UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2006
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ To ________
Commission File Number 000-51078
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LINCOLN PARK BANCORP
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FEDERAL 61-1479859
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
31 Boonton Turnpike, Lincoln Park, New Jersey 07035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 694-0330
--------------
Indicate by check X whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 1,851,500 shares of common stock, par
value $.01 per share as of November 9, 2006.
Transitional Small Business Disclosure Format. Yes [_] No [X]
LINCOLN PARK BANCORP AND SUBSIDIARY
INDEX
Page
Number
-------
PART I -FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Statements of Financial Condition
at September 30, 2006 and December 31, 2005 (Unaudited) 1
Consolidated Statements of Income for the Three Months and
Nine Months Ended September 30, 2006 and 2005 (Unaudited) 2
Consolidated Statements of Comprehensive Income for the Three Months
And Nine Months Ended September 30, 2006 and 2005 (Unaudited) 3
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2006 and 2005 (Unaudited) 4
Notes to Consolidated Financial Statements (Unaudited) 5-9
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations 10-17
Item 3: Controls and Procedures 18
PART II-OTHER INFORMATION 19-20
Item 1: Legal Proceedings
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Item 3: Defaults Upon Senior Securities
Item 4: Submission of Matters to a Vote of Security Holders
Item 5: Other Information
Item 6: Exhibits and Reports on Form 8-K
SIGNATURES 21
ITEM 1. FINANCIAL INFORMATION
LINCOLN PARK BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
(Unaudited)
September 30, December 31,
2006 2005
------------- ------------
ASSETS
Cash and amounts due from depository institutions $ 1,307,809 $ 1,627,946
Interest-bearing deposits in other banks 688,506 688,232
----------- -----------
Total cash and cash equivalents 1,996,315 2,316,178
----------- -----------
Term deposits 584,446 580,629
Securities available for sale 2,563,710 3,002,336
Securities held to maturity, estimated fair value of $18,489,000
and $18,659,000 respectively 18,905,132 18,817,087
Loans receivable, net of allowance for loan losses 2006 $161,000;
and 2005 $158,500, respectively 69,032,914 66,383,298
Premises and equipment 868,439 883,848
Federal Home Loan Bank of New York stock, at cost 1,302,200 1,264,500
Interest receivable 508,431 448,172
Other assets 63,536 262,209
----------- -----------
Total assets $95,825,123 $93,958,257
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $56,075,450 $54,366,814
Advances from Federal Home Loan Bank of New York 25,995,594 25,533,730
Advance payments by borrowers for taxes and insurance 372,752 364,785
Other liabilities 88,212 305,390
----------- -----------
Total liabilities 82,532,008 80,570,719
----------- -----------
Stockholders' equity:
Preferred stock; no par value; 1,000,000 shares authorized;
none issued or outstanding - -
Common stock; $.01 par value; 5,000,000 shares authorized;
1,851,500 issued and outstanding 18,515 18,515
Additional paid in capital 7,468,439 7,776,418
Retained earnings - substantially restricted 6,174,042 5,982,726
Unearned ESOP shares (351,700) (366,220)
Accumulated other comprehensive loss -
unrealized loss on securities available for sale (16,181) (23,901)
----------- -----------
Total stockholders' equity 13,293,115 13,387,538
----------- -----------
Total liabilities and stockholders' equity $95,825,123 $93,958,257
=========== ===========
See notes to consolidated financial statements.
