##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 Commission File No. 1-14771
 MICROFINANCIAL INCORPORATED
  Massachusetts
    
    04-2962824(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 
 
 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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##### 



MICROFINANCIAL INCORPORATED
TABLE OF CONTENTS
 PagePart I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited):Condensed Consolidated Balance Sheets  March 31, 2011 and December 31, 2010
    
    3Condensed Consolidated Statements of Income  Three months ended March 31, 2011 and 2010
    
    4Condensed Consolidated Statements of Cash Flows  Three months ended March 31, 2011 and 2010
    
    5Notes to Condensed Consolidated Financial Statements
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    21Item 4.
    
    Controls and Procedures
    
    21Part II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    22Item 1A.
    
    Risk Factors
    
    22Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    22Item 6.
    
    Exhibits
    
    23Signatures
    
    
    
    24EX-31.1EX-31.2EX-32.1EX-32.2




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MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands, except share and per share data)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCash and cash equivalents
    
    $
    1,232
    
    
    $
    1,528Restricted cash
    
    
    952
    
    
    
    753Net investment in leases:Receivables due in installments
    
    
    191,887
    
    
    
    191,067Estimated residual value
    
    
    22,198
    
    
    
    21,832Initial direct costs
    
    
    1,446
    
    
    
    1,490Less:Advance lease payments and deposits
    
    
    (3,526
    )
    
    
    (3,479
    )Unearned income
    
    
    (59,008
    )
    
    
    (59,245
    )Allowance for credit losses
    
    
    (12,895
    )
    
    
    (13,132
    )Net investment in leases
    
    
    140,102
    
    
    
    138,533Investment in rental contracts, net
    
    
    544
    
    
    
    461Property and equipment, net
    
    
    1,870
    
    
    
    800Other assets
    
    
    1,252
    
    
    
    1,530Total assets
    
    $
    145,952
    
    
    $
    143,605LIABILITIES AND STOCKHOLDERS EQUITYRevolving line of credit
    
    $
    61,884
    
    
    $
    62,650Accounts payable
    
    
    2,092
    
    
    
    2,435Capital lease obligation
    
    
    13
    
    
    
    26Dividends payable
    
    
    8
    
    
    
    5Other liabilities
    
    
    2,509
    
    
    
    1,375Deferred income taxes
    
    
    8,643
    
    
    
    7,627Total liabilities
    
    
    75,149
    
    
    
    74,118Stockholders equity:Preferred stock, $.01 par value; 5,000,000 shares authorized;
no shares issued at March 31, 2011 and December 31, 2010
    
    
    
    
    
    
    Common stock, $.01 par value; 25,000,000 shares authorized;
14,231,692 and 14,231,933 shares issued at March 31, 2011 and December 31,
2010, respectively
    
    
    142
    
    
    
    142Additional paid-in capital
    
    
    46,480
    
    
    
    46,475Retained earnings
    
    
    24,181
    
    
    
    22,870Total stockholders equity
    
    
    70,803
    
    
    
    69,487Total liabilities and stockholders equity
    
    $
    145,952
    
    
    $
    143,605
  3




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MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (In thousands, except share and per share data)
 Three Months EndedMarch 31,2011
    
    2010Revenues:Income on financing leases
    
    $
    9,101
    
    
    $
    8,122Rental income
    
    
    2,006
    
    
    
    1,958Income on service contracts
    
    
    108
    
    
    
    141Loss and damage waiver fees
    
    
    1,201
    
    
    
    1,104Service fees and other
    
    
    932
    
    
    
    993Total revenues
    
    
    13,348
    
    
    
    12,318Expenses:Selling, general and administrative
    
    
    3,953
    
    
    
    3,230Provision for credit losses
    
    
    4,752
    
    
    
    6,931Depreciation and amortization
    
    
    681
    
    
    
    428Interest
    
    
    663
    
    
    
    811Total expenses
    
    
    10,049
    
    
    
    11,400Income before provision for income taxes
    
    
    3,299
    
    
    
