##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-52705
 Abington Bancorp, Inc.
  Pennsylvania
    
    20-8613037(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)180 Old York Road
Jenkintown, Pennsylvania
    
    19046(Address of Principal Executive Offices)
    
    (Zip Code)
  (Registrants Telephone Number, Including Area Code)
  (Former name, former address or former fiscal year if changed since last report)
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



ABINGTON BANCORP, INC.
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSUnaudited Consolidated Statements of Financial Condition as of March 31, 2010 and
December 31, 2009
    
    
    1Unaudited Consolidated Statements of Operations for the Three Months Ended March 31,
2010 and 2009
    
    
    2Unaudited Consolidated Statements of Stockholders Equity for the Three Months Ended
March 31, 2010 and 2009
    
    
    3Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31,
2010 and 2009
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    6ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    33ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    47ITEM 4. CONTROLS AND PROCEDURES
    
    
    50PART II  OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    50ITEM 1A. Risk Factors
    
    
    50ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50ITEM 3. Defaults upon Senior Securities
    
    
    51ITEM 4. (Removed and Reserved)
    
    
    51ITEM 5. Other Information
    
    
    51ITEM 6. Exhibits
    
    
    51SIGNATURES
    
    
    52CERTIFICATIONSExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



ABINGTON BANCORP, INC.
 
 UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 March 31, 2010
    
    
    December 31, 2009ASSETSCash and due from banks
    
    $
    29,713,214
    
    
    $
    18,941,066Interest-bearing deposits in other banks
    
    
    40,637,427
    
    
    
    25,773,173Total cash and cash equivalents
    
    
    70,350,641
    
    
    
    44,714,239Investment securities held to maturity (estimated fair
value2010, $20,830,733; 2009, $20,787,269)
    
    
    20,386,403
    
    
    
    20,386,944Investment securities available for sale (amortized cost
2010, $99,363,321; 2009, $82,905,101)
    
    
    101,081,838
    
    
    
    84,317,271Mortgage-backed securities held to maturity (estimated fair
value2010, $72,204,755; 2009, $77,297,497)
    
    
    71,627,796
    
    
    
    77,149,936Mortgage-backed securities available for sale (amortized cost
2010, $139,560,016; 2009, $133,916,731)
    
    
    144,298,930
    
    
    
    138,628,592Loans receivable, net of allowance for loan losses
(2010, $9,319,942; 2009, $9,090,353)
    
    
    752,279,142
    
    
    
    764,559,941Accrued interest receivable
    
    
    4,523,338
    
    
    
    4,279,032Federal Home Loan Bank stockat cost
    
    
    14,607,700
    
    
    
    14,607,700Cash surrender value  bank owned life insurance
    
    
    41,421,688
    
    
    
    40,983,202Property and equipment, net
    
    
    10,200,904
    
    
    
    10,423,190Real estate owned
    
    
    21,816,656
    
    
    
    22,818,856Deferred tax asset
    
    
    4,829,756
    
    
    
    4,711,447Prepaid expenses and other assets
    
    
    9,532,405
    
    
    
    10,531,771TOTAL ASSETS
    
    $
    1,266,957,197
    
    
    $
    1,238,112,121LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Deposits:Noninterest-bearing
    
    $
    42,440,192
    
    
    $
    45,146,650Interest-bearing
    
    
    835,208,423
    
    
    
    805,053,843Total deposits
    
    
    877,648,615
    
    
    
    850,200,493Advances from Federal Home Loan Bank
    
    
    140,733,174
    
    
    
    146,739,435Other borrowed money
    
    
    22,087,766
    
    
    
    16,673,480Accrued interest payable
    
    
    2,699,894
    
    
    
    1,807,334Advances from borrowers for taxes and insurance
    
    
    3,690,683
    
    
    
    3,142,470Accounts payable and accrued expenses
    
    
    5,663,479
    
    
    
    5,366,909Total liabilities
    
    
    1,052,523,611
    
    
    
    1,023,930,121COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock, $0.01 par value, 20,000,000 shares authorized
none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 80,000,000 shares authorized;
24,460,240 shares issued; outstanding: 20,862,196 shares in
2010,
21,049,025 shares in 2009
    
    
    244,602
    
    
    
    244,602Additional paid-in capital
    
    
    201,991,693
    
    
    
    201,922,651Treasury stockat cost, 3,598,044 shares in 2010,
3,411,215 shares in 2009
    
    
    (28,755,949
    )
    
    
    (27,446,596
    )Unallocated common stock held by:Employee Stock Ownership Plan (ESOP)
    
    
    (14,089,618
    )
    
    
    (14,299,378
    )Recognition & Retention Plan Trust (RRP)
    
    
    (3,504,089
    )
    
    
    (3,918,784
    )Deferred compensation plans trust
    
    
    (1,010,698
    )
    
    
    (995,980
    )Retained earnings
    
    
    55,447,278
    
    
    
    54,804,913Accumulated other comprehensive income
    
    
    4,110,367
    
    
    
    3,870,572Total stockholders equity
    
    
    214,433,586
    
    
    
    214,182,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,266,957,197
    
    
    $
    1,238,112,121
   1




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##### Table of Contents



ABINGTON BANCORP, INC.
 
 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three
Months Ended March 31,2010
    
    
    2009INTEREST INCOME:Interest on loans
    
    $
    9,999,227
    
    
    $
    10,028,633Interest and dividends on investment and
mortgage-backed securities:Taxable
    
    
    2,697,977
    
    
    
    3,282,931Tax-exempt
    
    
    398,027
    
    
    
    400,775Interest and dividends on other interest-earning assets
    
    
    5,892
    
    
    
    12,930Total interest income
    
    
    13,101,123
    
    
    
    13,725,269INTEREST EXPENSE:Interest on deposits
    
    
    3,288,583
    
    
    
    4,041,397Interest on Federal Home Loan Bank advances
    
    
    1,554,366
    
    
    
    2,084,584Interest on other borrowed money
    
    
    14,292
    
    
    
    14,578Total interest expense
    
    
    4,857,241
    
    
    
    6,140,559NET INTEREST INCOME
    
    
    8,243,882
    
    
    
    7,584,710PROVISION FOR LOAN LOSSES
    
    
    563,445
    
    
    
    116,691NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
    
    
    7,680,437
    
    
    
    7,468,019NON-INTEREST INCOMEService charges
    
    
    296,378
    
    
    
    389,246Income on bank owned life insurance
    
    
    438,486
    
    
    
    448,554Net (loss) gain on real estate owned
    
    
    (581,275
    )
    
    
    15,834Other income
    
    
    201,741
    
    
    
    162,906Total non-interest income
    
    
    355,330
    
    
    
    1,016,540NON-INTEREST EXPENSESSalaries and employee benefits
    
    
    2,929,782
    
    
    
    2,957,359Occupancy
    
    
    712,720
    
    
    
    579,294Depreciation
    
    
    229,725
    
    
    
    222,185Professional services
    
    
    443,911
    
    
    
    337,660Data processing
    
    
    422,622
    
    
    
    379,812Deposit insurance premium
    
    
    360,503
    
    
    
    194,147Advertising and promotions
    
    
    107,373
    
    
    
    74,535Director compensation
    
    
    219,946
    
    
    
    223,746Other
    
    
    540,739
    
    
    
    621,667Total non-interest expenses
    
    
    5,967,321
    
    
    
    5,590,405INCOME BEFORE INCOME TAXES
    
    
    2,068,446
    
    
    
    2,894,154PROVISION FOR INCOME TAXES
    
    
    460,086
    
    
    
    741,785NET INCOME
    
    $
    1,608,360
    
    
    $
    2,152,369BASIC EARNINGS PER COMMON SHARE
    
    $
    0.08
    
    
    $
    0.10DILUTED EARNINGS PER COMMON SHARE
    
    $
    0.08
    
    
    $
    0.10BASIC AVERAGE COMMON SHARES OUTSTANDING:
    
    
    18,995,279
    
    
    
    20,550,141DILUTED AVERAGE COMMON SHARES OUTSTANDING:
    
    
    19,372,522
    
    
    
    21,107,543
   2




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##### Table of Contents



ABINGTON BANCORP, INC.
 
 UNAUDITED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 CommonStock
    
    
    
    
    
    
    AccumulatedCommon
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Acquired by
    
    
    
    
    
    
    Other
    
    
    TotalStock
    
    
    Common
    
    
    Paid-in
    
    
    Treasury
    
    
    Benefit
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Plans
    
    
    Earnings
    
    
    Income
    
    
    EquityBALANCEJANUARY 1, 2010
    
    
    24,460,240
    
    
    $
    244,602
    
    
    $
    201,922,651
    
    
    $
    (27,446,596
    )
    
    $
    (19,214,142
    )
    
    $
    54,804,913
    
    
    $
    3,870,572
    
    
    $
    214,182,000Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,608,360
    
    
    
    
    
    
    
    1,608,360Net unrealized holding gain on
available for sale securities
arising during the period, net
of tax expense of $113,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220,044
    
    
    
    220,044Amortization of unrecognized
deferred costs on SERP, net
of tax benefit of $10,175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,751
    
    
    
    19,751Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,848,155Treasury stock purchased
(193,677 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,374,751
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,374,751
    )Cash dividends declared,
($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (965,995
    )
    
    
    
    
    
    
    (965,995
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (13,970
    )
    
    
    65,398
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,428Excess tax liability on
stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    (63,591
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,591
    )Stock options expense
    
    
    
    
    
    
    
    
    
    
    217,275
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217,275Common stock released from
benefit plans
    
    
    
    
    
    
    
    
    
    
    (70,672
    )
    
    
    
    
    
    
    627,055
    
    
    
    
    
    
    
    
    
    
    
    556,383Common stock acquired by
benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,318
    )
    
    
    
    
    
    
    
    
    
    
    (17,318
    )BALANCEMARCH 31, 2010
    
    
    24,460,240
    
    
    $
    244,602
    
    
    $
    201,991,693
    
    
    $
    (28,755,949
    )
    
    $
    (18,604,405
    )
    
    $
    55,447,278
    
    
    $
    4,110,367
    
    
    $
    214,433,586
 Common
    
    
    
    
    
    
    AccumulatedStock
    
    
    