-1-
LINCOLN PARK BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Interest income:
Loans $ 976,562 $ 853,258 $2,837,339 $2,438,401
Securities 268,009 257,243 794,391 776,913
Other interest-earning assets 13,648 11,667 40,293 36,908
---------- ---------- ---------- ----------
Total interest income 1,258,219 1,122,168 3,672,023 3,252,222
---------- ---------- ---------- ----------
Interest expense:
Deposits 380,586 269,129 1,033,578 747,170
Advances and other borrowed money 295,162 179,554 827,866 467,664
---------- ---------- ---------- ----------
Total interest expense 675,748 448,683 1,861,444 1,214,834
---------- ---------- ---------- ----------
Net interest income 582,471 673,485 1,810,579 2,037,388
(Recovery of) provision for loan losses (1,000) (22,444) 2,616 (4,444)
---------- ---------- ---------- ----------
Net interest income after (recovery of) provision for loan losses 583,471 695,929 1,807,963 2,041,832
---------- ---------- ---------- ----------
Non-interest income:
Fees and service charges 23,630 19,960 60,265 60,655
(Loss) gains on calls of securities held to maturity - - 500 (7,239)
Gains on calls of securities available for sale - - 9,612 -
Miscellaneous 6,738 6,311 17,677 20,407
---------- ---------- ---------- ----------
Total non-interest income 30,368 26,271 88,054 73,823
---------- ---------- ---------- ----------
Non-interest expenses:
Salaries and employee benefits 222,102 198,524 635,690 593,267
Net occupancy expense of premises 28,679 30,598 83,931 93,182
Equipment 66,565 55,374 183,416 157,742
Advertising 12,849 11,305 33,087 39,997
Legal Expense 28,546 10,393 98,042 64,168
Audit and Accounting 29,618 27,904 72,380 76,431
Federal insurance premium 1,713 1,894 5,283 6,086
Miscellaneous 143,715 116,223 411,790 349,234
---------- ---------- ---------- ----------
Total non-interest expenses 533,787 452,215 1,523,619 1,380,107
---------- ---------- ---------- ----------
Income before income taxes 80,051 269,985 372,398 735,548
Income taxes 26,663 104,893 137,968 286,755
---------- ---------- ---------- ----------
Net income $ 53,388 $ 165,092 $ 234,430 $ 448,793
---------- ---------- ---------- ----------
Net income per common share:
Basic $ 0.03 $ 0.09 $ 0.13 $ 0.25
---------- ---------- ---------- ----------
Weighted average number of common shares and common stock
equivalents outstanding:
Basic 1,783,985 1,818,638 1,794,711 1,818,213
---------- ---------- ---------- ----------
Net income per common share:
Diluted $ 0.03 $ 0.09 $ 0.13 $ 0.25
---------- ---------- ---------- ----------
Weighted average number of common shares and
common stock equivalents outstanding:
Diluted 1,786,067 1,818,638 1,797,662 1,818,213
---------- ---------- ---------- ----------
See notes to consolidated financial statements.
-2-
LINCOLN PARK BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net income $ 53,388 $165,092 $234,430 $448,793
-------- -------- -------- --------
Other comprehensive income (loss), net of income taxes:
Gross unrealized holding (loss) gain on
securities available for sale 47,216 (16,684) 12,884 (12,337)
Deferred income taxes (18,903) 6,649 (5,164) 4,930
-------- -------- -------- --------
Other comprehensive income (loss) 28,313 (10,035) 7,720 (7,407)
-------- -------- -------- --------
Comprehensive income $ 81,701 $155,057 $242,150 $441,386
======== ======== ======== ========
See notes to consolidated financial statements.
-3-
LINCOLN PARK BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Nine Months Ended
September 30,
---------------------------
2006 2005
------------ ------------
Cash flows from operating activities:
Net income $ 234,430 $ 448,793
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of premises and equipment 50,611 48,241
Amortization and accretion, net 24,973 36,148
Loss (gain) on calls of term deposits and securities held to maturity (500) 7,239
Gain on calls of term deposits and securities available for sale (9,612) -
Provision(recovery of) provisions for loan losses 2,616 (4,444)
(Increase) in interest receivable (60,259) (80,799)
Decrease in other assets 198,673 13,035
Increase in accrued interest payable 27,549 15,326
Increase (decrease) in other liabilities (241,668) 124,676
ESOP shares committed to be released 12,288 12,325
Restricted stock earned 47,799 -
------------ ------------
Net cash provided by operating activities 286,900 620,540
------------ ------------
Cash flows from investing activities:
Purchases of term deposits - (495,000)
Purchases of securities available for sale (86,867) (55,723)
Proceeds from maturities and calls of securities available for sale 500,000 1,200,000
Principal repayments on securities available for sale 23,421 35,114
Proceeds from sales of securities available for sale 24,298 -
Purchases of securities held to maturity (1,000,000) (3,960,000)
Proceeds from maturities and calls of securities held to maturity 710,500 1,685,000
Principal repayments on securities held to maturity 201,729 320,255
Net (increase) in loans receivable (2,680,526) (6,221,244)
Additions to premises and equipment (35,202) (19,242)
Purchase of Federal Home Loan Bank of New York stock (367,050) (414,600)
