##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2010 or
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act
 For the transition period from  to
 Commission file number: 000-49814
 MONARCH COMMUNITY BANCORP, INC.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    04-3627031(State or other jurisdiction
    
    (I.R.S. employerof incorporation or organization)
    
    identification no.)
 (Address of principal executive offices)
 (Registrants telephone number)
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
 (Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



Monarch Community Bancorp, Inc.
 PART I  FINANCIAL INFORMATIONItem 1 Condensed Financial Statements:Condensed Consolidated Balance Sheets  March 31, 2010 and
December 31, 2009Condensed Consolidated Statements of Operations  Three Months
Ended March 31, 2010 and 2009
    
    
    2Condensed Consolidated Statements of Changes in Stockholders Equity 
Three Months Ended March 31, 2010 and 2009
    
    
    3Condensed Consolidated Statements of Cash Flows  Three Months Ended
March 31, 2010 and 2009
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5-9Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    9 - 15Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    16Item 4T Controls and Procedures
    
    
    16PART II  OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    16Item 1A Risk Factors
    
    
    16Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3 Defaults Upon Senior Securities
    
    
    17Item 4 [Reserved]
    
    
    17Item 5 Other Information
    
    
    17Item 6 Exhibits
    
    
    17SIGNATURES
    
    
    18CERTIFICATIONS
    
    
    19-22EX-31.1EX-31.2EX-32




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1.
    
    CONDENSED FINANCIAL STATEMENTS
 
 Condensed Consolidated Balance Sheets
 (Unaudited)March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands,except per share data)AssetsCash and due from banks
    
    $
    19,838
    
    
    $
    12,631Federal Home Loan Bank overnight time and
other interest bearing deposits
    
    
    11,938
    
    
    
    10,723Total cash and cash equivalents
    
    
    31,776
    
    
    
    23,354Securities  Available for sale
    
    
    16,849
    
    
    
    16,063Securities  Held to maturity
    
    
    23
    
    
    
    23Other securities
    
    
    4,237
    
    
    
    4,237Loans held for sale
    
    
    542
    
    
    
    809Loans, net
    
    
    216,624
    
    
    
    220,875Foreclosed assets, net
    
    
    2,238
    
    
    
    2,839Premises and equipment
    
    
    4,412
    
    
    
    4,467Core deposit intangible
    
    
    496
    
    
    
    532Other assets
    
    
    9,880
    
    
    
    10,005Total assets
    
    $
    287,077
    
    
    $
    283,204Liabilities and Stockholders EquityLiabilitiesDeposits:Non-interest bearing
    
    $
    15,151
    
    
    $
    14,422Interest bearing
    
    
    203,262
    
    
    
    198,946Total deposits
    
    
    218,413
    
    
    
    213,368Federal Home Loan Bank advances
    
    
    44,518
    
    
    
    44,518Accrued expenses and other liabilities
    
    
    2,301
    
    
    
    2,155Total liabilities
    
    
    265,232
    
    
    
    260,041Stockholders EquityPreferred stock-$.01 par value, 5,000,000 shares authorized, and 6,785
shares, fixed
rate cumulative perpetual preferred stock, series A, $1,000 per share
liquidation preference, issued and outstanding as of March 31, 2010
    
    
    6,742
    
    
    
    6,739Common stock  $0.01 par value, 20,000,000 shares authorized, 2,044,606
shares issued and outstanding at March 31, 2010 and December 31, 2009
    
    
    20
    
    
    
    20Additional paid-in capital
    
    
    21,218
    
    
    
    21,216Retained earnings
    
    
    (5,679
    )
    
    
    (4,355
    )Accumulated other comprehensive income
    
    
    224
    
    
    
    223Unearned compensation
    
    
    (680
    )
    
    
    (680
    )Total stockholders equity
    
    
    21,845
    
    
    
    23,163Total liabilities and stockholders equity
    
    $
    287,077
    
    
    $
    283,204




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##### Table of Contents



Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31,
    
    
    March 31,2010
    
    
    2009(Dollars in thousands, except per share data)Interest IncomeLoans, including fees
    
    $
    3,336
    
    
    $
    3,954Investment securities
    
    
    151
    
    
    