    
    
    
    OtherCommon
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Acquired by
    
    
    
    
    
    
    Comprehensive
    
    
    TotalStock
    
    
    Common
    
    
    Paid-in
    
    
    Treasury
    
    
    Benefit
    
    
    Retained
    
    
    Income
    
    
    StockholdersShares
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Plans
    
    
    Earnings
    
    
    (Loss)
    
    
    EquityBALANCEJANUARY 1, 2009
    
    
    24,460,240
    
    
    $
    244,602
    
    
    $
    201,378,465
    
    
    $
    (10,525,100
    )
    
    $
    (21,923,096
    )
    
    $
    66,007,138
    
    
    $
    2,918,576
    
    
    $
    238,100,585Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,152,369
    
    
    
    
    
    
    
    2,152,369Net unrealized holding gain on
available for sale securities
arising during the period, net
of tax expense of $353,185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    685,595
    
    
    
    685,595Amortization of unrecognized
deferred costs on SERP, net
of tax benefit of $4,549
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,830
    
    
    
    8,830Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,846,794Treasury stock purchased
(1,381,055 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,014,188
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,014,188
    )Cash dividends declared,
($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,026,769
    )
    
    
    
    
    
    
    (1,026,769
    )Excess tax liability on
stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    (68,037
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68,037
    )Stock options expense
    
    
    
    
    
    
    
    
    
    
    221,151
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,151Common stock released from
benefit plans
    
    
    
    
    
    
    
    
    
    
    (73,902
    )
    
    
    
    
    
    
    874,670
    
    
    
    
    
    
    
    
    
    
    
    800,768Common stock acquired by
benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,069
    )
    
    
    
    
    
    
    
    
    
    
    (16,069
    )BALANCEMARCH 31, 2009
    
    
    24,460,240
    
    
    $
    244,602
    
    
    $
    201,457,677
    
    
    $
    (20,539,288
    )
    
    $
    (21,064,495
    )
    
    $
    67,132,738
    
    
    $
    3,613,001
    
    
    $
    230,844,235
   3




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##### Table of Contents



ABINGTON BANCORP, INC.
 
 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,2010
    
    
    2009OPERATING ACTIVITIES:$
    1,608,360
    
    
    $
    2,152,369Adjustments to reconcile net income to net cash provided by operating
activities:Provision for loan losses
    
    
    563,445
    
    
    
    116,691Depreciation
    
    
    229,725
    
    
    
    222,185Stock-based compensation expense
    
    
    771,058
    
    
    
    782,448Net loss (gain) on real estate owned
    
    
    297,286
    
    
    
    (15,834
    )Deferred income tax (benefit) expense
    
    
    (241,840
    )
    
    
    1,310,976Amortization of:Deferred loan fees
    
    
    (331,420
    )
    
    
    (307,654
    )Premiums and discounts, net
    
    
    (41,830
    )
    
    
    (57,690
    )Income from bank owned life insurance
    
    
    (438,486
    )
    
    
    (448,554
    )Changes in assets and liabilities which (used) provided cash:Accrued interest receivable
    
    
    (244,306
    )
    
    
    (70,753
    )Prepaid expenses and other assets
    
    
    999,366
    
    
    
    (773,246
    )Accrued interest payable
    
    
    892,560
    
    
    
    838,042Accounts payable and accrued expenses
    
    
    311,778
    
    
    
    (374,835
    )Net cash provided by operating activities
    
    
    4,375,696
    
    
    
    3,374,145INVESTING ACTIVITIES:Principal collected on loans
    
    
    29,717,723
    
    
    
    34,124,827Disbursements for loans
    
    
    (17,668,949
    )
    
    
    (40,870,441
    )Purchases of:Mortgage-backed securities available for sale
    
    
    (18,466,875
    )
    
    
    (4,399,240
    )Investments available for sale
    
    
    (35,013,521
    )
    
    
    (535,024
    )Property and equipment
    
    
    (7,439
    )
    
    
    (97,727
    )Proceeds from:Maturities of mortgage-backed securities held to maturity
    
    
    150,178
    
    
    
    Maturities of mortgage-backed securities available for sale
    
    
    
    
    
    
    461,536Maturities of investments available for sale
    
    
    18,540,000
    
    
    
    9,194,000Principal repayments of mortgage-backed securities held to maturity
    
    
    5,348,352
    
    
    
    4,318,601Principal repayments of mortgage-backed securities available for sale
    
    
    12,904,872
    
    
    
    8,886,562Sales of real estate owned
    
    
    704,914
    
    
    
    491,106Reimbursements towards real estate owned
    
    
    
    
    
    
    75,445Net cash (used in) provided by investing activities
    
    
    (3,790,745
    )
    
    
    11,649,645FINANCING ACTIVITIES:Net increase in demand deposits and savings accounts
    
    
    20,215,781
    
    
    
    23,169,586Net increase in certificate accounts
    
    
    7,232,341
    
    
    
    41,562,821Net increase in other borrowed money
    
    
    5,414,286
    
    
    
    2,727,131Advances from Federal Home Loan Bank
    
    
    935,000
    
    
    
    45,935,000Repayments of advances from Federal Home Loan Bank
    
    
    (6,941,261
    )
    
    
    (100,487,696
    )Net increase in advances from borrowers for taxes and insurance
    
    
    548,213
    
    
    
    1,056,989Proceeds from exercise of stock options
    
    
    51,428
    
    
    
    Excess tax liability from stock-based compensation
    
    
    (63,591
    )
    
    
    (68,037
    )Purchase of treasury stock
    
    
    (1,374,751
    )
    
    
    (10,014,188
    )Payment of cash dividend
    
    
    (965,995
    )
    
    
    (1,026,769
    )Net cash provided by financing activities
    
    
    25,051,451
    
    
    
    2,854,837NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    25,636,402
    
    
    
    17,878,627CASH AND CASH EQUIVALENTSBeginning of period
    
    
    44,714,239
    
    
    
    31,863,344CASH AND CASH EQUIVALENTSEnd of period
    
    $
    70,350,641
    
    
    $
    49,741,971
   4




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##### Table of Contents



ABINGTON BANCORP, INC.
 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
 Three Months Ended March 31,2010
    
    
    2009SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the year for:Interest on deposits and other borrowings
    
    $
    3,964,381
    
    
    $
    5,302,517Income taxes
    
    $
    
    
    
    $
    Non-cash transfer of loans to real estate owned
    
    $
    
    
    
    $
    11,950,195Acquisition of stock for deferred compensation plans trust
    
    $
    17,318
    
    
    $
    16,069Release of stock from deferred compensation plans trust
    
    $
    2,600
    
    
    $
    239,471
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##### Table of Contents



ABINGTON BANCORP, INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 Basis of Financial Statement PresentationAbington Bancorp, Inc. (the Company) is a
Pennsylvania corporation which was organized to be the stock holding company for Abington
Savings Bank in connection with our second-step conversion and reorganization completed in 2007,
which is discussed further below. Abington Savings Bank is a Pennsylvania-chartered,
FDIC-insured savings bank, which conducts business under the name Abington Bank (the Bank or
Abington Bank). As a result of the Banks election pursuant to Section 10(l) of the Home
Owners Loan Act, the Company is a savings and loan holding company regulated by the Office of
Thrift Supervision (the OTS). The Bank is a wholly owned subsidiary of the Company. The
Companys results of operations are primarily dependent on the results of the Bank and the
Banks wholly owned subsidiaries, ASB Investment Co., American Street Lofts LLC, 1210 Chestnut
Realty LLC, and North Front Street Realty LLC. The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, which combined constitute one
reportable segment. All significant intercompany balances and transactions have been eliminated.
 The Banks executive offices are in Jenkintown, Pennsylvania, with 12 other branches and seven
limited service facilities located in Montgomery, Bucks and Delaware Counties, Pennsylvania. The
Bank is principally engaged in the business of accepting customer deposits and investing these
funds in loans that include residential mortgage, commercial, consumer and construction loans.
The principal business of ASB Investment Co. is to hold certain investment securities for the
Bank. The principal business of American Street Lofts LLC, 1210 Chestnut Realty LLC, and North
Front Realty LLC is to own and manage certain properties that were acquired as real estate
owned. The Bank also has the following inactive subsidiaries  Keswick Services II, and its
wholly owned subsidiaries, and Abington Corp.
 The accompanying unaudited consolidated financial statements were prepared in accordance with
the instructions to Form 10-Q, and therefore, do not include all the information or footnotes
necessary for a complete presentation of financial condition, results of operations, changes in
stockholders equity and comprehensive income and cash flows in conformity with accounting
principles generally accepted in the United States of America. However, all normal recurring
adjustments that, in the opinion of management, are necessary for a fair presentation of the
consolidated financial statements have been included. These financial statements should be read
in conjunction with the audited consolidated financial statements of Abington Bancorp, Inc. and
the accompanying notes thereto for the year ended December 31, 2009, which are included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2009. The results for the
three months ended March 31, 2010 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2010, or any other period.
 The Company follows accounting standards set by the Financial Accounting Standards Board (the
FASB). The FASB sets accounting principles generally accepted in the United States (U.S.
GAAP) that we follow to ensure we consistently report our financial condition, results of
operations and cash flows. The FASB established the FASB Accounting Standards Codification (the
Codification or the ASC) as the source of authoritative accounting principles effective for
interim
and annual periods ended on or after September 15, 2009. The Company adopted the Codification as
of September 30, 2009. The adoption did not have an impact on our financial position or results
of operations.
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In accordance with the subsequent events topic of the ASC, the Company evaluates events and
transactions that occur after the balance sheet date for potential recognition in the financial
statements. The effect of all subsequent events that provide additional evidence of conditions
that existed at the balance sheet date are recognized in the financial statements as of March
31, 2010.
 Use of Estimates in the Preparation of Financial StatementsThe preparation of financial
statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. The Companys most significant
estimates are the allowance for loan losses, the assessment of other-than-temporary impairment
of investment and mortgage-backed securities and deferred income taxes.
 Other-Than-Temporary Impairment of SecuritiesSecurities are evaluated on at least a quarterly
basis, and more frequently when market conditions warrant such an evaluation, to determine
whether a decline in their value is other-than-temporary. To determine whether a loss in value
is other-than-temporary, management utilizes criteria such as the reasons underlying the
decline, the magnitude and duration of the decline and whether or not management intends to sell
or expects that it is more likely than not that it will be required to sell the security prior
to an anticipated recovery of the fair value. The term other-than-temporary is not intended to
indicate that the decline is permanent, but indicates that the prospects for a near-term
recovery of value is not necessarily favorable, or that there is a lack of evidence to support a
realizable value equal to or greater than the carrying value of the investment. Once a decline
in value for a debt security is determined to be other-than-temporary, the other-than-temporary
impairment is separated into (a) the amount of the total other-than-temporary impairment related
to a decrease in cash flows expected to be collected from the debt security (the credit loss)
and (b) the amount of the total other-than-temporary impairment related to all other factors.
The amount of the total other-than-temporary impairment related to the credit loss is recognized
in earnings. The amount of the total other-than-temporary impairment related to all other
factors is recognized in other comprehensive income. For equity securities, the full amount of
the other-than-temporary impairment is recognized in earnings. No impairment charges were
recognized during the three months ended March 31, 2010 or 2009.
 Allowance for Loan LossesThe allowance for loan losses is increased by charges to income
through the provision for loan losses and decreased by charge-offs (net of recoveries). The
allowance is maintained at a level that management considers adequate to provide for losses
based upon evaluation of the known and inherent risks in the loan portfolio. Managements
periodic evaluation of the adequacy of the allowance is based on the Companys past loan loss
experience, the volume and composition of lending conducted by the Company, adverse situations
that may affect a borrowers ability to repay, the estimated value of any underlying collateral,
current economic conditions and other factors affecting the known and inherent risk in the
portfolio. Managements evaluation of these factors is done separately for each type of loan.
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The allowance consists of specific allowances for impaired loans, a general allowance, or in
some cases a specific allowance, on all classified and criticized loans which are not impaired
and a general allowance on the remainder of the portfolio. Although we determine the amount of
each element of the allowance separately, the entire allowance for loan losses is available for
the entire portfolio. The
allowance on impaired loans is established for the amount by which the discounted cash flows,
observable market price or fair value of collateral if the loan is collateral dependent is lower
than the carrying value of the loan. The general valuation allowance on classified and
criticized loans which are not impaired relates to loans that are assigned to categories such as
doubtful, substandard or special mention, based on identified weaknesses that increase the
credit risk of the loan. The general allowance on non-classified and non-criticized loans is
established to recognize the inherent losses associated with lending activities, but which,
unlike specific allowances, have not been allocated to particular problem loans. This allowance
is based on historical loss experience adjusted for qualitative factors including the
composition of the loan portfolio, collateral value trends and current economic conditions.
 The Company measures impaired loans based on the present value of expected future cash flows
discounted at the loans effective interest rate, the loans observable market price, or the
fair value of the collateral if the loan is collateral dependent. During the periods presented,
loan impairment was evaluated based on the fair value of the loans collateral. The
determination of fair value for the collateral underlying a loan is more fully described in Note
8. Impairment losses are included in the provision for loan losses.
 Comprehensive IncomeThe Company presents as a component of comprehensive income the amounts
from transactions and other events which currently are excluded from the consolidated statements
of income and are recorded directly to stockholders equity. These amounts consist of unrealized
holding gains on available for sale securities and amortization of unrecognized deferred costs
of the Companys defined benefit pension plan.
 The components of other comprehensive income are as follows:
 Three Months EndedMarch 31,2010
    