Redemption of Federal Home Loan Bank of New York stock 329,350 145,500
------------ ------------
Net cash (used in) investing activities (2,380,347) (7,779,940)
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in deposits 1,700,413 (1,760,385)
Proceeds from advances from Federal Home Loan Bank of New York 68,750,000 18,200,000
Repayments of advances from Federal Home Loan Bank of New York (68,288,136) (12,817,350)
Net increase in payments by borrowers for taxes and insurance 7,967 17,118
Net change in paid in capital - (8,025)
Purchase of restricted stock (355,778) -
Dividends paid (40,882) -
------------ ------------
Net cash provided by financing activities 1,773,584 3,631,358
------------ ------------
Net (decrease) increase in cash and cash equivalents (319,863) (3,528,042)
Cash and cash equivalents - beginning 2,316,178 5,898,288
------------ ------------
Cash and cash equivalents - ending $ 1,996,315 $ 2,370,246
============ ============
Supplemental information:
Cash paid during the period for:
Interest on deposits and borrowings $ 1,835,323 $ 1,201,375
------------ ------------
Income taxes $ 389,797 $ 197,741
------------ ------------
See notes to consolidated financial statements.
-4-
LINCOLN PARK BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. PRINCIPLES OF CONSOLIDATION
--------------------------------
The consolidated financial statements include the accounts of Lincoln
Park Bancorp (the "Company") and its wholly owned subsidiary, Lincoln Park
Savings Bank (the "Bank"), and the Bank's wholly owned subsidiary LPS Investment
Company. LPS Investment Company was recently formed as an operating subsidiary
of the Bank for the purpose of investing in stocks, bonds, mortgages, and other
securities, limited to the types of securities in which the Bank is authorized
to invest. The Company's business is conducted principally through the Bank. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
-------------------------------------
FAS 157
In September 2006, the FASB issued FASB Statement No. 157, FAIR VALUE
MEASUREMENTS, which defines fair value, establishes a framework for measuring
fair value under GAAP, and expands disclosures about fair value measurements.
FASB Statement No. 157 applies to other accounting pronouncements that require
or permit fair value measurements. The new guidance is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and for
interim periods within those fiscal years. We are currently evaluating the
potential impact, if any, of the adoption of FASB Statement No. 157 on our
consolidated financial position, results of operations and cash flows.
SAB 108
On September 13, 2006, the Securities and Exchange Commission "SEC"
issued Staff Accounting Bulletin No. 108 ("SAB 108"). SAB 108 provides
interpretive guidance on how the effects of the carryover or reversal of prior
year misstatements should be considered in quantifying a potential current year
misstatement. Prior to SAB 108, companies might evaluate the materiality of
financial-statement misstatements using either the income statement or balance
sheet approach, with the income statement approach focusing on new misstatements
added in the current year, and the balance sheet approach focusing on the
cumulative amount of misstatement present in a company's balance sheet.
Misstatements that would be material under one approach could be viewed as
immaterial under another approach, and not be corrected. SAB 108 now requires
that companies view financial statement misstatements as material if they are
material according to either the income statement or balance sheet approach. The
Company has analyzed SAB 108 and determined that upon adoption it will have no
impact on the reported consolidated results of operations or financial
condition.
3. BASIS OF PRESENTATION
--------------------------
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-QSB and regulation S-X and
do not include information or footnotes necessary for a complete presentation of
financial condition, results of operations, and cash flows in conformity with
U.S. generally accepted accounting principles. However, in the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the consolidated financial statements have
been included. The results of operations for the three months and nine months
ended September 30, 2006, are not necessarily indicative of the results which
may be expected for the entire fiscal year.
4. NET INCOME PER COMMON SHARE
--------------------------------
Basic and diluted net income per share were computed by dividing net
income by the weighted average number of shares of common stock outstanding,
adjusted for unearned shares of the ESOP, restricted stock and stock options.
-5-
5. CRITICAL ACCOUNTING POLICIES
---------------------------------
We consider accounting policies involving significant judgments and
assumptions by management that have, or could have, a material impact on the
carrying value of certain assets or on income to be critical accounting
policies. Material estimates that are particularly susceptible to significant
changes relate to the determination of the allowance for loan losses.