    119Federal funds sold and overnight deposits
    
    
    1
    
    
    
    2Total interest income
    
    
    3,488
    
    
    
    4,075Interest ExpenseDeposits
    
    
    964
    
    
    
    1,319Federal Home Loan Bank advances
    
    
    494
    
    
    
    658Total interest expense
    
    
    1,458
    
    
    
    1,977Net Interest Income
    
    
    2,030
    
    
    
    2,098Provision for Loan Losses
    
    
    1,845
    
    
    
    722Net Interest Income After Provision for Loan Losses
    
    
    185
    
    
    
    1,376Non-interest IncomeFees and service charges
    
    
    546
    
    
    
    515Loan servicing fees
    
    
    117
    
    
    
    106Net gain on sale of loans
    
    
    199
    
    
    
    710Net gain (loss) on sale of securities
    
    
    37
    
    
    
    Other income
    
    
    173
    
    
    
    42Total non-interest income
    
    
    1,072
    
    
    
    1,373Non-interest ExpenseSalaries and employee benefits
    
    
    1,106
    
    
    
    1,149Occupancy and equipment
    
    
    241
    
    
    
    272Data processing
    
    
    209
    
    
    
    207Amortization of mortgage servicing rights
    
    
    88
    
    
    
    199Professional services
    
    
    150
    
    
    
    129Amortization of core deposit intangible
    
    
    35
    
    
    
    43NOW account processing
    
    
    51
    
    
    
    46ATM/Debit card processing
    
    
    57
    
    
    
    61Foreclosed property expense
    
    
    206
    
    
    
    32Other general and administrative
    
    
    350
    
    
    
    372Total non-interest expense
    
    
    2,493
    
    
    
    2,510Income (Loss)  Before income taxes
    
    
    (1,236
    )
    
    
    239Income Taxes
    
    
    
    
    
    
    60Net Income (Loss)
    
    $
    (1,236
    )
    
    $
    179Dividends and amortization of discount on
preferred stock
    
    $
    88
    
    
    $
    51Net Income (loss) available to common stock
    
    $
    (1,324
    )
    
    $
    128Earnings(Loss) Per ShareBasic
    
    $
    (0.67
    )
    
    $
    0.07Diluted
    
    $
    (0.67
    )
    
    $
    0.07
  2




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##### Table of Contents



AccumulatedPreferred Stock
    
    
    Common Stock
    
    
    Additional
    
    
    
    
    
    
    OtherNumber
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    Paid in
    
    
    Retained
    
    
    Comprehensive
    
    
    Unearnedof Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Compensation
    
    
    TotalBalance- January 1 , 2009
    
    
    
    
    
    $
    
    
    
    
    2,047
    
    
    $
    20
    
    
    $
    21,152
    
    
    $
    15,867
    
    
    $
    69
    
    
    $
    (838
    )
    
    $
    36,270Issuance of preferred stock
    
    
    6785
    
    
    
    6729
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,785Stock option expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    179
    
    
    
    
    
    
    
    
    
    
    
    179Change in unrealized loss on
securities available-for-sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    202Dividends on preferred stock and
accretion of discount
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Dividends paid ($0.09/share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (182
    )
    
    
    
    
    
    
    
    
    
    
    (182
    )Balance -March 31, 2009
    
    
    6,785
    
    
    $
    6,731
    
    
    
    2,047
    
    
    $
    20
    
    
    $
    21,210
    
    
    $
    15,864
    
    
    $
    92
    
    
    $
    (838
    )
    
    $
    43,079Balance  January 1, 2010
    
    
    6,785
    
    
    $
    6,739
    
    
    
    2,046
    
    
    $
    20
    
    
    $
    21,216
    
    
    $
    (4,355
    )
    
    $
    223
    
    
    $
    (680
    )
    
    $
    23,163Stock option expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,236
    )
    
    
    
    
    
    
    
    
    
    
    (1,236
    )Change in unrealized loss on
securities available-for-sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,235
    )Dividends on preferred stock and
accretion of discount
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    
    
    
    
    (85
    )Balance  March 31, 2010
    
    
    6,785
    
    
    $
    6,742
    
    
    
