##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 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 No. 001-33934
 Cape Bancorp, Inc.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    26-1294270(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)225 North Main Street, Cape May Court House, New Jersey
    
    08210(Address of Principal Executive Offices)
    
    Zip Code
 (609) 465-5600
(Registrants telephone number)
 N/A
(Former name or former address, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller Reporting Company o(Do not check if smaller reporting company)
 YES o NO þ




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##### 



CAPE BANCORP, INC.
FORM 10-Q
 Index
 PagePart I. Financial InformationItem 1. Financial Statements
    
    
    3Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009
    
    
    3Consolidated Statements of Income for the Three Months Ended March 31, 2010 and March 31, 2009 (unaudited)
    
    
    4Consolidated Statements of Changes in Stockholders Equity for the Twelve Months Ended December 31, 2009
and Three Months Ended March 31, 2010 (unaudited)
    
    
    5Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and March 31, 2009
(unaudited)
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35Part II. Other InformationItem 1. Legal Proceedings
    
    
    36Item 1A. Risk Factors
    
    
    36Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3. Defaults upon Senior Securities
    
    
    36Item 4. (Reserved)
    
    
    36Item 5. Other Information
    
    
    36Item 6. Exhibits
    
    
    37Signature Page
    
    
    38Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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##### Table of Contents



Item 1. Financial Statements
 CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (unaudited)March 31,
    
    
    December 31,2010
    
    
    2009(in thousands)ASSETSCash & due from financial institutions
    
    $
    16,765
    
    
    $
    9,573Interest-bearing bank balances
    
    
    4,652
    
    
    
    3,940Cash and cash equivalents
    
    
    21,417
    
    
    
    13,513Interest-bearing time deposits
    
    
    8,402
    
    
    
    7,451Investment securities available for sale, at fair value (amortized
cost of $160,718 and $162,935 respectively)
    
    
    153,743
    
    
    
    152,815Loans held for sale
    
    
    1,059
    
    
    
    398Loans, net of allowance of $11,876 and $13,311 respectively
    
    
    783,687
    
    
    
    789,473Accrued interest receivable
    
    
    4,007
    
    
    
    4,630Premises and equipment, net
    
    
    26,029
    
    
    
    26,383Other real estate owned
    
    
    2,514
    
    
    
    4,817Federal Home Loan Bank (FHLB) stock, at cost
    
    
    8,794
    
    
    
    10,275Prepaid FDIC insurance premium
    
    
    4,078
    
    
    
    4,377Deferred income taxes
    
    
    4,026
    
    
    
    3,956Bank owned life insurance (BOLI)
    
    
    27,462
    
    
    
    27,210Goodwill
    
    
    22,575
    
    
    
    22,575Intangible assets, net
    
    
    547
    
    
    
    585Assets held for sale
    
    
    1,828
    
    
    
    1,828Other assets
    
    
    2,817
    
    
    
    2,535Total assets
    
    $
    1,072,985
    
    
    $
    1,072,821LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesDepositsNoninterest-bearing deposits
    
    $
    66,172
    
    
    $
    62,365Interest-bearing deposits
    
    
    700,424
    
    
    
    674,222Borrowings
    
    
    171,082
    
    
    
    203,981Advances from borrowers for taxes and insurance
    
    
    553
    
    
    
    542Accrued interest payable
    
    
    724
    
    
    
    807Other liabilities
    
    
    4,733
    
    
    
    4,356Total liabilities
    
    
    943,688
    
    
    
    946,273Stockholders EquityCommon stock, $.01 par value: authorized 100,000,000 shares; issued and
outstanding 13,313,521 shares
    
    
    133
    
    
    
    133Additional paid-in capital
    
    
    126,660
    
    
    
    126,695Unearned ESOP shares
    
    
    (9,699
    )
    
    
    (9,806
    )Accumulated other comprehensive loss, net
    
    
    (4,603
    )
    
    
    (6,645
    )Retained earnings
    
    
    16,806
    
    
    
    16,171Total stockholders equity
    
    
    129,297
    
    
    
    126,548Total liabilities & stockholders equity
    
    $
    1,072,985
    
    
    $
    1,072,821
   3




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CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (unaudited)
 For the three months ended March 31,2010
    
    
    2009(dollars in thousands, except share data)Interest income:Interest on loans
    
    $
    11,606
    
    
    $
    11,627Interest and dividends on investmentsTaxable
    
    
    
    
    
    
    855Tax-exempt
    
    
    314
    
    
    
    345Interest on mortgage-backed securities
    
    
    645
    
    
    
    1,116Total interest income
    
    
    12,565
    
    
    
    13,943Interest expense:Interest on deposits
    
    
    2,381
    
    
    
    3,611Interest on borrowings
    
    
    1,587
    
    
    
    1,596Total interest expense
    
    
    3,968
    
    
    
    5,207Net interest income before provision for loan losses
    
    
    8,597
    
    
    
    8,736Provision for loan losses
    
    
    244
    
    
    
    745Net interest income after provision for loan losses
    
    
    8,353
    
    
    
    7,991Non-interest income:Service fees
    
    
    763
    
    
    
    709Net gains on sale of loans
    
    
    12
    
    
    
    27Net income from BOLI
    
    
    252
    
    
    
    255Net rental income
    
    
    58
    
    
    
    86Net gains (losses) on sale of OREO
    
    
    265
    
    
    
    (29
    )Other
    
    
    66
    
    
    
    58Gross other-than-temporary impairment losses
    
    
    (2,422
    )
    
    
    (1,539
    )Less: Portion of loss recognized in other comprehensive income
    
    
    (149
    )
    
    
    Net other-than-temporary impairment losses
    
    
    (2,571
    )
    
    
    (1,539
    )Total non-interest income (expense)
    
    
    (1,155
    )
    