Determining the amount of the allowance for loan losses necessarily involves a
high degree of judgment. Management reviews the level of the allowance on a
quarterly basis, at a minimum, and establishes the provision for loan losses
based on the composition of the loan portfolio, delinquency levels, loss
experience, economic conditions, and other factors related to the collectibility
of the loan portfolio. Since there has been no material shift in the loan
portfolio, the level of the allowance for loan losses has changed primarily due
to changes in the size of the loan portfolio and the level of nonperforming
loans. We have allocated the allowance among categories of loan types as well as
classification status at each period-end date. Assumptions and allocation
percentages based on loan types and classification status have been consistently
applied. Management regularly evaluates various risk factors related to the loan
portfolio, such as type of loan, underlying collateral and payment status, and
the corresponding allowance allocation percentages.
Although we believe that we use the best information available to
establish the allowance for loan losses, future additions to the allowance may
be necessary based on estimates that are susceptible to change as a result of
changes in economic conditions and other factors. In addition, the regulatory
authorities, as an integral part of their examination process, periodically
reviews our allowance for loan losses. Such agencies may require us to recognize
adjustments to the allowance based on its judgments about information available
to it at the time of their examinations.
6. STOCK COMPENSATION PLANS
-----------------------------
The Company has two stock-related compensation plans, including stock
option and restricted stock plans, which are described in Note 13 to the
Company's Consolidated Financial Statements included in its Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2005. Through December 31,
2005, the Company accounted for its stock option and employee stock ownership
plans using the intrinsic value method set forth in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," ("APB No. 25") and
related interpretations for these plans. Under APB No. 25, generally, when the
exercise price of the Company's stock options equaled the market price of the
underlying stock on the date of the grant, no compensation expense was
recognized. The Company adopted SFAS No. 123R, using the modified-prospective
transition method, beginning on January 1, 2006 and, therefore, began to expense
the fair value of all options over their remaining vesting periods to the extent
the options were not fully vested as of the adoption date and began to expense
the fair value of all share-based compensation granted subsequent to December
31, 2005, over its requisite service periods.
SFAS No. 123R also requires the benefits of realized tax deductions in
excess of previously recognized tax benefits on compensation expense to be
reported as a financing cash flow (there were no realized tax benefits for the
three or nine months ended September 30, 2006) rather than an operating cash
flow, as previously required. In accordance with Staff Accounting Bulletin
("SAB") No. 107, the Company classified share-based compensation within salaries
and employee benefits and other expenses to correspond with the same line item
as the cash compensation paid to employees and non-employee directors.
Employee options vest over a seven-year service period and
non-employee director options vest over a five-year service period. Compensation
expense recognized for all option grants is recognized over the awards'
respective requisite service periods. The fair values relating to all of the
calendar 2005 option grants were estimated using the Black-Scholes option
pricing model. Expected volatilities are based on historical volatility of our
stock and other factors, such as implied market volatility. We used historical
exercise data based on the age at grant of the option holder to estimate the
options' expected term, which represents the period of time that the options
granted are expected to be outstanding. We anticipated the future option holding
periods to be similar to the historical option holding periods. The risk-free
rate for periods within the contractual life of the option is based on the U.S.
Treasury yield curve in effect at the time of grant. We recognize compensation
expense for the fair values of these awards, which have graded vesting, on a
straight-line basis over the requisite service period of the awards. We did not
grant any options during the nine months ended September 30, 2006 and 2005.
-6-
LINCOLN PARK BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
6. STOCK COMPENSATION PLANS (Cont'd)
--------------------------------------
Restricted shares granted to outside directors and employees vest in
five annual installments and seven annual installments, respectively. The fair
value of restricted shares under the Company's restricted stock plans is
determined by the product of the number of shares granted and the grant date
market price of the Company's common stock. The fair value of restricted shares
is expensed on a straight-line basis over the requisite service period of five
years for the outside directors and seven years for the employees.
During the nine months ended September 30, 2006, the Company recorded
$47,799 of share-based compensation expense, which was comprised of stock option
expense of $26,263 and restricted stock expense of $21,536. The Company
estimates it will record share-based compensation expense of approximately
$70,000 in fiscal 2006.