    918Provision for income taxes
    
    
    1,270
    
    
    
    353Net income
    
    $
    2,029
    
    
    $
    565Net income per common share  basic
    
    $
    0.14
    
    
    $
    0.04Net income per common share  diluted
    
    $
    0.14
    
    
    $
    0.04Weighted-average shares:Basic
    
    
    14,246,750
    
    
    
    14,210,275Diluted
    
    
    14,533,102
    
    
    
    14,409,175
  4




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MICROFINANCIAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands)
 Three Months EndedMarch 31,2011
    
    2010Cash flows from operating activities:Cash received from customers
    
    $
    25,789
    
    
    $
    21,856Cash paid to suppliers and employees
    
    
    (4,587
    )
    
    
    (4,034
    )Cash paid for income taxes
    
    
    (22
    )
    
    
    (321
    )Interest paid
    
    
    (616
    )
    
    
    (432
    )Net cash provided by operating activities
    
    
    20,564
    
    
    
    17,069Cash flows from investing activities:Investment in lease and rental contracts
    
    
    (18,195
    )
    
    
    (17,978
    )Investment in direct costs
    
    
    (240
    )
    
    
    (277
    )Investment in property and equipment
    
    
    (490
    )
    
    
    (31
    )Net cash used in investing activities
    
    
    (18,925
    )
    
    
    (18,286
    )Cash flows from financing activities:Proceeds from secured debt
    
    
    24,616
    
    
    
    24,192Repayment of secured debt
    
    
    (25,382
    )
    
    
    (21,322
    )Payment of debt closing costs
    
    
    (2
    )
    
    
    (Increase) decrease in restricted cash
    
    
    (199
    )
    
    
    63Repayment of capital lease obligation
    
    
    (13
    )
    
    
    (17
    )Repurchase of common stock
    
    
    (240
    )
    
    
    Payment of dividends
    
    
    (715
    )
    
    
    (709
    )Net cash (used in) provided by financing activities
    
    
    (1,935
    )
    
    
    2,207Net change in cash and cash equivalents
    
    
    (296
    )
    
    
    990Cash and cash equivalents, beginning of period
    
    
    1,528
    
    
    
    391Cash and cash equivalents, end of period
    
    $
    1,232
    
    
    $
    1,381Reconciliation of net income to net cash provided by operating activities:Net income
    
    $
    2,029
    
    
    $
    565Adjustments to reconcile net income to net
cash provided by operating activities:Amortization of unearned income, net of initial direct costs
    
    
    (9,101
    )
    
    
    (8,122
    )Depreciation and amortization
    
    
    681
    
    
    
    428Provision for credit losses
    
    
    4,752
    
    
    
    6,931Recovery of equipment cost and residual value
    
    
    20,573
    
    
    
    16,693Stock-based compensation expense
    
    
    33
    
    
    
    30Changes in assets and liabilities:Current taxes payable
    
    
    
    
    
    
    (56
    )Deferred income taxes
    
    
    1,016
    
    
    
    89Decrease in other assets
    
    
    278
    
    
    
    108Decrease in accounts payable
    
    
    (131
    )
    
    
    (38
    )Increase in other liabilities
    
    
    434
    
    
    
    441Net cash provided by operating activities
    
    $
    20,564
    
    
    $
    17,069Supplemental disclosure of non-cash activities:Acquisition of property and equipment through lease incentives
    
    $
    700
    
    
    $
    Fair market value of stock issued for compensation
    
    $
    212
    
    
    $
    171
  5




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
 A. Nature of Business
  B. Summary of Significant Accounting Policies
 Basis of Presentation
   Allowance for Loan Losses and Credit Quality of Loans
   6




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
     Three Months EndedMarch 31,2011
    
    2010Allowance for credit losses beginning balance
    
    $
    13,132
    
    
    $
    13,856Provision for credit losses
    
    
    4,752
    
    
    
    6,931Charge-offs
    
    
    (6,332
    )
    