    
    (433
    )Non-interest expense:Salaries and employee benefits
    
    
    3,559
    
    
    
    4,727Occupancy and equipment
    
    
    1,030
    
    
    
    856Federal insurance premiums
    
    
    320
    
    
    
    854Data processing
    
    
    331
    
    
    
    279Loan related expenses
    
    
    201
    
    
    
    79Advertising
    
    
    95
    
    
    
    51Telecommunications
    
    
    233
    
    
    
    202Professional services
    
    
    202
    
    
    
    223OREO expenses
    
    
    308
    
    
    
    68Other operating
    
    
    815
    
    
    
    745Total non-interest expense
    
    
    7,094
    
    
    
    8,084Income (loss) before income taxes
    
    
    104
    
    
    
    (526
    )Income tax expense (benefit)
    
    
    (531
    )
    
    
    (427
    )Net income (loss)
    
    $
    635
    
    
    $
    (99
    )Earnings (loss) per share (see Note 9):Basic
    
    $
    0.05
    
    
    $
    (0.01
    )Diluted
    
    $
    0.05
    
    
    $
    (0.01
    )Weighted average number of shares outstanding:Basic
    
    
    12,338,966
    
    
    
    12,296,879Diluted
    
    
    12,338,966
    
    
    
    12,296,879
   4




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CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Year ended December 31, 2009 and three months ended March 31, 2010
 (unaudited)
 AccumulatedUnearned
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Paid-In
    
    
    ESOP
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Shares
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Equity(in thousands)Balance, December 31, 2008
    
    $
    133
    
    
    $
    126,801
    
    
    $
    (10,232
    )
    
    $
    30,045
    
    
    $
    (6,022
    )
    
    $
    140,725Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,901
    )
    
    
    
    
    
    
    (17,901
    )Net unrealized gains, net of
reclassification adjustments and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,404
    
    
    
    3,404Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,497
    )Cumulative effect adjustment to reclassify
non-credit component of previously recorded
other-than-temporary impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,027
    
    
    
    (4,027
    )
    
    
    ESOP shares earned
    
    
    
    
    
    
    (106
    )
    
    
    426
    
    
    
    
    
    
    
    
    
    
    
    320Balance, December 31, 2009
    
    
    133
    
    
    
    126,695
    
    
    
    (9,806
    )
    
    
    16,171
    
    
    
    (6,645
    )
    
    
    126,548Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    635
    
    
    
    
    
    
    
    635Net unrealized gains, net of
reclassification adjustments and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,042
    
    
    
    2,042Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,677ESOP shares earned
    
    
    
    
    
    
    (35
    )
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    72Balance, March 31, 2010
    
    $
    133
    
    
    $
    126,660
    
    
    $
    (9,699
    )
    
    $
    16,806
    
    
    $
    (4,603
    )
    
    $
    129,297
   5




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##### Table of Contents



CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three months ended March 31,2010
    
    
    2009(in thousands)Cash flows from operating activitiesNet income (loss)
    
    $
    635
    
    
    $
    (99
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Provision for loan losses
    
    
    244
    
    
    
    745Net gain on the sale of loans
    
    
    (12
    )
    
    
    (27
    )Net (gain) loss on the sale of other real estate owned
    
    
    (265
    )
    
    
    29Write-down of other real estate owned
    
    
    184
    
    
    
    68Loss on impairment of securities
    
    
    2,571
    
    
    
    1,539Earnings on BOLI
    
    
    (252
    )
    
    
    (255
    )Origination of loans held for sale
    
    
    (1,479
    )
    
    
    (2,586
    )Proceeds from sales of loans
    
    
    818
    
    
    
    2,010Depreciation and amortization
    
    
    502
    
    
    
    519ESOP compensation expense
    
    
    72
    
    
    
    80Deferred income taxes
    
    
    (1,173
    )
    
    
    (576
    )Changes in assets and liabilities that (used) provided cash:Accrued interest receivable
    
    
    623
    
    
    
    (312
    )Other assets
    
    
    15
    
    
    
    (420
    )Accrued interest payable
    
    
    (83
    )
    
    
    49Other liabilities
    
    
    377
    
    
    
    1,623Net cash provided by operating activities
    
    
    2,777
    
    
    
    2,387Cash flows from investing activitiesProceeds from calls, maturities, and principal repayments of HTM securities
    
    
    
    
    
    
    1,441Proceeds from calls, maturities, and principal repayments of AFS securities
    
    
    22,069
    
    
    
    13,013Purchases of HTM securities
    
    
    
    
    
    
    (2,998
    )Purchases of AFS securities
    
    
    (22,383
    )
    
    
    (23,837
    )Redemption of Federal Home Loan Bank stock
    
    
    1,481
    
    
    
    2,988Proceeds from sale of other real estate owned
    
    
    2,868
    
    
    
    163(Increase) decrease in interest-bearing time deposits
    
    
    (951
    )
    
    
    198(Increase) decrease in loans, net
    
    
    4,932
    
    
    
    (11,287
    )Purchase of property and equipment, net
    
    
    (16
    )
    
    
    (277
    )Net cash provided by (used in) investing activities
    
    
    8,000
    
    
    
    (20,596
    )Cash flows from financing activitiesNet increase in deposits
    
    
    30,016
    
    
    
    79,265Increase in advances from borrowers for taxes and insurance
    
    
    11
    
    
    
    15Increase in long-term borrowings
    
    
    
    
    
    
    35,000Repayments of long-term borrowings
    
    
    (25,000
    )
    
    
    (5,000
    )Net change in short-term borrowings
    
    
    (7,900
    )
    
    
    (96,400
    )Net cash provided by (used in) financing activities
    
    
    (2,873
    )
    
    
    12,880Net increase (decrease) in cash and cash equivalents
    
    
    7,904
    
    
    