The following table illustrates the impact of share-based compensation
on reported amounts:
Three Months Ended Nine Months Ended
September 30, 2006 September 30, 2006
-------------------------- --------------------------
Impact of Impact of
Share-Based Share-Based
Compensation Compensation
As Reported Expense As Reported Expense
----------- ------------ ----------- ------------
Net operating income before taxes $80,051 $12,248 $372,398 $47,799
Net Income 53,388 10,047 234,430 40,959
Earnings per share:
Basic $ 0.03 $ 0.01 $ 0.13 $ 0.02
======= ======= ======== =======
Diluted $ 0.03 $ 0.01 $ 0.13 $ 0.02
======= ======= ======== =======
-7-
LINCOLN PARK BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
6. STOCK COMPENSATION PLANS (Cont'd)
--------------------------------------
A summary of the Company's stock option activity and related
information for its option plans for the nine months ended September 30, 2006,
was as follows:
WEIGHTED
WEIGHTED AVERAGE AGGREGATE
AVERAGE REMAINING INTRINSIC
EXERCISE CONTRACTUAL VALUE
OPTIONS PRICE TERM (000's)
------- -------- ----------- ---------
Outstanding at December 31, 2005 66,520 $8.90
Granted - -
Exercised - -
Forfeited 10,000 -
------
Outstanding at September 30, 2006 56,520 $8.90 5.1 years $12,000
======
Exercisable at September 30, 2006 - $ - 5.1 years $ -
A summary of the status of the Company's non-vested options as of
September 30, 2006 and changes during the nine months ended September 30, 2006,
is presented below:
WEIGHTED
AVERAGE
GRANT DATE
OPTIONS FAIR VALUE
------- -----------
Non-vested at December 31, 2005 66,520 $3.38
Granted - -
Vested - -
Forfeited 10,000 -
------
Non-vested at September 30, 2006 56,520 $3.38
======
-8-
LINCOLN PARK BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
6. STOCK COMPENSATION PLANS (Cont'd)
--------------------------------------
Expected future compensation expense relating to the 56,520 non-vested
options outstanding as of September 30, 2006 is $164,000 over a weighted-average
period of 5.1 years.
A summary of the status of the Company's restricted shares as of
September 30, 2006 and changes during the nine months ended September 30, 2006,
is presented below:
WEIGHTED
AVERAGE
RESTRICTED GRANT DATE
SHARES FAIR VALUE
---------- ----------
Non-vested at December 31, 2005 18,705 $8.90
Granted 500 -
Vested - -
Forfeited 1,500 -
------
Non-vested at September 30, 2006 17,705 $8.90
======
Expected future compensation expense relating to the 17,705 restricted
shares at September 30, 2006 is $135,000 over a weighted-average period of 4.7
years.
For purposes of pro forma disclosures, the estimated fair value of the
stock options, restricted shares, and shares under the employee stock ownership
plan were amortized to expense over their assumed vesting periods.
-9-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
ITEM 2.
FORWARD-LOOKING STATEMENTS.
---------------------------
This Form 10-QSB may include certain forward-looking statements based
on current management expectations. The actual results of the Company could
differ materially from those management expectations. Factors that could cause
future results to vary from current management expectations include, but are not
limited to, general economic conditions, legislative and regulatory changes,
monetary and fiscal policies of the federal government, changes in tax policies,
rules and regulations of federal, state and local tax authorities, changes in
interest rates, deposit flows, the cost of funds, demand for loan products,
demand for financial services, competition, changes in the quality or
composition of loan and investment portfolios of the Bank, changes in accounting
principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
Our total assets increased by $1.9 million, or 2.0%, to $95.8 million
at September 30, 2006, from $94.0 million at December 31, 2005. At September 30,
2006, the level of cash and cash equivalents decreased by $320,000 or 13.8% to
$2.0 million from $2.3 million at December 31, 2005. Term deposits increased
$4,000 to $585,000 at September 30, 2006 when compared with $581,000 at December
31, 2005.