    
    2009Net unrealized gain on securities
arising during the period, net of tax
    
    $
    220,044
    
    
    $
    685,595Plus: reclassification adjustment for net gain
included in net income, net of tax
    
    
    
    
    
    
    Net unrealized gain on securities,
net of tax
    
    $
    220,044
    
    
    $
    685,595Amortization of deferred costs on
supplemental retirement plan, net of tax
    
    
    19,751
    
    
    
    8,830Total other comprehensive income,
net of tax
    
    $
    239,795
    
    
    $
    694,425
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The components of accumulated other comprehensive income are as follows:
 March 31,
    
    
    December 31,2010
    
    
    2009Net unrealized gain on securities
    
    $
    4,261,904
    
    
    $
    4,041,860Unrecognized deferred costs of supplemental
retirement plan
    
    
    (151,537
    )
    
    
    (171,288
    )Total accumulated other comprehensive
income
    
    $
    4,110,367
    
    
    $
    3,870,572
 Share-Based CompensationThe Company accounts for its share-based compensation awards in
accordance with the stock compensation topic of the ASC. Under ASC Topic 718, Compensation 
Stock Compensation(ASC 718), the Company recognizes the cost of employee services received in
share-based payment transactions and measures the cost based on the grant-date fair value of the
award. That cost will be recognized over the period during which an employee is required to
provide service in exchange for the award.
 At March 31, 2010, the Company has four share-based compensation plans, the 2005 and the 2007
Recognition and Retention Plans and the 2005 and 2007 Stock Option Plans. Share awards were
first issued under the 2005 plans in July 2005. Share awards were first issued under the 2007
plans in January 2008. These plans are more fully described in Note 6.
 The Company also has an employee stock ownership plan (ESOP). This plan is more fully
described in Note 6. Shares held under the ESOP are also accounted for under ASC 718. As ESOP
shares are committed to be released and allocated among participants, the Company recognizes
compensation expense equal to the average market price of the shares over the period earned.
 Earnings per shareEarnings per share (EPS) consists of two separate components, basic EPS
and diluted EPS. Basic EPS is computed based on the weighted average number of shares of common
stock outstanding for each period presented. Diluted EPS is calculated based on the weighted
average number of shares of common stock outstanding plus dilutive common stock equivalents
(CSEs). CSEs consist of shares that are assumed to have been purchased with the proceeds from
the exercise of stock options, as well as unvested common stock awards. Common stock equivalents
which are considered antidilutive are not included for the purposes of this calculation. For the
three months ended March 31, 2010 and 2009, there were 2,183,700 and 2,206,296 antidilutive
CSEs, respectively. Earnings per share were calculated as follows:
 Three Months Ended March 31,2010
    
    
    2009Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNet income
    
    $
    1,608,360
    
    
    $
    1,608,360
    
    
    $
    2,152,369
    
    
    $
    2,152,369Weighted average shares outstanding
    
    
    18,995,279
    
    
    
    18,995,279
    
    
    
    20,550,141
    
    
    
    20,550,141Effect of common stock equivalents
    
    
    
    
    
    
    377,243
    
    
    
    
    
    
    
    557,402Adjusted weighted average shares
used
in earnings per share computation
    
    
    18,995,279
    
    
    
    19,372,522
    
    
    
    20,550,141
    
    
    
    21,107,543Earnings per share
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.10
    
    
    $
    0.10
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Recent Accounting PronouncementsIn June 2009, the FASB issued Statement of Financial
Accounting Standards (SFAS) No. 166, Accounting for Transfers of Financial Assets, an
amendment of FASB Statement No. 140(SFAS 166).This statement was codified in December 2009
through the issuance of Accounting Standards Update (ASU) 2009-16, Accounting for Transfers of
Financial Assets, which updates ASC 860, Transfers and Servicing. The updated guidance removes
the concept of a qualifying special-purpose entity and limits the circumstances in which a
financial asset, or portion of a financial asset, should be derecognized when the transferor has
not transferred the entire involvement with the transferred financial asset. The guidance also
enhances information reported to financial statement users by increasing the transparency of
disclosures about transfers of financial assets and an entitys continuing involvement with
transferred financial assets. The amended guidance in ASU 2009-16 is effective for fiscal years
beginning after November 15, 2009. The Company adopted this guidance on January 1, 2010. The
adoption did not have a significant impact on our financial position or results of operations.
 In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R)(SFAS
167).This statement was codified in December 2009 through the issuance of ASU 2009-17,
Improvements to Financial Reporting By Enterprises Involved with Variable Interest Entities,
which updated ASC 810, Consolidations. The updated guidance amends tests for variable interest
entities to determine whether a variable interest entity (a VIE) must be consolidated. The
updated guidance requires an entity to determine whether it has a controlling financial interest
in a VIE through an approach focused on identifying which reporting entity has (1) the power to
direct the activities of a VIE that most significantly affect the entitys economic performance
and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity.
The updated guidance also requires enhanced disclosures about a reporting entitys involvement
with VIEs and about any significant changes in risk exposure as a result of that involvement.
The amended guidance in ASU 2009-17 is effective for fiscal years beginning after November 15,
2009. The Company adopted this guidance on January 1, 2010. The adoption did not have any
impact on our financial position or results of operations.
 In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value
Measurements, which updates ASC 820, Fair Value Measurements and Disclosures. The updated
guidance adds new requirements for disclosures about transfers into and out of Levels 1 and 2
and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3
measurements. It also clarifies existing fair value disclosures about the level of
disaggregation and about inputs and valuation techniques used to measure fair value. The amended
guidance in ASU 2010-06 is effective for the first interim or annual reporting period beginning
after December 15, 2009, except for the requirement to provide the Level 3 activity of purchase,
sales, issuances, and settlements on a gross basis, which will be effective for fiscal years
beginning after December 15, 2010. The Company adopted the amended guidance, except for the
requirement effective for fiscal years beginning after December 15, 2010, on January 1, 2010.
The adoption did not have any impact on our financial position or results of operations.
 In March 2010, the FASB issues ASU 2010-11, Scope Exception Related to Embedded Credit
Derivatives, which updates ASC 815, Derivatives and Hedging. The updated guidance addresses
application of the embedded derivative scope exception in ASC 815-15-15-8 and 15-9 and primarily
affects entities that hold or issue investments in financial instruments that contain embedded
credit derivative features. The ASU includes a transition provision which permits entities to
make a special one-time election to apply the fair value option to any investments in a
beneficial interest in securitized financial asset, regardless of whether such investments
contain embedded derivative features. The amended guidance is effective for the Company on July
1, 2010. The Company is continuing to evaluate this guidance, but does not expect that the
guidance will have a significant impact on our financial position or results of operations.
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##### Table of Contents



ReclassificationsCertain items in the 2009 consolidated financial statements have been
reclassified to conform to the presentation in the 2010 consolidated financial statements. Such
reclassifications did not have a material impact on the presentation of the overall financial
statements.
 2.
    