    (5,329
    )Cash and cash equivalents at beginning of period
    
    
    13,513
    
    
    
    22,501Cash and cash equivalents at end of period
    
    $
    21,417
    
    
    $
    17,172Supplementary disclosure of cash flow information:Cash paid during period for:Interest
    
    $
    4,051
    
    
    $
    5,158Income taxes, net of refunds
    
    $
    
    
    
    $
    (586
    )Supplementary disclosure of non-cash financing and investing activities:Transfers from loans to other real estate owned
    
    $
    484
    
    
    $
    
  6




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##### Table of Contents



Notes to Financial Statements (Unaudited)
 NOTE 1  ORGANIZATION
      NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Financial Statement Presentation:
   Use of Estimates:
 Cash and Cash Equivalents:
 Interest-Bearing Time Deposits:
  7




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##### Table of Contents



Investment Securities:
  Loans Held for Sale:
 Loans and Allowance for Loan Losses:
     Other Real Estate Owned:
  8




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##### Table of Contents



Premises and Equipment:
 Federal
Home Loan Bank (FHLB) Stock:
 Goodwill and Other Intangible Assets:
  Bank Owned Life Insurance (BOLI):
 Loan Commitments and Related Financial Instruments:
 Defined Benefit Plan:
 4 01(k) Plan:
 Employee Stock Ownership Plan (ESOP):
 Income Taxes:
  9




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##### Table of Contents



Accounting for Uncertainty in
Income Taxes, Income Taxes  Overall
  Earnings Per Share:
 Comprehensive Income (Loss):
 Before Tax
    
    
    Tax Benefit
    
    
    Net of TaxAmount
    
    
    (Expense)
    
    
    Amount(in thousands)Three months ended March 31, 2010Unrealized holding gains arising during the period
    
    $
    425
    
    
    $
    (178
    )
    
    $
    247Non-credit related unrealized gain on other-than-temporarily impaired CDOs
    
    
    149
    
    
    
    (51
    )
    
    
    98Reclassification adjustment for credit related OTTI included in net income
    
    
    2,571
    
    
    
    (874
    )
    
    
    1,697Other comprehensive income, net
    
    $
    3,145
    
    
    $
    (1,103
    )
    
    $
    2,042Three months ended March 31, 2009Unrealized holding losses arising during the period
    
    $
    (756
    )
    
    $
    257
    
    
    $
    (500
    )Reclassification adjustment for net losses realized in net income
    
    
    1,539
    
    
    
    (523
    )
    
    
    1,016Other comprehensive income, net
    
    $
    783
    
    
    $
    (266
    )
    
    $
    517
  10




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##### Table of Contents



Operating Segments:
 Effect of Newly Issued Accounting Standards:
   11




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##### Table of Contents



NOTE 3  INVESTMENT SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(in thousands)March 31, 2010Investment securities available for saleDebt securitiesU.S. Government and agency obligations
    
    $
    51,493
    
    
    $
    81
    
    
    $
    (53
    )
    
    $
    51,521Municipal bonds
    
    
    33,377
    
    
    
    865
    
    
    
    (490
    )
    
    
    33,752Collateralized debt obligations
    
    
    10,523
    
    
    
    
    
    
    
    (8,938
    )
    
    
    1,585Corporate bonds
    
    
    8,803
    
    
    
    249
    
    
    
    
    
    
    
    9,052Total debt securities
    
    $
    104,196
    
    
    $
    1,195
    
    
    $
    (9,481
    )
    
    $
    95,910Mortgage-backed securitiesGNMA pass-through certificates
    
    $
    2,548
    
    
    $
    21
    
    
    $
    (9
    )
    
    $
    2,560FHLMC pass-through certificates
    
    
    4,718
    
    
    
    142
    
    
    
    
    
    
    
    4,860FNMA pass-through certificates
    
    
    24,879
    
    
    
    1,052
    
    
    
    (19
    )
    
    
    25,912Collateralized mortgage obligations
    
    
    24,377
    
    
    
    561
    
    
    
    (437
    )
    
    
    24,501Total mortgage-backed securities
    
    $
    56,522
    
    
    $
    1,776
    
    
    $
    (465
    )
    
    $
    57,833Total securities available for sale
    
    $
    160,718
    
    
    $
    2,971
    
    
    $
    (9,946
    )
    
    $
    153,743
  12




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##### Table of Contents



Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(in thousands)December 31, 2009Investment securities available for saleDebt securitiesU.S. Government and agency obligations
    
    $
    46,004
    
    
    $
    96
    
    
    $
    (128
    )
    
    $
    45,972Municipal bonds
    
    
    33,901
    
    
    
    953
    
    
    
    (473
    )
    
    
    34,381Collateralized debt obligations
    
    
    13,038
    
    
    
    58
    
    
    
    (11,640
    )
    
    
    1,456Corporate bonds
    
    
    10,851
    
    
    
    195
    
    
    
    
    
    
    
    11,046Total debt securities
    
    $
    103,794
    
    
    $
    1,302
    
    
    $
    (12,241
    )
    
    $
    92,855Mortgage-backed securitiesGNMA pass-through certificates
    
    $
    677
    
    
    $
    16
    
    
    $
    
    
    
    $
    693FHLMC pass-through certificates
    
    
    5,338
    
    
    
    175
    
    
    
    
    
    
    
    5,513FNMA pass-through certificates
    
    
    26,612
    
    
    
    1,001
    
    
    
    (25
    )
    
    
    27,588Collateralized mortgage obligations
    
    
    26,514
    
    
    
    567
    
    
    
    (915
    )
    
    
    26,166Total mortgage-backed securities
    
    $
    59,141
    
    
    $
    1,759
    
    
    $
    (940
    )
    
    $
    59,960Total securities available for sale
    
    $
    162,935
    
    
    $
    3,061
    
    
    $
    (13,181
    )
    