    2,046
    
    
    $
    20
    
    
    $
    21,218
    
    
    $
    (5,679
    )
    
    $
    224
    
    
    $
    (680
    )
    
    $
    21,845
 3




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##### Table of Contents



Three Months EndedMarch, 312010
    
    
    2009(Dollars in thousands)Cash Flows From Operating ActivitiesNet Income (Loss)
    
    $
    (1,236
    )
    
    $
    179Adjustments to reconcile net income (loss) to net cash from operating activitiesDepreciation and amortization
    
    
    271
    
    
    
    369Provision for loan losses
    
    
    1,845
    
    
    
    722Stock option expense
    
    
    2
    
    
    
    2Gain on sale of foreclosed assets
    
    
    (116
    )
    
    
    (10
    )Mortgage loans originated for sale
    
    
    (6,116
    )
    
    
    (35,002
    )Proceeds from sale of mortgage loans
    
    
    6,383
    
    
    
    34,284Gain on sale of mortgage loans
    
    
    (199
    )
    
    
    (710
    )(Gain) Loss on sale of available for sale securities
    
    
    (37
    )
    
    
    Net change in:Deferred loan fees
    
    
    28
    
    
    
    28Accrued interest receivable
    
    
    (37
    )
    
    
    20Other assets
    
    
    77
    
    
    
    (283
    )Accrued expenses and other liabilities
    
    
    142
    
    
    
    36Net cash provided by operating activities
    
    
    1,007
    
    
    
    (365
    )Cash Flows From Investing ActivitiesActivity in available-for-sale securities:Purchases
    
    
    (3,716
    )
    
    
    (8,595
    )Proceeds from maturities of securities
    
    
    1,863
    
    
    
    2,654Proceeds from sale of securities
    
    
    1,066
    
    
    
    Activity in held-to-maturity securities:Loan originations and principal collections, net
    
    
    2,269
    
    
    
    6,809Proceeds from sale of foreclosed assets
    
    
    1,026
    
    
    
    240Purchase of premises and equipment
    
    
    (54
    )
    
    
    (80
    )Net cash provided by (used in) investing activities
    
    
    2,454
    
    
    
    1,028Cash Flows From Financing ActivitiesNet increase in deposits
    
    
    5,045
    
    
    
    9,102Issuance of Preferred Stock
    
    
    
    
    
    
    6,785Dividends paid
    
    
    (84
    )
    
    
    (180
    )Repayment of FHLB advances
    
    
    
    
    
    
    (3,500
    )Repayment of Fed Funds purchased
    
    
    
    
    
    
    (1,000
    )Net cash provided by financing activities
    
    
    4,961
    
    
    
    11,207Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    8,422
    
    
    
    11,870Cash and Cash Equivalents Beginning
    
    
    23,354
    
    
    
    6,272Cash and Cash Equivalents End
    
    $
    31,776
    
    
    $
    18,142Supplemental Cash Flow Information:Cash paid for:Interest
    
    
    1,475
    
    
    
    1,992Income taxes
    
    
    
    
    
    
    125Noncash investing activities:Loans transferred to foreclosed assets
    
    
    308
    
    
    
    357
  4




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##### Table of Contents



MONARCH COMMUNITY BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 ORGANIZATION
   BASIS OF PRESENTATION
     ALLOWANCE FOR LOAN LOSSES
    5




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RECLASSIFICATIONS
  EARNINGS PER SHARE
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2010
    
    
    March 31, 2009Basic earnings per shareNumerator:Net income (loss)
    
    $
    (1,236
    )
    
    $
    179Dividends and amortization of discount on
preferred stock
    
    $
    88
    
    
    $
    51Net Income (Loss) available to common stock
    
    $
    (1,324
    )
    
    $
    128Denominator:Weighted average common shares outstanding
    
    
    2,045
    
    
    
    2,046Less: Average unallocated ESOP shares
    
    
    (65
    )
    
    
    (74
    )Less: Average non-vested RRP shares
    
    
    (2
    )
    
    
    (6
    )Weighted average common shares outstanding
for basic earnings (loss) per share
    
    
    1,978
    
    
    
    1,966Basic earnings (loss) per share
    
    $
    (0.67
    )
    