    INVESTMENT SECURITIES
 The amortized cost and estimated fair value of investment securities are summarized as follows:
 Held to MaturityMarch 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:Municipal bonds
    
    $
    20,386,403
    
    
    $
    444,330
    
    
    $
    
    
    
    $
    20,830,733Total debt
securities
    
    $
    20,386,403
    
    
    $
    444,330
    
    
    $
    
    
    
    $
    20,830,733
 Available for SaleMarch 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:Agency bonds
    
    $
    73,860,511
    
    
    $
    783,431
    
    
    $
    (57,849
    )
    
    $
    74,586,093Corporate bonds and
commercial paper
    
    
    2,113,618
    
    
    
    18,082
    
    
    
    
    
    
    
    2,131,700Municipal bonds
    
    
    20,688,125
    
    
    
    974,175
    
    
    
    (4,397
    )
    
    
    21,657,903Certificates of deposit
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    99,000Total debt securities
    
    
    96,761,254
    
    
    
    1,775,688
    
    
    
    (62,246
    )
    
    
    98,474,696Equity securities:Common stock
    
    
    10
    
    
    
    
    
    
    
    (2
    )
    
    
    8Mutual funds
    
    
    2,602,057
    
    
    
    5,077
    
    
    
    
    
    
    
    2,607,134Total equity
securities
    
    
    2,602,067
    
    
    
    5,077
    
    
    
    (2
    )
    
    
    2,607,142Total
    
    $
    99,363,321
    
    
    $
    1,780,765
    
    
    $
    (62,248
    )
    
    $
    101,081,838
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##### Table of Contents



Held to MaturityDecember 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:Municipal bonds
    
    $
    20,386,944
    
    
    $
    400,325
    
    
    $
    
    
    
    $
    20,787,269Total debt
securities
    
    $
    20,386,944
    
    
    $
    400,325
    
    
    $
    
    
    
    $
    20,787,269
 Available for SaleDecember 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:Agency bonds
    
    $
    55,863,999
    
    
    $
    691,337
    
    
    $
    (95,669
    )
    
    $
    56,459,667Corporate bonds and
commercial paper
    
    
    3,123,496
    
    
    
    6,286
    
    
    
    (8,342
    )
    
    
    3,121,440Municipal bonds
    
    
    21,238,185
    
    
    
    817,838
    
    
    
    (848
    )
    
    
    22,055,175Certificates of deposit
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    99,000Total debt securities
    
    
    80,324,680
    
    
    
    1,515,461
    
    
    
    (104,859
    )
    
    
    81,735,282Equity securities:Common stock
    
    
    10
    
    
    
    
    
    
    
    (1
    )
    
    
    9Mutual funds
    
    
    2,580,411
    
    
    
    1,569
    
    
    
    
    
    
    
    2,581,980Total equity
securities
    
    
    2,580,421
    
    
    
    1,569
    
    
    
    (1
    )
    
    
    2,581,989Total
    
    $
    82,905,101
    
    
    $
    1,517,030
    
    
    $
    (104,860
    )
    
    $
    84,317,271
 There were no sales of debt or equity securities during the three months ended March 31,
2010 or 2009. No impairment charge was recognized on investment securities during the three
months ended March 31, 2010 or 2009.
 All municipal bonds included in debt securities are bank-qualified municipal bonds.
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The amortized cost and estimated fair value of debt securities by contractual maturity are shown
below. Expected maturities will differ from contractual maturities because the parties may have
the right to call or prepay obligations with or without call or prepayment penalties.
 March 31, 2010Available for Sale
    
    
    Held to MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    4,708,640
    
    
    $
    4,737,005
    
    
    $
    
    
    
    $
    Due after one year
through five years
    
    
    81,890,521
    
    
    
    83,318,354
    
    
    
    
    
    
    
    Due after five years
through ten years
    
    
    10,162,093
    
    
    
    10,419,337
    
    
    
    9,507,457
    
    
    
    9,748,699Due after ten years
    
    
    
    
    
    
    
    
    
    
    10,878,946
    
    
    
    11,082,034Total
    
    $
    96,761,254
    
    
    $
    98,474,696
    
    
    $
    20,386,403
    
    
    $
    20,830,733
 The table below sets forth investment securities which had an unrealized loss position as
of March 31, 2010:
 Less than 12 months
    
    
    More than 12 monthsGross
    
    
    Estimated
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    ValueSecurities available for sale:Agency bonds
    
    $
    (57,849
    )
    
    $
    27,935,300
    
    
    $
    
    
    
    $
    Municipal bonds
    
    
    (4,397
    )
    
    
    814,595
    
    
    
    
    
    
    
    Equity securities
    
    
    (2
    )
    
    
    8
    
    
    
    
    
    
    
    Total securities
available for sale
    
    
    (62,248
    )
    
    
    28,749,903
    
    
    
    
    
    
    
    
 The table below sets forth investment securities which had an unrealized loss position as
of December 31, 2009:
 Less than 12 months
    
    
    More than 12 monthsGross
    
    
    Estimated
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    ValueSecurities available for sale:Agency bonds
    
    $
    (95,669
    )
    
    $
    18,299,480
    
    
    $
    
    
    
    $
    Corporate bonds and
commercial paper
    
    
    (8,342
    )
    
    
    1,127,220
    
    
    
    
    
    
    
    Municipal bonds
    
    
    (848
    )
    
    
    251,938
    
    
    
    
    
    
    
    Equity securities
    
    
    (1
    )
    
    
    9
    
    
    
    
    
    
    
    Total securities
available for sale
    
    
    (104,860
    )
    
    
    19,678,647
    
    
    
    
    
    
    
    
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On a quarterly basis, management of the Company reviews the securities in its investment
portfolio to identify any securities that might have an other-than-temporary impairment. At
March 31, 2010, no investment securities were in a gross unrealized loss position for 12 months
or longer. Investment securities in a gross unrealized loss position for less than 12 months at
March 31, 2010, consisted of 15 securities having an aggregate depreciation of 0.2% from the
Companys amortized cost basis. The 15 securities included 11 agency bonds, three municipal
bonds, and one equity security. Management has concluded that, as of March 31, 2010, the
unrealized losses above were temporary in nature. The unrealized loss on the equity security is
not material. The unrealized losses on these debt securities are not related to the underlying
credit quality of the issuers, and they are on securities that have contractual maturity dates.
The principal and interest payments on these debt securities have been made as scheduled, and
there is no evidence that the issuers will not continue to do so. In managements opinion, the
future principal payments will be sufficient to recover the current amortized costs of the
securities. The unrealized losses above are primarily related to market interest rates and the
current market environment. The current declines in market value are not significant, and
management of the Company believes that the values will recover as market interest rates move
and the current market environment improves. The Company does not currently have plans to sell
any of these securities, nor does it anticipate that it will be required to sell any of these
securities prior to a recovery of their cost basis.
 3.
    
    MORTGAGE-BACKED SECURITIES
 The amortized cost and estimated fair value of mortgage-backed securities are summarized as
follows:
 Held to MaturityMarch 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueGNMA pass-through
certificates
    
    $
    16,739,474
    
    
    $
    369,337
    
    
    $
    (83,290
    )
    
    $
    17,025,521FNMA pass-through
certificates
    
    
    26,187,836
    
    
    
    1,168,103
    
    
    
    
    
    
    
    27,355,939FHLMC pass-through
certificates
    
    
    12,381,807
    
    
    
    309,527
    
    
    
    (14,762
    )
    
    
    12,676,572Collateralized
mortgage
obligations
    
    
    16,318,679
    
    
    
    
    
    
    
    (1,171,956
    )
    
    
    15,146,723Total
    
    $
    71,627,796
    
    
    $
    1,846,967
    
    
    $
    (1,270,008
    )
    
    $
    72,204,755
  14




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##### Table of Contents



Available for saleMarch 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueGNMA pass-through
certificates
    
    $
    2,336
    
    
    $
    360
    
    
    $
    
    
    
    $
    2,696FNMA pass-through
certificates
    
    
    42,940,677
    
    
    
    2,210,386
    
    
    
    
    
    
    
    45,151,063FHLMC pass-through
certificates
    
    
    42,888,719
    
    
    
    2,150,445
    
    
    
    (4,365
    )
    
    
    45,034,799Collateralized
mortgage
obligations
    
    
    53,728,284
    
    
    
    477,663
    
    
    
    (95,575
    )
    
    
    54,110,372Total
    
    $
    139,560,016
    
    
    $
    4,838,854
    
    
    $
    (99,940
    )
    
    $
    144,298,930
 Held to MaturityDecember 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueGNMA pass-through
certificates
    
    $
    18,607,580
    
    
    $
    374,179
    
    
    $
    (198,784
    )
    
    $
    18,782,975FNMA pass-through
certificates
    
    
    27,817,665
    
    
    
    1,031,598
    
    
    
    
    
    
    
    28,849,263FHLMC pass-through
certificates
    
    
    13,242,317
    
    
    
    258,707
    
    
    
    (26,483
    )
    
    
    13,474,541Collateralized
mortgage
obligations
    
    
    17,482,374
    
    
    
    
    
    
    
    (1,291,656
    )
    
    
    16,190,718Total
    
    $
    77,149,936
    
    
    $
    1,664,484
    
    
    $
    (1,516,923
    )
    
    $
    77,297,497
 Available for saleDecember 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueGNMA pass-through
certificates
    
    $
    2,464
    
    
    $
    369
    
    
    $
    
    
    
    $
    2,833FNMA pass-through
certificates
    
    
    45,813,997
    
    
    
    2,265,098
    
    
    
    
    
    
    
    48,079,095FHLMC pass-through
certificates
    
    
    48,863,220
    
    
    
    2,363,183
    
    
    
    (24,953
    )
    
    
    51,201,450Collateralized
mortgage
obligations
    
    
    39,237,050
    
    
    
    354,656
    
    
    
    (246,492
    )
    
    
    39,345,214Total
    
    $
    133,916,731
    
    
    $
    4,983,306
    
    
    $
    (271,445
    )
    