    $
    152,815
   Less Than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of Securities
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(in thousands)U.S. Government and agency obligations
    
    $
    24,939
    
    
    $
    (53
    )
    
    $
    
    
    
    $
    
    
    
    $
    24,939
    
    
    $
    (53
    )Municipal bonds
    
    
    4,118
    
    
    
    (20
    )
    
    
    3,670
    
    
    
    (470
    )
    
    
    7,788
    
    
    
    (490
    )Collateralized debt obligations
    
    
    483
    
    
    
    (974
    )
    
    
    1,102
    
    
    
    (7,964
    )
    
    
    1,585
    
    
    
    (8,938
    )Mortgage-backed securities
    
    
    7,549
    
    
    
    (65
    )
    
    
    3,133
    
    
    
    (400
    )
    
    
    10,682
    
    
    
    (465
    )Total temporarily impaired investment
securities
    
    $
    37,089
    
    
    $
    (1,112
    )
    
    $
    7,905
    
    
    $
    (8,834
    )
    
    $
    44,994
    
    
    $
    (9,946
    )
  13




---



##### Table of Contents



Less Than 12 Months
    
    

12
Months or Longer
    
    

TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of Securities
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(in thousands)U.S. Government and agency obligations
    
    $
    16,877
    
    
    $
    (128
    )
    
    $
    
    
    
    $
    
    
    
    
    16,877
    
    
    $
    (128
    )Municipal bonds
    
    
    578
    
    
    
    (8
    )
    
    
    3,988
    
    
    
    (465
    )
    
    
    4,566
    
    
    
    (473
    )Collateralized debt obligations
    
    
    90
    
    
    
    (3,329
    )
    
    
    1,308
    
    
    
    (8,311
    )
    
    
    1,398
    
    
    
    (11,640
    )Mortgage-backed securities
    
    
    7,496
    
    
    
    (116
    )
    
    
    2,718
    
    
    
    (824
    )
    
    
    10,214
    
    
    
    (940
    )Total temporarily impaired investment
securities
    
    $
    25,041
    
    
    $
    (3,581
    )
    
    $
    8,014
    
    
    $
    (9,600
    )
    
    $
    33,055
    
    
    $
    (13,181
    )
     14




---



##### Table of Contents



Pooled Trust Preferred Collateralized Debt Obligations
  ActualDeferrals
    
    
    Excessand
    
    
    SubordinationCurrent
    
    
    Defaults
    
    
    as a % ofMoodys/
    
    
    Number of
    
    
    as a % of
    
    
    CurrentBook
    
    
    Fair
    
    
    Unrealized
    
    
    Realized
    
    
    Fitch
    
    
    Performing
    
    
    Current
    
    
    PerformingDeal
    
    Class
    
    
    Value
    
    
    Value
    
    
    Loss
    
    
    Loss
    
    
    Ratings
    
    
    Issuers
    
    
    Collateral
    
    
    CollateralPreTSL II
    
    Mezzanine
    
    $
    397
    
    
    $
    16
    
    
    $
    (381
    )
    
    $
    (635
    )
    
    Ca/C
    
    
    22
    
    
    
    38.90
    %
    
    
    0.00
    %PreTSL VI
    
    Mezzanine
    
    
    42
    
    
    
    5
    
    
    
    (37
    )
    
    
    (16
    )
    
    Ca/CCC
    
    
    2
    
    
    
    81.00
    %
    
    
    0.00
    %PreTSL XIX
    
    Mezzanine
    
    
    1,186
    
    
    
    37
    
    
    
    (1,149
    )
    
    
    (573
    )
    
    Ca/C
    
    
    55
    
    
    
    22.10
    %
    
    
    0.00
    %PreTSL XXII
    
    Mezzanine
    
    
    156
    
    
    
    18
    
    
    
    (138
    )
    
    
    (2,443
    )
    
    NR/C
    
    
    71
    
    
    
    26.50
    %
    
    
    0.00
    %PreTSL XXIII
    
    Mezzanine
    
    
    63
    
    
    
    3
    
    
    
    (60
    )
    
    
    (387
    )
    
    NR/C
    
    
    100
    
    
    
    22.90
    %
    
    
    0.00
    %PreTSL XXIV
    
    Mezzanine
    
    
    211
    
    
    
    4
    
    
    
    (207
    )
    
    
    (216
    )
    
    Ca/C
    
    
    65
    
    
    
    31.40
    %
    
    
    0.00
    %I-PreTSL I
    
    Mezzanine
    
    
    1,829
    
    
    
    252
    
    
    
    (1,577
    )
    
    
    
    
    
    NR/BB
    
    
    16
    
    
    
    17.40
    %
    
    
    7.78
    %I-PreTSL II
    
    Mezzanine
    
    
    2,709
    
    
    
    374
    
    
    
    (2,335
    )
    
    
    
    
    
    NR/BB
    
    
    29
    
    
    
    4.90
    %
    
    
    14.33
    %I-PreTSL III
    
    Mezzanine
    
    
    2,694
    
    
    
    374
    
    
    
    (2,320
    )
    
    
    
    
    
    B2/BB
    
    
    24
    
    
    
    11.20
    %
    
    
    9.05
    %I-PreTSL IV
    
    Mezzanine
    
    
    437
    
    
    
    62
    
    
    
    (375
    )
    
    
    
    
    
    Ba2/B
    
    
    31
    
    
    
    4.20
    %
    
    
    8.84
    %MM Comm I
    
    Mezzanine
    
    
    799
    
    
    
    440
    
    
    
    (359
    )
    
    
    (774
    )
    
    Ca/C
    
    
    8
    
    
    
    50.61
    %
    
    
    0.00
    %Total
    
    
    
    
    