    
    (7,901
    )Recoveries
    
    
    1,343
    
    
    
    916Allowance for credit losses ending balance
    
    $
    12,895
    
    
    $
    13,802
  LeaseComm
    
    TimePayment
    
    TotalMicroticket
    
    Microticketequipment
    
    equipmentAllowance for Credit Losses:Beginning Balance
    
    $
    231
    
    
    $
    12,901
    
    
    $
    13,132Charge-Offs
    
    
    (218
    )
    
    
    (6,114
    )
    
    
    (6,332
    )Recoveries
    
    
    311
    
    
    
    1,032
    
    
    
    1,343Provisions (Credits)
    
    
    (126
    )
    
    
    4,878
    
    
    
    4,752Ending Balance
    
    $
    198
    
    
    $
    12,697
    
    
    $
    12,895Ending Balance: Individually
evaluated for impairment
    
    
    
    
    
    
    
    
    
    
    Ending Balance: Collectively
evaluated for impairment
    
    
    198
    
    
    
    12,697
    
    
    
    12,895Ending Balance: contracts
acquired with deteriorated
credit quality
    
    
    
    
    
    
    
    
    
    
    
 7




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
 LeaseComm
    
    TimePayment
    
    TotalMicroticket
    
    Microticketequipment
    
    equipmentFinancing Receivables:Ending Balance
    
    
    427
    
    
    
    152,570
    
    
    
    152,997
    (1)Ending Balance: Individually
evaluated for impairment
    
    
    
    
    
    
    
    
    
    
    Ending Balance: Collectively
evaluated for impairment
    
    
    427
    
    
    
    152,570
    
    
    
    152,997
    (1)Ending Balance: contracts
acquired with deteriorated
credit quality
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Total financing receivables include net investment in leases. For purposes of
asset quality and allowance calculations, the allowance for credit losses is
excluded.    
    
    Leases assigned a gold rating represent those transactions which exhibit the highest
risk rating based on our internal credit scores. They are considered of sufficient
quality to preclude an otherwise adverse rating. Gold rated leases are typically
represented by lessees with high bureau reported credit scores at lease inception or are
supported by established businesses for those transactions which are not personally
guaranteed by the lessee.
    
    Leases assigned a silver rating fall in the middle range of the nine acceptable
scores generated by the scoring model. These transactions possess a reasonable amount of
risk based on their profile and may exhibit vulnerability to deterioration if adverse
factors are encountered. These accounts typically demonstrate adequate coverage but
warrant a higher level of monitoring by management to ensure that weaknesses do not
advance.
    
    A bronze rating applies to leases at the lower end of the nine acceptable scores
generated by the scoring model whereby the lessee may have difficulty meeting the lease
obligation if adverse factors are
encountered. Bronze rated transactions typically have lower reported credit scores at
lease inception and will typically have other less desirable credit attributes.
 8




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
  Current
    
    Past Due
    
    TotalTimePayment Corp.GradeGold
    
    $
    44,121
    
    
    $
    4,105
    
    
    $
    48,226Silver
    
    
    78,469
    
    
    
    18,785
    
    
    
    97,254Bronze
    
    
    4,422
    
    
    
    2,668
    
    
    
    7,090Total
    
    
    127,012
    
    
    
    25,558
    
    
    
    152,570LeaseComm
    
    
    190
    
    
    
    237
    
    
    
    427Total
    
    $
    127,202
    
    
    $
    25,795
    
    
    $
    152,997
  31 to 60
    
    61 to 90
    
    
    
    
    
    
    
    
    
    Over 90days
    
    days
    
    Over 90 Days
    
    
    
    
    
    DaysCurrent
    
    Past Due
    
    Past Due
    
    Past Due
    
    Total
    
    AccruingLeaseComm:
    
    $
    190
    
    
    $
    11
    
    
    $
    10
    
    
    $
    216
    
    
    $
    427
    
    
    $
    216TimePayment Corp.Gold
    
    
    44,121
    
    
    