    $
    0.07Diluted earnings per shareNumerator:Net Income (Loss) available to common stock
    
    $
    (1,324
    )
    
    $
    128Denominator:Weighted average common shares outstanding for basic earnings per share
    
    
    1,978
    
    
    
    1,966Add: Dilutive effects of restricted stock, stock options and warrants
    
    
    
    
    
    
    Weighted average common shares and dilutive
potential common shares outstanding
    
    
    1,978
    
    
    
    1,966Diluted earnings (loss) per share
    
    $
    (0.67
    )
    
    $
    0.07
 6




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##### Table of Contents



FAIR VALUE MEASUREMENTS
      SignificantQuoted Prices in Active
    
    
    Other
    
    
    SignificantMarkets for Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance at MarchAssets (Level 1)
    
    
    Inputs (Level 2)
    
    
    Inputs (Level 3)
    
    
    31, 2010AssetsInvestment securities- available  for  sale
    
    $
    5,984
    
    
    $
    10,865
    
    
    $
    
    
    
    $
    16,849
 SignificantQuoted Prices in Active
    
    
    Other
    
    
    SignificantMarkets for Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance at DecemberAssets (Level 1)
    
    
    Inputs (Level 2)
    
    
    Inputs (Level 3)
    
    
    31, 2009AssetsInvestment securities- available  for  sale
    
    $
    9,803
    
    
    $
    6,260
    
    
    $
    
    
    
    $
    16,063
 7




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##### Table of Contents



Assets Measured at Fair Value on a Nonrecurring BasisQuoted Prices in
    
    
    
    
    
    
    
    
    
    Change in FairActive Markets for
    
    Significant Other
    
    Significant
    
    Value for theBalance at March
    
    Identical Assets
    
    Observable Inputs
    
    Unobservable Inputs
    
    quarter ended March31, 2010
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    31, 2010Impaired Loans
accounted for under
FASB ASC 310
    
    $
    16,326
    
    
    
    
    
    
    
    
    
    
    $
    16,326
    
    
    $
    (1,001
    )Foreclosed Assets
    
    $
    2,238
    
    
    
    
    
    
    
    
    
    
    $
    2,238
    
    
    $
    (459
    )Quoted Prices in
    
    
    
    
    
    
    
    
    
    Change in FairActive Markets for
    
    Significant Other
    
    Significant
    
    Value for theBalance at March
    
    Identical Assets
    
    Observable Inputs
    
    Unobservable Inputs
    
    quarter ended March31, 2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    31, 2009Impaired Loans
accounted
for under
FASB ASC 310
    
    $
    4,229
    
    
    $
    
    
    
    $
    
    
    
    $
    4,229
    
    
    $
    
 Fair Value of Financial Instruments
   Securities
 Mortgage Loans Held for Sale
 Loans Receivable
 Deposit Liabilities
 Federal Home Loan Bank Advances
 8




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##### Table of Contents



March 31,
    
    December 31,2010
    
    2009Carrying Amount
    
    Fair Value
    
    Carrying Amount
    
    Fair ValueAssets:Cash and cash equivalents
    
    $
    31,776
    
    
    $
    31,776
    
    
    $
    23,354
    
    
    $
    23,354Securities  Held to maturity
    
    
    23
    
    
    
    23
    
    
    
    23
    
    
    
    23Securities  Available for sale
    
    
    16,849
    
    
    
    16,849
    
    
    
    16,063
    
    
    
    16,063Other securities
    
    
    4,237
    
    
    
    4,237
    
    
    
    4,237
    
    
    
    4,237Loans held for sale
    
    
    542
    
    
    
    550
    
    
    
    809
    
    
    
    827Net loans
    
    
    216,624
    
    
    
    220,827
    
    
    
    220,875
    
    
    
    230,866Accrued interest
and late charges receivable
    
    
    1,190
    
    
    
    1,190
    
    
    
    1,154
    
    
    
    1,154Liabilities:Deposits
    
    
    218,413
    
    
    
    219,693
    
    
    
    213,368
    
    
    
    214,581Federal Home Loan Bank
advances
    
    
    44,518
    
    
    
    47,870
    
    
    
    44,518
    
    
    
    48,260Accrued interest payable
    
    
    381
    
    
    
