods is attributable to the gain on            sale of securities of $140,000. The Bank sold $3.0 million of short-term securities, taking advantage of market opportunities to realize gains while providing funding for the growth in the loan portfolio. In addition, loan fees and late charges increased by $20,000 and $25,000 for the three and nine months ended June 30, 2009, respectively, compared to the same 2008 periods, while gain on sale of loans increased by $20,000 and $27,000 for the three and nine months ended June 30,            2009, respectively, compared to the same 2008 periods. The increase in loan fees is primarily attributable to an increase in late charges collected. With the refinance market, a larger volume of residential loans were originated and sold, with a resulting increase in gain on sale of loans. 

*Non-interest Expense*. Non-interest expense increased $135,000, or 11.5%, to $1,306,000 for the three-month period ended June 30, 2009 compared to $1,171,000 for the same period in 2008, and increased $228,000, or 6.6%, to $3,680,000 for the nine months ended June 30, 2009, compared to the same 2008 period. The increase in non-interest expense is due            primarily to an increase in FDIC insurance premiums. Compensation and benefits increased by $33,000 and $98,000 for the three and nine months ended June 30, 2009, compared to the same 2008 periods. The increase in compensation expense is primarily attributable to the re-filling of two positions which were vacant for most of the 2008 period and an increase in the directors’ retirement plan expense. The increase in the retirement plan expense is related to an increase in            director fees, as well as a change in the payment period to ten years from seven years. Service bureau and data processing expense increased by $5,000 and $40,000, largely related to the growth of the Bank and the maintenance, monitoring and security of our systems and networks. Federal deposit insurance premium expense increased by $113,000 and $149,000 for the three and nine months ended June 30, 2009, respectively, compared to the same 2008 periods. The FDIC increased the            assessment rate for the most highly rated institutions to between 12 and 14 basis points for the first quarter of 2009 from previous levels of five to seven basis points, and to between 12 and 16 basis points thereafter. The FDIC is also implementing changes to the risk-based assessment system, which will include higher rates for some institutions that rely significantly on secured liabilities or brokered deposits. In addition, on May 22, 2009, the FDIC imposed a special assessment            of 5 basis points, based on June 30, 2009 assets minus Tier 1 capital. $80,000 of the increase in deposit insurance expense represents the estimated amount of this one-time assessment. At the same time, the FDIC also indicated that it was probable that an assessment not greater than 5 basis points will be necessary in the fourth quarter of this year. The Bank is also participating in the FDIC’s temporary transaction account guarantee program under which the FDIC fully            guarantees all non-interest bearing transaction accounts. Under this program, the Bank is assessed ten basis points for non-interest bearing transaction account balances in excess of $250,000. The Company and the Bank have opted out of the FDIC’s temporary liquidity guarantee program under which the FDIC guarantees senior unsecured debt of banks and their holding companies. Partially offsetting these increases were a decline in occupancy and equipment expense of $8,000 and            $32,000 for the three and nine months ended June 30, 2009, compared to the same 2008 periods, as well as a decline in other expense of $8,000 and $27,000 for the same periods. The decrease in occupancy and equipment expense is primarily due to a decrease in depreciation expense, as a number of fixed assets became fully depreciated. The decline in other expense is related primarily to decreased expenses associated with compliance with the Sarbanes-Oxley Act, partially offset by an            increase in legal and other expenses related to non-performing assets. 

 

 

 

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*Income Tax Expense.*The Company recorded tax benefits of $261,000 and $414,000 for the three and nine months ended June 30, 2009, respectively, resulting in an effective tax benefit rate of 40.0% and 41.9%, respectively. For the three and nine months ended June 30, 2008, the Company recorded tax expense of $90,000 and $186,000, respectively, resulting            in an effective tax rate of 37.0 % and 36.3%, respectively. The decrease in tax expense is primarily attributable to the decrease in earnings. 