    1,495
    
    
    
    912
    
    
    
    1,698
    
    
    
    48,226
    
    
    
    1,698Silver
    
    
    78,469
    
    
    
    2,589
    
    
    
    2,853
    
    
    
    13,343
    
    
    
    97,254
    
    
    
    13,343Bronze
    
    
    4,422
    
    
    
    298
    
    
    
    293
    
    
    
    2,077
    
    
    
    7,090
    
    
    
    2,077TimePayment Corp.
subtotal
    
    
    127,012
    
    
    
    4,382
    
    
    
    4,058
    
    
    
    17,118
    
    
    
    152,570
    
    
    
    17,118Total
    
    $
    127,202
    
    
    $
    4,393
    
    
    $
    4,068
    
    
    $
    17,334
    
    
    $
    152,997
    
    
    $
    17,334Percent of Total
Financing
Receivables
    
    
    83.1
    %
    
    
    2.9
    %
    
    
    2.7
    %
    
    
    11.3
    %
    
    
    100.0
    %
 Fair Value of Financial Instruments
  9




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
 Net Income Per Share
   Three Months EndedMarch 31,2011
    
    2010Net income
    
    $
    2,029
    
    
    $
    565Weighted average common shares outstanding
    
    
    14,246,750
    
    
    
    14,210,275Dilutive effect of common stock
options, warrants and restricted stock
    
    
    286,352
    
    
    
    198,900Shares used in computation of net income
per common share  diluted
    
    
    14,533,102
    
    
    
    14,409,175Net income per common share  basic
    
    $
    0.14
    
    
    $
    0.04Net income per common share  diluted
    
    $
    0.14
    
    
    $
    0.04
 Stock-Based Employee Compensation
   Weighted-AverageShares
    
    
    Price Per Share
    
    
    Exercise PriceOutstanding at December 31, 2010
    
    
    908,028
    
    
    $
    1.585 to $13.10
    
    
    $
    5.07Granted
    
    
    Expired
    
    
    (90,000
    )
    
    $
    13.10
    
    
    $
    13.10Forfeited
    
    
    Outstanding at March 31, 2011
    
    
    818,028
    
    
    $
    1.585 to $6.70
    
    
    $
    4.19
  10




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
  Restricted Stock
    
    Restricted Stock UnitsNumber
    
    Amortized
    
    Number
    
    Amortizedof
    
    Compensation
    
    of
    
    CompensationShares
    
    Expense
    
    Shares
    
    ExpenseNon-vested at December 31,
2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    51,642
    
    
    
    
    
    
    
    33,044
    
    
    
    Vested
    
    
    (51,642
    )
    
    
    
    
    
    
    
    
    
    $
    5Non-vested at March 31, 2011
    
    
    
    
    
    
    
    
    
    
    33,044
    
    
    $
    5
  Outstanding
    
    ExercisableWeighted-
    
    
    
    
    
    
    Weighted-Exercise
    
    
    
    
    
    Average
    
    
    Intrinsic
    
    
    Average
    
    
    
    
    
    
    IntrinsicPrice
    
    Shares
    
    
    Life (Years)
    
    
    Value
    
    
    Exercise Price
    
    
    Shares
    
    
    Value$   6.70
    
    
    235,000
    
    
    
    0.91
    
    
    
    
    
    
    
    6.70
    
    
    
    235,000
    
    
    
    1.59
    
    
    150,000
    
    
    
    1.66
    
    
    $
    427
    
    
    
    1.59
    
    
    
    150,000
    
    
    $
    4275.77
    
    
    31,923
    
    
    
    5.92
    
    
    
    
    
    
    
    5.77
    
    
    
    
    
    
    
    5.85
    
    
    142,382
    
    
    
    6.83
    
    
    
    
    
    
    
    5.85
    
    
    
    71,191
    
    
    
    2.30
    
    
    258,723
    
    
    
    7.92
    
    
    
    551
    
    
    
    2.30
    
    
    