    $
    138,628,592
  15




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##### Table of Contents



There were no sales of mortgage-backed securities during the three months ended March 31,
2010 or 2009. No impairment charge was recognized on mortgage-backed securities during the three
months ended March 31, 2010 or 2009.
 Our collateralized mortgage obligations (CMOs) are issued by the FNMA and the FHLMC as well as
certain AAA rated private issuers. At March 31, 2010 and December 31, 2009, respectively, $7.9
million and $8.4 million of our CMOs were issued by private issuers.
 The table below sets forth mortgage-backed securities which had an unrealized loss position as
of March 31, 2010:
 Less than 12 months
    
    
    More than 12 monthsGross
    
    
    Estimated
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    ValueSecurities held to maturity:GNMA pass-through
certificates
    
    $
    (83,290
    )
    
    $
    10,197,886
    
    
    $
    
    
    
    $
    FHLMC pass-through
certificates
    
    
    (14,762
    )
    
    
    4,681,730
    
    
    
    
    
    
    
    Collateralized mortgage
obligations
    
    
    (214,740
    )
    
    
    8,225,883
    
    
    
    (957,216
    )
    
    
    6,920,840Total securities held to maturity
    
    
    (312,792
    )
    
    
    23,105,499
    
    
    
    (957,216
    )
    
    
    6,920,840Securities available for sale:FHLMC pass-through
certificates
    
    
    
    
    
    
    
    
    
    
    (4,365
    )
    
    
    1,090,643Collateralized mortgage
obligations
    
    
    (72,611
    )
    
    
    20,753,057
    
    
    
    (22,964
    )
    
    
    3,369,402Total securities available for
sale
    
    
    (72,611
    )
    
    
    20,753,057
    
    
    
    (27,329
    )
    
    
    4,460,045Total
    
    $
    (385,403
    )
    
    $
    43,858,556
    
    
    $
    (984,545
    )
    
    $
    11,380,885
  16




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The table below sets forth mortgage-backed securities which had an unrealized loss position
as of December 31, 2009:
 Less than 12 months
    
    
    More than 12 monthsGross
    
    
    Estimated
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    ValueSecurities held to maturity:GNMA pass-through
certificates
    
    $
    (198,784
    )
    
    $
    10,122,441
    
    
    $
    
    
    
    $
    FHLMC pass-through
certificates
    
    
    (26,483
    )
    
    
    4,787,594
    
    
    
    
    
    
    
    Collateralized mortgage
obligations
    
    
    (322,627
    )
    
    
    8,755,414
    
    
    
    (969,029
    )
    
    
    7,435,304Total securities held to maturity
    
    
    (547,894
    )
    
    
    23,665,449
    
    
    
    (969,029
    )
    
    
    7,435,304Securities available for sale:FHLMC pass-through
certificates
    
    
    (21,372
    )
    
    
    2,060,797
    
    
    
    (3,581
    )
    
    
    1,225,716Collateralized mortgage
obligations
    
    
    (194,886
    )
    
    
    13,186,239
    
    
    
    (51,606
    )
    
    
    3,340,759Total securities available for
sale
    
    
    (216,258
    )
    
    
    15,247,036
    
    
    
    (55,187
    )
    
    
    4,566,475Total
    
    $
    (764,152
    )
    
    $
    38,912,485
    
    
    $
    (1,024,216
    )
    
    $
    12,001,779
 On a quarterly basis, management of the Company reviews the securities in its investment
portfolio to identify any securities that might have an other-than-temporary impairment. At
March 31, 2010, mortgage-backed securities in a gross unrealized loss position for 12 months or
longer consisted of six securities having an aggregate depreciation of 8.0% from the Companys
amortized cost basis. The six securities included one FHLMC balloon MBS and five CMOs of which
one was an agency CMO and four of which were issued by private issuers. Included in this total
are two CMOs with an aggregate principal balance of approximately $3.6 million at March 31,
2010, that had declines of approximately 21% and 23% from their amortized cost basis at such
date. These CMOs were issued by private issuers. Mortgage-backed securities in a gross
unrealized loss position for less than 12 months at March 31, 2010, consisted of 13 securities
having an aggregate depreciation of 0.9% from the Companys amortized cost basis. The 13
securities included two GNMA MBS, one FHLMC MBS, and ten CMOs, all of which were agency CMOs.
Management has concluded that, as of March 31, 2010, the unrealized losses above, including the
losses on the CMOs issued by private
issuers, were temporary in nature. There is no exposure to subprime loans in our mortgage-backed
securities portfolio, including our CMOs. The losses are not related to the underlying credit
quality of the issuers, all of whom remain AAA rated, including the private issuers, and they
are on securities that have contractual maturity dates. The principal and interest payments on
our mortgage-backed securities, including the CMOs, have been made as scheduled, and there is no
evidence that the issuers will not continue to do so. In managements opinion, the future
principal payments will be sufficient to recover the current amortized cost of the securities.
The unrealized losses above are primarily related to market interest rates and the current
market environment. The current declines in market value are not significant, and management of
the Company believes that these values will recover as market interest rates move and the market
environment improves. The Company does not currently have plans to sell any these securities,
nor does it anticipate that it will be required to sell any these securities prior to a recovery
of their cost basis.
  17




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4.
    
    LOANS RECEIVABLE AND REAL ESTATE OWNED
 Loans receivable consist of the following:
 March 31, 2010
    
    
    December 31, 2009One-to four-family residential
    
    $
    424,528,057
    
    
    $
    432,004,572Multi-family residential and
commercial
    
    
    129,271,322
    
    
    
    135,482,758Construction
    
    
    191,129,880
    
    
    
    203,642,336Home equity lines of credit
    
    
    38,886,458
    
    
    
    36,273,685Commercial business loans
    
    
    21,123,798
    
    
    
    18,876,987Consumer non-real estate loans
    
    
    676,249
    
    
    
    2,358,063Total loans
    
    
    805,615,764
    
    
    
    828,638,401Less:Construction loans in process
    
    
    (43,382,509
    )
    
    
    (54,198,647
    )Deferred loan fees, net
    
    
    (634,171
    )
    
    
    (789,460
    )Allowance for loan losses
    
    
    (9,319,942
    )
    
    
    (9,090,353
    )Loans receivablenet
    
    $
    752,279,142
    
    
    $
    764,559,941
 Following is a summary of changes in the allowance for loan losses:
 Three Months Ended
    
    
    Year Ended
    
    
    Three Months EndedMarch 31, 2010
    
    
    December 31, 2009
    
    
    March 31, 2009Balancebeginning of year
    
    $
    9,090,353
    
    
    $
    11,596,784
    
    
    $
    11,596,784Provision for loan losses
    
    
    563,445
    
    
    
    18,736,847
    
    
    
    116,691Charge-offs
    
    
    (342,267
    )
    
    
    (21,394,378
    )
    
    
    (3,669,223
    )Recoveries
    
    
    8,411
    
    
    
    151,100
    
    
    
    138,881(Charge-offs)/recoveriesnet
    
    
    (333,856
    )
    
    
    (21,243,278
    )
    
    
    (3,530,342
    )Balanceend of period
    
    $
    9,319,942
    
    
    $
    9,090,353
    
    
    $
    8,183,133
  18




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##### Table of Contents



The provision for loan losses is charged to expense to maintain the allowance for loan
losses at a level that management considers adequate to provide for losses based upon an
evaluation of the loan portfolio, including an evaluation of impaired loans, that considers a
number of factors such as past loan loss experience, adverse situations that may affect a
borrowers ability to repay, the estimated value of any underlying collateral, current economic
conditions and other factors affecting the known and inherent risk in the portfolio.
Managements evaluation of these factors is done separately for each type of loan. A loan is
considered to be impaired when, based upon current information and events, it is probable that
the Company will be unable to collect all amounts due according to the
contractual terms of the loan. An insignificant delay or insignificant shortfall in amount
of payments does not necessarily result in the loan being identified as impaired. For this
purpose, delays less than 90 days are generally considered to be insignificant. During the
periods presented, loan impairment was evaluated based on the fair value of the loans
collateral. The determination of fair value for the collateral underlying a loan is more fully
described in Note 8. Impairment losses are included in the provision for loan losses. Large
groups of smaller balance, homogeneous loans are collectively evaluated for impairment, except
for those loans restructured under a troubled debt restructuring. Loans collectively evaluated
for impairment include smaller balance commercial real estate loans, residential real estate
loans and consumer loans.
  March 31,
    
    
    December 31,2010
    
    
    2009Impaired collateral-dependent loans with a
valuation allowance
    
    $
    17,827,725
    
    
    $
    18,111,166Impaired collateral-dependent loans with no
valuation allowance
    
    
    9,619,709
    
    
    
    10,237,145Total Impaired collateral-dependent loans
    
    $
    27,447,434
    
    
    $
    28,348,311Average impaired loan balance
    
    $
    27,912,752
    
    
    $
    23,575,378Valuation allowance on impaired loans
    
    $
    3,794,300
    
    
    $
    3,605,504Interest income recognized on impaired loans
    
    $
    
    
    
    $
    
   19




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##### Table of Contents



Three Months Ended
    
    
    Year EndedMarch 31, 2010
    
    
    December 31, 2009Balancebeginning of period
    
    $
    22,818,856
    
    
    $
    1,739,599Additions
    
    
    
    
    
    
    25,582,818Capitalized improvements
    
    
    
    
    
    
    1,129,046Valuation adjustments
    
    
    (166,981
    )
    
    
    (4,501,580
    )Dispositions
    
    
    (835,219
    )
    
    
    (1,131,027
    )Balanceend of period
    
    $
    21,816,656
    
    
    $
    22,818,856
   20




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##### Table of Contents



5.
    