 

**Liquidity and Regulatory Capital Compliance**

 

On June 30, 2009, the Bank was in compliance with its regulatory capital requirements as follows:

 

| (Dollars in thousands)         |   |       |   |        |   |   |
|--------------------------------|--------|------------|--------|-------------|--------|--------|
|                           |   | **Amount** |   | **Percent** |   |
| Tangible capital               |   | $          | 12,619 |        | 7.28   | %      |
| Tangible capital requirement   |   |       | 2,600  |        | 1.50   | %      |
| Excess over requirement        |   | $          | 10,019 |        | 5.78   | %      |
|                           |   |       |   |        |   |   |
| Core capital                   |   | $          | 12,619 |        | 7.28   | %      |
| Core capital requirement       |   |       | 6,933  |        | 4.00   | %      |
| Excess over requirement        |   | $          | 5,686  |        | 3.28   | %      |
|                           |   |       |   |        |   |   |
| Risk-based capital             |   | $          | 13,977 |        | 12.86  | %      |
| Risk-based capital requirement |   |       | 8,692  |        | 8.00   | %      |
| Excess over requirement        |   | $          | 5,285  |        | 4.86   | %      |

 

The Company anticipates that it will have sufficient funds available to meet its current commitments. As of June 30, 2009, the Bank had outstanding commitments to fund loans of $2.5 million, commitments on unused lines of credit of $12.5 million, undisbursed construction loans of $2.6 million and $116,000 in outstanding letters of credit. Certificates of deposit scheduled to mature            in one year or less as of June 30, 2009 totaled $54.1 million. Based on historical deposit withdrawals and outflows, and on internal monthly deposit reports monitored by management, management believes that a majority of such deposits will remain with the Company. 

 

**Additional Key Operating Ratios**

 

|                                       |   | **At or for the Three Months** |
|--------------------------------------------|--------|--------------------------------|
|                                       |   | **Ended June 30,**             |
|                                       |   | **2009 (1)**                   |   | **2008 (1)** |
| Earnings per common share (2):             |   |                           |   |   |
| Basic                                      |   | $                              | (0.24 | ) |   | $ | 0.09 |   |
| Diluted                                    |   | $                              | (0.24 | ) |   | $ | 0.09 |   |
| Return on average assets (1)               |   |                           | (.91 | )% |   |   | .40 | % |
| Return on average equity (1)               |   |                           | (9.02 | )% |   |   | 3.55 | % |
| Interest rate spread (1)                   |   |                           | 2.79 | % |   |   | 3.20 | % |
| Net interest margin (1)                    |   |                           | 3.24 | % |   |   | 3.79 | % |
| Non-interest expense to average assets (1) |   |                           | 3.03 | % |   |   | 3.09 | % |
| Non-performing assets to total assets      |   |                           | 4.68 | % |   |   | .55 | % |
| Non-performing loans to total loans        |   |                           | 6.37 | % |   |   | .40 | % |
|                                       |   |                           |   |   |   |   |   |   |
|                                       |   | **At June 30,**                |
|                                       |   | **2009**                       |   | **2008** |
|                                       |   |                           |   |   |   |   |   |   |
| Book value per share (3)                   |   | $                              | 10.04 |   |   | $ | 10.01 |   |

 

____________

| (1) | The ratios for the three-month periods presented are annualized. |
|-----|------------------------------------------------------------------|

| (2) | The average number of shares outstanding during the three months ended June 30, 2009, was 1,653,316 basic and 1,653,316 diluted. The average number of shares outstanding during the three months ended June 30, 2008, was 1,660,139 basic and 1,662,376 diluted. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | There were 1,686,527 shares outstanding at June 30, 2009 and 1,718,473 shares outstanding as of June 30, 2008. |
|-----|----------------------------------------------------------------------------------------------------------------|

 

19

----

 

|                                       |   | **At or For the Nine Months** |
|--------------------------------------------|--------|------------------------------------|
|                                       |   | **Ended June 30,**                 |
|                                       |   | **2009 (1)**                       |   | **2008 (1)** |
| Earnings per common share (2):             |   |                               |   |   |
| Basic                                      |   | $                                  | (0.35 | ) |   | $ | 0.20 |   |
| Diluted                                    |   | $                                  | (0.35 | ) |   | $ | 0.20 |   |
| Return on average assets (1)               |   |                               | (.46 | )% |   |   | .29 | % |
| Return on average equity (1)               |   |                               | (4.38 | )% |   |   | 2.56 | % |
| Interest rate spread (1)                   |   |                               | 2.91 | % |   |   | 2.84 | % |
| Net interest margin (1)                    |   |                               | 3.39 | % |   |   | 3.49 | % |
| Non-interest expense to average assets (1) |   |                               | 2.94 | % |   |   | 3.06 | % |
|                                       |   |                               |   |   |   |   |   |   |