    64,681
    
    
    
    138818,028
    
    
    
    4.49
    
    
    $
    978
    
    
    
    4.56
    
    
    
    520,872
    
    
    $
    565
  Dividends
  Cash and Cash Equivalents
  Concentration of Credit Risk
  C. Revolving line of credit
  11




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
    D. Commitments and Contingencies
 Legal Matters
  Lease Commitments
  Stock Repurchase
   E. Subsequent Events
   12




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MICROFINANCIAL INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except share and per share data)
 F. Recent Accounting Pronouncements
  
    
    Transfers in and out of Levels 1 and 2. A reporting entry should disclose separately the
amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers.
    
    Activity in level 3 fair value measurements
    
    A reporting entity should provide fair value measurement disclosures for each class of
assets and liabilities.
   13




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Introduction
  Forward-Looking Information
  Overview
   14




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Critical Accounting Policies
   Results
of Operations  Three months ended March 31, 2011 compared to the three months ended March 31, 2010
 Revenue
 Three Months Ended March 31,2011
    
    
    Change
    
    
    2010(Dollars in thousands)Income on financing leases
    
    $
    9,101
    
    
    
    12.1
    %
    
    $
    8,122Rental income
    
    
    2,006
    
    
    
    2.5
    
    
    
    1,958Income on service contracts
    
    
    108
    
    
    
    (23.4
    )
    
    
    141Loss and damage waiver fees
    
    
    1,201
    
    
    
    8.8
    
    
    
    1,104Service fees and other income
    
    
    932
    
    
    
    (6.1
    )
    
    
    993Total revenues
    
    $
    13,348
    
    
    
    8.4
    %
    
    $
    12,318
  15




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Selling, General and Administrative Expenses
 Three Months Ended March 31,2011
    
    Change
    
    2010(Dollars in thousands)Selling, general and administrative
    
    $
    3,953
    
    
    
    22.4
    %
    
    $
    3,230As a percent of revenue
    
    
    29.6
    %
    
    
    
    
    
    
    26.2
    %
  Provision for Credit Losses
 Three Months Ended March 31,2011
    
    Change
    
    2010(Dollars in thousands)Provision for credit losses
    
    $
    4,752
    
    
    
    (31.4
    )%
    
    $
    6,931As a percent of revenue
    
    
    35.6
    %
    
    
    
    
    
    
    56.3
    %
  Depreciation and Amortization
 Three Months Ended March 31,2011
    
    
    Change
    
    
    2010(Dollars in thousands)Depreciation  fixed assets
    
    $
    121
    
    
    
    5.2
    %
    
    $
    115Depreciation  rental equipment
    
    
    560
    
    
    
    78.9
    
    
    
    313Total depreciation and amortization
    
    $
    681
    
    
    
    59.1
    
    
    $
    428As a percent of revenue
    
    
    5.1
    %
    
    
    
    
    
    
    3.5
    %
   16




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Interest Expense
 Three Months Ended March 31,2011
    
    Change
    
    2010(Dollars in thousands)Interest
    
    $
    663
    
    
    
    (18.2
    )%
    
    $
    811As a percent of revenue
    
    
    5.0
    %
    
    
    
    
    
    
    6.6
    %
  Provision for Income Taxes
 Three Months Ended March 31,2011
    
    Change
    
    2010(Dollars in thousands)Provision for income taxes
    
    $
    1,270
    
    
    
    259.8
    %
    
    $
    353As a percent of revenue
    
    
    9.5
    %
    
    
    
    
    
    
    2.9
    %As a percent of income before taxes
    
    
    38.5
    %
    
    
    
    
    
    
    38.5
    %
    Fair Value of Financial Instruments
  17




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##### Table of Contents



Other Operating Data
  Exposure to Credit Losses
  (dollars in thousands)
    
    March 31, 2011
    
    December 31, 2010Current
    
    $
    162,066
    
    
    
    84.4
    %
    
    $
    160,674
    
    
    