    381
    
    
    
    397
    
    
    
    397
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   FORWARD-LOOKING STATEMENTS
   9




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  Allowance for Loan Losses
 Foreclosed Assets .
 Income Taxes -
 FINANCIAL CONDITION
 Assets
  Securities
  10




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##### Table of Contents



Loans
  March 31, 2010
    
    
    December 31, 2009Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Real Estate Loans:One-to-four family
    
    $
    106,164
    
    
    
    47.5
    
    
    $
    108,354
    
    
    
    47.7Multi-family
    
    
    5,400
    
    
    
    2.4
    
    
    
    5,421
    
    
    
    2.2Commercial
    
    
    72,070
    
    
    
    32.3
    
    
    
    72,689
    
    
    
    32.0Construction or development
    
    
    8,946
    
    
    
    4.0
    
    
    
    9,528
    
    
    
    4.2Total real estate loans
    
    
    192,580
    
    
    
    86.2
    
    
    
    195,992
    
    
    
    86.3Other loans:Consumer loans:Home equity
    
    
    17,976
    
    
    
    8.0
    
    
    
    18,174
    
    
    
    8.0Other
    
    
    4,405
    
    
    
    2.0
    
    
    
    4,706
    
    
    
    2.1Total consumer loans
    
    
    22,381
    
    
    
    10.0
    
    
    
    22,880
    
    
    
    10.1Commercial Business Loans
    
    
    8,383
    
    
    
    3.8
    
    
    
    8,266
    
    
    
    3.5Total other loans
    
    
    30,764
    
    
    
    13.8
    
    
    
    31,146
    
    
    
    13.6Total Loans
    
    
    223,344
    
    
    
    100.0
    %
    
    
    227,138
    
    
    
    100.0
    %Allowance for loan losses
    
    
    6,267
    
    
    
    
    
    
    
    5,783Less: Net deferred loan fees
    
    
    453
    
    
    
    
    
    
    
    480Total Loans, net
    
    $
    216,624
    
    
    
    
    
    
    $
    220,875
   Deposits
  11




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##### Table of Contents



Federal Home Loan Bank Advances
  Equity
  RESULTS OF OPERATIONS
 Net Interest Income
    Three Months Ended March 31, 2010
    
    
    Three Months Ended March 31, 2009Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestOutstanding
    
    
    Earned/
    
    
    Yield/
    
    
    Outstanding
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(dollars in thousands)Fed Funds and overnight deposits
    
    $
    17,771
    
    
    
    1
    
    
    
    0.02
    %
    
    $
    10,800
    
    
    
    2
    
    
    
    0.08
    %Investment securities
    
    
    16,692
    
    
    
    128
    
    
    
    3.11
    
    
    
    9,937
    
    
    
    96
    
    
    
    3.92Other securities
    
    
    4,174
    
    
    
    23
    
    
    
    2.23
    
    
    
    4,174
    
    
    
    26
    
    
    
    2.53Loans receivable
    
    
    225,328
    
    
    $
    3,336
    
    
    
    6.00
    
    
    
    248,694
    
    
    $
    3,954
    
    
    
    6.45Total earning assets
    
    $
    263,965
    
    
    $
    3,488
    
    
    
    5.36
    
    
    $
    273,605
    
    
    $
    4,078
    
    
    
    6.04Demand and NOW Accounts
    
    $
    37,688
    
    
    $
    30
    
    
    
    0.32
    
    
    $
    31,347
    
    
    $
    20
    
    
    
    0.26Money market accounts
    
    
    59,616
    
    
    
    157
    
    
    
    1.07
    
    
    
    41,547
    
    
    
    227
    
    
    
    2.22Savings accounts
    
    
    20,817
    
    
    
    16
    
    
    
    0.31
    
    
    
    18,341
    
    
    
    19
    
    
    
    0.42Certificates of deposit
    
    
    96,641
    
    
    
    761
    
    
    
    3.19
    
    
    
    104,690
    
    
    
    1,053
    
    
    
    4.08Federal Home Loan Bank Advances
    
    
    44,518
    
    
    
    493
    
    
    
    4.49
    
    
    
    58,666
    
    
    