 

_____________

| (1) | The ratios for the nine-month periods presented are annualized. |
|-----|-----------------------------------------------------------------|

| (2) | The average number of shares outstanding during the nine months ended June 30, 2009, was 1,661,677 basic and 1,661,677 diluted. The average number of shares outstanding during the nine months ended June 30, 2008, was 1,657,851 basic and 1,661,641 diluted. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

| **ITEM 3.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |
|-------------|----------------------------------------------------------------|

 

Notapplicable as the Company is a smaller reporting company.

 

| **ITEM 4T.** | **CONTROLS AND PROCEDURES** |
|--------------|-----------------------------|

 

(a) *Evaluation of disclosure controls and procedures.*The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on            this evaluation, the Company's principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and            Exchange Commission rules and forms. 

 

(b) *Changes in internal control over financial reporting.*During the period under report, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

 

 

 

20

----

**ROEBLING FINANCIAL CORP, INC.**

 

**Part II**

 

| **ITEM 1.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

There are various claims and lawsuits in which the company or the Bank are periodically involved,

such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank’s business. In the opinion of management, no material loss is expected from any of such pending claims or lawsuits.

 

| **ITEM 1A.** | **RISK FACTORS** |
|--------------|------------------|

 

|   | Not applicable as the Company is a smaller reporting company. |
|--------|---------------------------------------------------------------|

 

| **ITEM 2.** | **UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS** |
|-------------|-----------------------------------------------------------------|

 

 

|  

 

 

 

 

**Period** |  

 

 

**(a) Total Number**

**of Shares (or**

**Units) Purchased** |  

 

**(b)**

**Average Price**

**Paid per Share**

**(or Unit****)** | **(c) Total Number**

**of Shares (or Units) Purchased as Part Of Publicly**

**Announced Plans**

**or Programs*** | **(d) Maximum Number**

**(or Approximate Dollar**

**Value) of Shares (or**

**Units) that May Yet Be**

**Purchased Under the**

**Plans or Programs*** |
|----------------------------------------------------|---------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| April 1 through 30                                 | --                                                                                    | --                                                                                | --                                                                                                                  | 106,938                                                                                                                                                   |
| May 1 through 31                                   | 42,046 ***                                                                            | $5.90                                                                             | 41,946                                                                                                              | 64,992                                                                                                                                                    |
| June 1 through 30                                  | 500 **                                                                                | $5.90                                                                             | --                                                                                                                  | 64,992                                                                                                                                                    |
| Total                                              | 42,546                                                                                | $5.90                                                                             | 41,946                                                                                                              | 64,992                                                                                                                                                    |

 

|        | *  | The Company announced the repurchase of up to approximately 85,500 shares on December |
|--------|----|---------------------------------------------------------------------------------------|
|        |    | 13, 2005 and 47,000 shares for the RSP on January 31, 2006                            |
|   | ** | Represents shares purchased for the Deferred Compensation Plan.                       |

|   | *** | 100 shares were purchased for the Deferred Compensation Plan; 10,000 shares for the RSP and 31,946 shares for treasury. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------|

 

| **ITEM 3.** | **DEFAULTS UPON SENIOR SECURITIES** |
|-------------|-------------------------------------|

 

Not applicable

 

| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS** |
|-------------|---------------------------------------------------------|

 

|   | Not applicable |
|--------|----------------|

 

| **ITEM 5.** | **OTHER INFORMATION** |
|-------------|-----------------------|

 

|   | (a) | Not applicable |
|--------|-----|----------------|

|   | (b) | Not applicable |
|--------|-----|----------------|

 

 

 