    $
    10,523
    
    
    $
    1,585
    
    
    $
    (8,938
    )
    
    $
    (5,044
    )
    15




---



##### Table of Contents



Available for SaleAmortizedCost
    
    
    Fair Value(in thousands)Due within one year or less
    
    $
    10,334
    
    
    $
    10,423Due after one year but within five years
    
    
    62,047
    
    
    
    62,726Due after five years but within ten years
    
    
    10,540
    
    
    
    10,830Due after ten years
    
    
    21,275
    
    
    
    11,931Mortgage-backed securities
    
    
    56,522
    
    
    
    57,833Total investment securities
    
    $
    160,718
    
    
    $
    153,743
  Three Months EndedMarch 31, 2010Beginning balance of cumulative credit losses on CDO securities (1)
    
    $
    (13,493
    )Additional credit losses for which other than temporary impairment was previously recognized
    
    
    (2,571
    )Ending balance of cumulative credit losses on CDO securities, March 31, 2010
    
    $
    (16,064
    )
 
 (1)
    
    On April 1, 2009, we recognized a cumulative effect adjustment based upon FASB guidance regarding
the recognition and presentation of other-than-temporary impairment and determined that $9.9 million of
previously recorded OTTI write-downs represented credit losses.  16




---



##### Table of Contents



NOTE 4  LOANS RECEIVABLE
  March 31,
    
    
    December 31,2010
    
    
    2009(in thousands)Commercial mortgage
    
    $
    419,840
    
    
    $
    416,575Residential mortgage
    
    
    245,141
    
    
    
    244,897Construction
    
    
    27,267
    
    
    
    28,839Home equity loans and lines of credit
    
    
    47,260
    
    
    
    48,706Commercial business loans
    
    
    55,127
    
    
    
    62,685Other consumer loans
    
    
    1,096
    
    
    
    1,284Loans receivable, gross
    
    
    795,731
    
    
    
    802,986Less:Allowance for loan losses
    
    
    11,876
    
    
    
    13,311Deferred loan fees
    
    
    168
    
    
    
    202Loans receivable, net
    
    $
    783,687
    
    
    $
    789,473
  Three months ended March 31,2010
    
    
    2009(in thousands)Balance at beginning of period
    
    $
    13,311
    
    
    $
    11,240Provisions charged to operations
    
    
    244
    
    
    
    745Charge-offs
    
    
    (2,164
    )
    
    
    (70
    )Recoveries
    
    
    485
    
    
    
    9Balance at end of period
    
    $
    11,876
    
    
    $
    11,924
  17




---



##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(in thousands)Period-end loans with no allocated allowance for loan losses
    
    $
    18,560
    
    
    $
    26,020Period-end loans with allocated allowance for loan losses
    
    
    17,931
    
    
    
    7,228Total
    
    $
    36,491
    
    
    $
    33,248Amount of the allowance for loan losses allocated
    
    $
    1,592
    
    
    $
    3,016
 Three months ended March 31,2010
    
    
    2009(in thousands)Average of individually impaired loans during the period
    
    $
    39,889
    
    
    $
    27,264Interest income recognized during impairment
    
    $
    94
    
    
    $
    21Cash basis interest income recognized
    
    $
    119
    
    
    $
    15
 NOTE 5  FAIR VALUE
  Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets
that the entity has the ability to access as of the measurement date.Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices
for similar assets or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market data.Level 3: Significant unobservable inputs that reflect a reporting entitys own assumptions
about the assumptions that market participants would use in pricing an asset or liability.
      18




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##### Table of Contents



Assets and Liabilities Measured on a Recurring Basis
  Fair Value Measurements
    
    
    Fair Value Measurementsat March 31, 2010
    
    
    at December 31, 2009Quoted
    
    
    
    
    
    
    
    
    
    
    QuotedPrices
    
    
    
    
    
    
    
    
    
    
    Pricesin Active
    
    
    Significant
    
    
    Significant
    
    
    in Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    Other
    
    
    Markets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    Observable
    
    
    Identical
    
    
    Observable
    
    
    ObservableAssets
    
    
    Inputs
    
    
    Inputs
    
    
    Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Level 1)
    
    
    (Level 2)
    
    

(Level 3)(in thousands)
    
    
    (in thousands)Investment securities available for sale:U.S. Government and agency obligations
    
    $
    
    
    
    $
    51,521
    
    
    $
    
    
    
    $
    
    
    
    $
    45,972
    
    

    
    Municipal bonds
    
    
    
    
    
    
    33,752
    
    
    
    
    
    
    
    
    
    
    
    34,381
    
    
    
    Collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    1,585
    
    
    
    
    
    
    
    
    
    
    
    1,456Corporate bonds
    
    
    
    
    
    
    9,052
    
    
    
    
    
    
    
    
    
    
    
    11,046
    
    
    
    Mortgage-backed securities
    
    
    
    
    
    
    57,833
    
    
    
    
    
    
    
    
    
    
    
    59,960
    
    

    
    Total securities available for sale
    
    $
    
    
    
    $
    152,158
    
    
    $
    1,585
    
    
    $
    
    
    
    $
    151,359
    
    
    $
    1,456
  Fair Value MeasurementsUsing SignificantUnobservable Inputs(Level 3)CDO SecuritiesAvailable for Sale(in thousands)Three months ended March 31,2010
    
    
    2009Beginning balance
    
    $
    1,456
    
    
    $
    3,033Accretion of discount
    
    
    56
    
    
    
    10Payments received
    
    
    
    
    
    
    (2
    )Unrealized holding gain (loss)
    
    
    2,644
    
    
    
    (138
    )Other-than-temporary impairment included in earnings
    
    
    (2,571
    )
    
    
    (1,539
    )Ending balance
    
    $
    1,585
    
    
    $
    1,364
  19




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##### Table of Contents



Assets and Liabilities Measured on a Non-Recurring Basis
  Fair Value Measurements
    