    DEFERRED INCOME TAXES
  March 31,
    
    
    December 31,2010
    
    
    2009Deferred tax assets:Allowance for loan losses
    
    $
    3,168,780
    
    
    $
    3,090,720Deferred compensation
    
    
    1,977,585
    
    
    
    2,048,647Write-down of impaired investments
    
    
    295,526
    
    
    
    295,526Write-down of real estate owned
    
    
    1,587,311
    
    
    
    1,530,537Other assets
    
    
    339,681
    
    
    
    181,702Total deferred tax assets
    
    
    7,368,883
    
    
    
    7,147,132Deferred tax liabilities:Unrealized gain on securities available-for-sale
    
    
    (2,195,527
    )
    
    
    (2,082,171
    )Deferred loan fees
    
    
    (329,834
    )
    
    
    (333,723
    )Other liabilities
    
    
    (13,766
    )
    
    
    (19,791
    )Total deferred tax liabilities
    
    
    (2,539,127
    )
    
    
    (2,435,685
    )Net deferred tax asset
    
    $
    4,829,756
    
    
    $
    4,711,447
 6.
    
    PENSION, PROFIT SHARING AND STOCK COMPENSATION PLANS
  Employee
Stock Ownership Plan
   21




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##### Table of Contents



Recognition
and Retention Plans
    Three Months Ended March 31,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average grant
    
    
    Number of
    
    
    average grantshares
    
    
    date fair value
    
    
    shares
    
    
    date fair valueNonvested at the beginning of the year
    
    
    481,272
    
    
    $
    8.79
    
    
    
    661,763
    
    
    $
    8.72Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    (94,940
    )
    
    
    9.11
    
    
    
    (97,140
    )
    
    
    9.11Forfeited
    
    
    (3,876
    )
    
    
    7.95
    
    
    
    
    
    
    
    Nonvested at the end of the period
    
    
    382,456
    
    
    $
    8.71
    
    
    
    564,623
    
    
    $
    8.65
  22




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##### Table of Contents



Stock
Options
    Three Months Ended March 31,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average
    
    
    Number of
    
    
    averageshares
    
    

exercise price
    
    
    shares
    
    
    exercise priceOutstanding at the beginning of the year
    
    
    2,198,888
    
    
    $
    8.47
    
    
    
    2,206,296
    
    
    $
    8.48Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (6,848
    )
    
    
    7.51
    
    
    
    
    
    
    
    Forfeited
    
    
    (8,340
    )
    
    
    8.06
    
    
    
    
    
    
    
    Outstanding at the end of the period
    
    
    2,183,700
    
    
    $
    8.47
    
    
    
    2,206,296
    
    
    $
    8.48Exercisable at the end of the period
    
    
    1,240,920
    
    
    $
    8.21
    
    
    
    817,600
    
    
    $
    8.05
  23




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    Weighted Average
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Remaining
    
    
    Number of
    
    
    AverageExercise Price
    
    Shares
    
    
    Exercise Price
    
    
    Contractual Life
    
    
    Shares
    
    
    Exercise Price(in years)$6.00 - $7.00
    
    
    12,500
    
    
    $
    6.72
    
    
    
    9.6
    
    
    
    
    
    
    $
    7.01 - 8.00
    
    
    905,920
    
    
    
    7.51
    
    
    
    5.2
    
    
    
    724,736
    
    
    
    7.518.01 - 9.00
    
    
    7,200
    
    
    
    8.35
    
    
    
    5.6
    
    
    
    5,760
    
    
    
    8.359.01 - 10.00
    
    
    1,218,800
    
    
    
    9.15
    
    
    
    7.8
    
    
    
    486,600
    
    
    
    9.14Over 10.00
    
    
    39,280
    
    
    
    10.18
    
    
    
    6.6
    
    
    
    23,824
    
    
    
    10.18Total
    
    
    2,183,700
    
    
    $
    8.47
    
    
    
    6.7
    
    
    
    1,240,920
    
    
    $
    8.21Intrinsic value
    
    $
    368,059
    
    
    
    
    
    
    
    
    
    
    $
    282,647
   7.
    
    COMMITMENTS AND CONTINGENCIES
    24




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##### Table of Contents



8.
    
    FAIR VALUE MEASUREMENTS
  Fair Value Measurements and Disclosures
 
    
    Level 1  Valuation is based upon quoted prices for identical instruments traded
in active markets.
    
    Level 2  Valuation is based upon quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets that are not
active, and model-based valuation techniques for which all significant assumptions are
observable in the market.
    
    Level 3  Valuation is generated from model-based techniques that use significant
assumptions not observable in the market. These unobservable assumptions reflect the
Companys own estimates of assumptions that market participants would use in pricing
the asset.
  25




---



##### Table of Contents



Cash and Cash Equivalents
 Investment and Mortgage-backed Securities Available for Sale
  26




---



##### Table of Contents



Loans Receivable
 Impaired Loans
 Accrued Interest Receivable
 FHLB Stock
 Real Estate Owned
  27




---



##### Table of Contents



Deposits
 Advances from Federal Home Loan Bank
 Other Borrowed Money
 Accrued Interest Payable
 Commitments to Extend Credit and Letters of Credit
  28




---



##### Table of Contents



March 31, 2010Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Investment securities
available for sale:Debt securities:Agency bonds
    
    $
    74,586,093
    
    
    $
    
    
    
    $
    74,586,093
    
    
    $
    Corporate bonds and
commercial paper
    
    
    2,131,700
    
    
    
    
    
    
    
    2,131,700
    
    
    
    Municipal bonds
    
    
    21,657,903
    
    
    
    
    
    
    
    21,657,903
    
    
    
    Certificates of deposit
    
    
    99,000
    
    
    
    
    
    
    
    99,000
    
    
    
    Equity securities:Common stock
    
    
    8
    
    
    
    8
    
    
    
    
    
    
    
    Mutual funds
    
    
    2,607,134
    
    
    
    2,607,134
    
    
    
    
    
    
    
    Total investment securities
available for sale
    
    
    101,081,838
    
    
    
    2,607,142
    
    
    
    98,474,696
    
    
    
    Mortgage-backed securities
available for sale:GNMA pass-through
certificates
    
    $
    2,696
    
    
    $
    
    
    
    $
    2,696
    
    
    $
    FNMA pass-through
certificates
    
    
    45,151,063
    
    
    
    
    
    
    
    45,151,063
    
    
    
    FHLMC pass-through
certificates
    
    
    45,034,799
    
    
    
    
    
    
    
    45,034,799
    
    
    
    Collateralized mortgage
obligations
    
    
    54,110,372
    
    
    
    
    
    
    
    54,110,372
    
    
    
    Total mortgage-backed
securities available for sale
    
    
    144,298,930
    
    
    
    
    
    
    
    144,298,930
    
    
    
    Total
    
    $
    245,380,768
    
    
    $
    2,607,142
    
    
    $
    242,773,626
    
    
    $
    
  29




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##### Table of Contents



December 31, 2009Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Investment securities
available for sale:Debt securities:Agency bonds
    
    $
    56,459,667
    
    
    $
    
    
    
    $
    56,459,667
    
    
    $
    Corporate bonds and
commercial paper
    
    
    3,121,440
    
    
    
    
    
    
    
    3,121,440
    
    
    
    Municipal bonds
    
    
    22,055,175
    
    
    
    
    
    
    
    22,055,175
    
    
    
    Certificates of deposit
    
    
    99,000
    
    
    
    
    
    
    
    99,000
    
    
    
    Equity securities:Common stock
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    Mutual funds
    
    
    2,581,980
    
    
    
    2,581,980
    
    
    
    
    
    
    
    Total investment securities
available for sale
    
    
    84,317,271
    
    
    
    2,581,989
    
    
    
    81,735,282
    
    
    
    Mortgage-backed securities
available for sale:GNMA pass-through
certificates
    
    $
    2,833
    
    
    $
    
    
    
    $
    2,833
    
    
    $
    FNMA pass-through
certificates
    
    
    48,079,095
    
    
    
    
    
    
    
    48,079,095
    
    
    
    FHLMC pass-through
certificates
    
    
    51,201,450
    
    
    
    
    
    
    
    51,201,450
    
    
    
    Collateralized mortgage
obligations
    
    
    39,345,214
    
    
    
    
    
    
    
    39,345,214
    
    
    
    Total mortgage-backed
securities available for sale
    
    
    138,628,592
    
    
    
    
    
    
    
    138,628,592
    
    
    
    Total
    
    $
    222,945,863
    
    
    $
    2,581,989
    
    
    $
    220,363,874
    
    
    $
    
  30




---



##### Table of Contents



March 31, 2010Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Impaired loans:Multi-family
residential and
commercial
    
    $
    3,646,396
    
    
    $
    
    
    
    $
    
    
    
    $
    3,646,396Construction
    
    
    10,387,029
    
    
    
    
    
    
    
    
    
    
    
    10,387,029Total impaired loans
    
    
    14,033,425
    
    
    
    
    
    
    
    
    
    
    
    14,033,425Real estate owned
    
    
    21,816,656
    
    
    
    
    
    
    
    
    
    
    
    21,816,656Total
    
    $
    35,850,081
    
    
    $
    
    
    
    $
    
    
    
    $
    35,850,081
 December 31, 2009Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Impaired loans:Multi-family
residential and
commercial
    
    $
    3,646,396
    
    
    $
    
    
    
    $
    
    
    
    $
    3,646,396Construction
    
    
    10,859,266
    
    
    
    
    
    
    
    
    
    
    
    10,859,266Total impaired loans
    
    
    14,505,662
    
    
    
    
    
    
    
    
    
    
    
    14,505,662Real estate owned
    
    
    22,818,856
    
    
    
    
    
    
    
    
    
    
    
    22,818,856Total
    
    $
    37,324,518
    
    
    $
    
    
    
    $
    
    
    
    $
    37,324,518
  31




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##### Table of Contents



March 31, 2010
    
    
    December 31, 2009Estimated
    
    
    
    
    
    
    EstimatedCarrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    Value(In Thousands)Assets:Cash and cash equivalents
    
    $
    70,351
    
    
    $
    70,351
    
    
    $
    44,714
    
    
    $
    44,714Investment securities
    
    
    121,468
    
    
    
    121,913
    
    
    
    104,704
    
    
    
    105,105Mortgage-backed securities
    
    
    215,927
    
    
    
    216,504
    
    
    
    215,779
    
    
    
    215,926Loans receivablenet
    
    
    752,279
    
    
    
    756,599
    
    
    
    764,560
    
    
    
    769,058FHLB stock
    
    
    14,608
    
    
    
    14,608
    
    
    
    14,608
    
    
    
    14,608Accrued interest receivable
    
    
    4,523
    
    
    
    4,523
    
    
    
    4,279
    
    
    
    4,279Liabilities:Deposits
    
    $
    877,649
    
    
    $
    858,666
    
    
    $
    850,200
    
    
    $
    836,176Advances from Federal
Home Loan Bank
    
    
    140,733
    
    
    
    146,613
    
    
    
    146,739
    
    
    
    152,773Other borrowed money
    
    
    22,088
    
    
    
    22,088
    
    
    
    16,673
    
    
    
    16,673Accrued interest payable
    
    
    2,700
    
    
    
    2,700
    
    
    
    1,807
    
    
    
    1,807Off balance sheet financial
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   32




---



##### Table of Contents



ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD LOOKING STATEMENTS
    Overview
    33




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##### Table of Contents



Critical Accounting Policies, Judgments and Estimates
 Allowance for Loan Losses
    34




---



##### Table of Contents



35




---



##### Table of Contents



Fair Value Measurements
  
    
    Level 1  Valuation is based upon quoted prices for identical instruments traded in
active markets.
    