21

----

**ITEM 6.**           **EXHIBITS**

 

|   | List of Exhibits: |
|--------|-------------------|

 

|   | 3.1 | Certificate of Incorporation* |
|--------|-----|-------------------------------|

|   | 3.2 | Bylaws** |
|--------|-----|----------|

|   | 4.0 | Form of Stock Certificate*** |
|--------|-----|------------------------------|

|   | 10.1 | Directors Consultation and Retirement Plan******* |
|--------|------|---------------------------------------------------|

|   | 10.2 | Stock Option Plan**** |
|--------|------|-----------------------|

|   | 10.3 | Restricted Stock Plan**** |
|--------|------|---------------------------|

|   | 10.4 | Employment Agreement between Janice A. Summers and Roebling Bank******** |
|--------|------|--------------------------------------------------------------------------|

|   | 10.5 | Employment Agreement between Frank J. Travea, III and Roebling Bank******** |
|--------|------|-----------------------------------------------------------------------------|

|   | 10.6 | Roebling Financial Corp, Inc. 2006 Stock Option Plan***** |
|--------|------|-----------------------------------------------------------|

|   | 10.7 | Roebling Bank 2006 Restricted Stock Plan***** |
|--------|------|-----------------------------------------------|

|   | 10.8 | Directors Change in Control Severance Plan****** |
|--------|------|--------------------------------------------------|

|   | 10.9 | Directors Deferred Compensation Agreement between John J. Ferry and Roebling Bank******* |
|--------|------|------------------------------------------------------------------------------------------|

|   | 10.10 | Directors Deferred Compensation Agreement between George N. Nyikita and Roebling Bank******* |
|--------|-------|----------------------------------------------------------------------------------------------|

|   | 10.11 | Directors Deferred Compensation Agreement between Mark V. Dimon and Roebling Bank******** |
|--------|-------|-------------------------------------------------------------------------------------------|

|   | 10.12 | Supervisory Agreement, dated June 17, 2009********* |
|--------|-------|-----------------------------------------------------|

|   | 31 | Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer and Chief Financial Officer |
|--------|----|------------------------------------------------------------------------------------------------|

|   | 32 | Section 1350 Certification |
|--------|----|----------------------------|

__________________

| * | Incorporated herein by reference to the Company’s Form 8-A (File No. 0-59069) filed with the |
|---|----------------------------------------------------------------------------------------------------|

|   | Commission on September 30, 2004. |
|--------|-----------------------------------|

| ** | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-QSB for the |
|----|-------------------------------------------------------------------------------------------------|

|   | quarter | ended March 31, 2005. |
|--------|---------|-----------------------|

| *** | Incorporated herein by reference to the Company’s Registration Statement on Form SB-2 (File No. |
|-----|-------------------------------------------------------------------------------------------------------|

|   | 333-116312) filed with the Commission on June 9, 2004. |
|--------|--------------------------------------------------------|

| **** | Incorporated herein by reference to Company’s Registration Statement on Form S-8 (File No. 333- |
|------|-------------------------------------------------------------------------------------------------------|

|   | 119839) filed with the Commission on October 20, 2004. |
|--------|--------------------------------------------------------|

| ***** | Incorporated herein by reference to Company’s Registration Statement on Form S-8 (File No. 333- |
|-------|-------------------------------------------------------------------------------------------------------|

|   | 132059) filed with the Commission on February 27, 2006. |
|--------|---------------------------------------------------------|

| ****** | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-QSB for the |
|--------|-------------------------------------------------------------------------------------------------|

|   | quarter ended March 31, 2008. |
|--------|-------------------------------|

| ******* | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter |
|---------|-------------------------------------------------------------------------------------------------------|

|   | nded December 31, 2008. |
|--------|-------------------------|

| ******** | Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter |
|----------|-------------------------------------------------------------------------------------------------------|

|   | ended March 31, 2009. |
|--------|-----------------------|

| ********* | Incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the |
|-----------|---------------------------------------------------------------------------------------------------|

|   | Commission on June 18, 2009. |
|--------|------------------------------|

 

 

 

 

22

----

**ROEBLING FINANCIAL CORP, INC.**

 

**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

|                                             |   | **ROEBLING FINANCIAL CORP, INC.** |
|--------------------------------------------------|--------|-----------------------------------|
|  

 

Date:  August 14, 2009 |   |  

 

By:               |  

 

/s/ Frank J. Travea, III |
|                                             |   |                              | Frank J. Travea, III

President and Chief Executive Officer

(Principal Executive Officer) |
|  

 

Date:  August 14, 2009 |   |  

 

By:               |  

 

/s/ Janice A. Summers |
|                                             |   |                              | Janice A. Summers

Senior Vice President, Chief Operating Officer and Chief Financial Officer

(Principal Financial and Accounting Officer) |

 

 

 

 

 

23