    
    Fair Value Measurementsat March 31, 2010
    
    
    at December 31, 2009Quoted
    
    
    
    
    
    
    
    
    
    
    QuotedPrices
    
    
    
    
    
    
    
    
    
    
    Pricesin Active
    
    
    Significant
    
    
    Significant
    
    
    in Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    Other
    
    
    Markets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    Unobservable
    
    
    Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs
    
    
    Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(in thousands)
    
    
    (in thousands)Assets:Impaired loans (1):Commercial mortgage
    
    $
    
    
    
    $
    27,764
    
    
    $
    
    
    
    $
    
    
    
    $
    25,132
    
    
    $
    Residential mortgage
    
    
    
    
    
    
    5,493
    
    
    
    
    
    
    
    
    
    
    
    3,251
    
    
    
    Construction
    
    
    
    
    
    
    430
    
    
    
    
    
    
    
    
    
    
    
    1,298
    
    
    
    Home equity loans
    
    
    
    
    
    
    518
    
    
    
    
    
    
    
    
    
    
    
    482
    
    
    
    Commercial business loans
    
    
    
    
    
    
    2,286
    
    
    
    
    
    
    
    
    
    
    
    3,085
    
    
    
    Total impaired loans
    
    $
    
    
    
    $
    36,491
    
    
    $
    
    
    
    $
    
    
    
    $
    33,248
    
    
    $
    Other real estate owned:Commercial
    
    $
    
    
    
    $
    1.334
    
    
    $
    
    
    
    $
    
    
    
    $
    3,532
    
    
    $
    Residential mortgage
    
    
    
    
    
    
    1,180
    
    
    
    
    
    
    
    
    
    
    
    1,285
    
    
    
    Total other real estate owned
    
    $
    
    
    
    $
    2,514
    
    
    $
    
    
    
    $
    
    
    
    $
    4,817
    
    
    $
    Loans held for sale
    
    
    
    
    
    
    1,059
    
    
    
    
    
    
    
    
    
    
    
    398
    
    
    
    Assets held for sale
    
    
    
    
    
    
    1,828
    
    
    
    
    
    
    
    
    
    
    
    1,828
    
    
    
    Goodwill
    
    
    
    
    
    
    
    
    
    
    22,575
    
    
    
    
    
    
    
    
    
    
    
    22,575Other intangibles
    
    
    
    
    
    
    
    
    
    
    547
    
    
    
    
    
    
    
    
    
    
    
    585
 (1)
    
    Includes loans delinquent greater than 90 days, loans less
than 90 day delinquent but not accruing and troubled debt
restructured loans.    20




---



##### Table of Contents



At March 31, 2010
    
    
    At December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    Value(in thousands)AssetsCash and cash equivalents
    
    $
    21,417
    
    
    $
    21,417
    
    
    $
    13,513
    
    
    $
    13,513Interest-bearing time deposits
    
    
    8,402
    
    
    
    8,487
    
    
    
    7,451
    
    
    
    7,539Investment securities
    
    
    153,743
    
    
    
    153,743
    
    
    
    152,815
    
    
    
    152,815Loans held for sale
    
    
    1,059
    
    
    
    1,059
    
    
    
    398
    
    
    
    398Loans receivable
    
    
    783,687
    
    
    
    780,403
    
    
    
    789,473
    
    
    
    788,421FHLB Stock
    
    
    8,794
    
    
    
    8,794
    
    
    
    10,275
    
    
    
    10,275Bank owned life insurance
    
    
    27,462
    
    
    
    27,462
    
    
    
    27,210
    
    
    
    27,210Accrued interest receivable
    
    
    4,007
    
    
    
    4,007
    
    
    
    4,630
    
    
    
    4,630LiabilitiesSavings deposits
    
    $
    80,539
    
    
    $
    80,539
    
    
    $
    79,368
    
    
    $
    79,368NOW, checking and MMDA deposits
    
    
    324,022
    
    
    
    324,022
    
    
    
    320,308
    
    
    
    320,308Certificates of deposit
    
    
    362,035
    
    
    
    365,572
    
    
    
    336,911
    
    
    
    340,084Borrowings
    
    
    171,082
    
    
    
    168,490
    
    
    
    203,981
    
    
    
    199,718Accrued interest payable
    
    
    724
    
    
    
    724
    
    
    
    807
    
    
    
    807
           21




---



##### Table of Contents



NOTE 6  OTHER REAL ESTATE OWNED
    NOTE 7 DEPOSITS
  March 31,
    
    
    December 31,2010
    
    
    2009(in thousands)Savings accounts
    
    $
    80,539
    
    
    $
    79,368NOW accounts and money market funds
    
    
    257,850
    
    
    
    257,943Non-interest bearing checking
    
    
    66,172
    
    
    
    62,365Certificates
of deposit of less than $100,000
    
    
    196,561
    
    
    
    201,303Certificates of deposit of $100,000 or more
    
    
    165,474
    
    
    
    135,608$
    766,596
    
    
    $
    736,587
 NOTE 8  INCOME TAXES
  For the three months ended March 31,Income taxes
    
    2010
    
    
    2009Pre-tax income (loss)
    
    $
    104
    
    
    $
    (526
    )Income tax benefit
    
    $
    (531
    )
    
    $
    (427
    )
  22




---



##### Table of Contents



2009 Annual
Report to Shareholders
 NOTE 9 EARNINGS PER SHARE
   Three months ended March 31,2010
    
    
    2009(in thousands, except share data)Net income (loss)
    
    $
    635
    
    
    $
    (99
    )Weighted average shares outstanding
    
    
    12,338,966
    
    
    
    12,296,879Basic earnings (loss) per share
    
    $
    0.05
    
    
    $
    (0.01
    )Diluted weighted average shares outstanding
    
    
    12,338,966
    
    
    