    84.1
    %31-60 days past due
    
    
    5,472
    
    
    
    2.9
    
    
    
    6,142
    
    
    
    3.261-90 days past due
    
    
    4,896
    
    
    
    2.6
    
    
    
    4,369
    
    
    
    2.3Over 90 days past due
    
    
    19,453
    
    
    
    10.1
    
    
    
    19,882
    
    
    
    10.4Gross receivables due in installments
    
    $
    191,887
    
    
    
    100.0
    %
    
    $
    191,067
    
    
    
    100.0
    %
 Liquidity and Capital Resources
 General
    18




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##### Table of Contents



Borrowings
  March 31, 2011
    
    December 31, 2010Maximum
    
    
    
    
    
    
    
    
    
    
    
    MaximumAmounts
    
    Interest
    
    Unused
    
    Facility
    
    Amounts
    
    Interest
    
    Unused
    
    Facility(dollars in 000)
    
    Outstanding
    
    Rate
    
    Capacity
    
    Amount
    
    Outstanding
    
    Rate
    
    Capacity
    
    AmountRevolving credit
facility(1)
    
    $
    61,884
    
    
    3.54-4.50%
    
    $
    38,116
    
    
    $
    100,000
    
    
    $
    62,650
    
    
    3.52 - 4.50%
    
    $
    37,350
    
    
    $
    100,000
 
 (1)
    
    The unused capacity is subject to the borrowing base formula.  Dividends
    19




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##### Table of Contents



Share repurchases
  Contractual Obligations and Lease Commitments
   2011
    
    2012
    
    2013
    
    2014
    
    2015
    
    thereafterOperating lease obligations
    
    $
    85
    
    
    $
    626
    
    
    $
    644
    
    
    $
    632
    
    
    $
    595
    
    
    $
    1,587
   Recent Accounting Pronouncements
  20




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
      
 ITEM 4. Controls and Procedures
   21




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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
  Total Number
    
    Approximateof Shares
    
    Dollar ValuePurchased as
    
    of Shares thatTotal
    
    
    
    
    
    Part of
    
    May Yet BeNumber
    
    Average
    
    Publicly
    
    Purchasedof Shares
    
    Price Paid
    
    Announced
    
    Under thePeriod
    
    Purchased
    
    Per Share
    
    Program(1)
    
    Program(2)August 10, 2010 to December 31,
2010
    
    
    34,412
    
    
    $
    4.06
    
    
    
    34,412
    
    
    $
    868,800January 1 to January 31, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N/AFebruary 1 to February 28, 2011
    
    
    31,321
    
    
    $
    4.63
    
    
    
    31,321
    
    
    
    N/AMarch 1 to March 31, 2011
    
    
    20,562
    
    
    $
    4.58
    
    
    
    20,562
    
    
    
    N/AJanuary 1 to March 31, 2011
    
    
    51,883
    
    
    $
    4.61
    
    
    
    51,883
    
    
    $
    725,000Total
 
 (1)
    
    All repurchases were made pursuant to the repurchase program
described above, which was publicly announced on August 11, 2010.(2)
    
    Based on the maximum number of shares remaining to be repurchased under the
program, and the closing price of our common stock of $4.43 on March 31, 2011. 22




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##### Table of Contents



ITEM 6. Exhibits
  3.1
    
    Restated Articles of Organization, as amended (incorporated by reference to Exhibit 3.1
in the Registrants Registration Statement on Form S-1, No. 333-56639, filed with the
Securities and Exchange Commission on June 9, 1998).3.2
    
    Restated Bylaws, as amended (incorporated by reference to Exhibit 3.2 in the
Registrants Annual Report on Form 10-K filed with the Securities and Exchange Commission
on March 28, 2007).31.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 23




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##### Table of Contents



SIGNATURES
  MicroFinancial IncorporatedBy:
    /s/ Richard F. LatourPresident and Chief Executive OfficerBy:
    /s/ James R. Jackson Jr.Vice President and Chief Financial Officer  24