    Level 2  Valuation is based upon quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets that are not
active, and model-based valuation techniques for which all significant assumptions are
observable in the market.
    
    Level 3  Valuation is generated from model-based techniques that use significant
assumptions not observable in the market. These unobservable assumptions reflect the
Companys own estimates of assumptions that market participants would use in pricing the
asset.
   36




---



##### Table of Contents



Other-Than-Temporary Impairment of Securities
 Income Taxes
   37




---



##### Table of Contents



COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2010 AND DECEMBER 31, 2009
    LIQUIDITY AND CAPITAL RESOURCES
   38




---



##### Table of Contents



Actual Ratios AtMarch 31,
    
    
    December 31,
    
    
    Regulatory
    
    
    To Be Well2010
    
    
    2009
    
    
    Minimum
    
    
    CapitalizedCapital Ratios:Tier 1 leverage ratio
    
    
    13.22
    %
    
    
    13.14
    %
    
    
    4.00
    %
    
    
    5.00
    %Tier 1 risk-based capital ratio
    
    
    20.54
    
    
    
    20.04
    
    
    
    4.00
    
    
    
    6.00Total risk-based capital ratio
    
    
    21.70
    
    
    
    21.16
    
    
    
    8.00
    
    
    
    10.00
 SHARE-BASED COMPENSATION
    39




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##### Table of Contents



COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS
      40




---



##### Table of Contents



Amount of Commitment Expiration - Per PeriodAfter One to
    
    
    After ThreeTotal Amounts
    
    
    To
    
    
    Three
    
    
    to Five
    
    
    After FiveCommitted
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Years(In Thousands)Letters of credit
    
    $
    49,320
    
    
    $
    21,066
    
    
    $
    28,253
    
    
    $
    1
    
    
    $
    Recourse obligations on loans
sold
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185Commitments to originate loans
    
    
    1,832
    
    
    
    1,832
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of home equity
lines of credit
    
    
    29,473
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,893Unused portion of commercial
lines of credit
    
    
    54,597
    
    
    
    54,597
    
    
    
    
    
    
    
    
    
    
    
    Undisbursed portion of
construction loans in process
    
    
    43,383
    
    
    
    26,852
    
    
    
    16,531
    
    
    
    
    
    
    
    Total commitments
    
    $
    178,790
    
    
    $
    104,347
    
    
    $
    44,784
    
    
    $
    1
    
    
    $
    29,658
  Payments Due By PeriodAfter One to
    
    
    After ThreeTo
    
    
    Three
    
    
    to Five
    
    
    After FiveTotal
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Years(In Thousands)Certificates of deposit
    
    $
    464,006
    
    
    $
    323,850
    
    
    $
    52,309
    
    
    $
    41,614
    
    
    $
    46,233FHLB advances
    
    
    140,733
    
    
    
    44,539
    
    
    
    14,761
    
    
    
    55,441
    
    
    
    25,992Repurchase agreements
    
    
    22,088
    
    
    
    22,088
    
    
    
    
    
    
    
    
    
    
    
    Total debt
    
    
    162,821
    
    
    
    66,627
    
    
    
    14,761
    
    
    
    55,441
    
    
    
    25,992Operating lease obligations
    
    
    4,676
    
    
    
    886
    
    
    
    1,586
    
    
    
    1,051
    
    
    
    1,153Total contractual obligations
    
    $
    631,503
    
    
    $
    391,363
    
    
    $
    68,656
    
    
    $
    98,106
    
    
    $
    73,378
  41




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##### Table of Contents



COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 General.
 Interest Income.
 Interest Expense.
  42




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##### Table of Contents



Average Balances, Net Interest Income, and Yields Earned and Rates Paid.
 Three Months Ended March 31,2010
    
    
    2009Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate(Dollars in Thousands)Interest-earning assets:Investment securities(1)
    
    $
    113,695
    
    
    $
    811
    
    
    
    2.85
    %
    
    $
    83,477
    
    
    $
    876
    
    
    
    4.20
    %Mortgage-backed securities
    
    
    209,577
    
    
    
    2,285
    
    
    
    4.36
    
    
    
    229,505
    
    
    
    2,807
    
    
    
    4.89Loans receivable(2)
    
    
    761,155
    
    
    
    9,999
    
    
    
    5.25
    
    
    
    749,559
    
    
    
    10,029
    
    
    
    5.35Other interest-earning assets
    
    
    46,351
    
    
    
    6
    
    
    
    0.05
    
    
    
    33,433
    
    
    
    13
    
    
    
    0.16Total interest-earning assets
    
    
    1,130,778
    
    
    
    13,101
    
    
    
    4.63
    
    
    
    1,095,974
    
    
    
    13,725
    
    
    
    5.01Cash and non-interest bearing
balances
    
    
    21,691
    
    
    
    
    
    
    
    
    
    
    
    22,997Other non-interest-earning assets
    
    
    94,921
    
    
    
    
    
    
    
    
    
    
    
    77,393Total assets
    
    $
    1,247,390
    
    
    
    
    
    
    
    
    
    
    $
    1,196,364Interest-bearing liabilities:Deposits:Savings and money market accounts
    
    $
    274,438
    
    
    
    687
    
    
    
    1.00
    
    
    $
    155,524
    
    
    
    568
    
    
    
    1.46Checking accounts
    
    
    80,630
    
    
    
    9
    
    
    
    0.04
    
    
    
    68,266
    
    
    
    4
    
    
    
    0.02Certificate accounts
    
    
    461,098
    
    
    
    2,593
    
    
    
    2.25
    
    
    
    432,668
    
    
    
    3,469
    
    
    
    3.21Total deposits
    
    
    816,166
    
    
    
    3,289
    
    
    
    1.61
    
    
    
    656,458
    
    
    
    4,041
    
    
    
    2.46FHLB advances
    
    
    143,740
    
    
    
    1,554
    
    
    
    4.32
    
    
    
    234,760
    
    
    
    2,085
    
    
    
    3.55Other borrowings
    
    
    20,018
    
    
    
    14
    
    
    
    0.28
    
    
    
    18,069
    
    
    
    14
    
    
    
    0.31Total interest-bearing liabilities
    
    
    979,924
    
    
    
    4,857
    
    
    
    1.98
    
    
    
    909,287
    
    
    
    6,140
    
    
    
    2.70Non-interest-bearing liabilities:Non-interest-bearing demand
accounts
    
    
    41,430
    
    
    
    
    
    
    
    
    
    
    
    38,719Real estate tax escrow accounts
    
    
    3,758
    
    
    
    
    
    
    
    
    
    
    
    4,006Other liabilities
    
    
    7,799
    
    
    
    
    
    
    
    
    
    
    
    8,997Total liabilities
    
    
    1,032,911
    
    
    
    
    
    
    
    
    
    
    
    961,009Stockholders equity
    
    
    214,479
    
    
    
    
    
    
    
    
    
    
    
    235,355Total liabilities and stockholders
equity
    
    $
    1,247,390
    
    
    
    
    
    
    
    
    
    
    $
    1,196,364Net interest-earning assets
    
    $
    150,854
    
    
    
    
    
    
    
    
    
    
    $
    186,687Net interest income; average
interest rate spread
    
    
    
    
    
    $
    8,244
    
    
    
    2.65
    %
    
    
    
    
    
    $
    7,585
    
    
    
    2.31
    %Net interest margin(3)
    
    
    
    
    
    
    
    
    
    
    2.92
    %
    
    
    
    
    
    
    
    
    
    
    2.77
    %
 
 (1)
    
    Investment securities for the 2010 period include 133 tax-exempt municipal bonds with an
aggregate average balance of $40.9 million and an average yield of 3.9%. Investment securities
for the 2009 period include 134 tax-exempt municipal bonds with an aggregate average balance
of $41.5 million and an average yield of 3.9%. The tax-exempt income from such securities has
not been presented on a tax equivalent basis.(2)
    
    Includes non-accrual loans during the respective periods. Calculated net of deferred fees
and discounts and loans in process.(3)
    
    Equals net interest income divided by average interest-earning assets.  43




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##### Table of Contents



Provision for Loan Losses.
    44




---



##### Table of Contents



March 31, 2010
    
    
    December 31, 2009
    
    
    September 30, 2009(Dollars in Thousands)Non-accruing loans:One- to four-family residential
    
    $
    
    
    
    $
    237
    
    
    $
    239Multi-family residential and
commercial real estate(1)
    
    
    4,788
    
    
    
    4,801
    
    
    
    261Construction
    
    
    22,659
    
    
    
    23,303
    
    
    
    31,477Commercial business
    
    
    
    
    
    
    
    
    
    
    Home equity lines of credit
    
    
    
    
    
    
    
    
    
    
    Consumer non-real estate
    
    
    
    
    
    
    
    
    
    
    Total non-accruing loans
    
    
    27,447
    
    
    
    28,341
    
    
    
    31,977Accruing loans 90 days or more past due:One- to four-family residential
    
    
    29
    
    
    
    110
    
    
    
    633Multi-family residential and
commercial real estate
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    10,535
    
    
    
    5,998
    
    
    
    10,844Commercial business
    
    
    
    
    
    
    
    
    