    12,296,879Diluted basic earnings (loss) per share
    
    $
    0.05
    
    
    $
    (0.01
    )
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
   Overview
   23




---



##### Table of Contents



1)
    
    Managing our credit underwriting and administration through the economic
recovery.
 2)
    
    Managing non-performing assets to performing status or disposal.
 3)
    
    Managing net interest income in a potentially rising rate environment.
  24




---



##### Table of Contents



Managing our credit underwriting and administration through the economic recovery:
    Managing non-performing assets to performing status or disposal:
    Managing net interest income in a potentially rising rate environment:
   25




---



##### Table of Contents



2010 Outlook
        Comparison of Financial Condition at March 31, 2010 and December 31, 2009
     26




---



##### Table of Contents



27




---



##### Table of Contents



For the Three Months Ended March 31,2010
    
    
    2009Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Yield
    
    
    Balance
    
    
    Expense
    
    
    Yield(dollars in thousands)AssetsInterest-earning deposits
    
    $
    12,456
    
    
    $
    40
    
    
    
    1.30
    %
    
    $
    15,022
    
    
    $
    66
    
    
    
    1.76
    %Investments
    
    
    172,723
    
    
    
    919
    
    
    
    2.13
    %
    
    
    187,947
    
    
    
    2,250
    
    
    
    4.79
    %Loans
    
    
    802,735
    
    
    
    11,606
    
    
    
    5.86
    %
    
    
    800,169
    
    
    
    11,627
    
    
    
    5.89
    %Total interest-earning assets
    
    
    987,914
    
    
    
    12,565
    
    
    
    5.16
    %
    
    
    1,003,138
    
    
    
    13,943
    
    
    
    5.64
    %Noninterest-earning assets
    
    
    101,420
    
    
    
    
    
    
    
    
    
    
    
    106,462Allowance for loan losses
    
    
    (13,519
    )
    
    
    
    
    
    
    
    
    
    
    (11,340
    )Total assets
    
    $
    1,075,815
    
    
    
    
    
    
    
    
    
    
    $
    1,098,260Liabilities and Stockholders EquityInterest-bearing demand accounts
    
    $
    112,395
    
    
    
    105
    
    
    
    0.38
    %
    
    $
    104,083
    
    
    
    107
    
    
    
    0.42
    %Savings accounts
    
    
    79,467
    
    
    
    87
    
    
    
    0.44
    %
    
    
    79,460
    
    
    
    117
    
    
    
    0.60
    %Money market accounts
    
    
    143,629
    
    
    
    463
    
    
    
    1.31
    %
    
    
    117,055
    
    
    
    428
    
    
    
    1.48
    %Certificates of deposit
    
    
    359,917
    
    
    
    1,726
    
    
    
    1.94
    %
    
    
    381,019
    
    
    
    2,959
    
    
    
    3.15
    %Borrowings
    
    
    182,784
    
    
    
    1,587
    
    
    
    3.52
    %
    
    
    205,162
    
    
    
    1,596
    
    
    
    3.15
    %Total interest-bearing liabilities
    
    
    878,192
    
    
    
    3,968
    
    
    
    1.83
    %
    
    
    886,779
    
    
    
    5,207
    
    
    
    2.38
    %Noninterest-bearing deposits
    
    
    62,892
    
    
    
    
    
    
    
    
    
    
    
    63,840Other liabilities
    
    
    5,730
    
    
    
    
    
    
    
    
    
    
    
    6,230Total liabilities
    
    
    946,814
    
    
    
    
    
    
    
    
    
    
    
    956,849Stockholders equity
    
    
    129,001
    
    
    
    
    
    
    
    
    
    
    
    141,411Total liabilities & stockholders
equity
    
    $
    1,075,815
    
    
    
    
    
    
    
    
    
    
    $
    1,098,260Net interest income
    
    
    
    
    
    $
    8,597
    
    
    
    
    
    
    
    
    
    
    $
    8,736Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.33
    %
    
    
    
    
    
    
    
    
    
    
    3.26
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.53
    %
    
    
    
    
    
    
    
    
    
    
    3.53
    %Net interest income and margin (tax
equivalent basis) (1)
    
    
    
    
    
    $
    8,735
    
    
    
    3.59
    %
    
    
    
    
    
    $
    8,892
    
    
    
    3.59
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    112.49
    %
    
    
    
    
    
    
    
    
    
    
    113.12
    %
 
 (1)
    
    In order to present pre-tax income and resultant yields on tax-exempt investments on a basis comparable to those on
taxable investments, a tax equivalent yield adjustment is made to interest income. The tax equilvalent adjustment has been
computed using a Federal income tax rate of 35%, and has the effect of increasing interest income by $138,000, and $156,000
for the three month period ended March 31, 2010 and 2009, respectively. The average yield on investments increased to
2.48% from 2.13% for the three month period ended March 31, 2010 and increased to 5.19% from 4.79% for the
three month period ended March 31, 2009.  28




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##### Table of Contents



Rate/Volume Analysis
  For the Three Months Ended March 31, 2010Compared to March 31, 2009Increase (decrease) due to changes in:Average
    
    
    Average
    
    
    NetVolume
    
    
    Rate
    
    
    Change(in thousands)Interest-Earning AssetsInterest-earning deposits
    
    $
    (10
    )
    
    $
    (16
    )
    
    $
    (26
    )Investments
    
    
    (171
    )
    
    
    (1,160
    )
    
    
    (1,331
    )Loans
    
    
    37
    
    
    
    (58
    )
    
    
    (21
    )Total interest income
    
    
    (144
    )
    
    
    (1,234
    )
    
    
    (1,378
    )Interest-Bearing LiabilitiesInterest-bearing demand accounts
    
    
    8
    
    
    