    658
    
    
    
    4.55Fed Funds Purchased
    
    
    11
    
    
    
    
    
    
    
    0.00
    
    
    
    86
    
    
    
    
    
    
    
    0.00Total interest bearing liabilities
    
    $
    259,291
    
    
    
    1,457
    
    
    
    2.28
    
    
    $
    254,677
    
    
    
    1,977
    
    
    
    3.15Net interest income
    
    
    
    
    
    $
    2,031
    
    
    
    
    
    
    
    
    
    
    $
    2,101Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.08
    %
    
    
    
    
    
    
    
    
    
    
    2.90
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.08
    %
    
    
    
    
    
    
    
    
    
    
    3.07
    %
 12




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##### Table of Contents



Provision for Loan Losses
    March 31, 2010
    
    
    December 31,2009(In thousands)Non-performing loans
    
    $
    17,520
    
    
    $
    15,570Real estate in judgement
    
    
    944
    
    
    
    1,126Foreclosed and repossessed assets
    
    
    1,294
    
    
    
    1,713Total non-performing assets
    
    $
    19,758
    
    
    $
    18,409Non-performing loans to total loans
    
    
    7.85
    %
    
    
    6.85
    %Non-performing assets to total assets
    
    
    6.88
    %
    
    
    6.50
    %Allowance for loan losses to non-performing loans
    
    
    35.80
    %
    
    
    37.14
    %Allowance for loan losses to net loans receivable
    
    
    2.81
    %
    
    
    2.54
    %
 Non-interest Income
     Non-interest Expense
  13




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##### Table of Contents



Federal Income Tax Expense
  LIQUIDITY
      14




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##### Table of Contents



CONTRACTUAL OBLIGATIONS AND OFF BALANCE SHEET ARRANGEMENTS
  Payments Due by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    AfterTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 years(Dollars in Thousands)Certificates of deposit
    
    $
    97,955
    
    
    $
    46,883
    
    
    $
    35,259
    
    
    $
    15,813
    
    
    $
    FHLB advances
    
    
    44,518
    
    
    
    19,168
    
    
    
    18,291
    
    
    
    7,059
    
    
    
    Total
    
    $
    142,473
    
    
    $
    66,051
    
    
    $
    53,550
    
    
    $
    22,872
    
    
    $
    
 Amount of commitment expiration per periodLess than
    
    
    1-3
    
    
    3-5
    
    
    AfterTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 years(Dollars in Thousands)Commitments to grant loans
    
    $
    3,115
    
    
    $
    1,098
    
    
    $
    1,000
    
    
    $
    
    
    
    $
    1,017Unfunded commitments under HELOCs
    
    
    14,016
    
    
    
    1,417
    
    
    
    3,949
    
    
    
    2,794
    
    
    
    5,856Unfunded commitments under Contruction loans
    
    
    2,238
    
    
    
    1,477
    
    
    
    128
    
    
    
    
    
    
    
    633Unfunded commitments under Commercial LOCs
    
    
    1,645
    
    
    
    621
    
    
    
    928
    
    
    
    
    
    
    
    96Letters of credit
    
    
    150
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    21,164
    
    
    $
    4,763
    
    
    $
    6,005
    
    
    $
    2,794
    
    
    $
    7,602
  CAPITAL RESOURCES
  RECENT DEVELOPMENTS
  15




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4T.
    
    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
  16




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##### Table of Contents



Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 Item 4.
    
    [RESERVED]
 
 Item 5.
    
    OTHER INFORMATION
  
 Item 6.
    
    EXHIBITS
  17




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##### Table of Contents



SIGNATURES
  MONARCH COMMUNITY BANCORP, INC.Date: May 17, 2010
    By:
    /s/ Donald L. DenneyDonald L. DenneyPresident and Chief Executive OfficerDate: May 17, 2010
    And:
    /s/ Rebecca S. CrabillRebecca S. CrabillSenior Vice President, Chief Financial Officer 18




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description of Exhibit31.1
    
    Rule 13a-14(a) Certification of the Corporations President and Chief Executive Officer.31.2
    
    Rule 13a-14(a) Certification of the Corporations Chief Financial Officer.32
    
    Section 1350 Certification.
 19