    
    Home equity lines of credit
    
    
    106
    
    
    
    141
    
    
    
    97Consumer non-real estate
    
    
    
    
    
    
    
    
    
    
    Total accruing loans 90 days or
more past due
    
    
    10,670
    
    
    
    6,249
    
    
    
    11,574Total non-performing loans(2)
    
    
    38,117
    
    
    
    34,590
    
    
    
    43,551Real estate owned, net
    
    
    21,817
    
    
    
    22,819
    
    
    
    18,181Total non-performing assets
    
    $
    59,934
    
    
    $
    57,409
    
    
    $
    61,732Total non-performing loans as a
percentage of loans
    
    
    5.00
    %
    
    
    4.47
    %
    
    
    5.53
    %Total non-performing loans as a
percentage of total assets
    
    
    3.01
    %
    
    
    2.79
    %
    
    
    3.55
    %Total non-performing assets as a
percentage of total assets
    
    
    4.73
    %
    
    
    4.64
    %
    
    
    5.03
    %
 
 (1)
    
    Included in this category of non-accruing loans at March 31, 2010 and December 31, 2009
is one troubled debt restructuring with a balance of $2.4 million and $2.5 million,
respectively, which was classified as non-accrual at such dates.(2)
    
    Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more
past due.  45




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##### Table of Contents



AllowanceAccruing
    
    
    for LoanType
    
    
    Loan Classification
    
    
    
    
    
    
    Loans 90
    
    
    LossesTotal
    
    
    
    
    
    
    One- to
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Days or
    
    
    Allocated toNo. of
    
    
    Balance
    
    
    Land
    
    
    Four-
    
    
    Multi-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special
    
    
    
    
    
    
    More Past
    
    
    ConstructionRange
    
    Loans
    
    
    Outstanding
    
    
    Only
    
    
    Family
    
    
    Family
    
    
    Commercial
    
    
    Doubtful
    
    
    Substandard
    
    
    Mention
    
    
    Non-Accrual(1)
    
    
    Due
    
    
    Loans(Dollars in Thousands)Loans over $10.0 million
    
    
    1
    
    
    $
    18,662
    
    
    $
    
    
    
    $
    
    
    
    $
    18,662
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,662
    
    
    $
    
    
    
    $
    
    
    
    $
    Loans $5.0 million to $10.0 million
    
    
    6
    
    
    
    38,030
    
    
    
    
    
    
    
    13,290
    
    
    
    5,000
    
    
    
    19,740
    
    
    
    1,747
    
    
    
    12,218
    
    
    
    5,368
    
    
    
    6,297
    
    
    
    
    
    
    
    3,053Loans $2.5 million to $5.0 million
    
    
    15
    
    
    
    54,842
    
    
    
    3,706
    
    
    
    33,071
    
    
    
    
    
    
    
    18,065
    
    
    
    5,674
    
    
    
    14,241
    
    
    
    11,972
    
    
    
    7,242
    
    
    
    10,535
    
    
    
    2,631Loans $1.0 million to $2.5 million
    
    
    17
    
    
    
    27,854
    
    
    
    10,673
    
    
    
    11,178
    
    
    
    
    
    
    
    6,003
    
    
    
    25
    
    
    
    11,990
    
    
    
    2,905
    
    
    
    6,925
    
    
    
    
    
    
    
    907Loans under $1.0 million
    
    
    21
    
    
    
    8,359
    
    
    
    1,403
    
    
    
    4,921
    
    
    
    1,686
    
    
    
    349
    
    
    
    137
    
    
    
    2,102
    
    
    
    1,658
    
    
    
    2,195
    
    
    
    
    
    
    
    275Total
construction loans
    
    
    60
    
    
    $
    147,747
    
    
    $
    15,782
    
    
    $
    62,460
    
    
    $
    25,348
    
    
    $
    44,157
    
    
    $
    7,583
    
    
    $
    40,551
    
    
    $
    40,565
    
    
    $
    22,659
    
    
    $
    10,535
    
    
    $
    6,866
 
 (1)
    
    Of the $22.7 million of non-accrual construction loans at March 31, 2010, $7.6 million are
classified doubtful and $13.6 million are classified substandard.  46




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##### Table of Contents



Non-interest Income.
 Non-interest Expenses.
 Income Tax Expense.
 
 ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Asset/Liability Management and Market Risk.
   47




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##### Table of Contents



Gap Analysis.
   48




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##### Table of Contents



More than
    
    
    More than
    
    
    More than6 Months
    
    
    6 Months
    
    
    1 Year
    
    
    3 Years
    
    
    More than
    
    
    Totalor Less
    
    
    to 1 Year
    
    
    to 3 Years
    
    
    to 5 Years
    
    
    5 Years
    
    
    Amount(Dollars in Thousands)Interest-earning assets (1):Loans receivable (2)
    
    $
    290,784
    
    
    $
    56,164
    
    
    $
    157,253
    
    
    $
    88,507
    
    
    $
    141,401
    
    
    $
    734,109Mortgage-backed
securities
    
    
    42,288
    
    
    
    29,460
    
    
    
    73,554
    
    
    
    34,921
    
    
    
    30,965
    
    
    
    211,188Investment securities
    
    
    5,882
    
    
    
    3,610
    
    
    
    65,820
    
    
    
    43,745
    
    
    
    693
    
    
    
    119,750Other interest-earning
assets
    
    
    55,245
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,245Total interest-earning
assets
    
    
    394,199
    
    
    
    89,234
    
    
    
    296,627
    
    
    
    167,173
    
    
    
    173,059
    
    
    
    1,120,292Interest-bearing liabilities:Savings and money market
accounts
    
    $
    43,134
    
    
    $
    43,134
    
    
    $
    108,919
    
    
    $
    50,118
    
    
    $
    44,159
    
    
    $
    289,464Checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,738
    
    
    
    81,738Certificate accounts
    
    
    241,678
    
    
    
    86,009
    
    
    
    48,473
    
    
    
    41,614
    
    
    
    46,232
    
    
    
    464,006FHLB advances
    
    
    58,709
    
    
    
    9,370
    
    
    
    31,682
    
    
    
    25,061
    
    
    
    15,911
    
    
    
    140,733Other borrowed money
    
    
    22,088
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,088Total interest-bearing
liabilities
    
    
    365,609
    
    
    
    138,513
    
    
    
    189,074
    
    
    
    116,793
    
    
    
    188,040
    
    
    
    998,029Interest-earning assets less
interest-bearing liabilities
    
    $
    28,590
    
    
    $
    (49,279
    )
    
    $
    107,553
    
    
    $
    50,380
    
    
    $
    (14,981
    )
    
    $
    122,263Cumulative interest-rate
sensitivity gap (3)
    
    $
    28,590
    
    
    $
    (20,689
    )
    
    $
    86,864
    
    
    $
    137,244
    
    
    $
    122,263Cumulative interest-rate
gap as a percentage of total
assets at March 31, 2010
    
    
    2.26
    %
    
    
    (1.63
    )%
    
    
    6.86
    %
    
    
    10.83
    %
    
    
    9.65
    %Cumulative interest-earning
assets as a percentage of
cumulative interest-bearing
liabilities at March 31, 2010
    
    
    107.82
    %
    
    
    95.90
    %
    
    
    112.53
    %
    
    
    116.94
    %
    
    
    112.25
    %
 
 (1)
    
    Interest-earning assets are included in the period in which the balances are
expected to be redeployed and/or repriced as a result of anticipated prepayments,
scheduled rate adjustments and contractual maturities.(2)
    
    For purposes of the gap analysis, loans receivable includes non-performing
loans net of the allowance for loan losses, undisbursed loan funds, unamortized
discounts and deferred loan fees.(3)
    
    Interest-rate sensitivity gap represents the difference between net interest-earning
assets and interest-bearing liabilities.  49




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##### Table of Contents



ITEM 4.   CONTROLS AND PROCEDURES
   
 PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
     50




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##### Table of Contents



Total Number of
    
    
    Maximum NumberTotal
    
    
    
    
    
    
    Shares Purchased
    
    
    of Shares that MayNumber of
    
    
    Average
    
    
    as Part of Publicly
    
    
    Yet be PurchasedShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Under the Plan orPeriod
    
    Purchased(1)
    
    
    per Share
    
    
    or Programs
    
    
    Programs(2)January 1, 
January 31, 2010
    
    
    101,351
    
    
    $
    6.82
    
    
    
    76,961
    
    
    
    1,048,603February 1, 
February 28, 2010
    
    
    79,852
    
    
    
    7.21
    
    
    
    79,852
    
    
    
    968,751March 1,  March
31, 2010
    
    
    12,474
    
    
    
    7.90
    
    
    
    12,474
    
    
    
    956,277Total
    
    
    193,677
    
    
    $
    7.05
    
    
    
    169,287
    
    
    
    956,277
 (1)
    
    Includes 24,390 shares purchased during the quarter as permitted by the tax withholding
provisions of the Companys recognition and retention plan. In conjunction with the plan,
participants may elect to have a portion of their awarded shares withheld upon vesting
solely to pay for any related tax liabilities on these awards.(2)
    
    On March 16, 2009, the Company announced a stock repurchase program to repurchase up to
5% of its outstanding shares, or 1,104,168 shares. Purchases under this plan were completed
in January 2010. On January 14, 2010, the Company announced a stock repurchase program to
repurchase up to 5% of its outstanding shares, or 1,048,603 shares. This repurchase program
is schedule to terminate as of January 14, 2011. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. (REMOVED AND RESERVED)
 
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 No.
    
    Description31.1
    
    
    Rule 13a-14(d) and 15d-14(d) Certification of the Chief Executive Officer.31.2
    
    
    Rule 13a-14(d) and 15d-14(d) Certification of the Chief Financial Officer.32.1
    
    
    Section 1350 Certification.32.2
    
    
    Section 1350 Certification.
  51




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##### Table of Contents



SIGNATURES
  ABINGTON BANCORP, INC.Date: May 7, 2010
    By:
    /s/ Robert W. WhiteRobert W. WhiteChairman, President and
Chief Executive OfficerDate: May 7, 2010
    By:
    /s/ Jack J. SandoskiJack J. SandoskiSenior Vice President and
Chief Financial Officer  52