    (10
    )
    
    
    (2
    )Savings accounts
    
    
    0
    
    
    
    (30
    )
    
    
    (30
    )Money market accounts
    
    
    89
    
    
    
    (54
    )
    
    
    35Certificates of deposit
    
    
    (156
    )
    
    
    (1,077
    )
    
    
    (1,233
    )Borrowings
    
    
    (184
    )
    
    
    175
    
    
    
    (9
    )Total interest expense
    
    
    (243
    )
    
    
    (996
    )
    
    
    (1,239
    )Total net interest income
    
    $
    99
    
    
    $
    (238
    )
    
    $
    (139
    )
 Comparison of Operating Results for the Three Months Ended March 31, 2010 and 2009
 General.
 Interest Income.
  29




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##### Table of Contents



Interest Expense.
  Net Interest Income.
 Provision for Loan Losses.
      30




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##### Table of Contents



Non-Interest Income.
 Non-Interest Expense .
 Income Tax Expense (Benefit).
 Liquidity and Capital Resources
      31




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##### Table of Contents



Per Regulatory GuidelinesActual
    
    
    Minimum
    
    

Well
CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(dollars in thousands)March 31, 2010Risk based capital ratios:Tier I
    
    $
    98,978
    
    
    
    11.97
    %
    
    $
    33,075
    
    
    
    4.00
    %
    
    $
    49,613
    
    
    
    6.00
    %Total capital
    
    $
    109,335
    
    
    
    13.22
    %
    
    $
    66,163
    
    
    
    8.00
    %
    
    $
    82,704
    
    
    
    10.00
    %Leverage ratio
    
    $
    98,978
    
    
    
    9.40
    %
    
    $
    42,118
    
    
    
    4.00
    %
    
    $
    52,648
    
    
    
    5.00
    %December 31, 2009Risk based capital ratios:Tier I
    
    $
    98,256
    
    
    
    11.45
    %
    
    $
    34,325
    
    
    
    4.00
    %
    
    $
    51,488
    
    
    
    6.00
    %Total capital
    
    $
    109,013
    
    
    
    12.71
    %
    
    $
    68,616
    
    
    
    8.00
    %
    
    $
    85,769
    
    
    
    10.00
    %Leverage ratio
    
    $
    98,256
    
    
    
    9.37
    %
    
    $
    41,945
    
    
    
    4.00
    %
    
    $
    52,431
    
    
    
    5.00
    %
 Critical Accounting Policies
 Note 2 of the Notes to
Consolidated Financial Statements.
  Allowance for Loan Losses.
  32




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##### Table of Contents



See Note 2  Summary of Significant Accounting Policies of the Notes to
Consolidated Financial Statements.
 Securities Impairment .
  Income Taxes .
   33




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 General
  
    
    originating commercial loans that generally tend to have shorter repricing or reset
periods and higher interest rates than residential mortgage loans;
 
    
    investing in shorter duration investment grade corporate securities and
mortgage-backed securities;
 
    
    originating adjustable rate and short-term consumer loans;
 
    
    selling a portion of our long-term residential mortgage loans;
 
    
    obtaining general financing through lower cost deposits and advances from the Federal
Home Loan Bank; and
 
    
    lengthening the terms of borrowings and deposits.
  Net Interest Income Analysis.
   34




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##### Table of Contents



Net Interest IncomeChange in
    
    Estimated
    
    
    Increase (Decrease) inInterest Rates
    
    Net Interest
    
    
    Estimated Net Interest Income(basis points)(1)
    
    Income
    
    
    Amount
    
    
    Percent(dollars in thousands)+200
    
    $
    35,372
    
    
    $
    (3,203
    )
    
    
    -8.30
    %+100
    
    
    36,929
    
    
    
    (1,646
    )
    
    
    -4.27
    %0
    
    
    38,575-100
    
    
    39,165
    
    
    
    590
    
    
    
    1.53
    %-200
    
    
    38,052
    
    
    
    (523
    )
    
    
    -1.36
    %
 
 (1)
    
    Assumes an instantaneous and sustained uniform change in interest rates at all
maturities.   
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures
  (b)
    
    Changes in internal controls
  (c)
    
    Management report on internal control over financial reporting
   35




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##### Table of Contents



Part II  Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    There were no sales of unregistered securities during the period covered by this Report.
 (b)
    
    Not applicable.
 (c)
    
    There were no issuer repurchases of securities during the period covered by this Report.
 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Reserved
 
 Item 5. Other Information
   36




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##### Table of Contents



Item 6. Exhibits
  3.1
    
    
    Charter of Cape Bancorp, Inc. *3.2
    
    
    Amended and Restated Bylaws of Cape Bancorp, Inc. * *4
    
    
    Form of Common Stock Certificate of Cape Bancorp, Inc. *10.1
    
    
    Form of Employee Stock Ownership Plan *10.2
    
    
    Form of Change in Control Agreement *10.3
    
    
    Amended and Restated Phantom Incentive Stock Option Plan *10.4
    
    
    Amended and Restated Phantom Restricted Stock Plan *10.5
    
    
    Form of Director Retirement Plan *10.6
    
    
    Benefit Equalization Plan *31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 *
    
    Filed as exhibits to the Companys Registration Statement on Form S-1, and any amendments
thereto, with the Securities and Exchange Commission (Registration No. 333-146178).**
    
    Filed as an exhibit to the Companys Current Report Form 8-K with the Securities and Exchange
Commission on July 18, 2008.  37




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##### Table of Contents



SIGNATURES
  CAPE BANCORP, INC.Date: May  7, 2010
    /s/ Michael D. DevlinMichael D. DevlinPresident and Chief Executive OfficerDate: May 7, 2010
    /s/ Guy HackneyGuy HackneySenior Vice President and Chief Financial Officer  38