Securities available for sale decreased $439,000 or 14.6% to $2.6
million at September 30, 2006 when compared with $3.0 million at December 31,
2005. The decrease in securities available for sale during the 2006 period
resulted primarily from maturities, repayments and sales of $548,000. Securities
held to maturity increased by $88,000 or 0.47% to $19.0 million at September 30,
2006 when compared with $18.8 million at December 31, 2005. During the nine
months ended September 30, 2006, purchases of securities held to maturity
amounted to $1.0 million which offset maturities and repayments of $912,000.
Loans receivable amounted to $69.0 million and $66.4 million at
September 30, 2006 and December 31, 2005, respectively, representing an increase
of $2.7 million or 4.0%. Our increase in loans resulted primarily from increased
one-to four family mortgage loan originations. The loans receivable was funded
by borrowings.
Federal Home Loan Bank of New York ("FHLB") stock remained unchanged
at $1.3 million at September 30, 2006 and December 31, 2005.
Other assets decreased $199,000 or 76.0% to $64,000 at September 30,
2006 from $262,000 at December 31, 2005. The decrease was mainly due to a $
200,000 loan that was originated but not closed at the end of December 2005.
-10-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
(CONT'D.)
Total deposits increased $1.7 million or 3.1% to $56.0 million at
September 30, 2006 from $54.4 million at December 31, 2005. The increase in
deposits was due to a management decision to be more competitive with deposit
rates. Advances from FHLB increased $462,000 or 1.8% to $26.0 million at
September 30, 2006 when compared with $25.5 million at December 31, 2005. The
proceeds from new advances were used to fund loan originations.
Other liabilities decreased $217,000 or 71.0% to $88,000 at September
30, 2006 when compared to $305,000 at December 31, 2005. The decrease was
primarily due to changes in taxes payable.
Stockholders' equity totaled $13.3 million and $13.4 million at
September 30, 2006 and December 31, 2005, respectively, reflecting net income of
$234,000 for the nine months ended September 30, 2006, offset by the purchase of
stock in the amount of $ 356,000 for the restricted stock plan.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
AND 2005
GENERAL. Net income decreased by $112,000, or 67.7%, to $53,000 for
the three months ended September 30, 2006, from $165,000 for the three months
ended September 30, 2005. The decrease in net income reflects increases in
interest expense, and non-interest expenses, partially offset by increases in
total interest income, non-interest income, a decrease in income tax expense and
a recovery of provision for loan losses.
INTEREST INCOME. Interest income increased $136,000, or 12.0%, to $1.3
million for the three months ended September 30, 2006, from $1.1 million for the
three months ended September 30, 2005. The increase in interest income is due to
increases of $123,000 in interest income from loans, $11,000 in interest income
on securities, and $2,000 in interest income from other interest earning assets.
Interest income from loans increased by $123,000, or 14.5%, to
$977,000 for the three months ended September 30, 2006, from $853,000 for the
three months ended September 30, 2005. The increase is due to a $6.3 million or
10.0% increase in the average balance of loans to $68.5 million in 2006 from
$62.2 million in 2005 and an increase in the average yield to 5.71% from 5.49%.
Interest income from securities, including available for sale and held to
maturity, increased $11,000, or 4.2% to $268,000 for the three months ended
September 30, 2006, from $257,000 for the three months ended September 30, 2005.
The average balance of securities increased $540,000 or 2.3% to $23.7 million in
2006, when compared to $23.1 million in 2005, and the average yield increased to
4.52% for the three months ended September 30, 2006 from 4.44% for the three
months ended September 30, 2005.
Interest income from other interest-earning assets increased $2,000,
or 17.0% to $14,000 for the three months ended September 30, 2006, from $12,000
for the three months ended September 30, 2005. The increase in interest income
from other interest-earning assets is due to an increase in the average yield to
3.38% in 2006 from 2.50% in 2005, partially offset by a decrease in the average
balance to $1.7 million in 2006 from $1.9 million in 2005.
INTEREST EXPENSE. Total interest expense increased $227,000, or 51.0%,
to $676,000 for the three months ended September 30, 2006, from $449,000 for the
three months ended September 30, 2005. The interest expense on interest-bearing
deposits increased by $111,000 or 41.0% to $381,000 in 2006 when compared with
$269,000 in the comparable 2005 period. The increase in interest expense on
deposits resulted from an increase in the average cost of interest-bearing
deposits to 2.84% from 1.97%, reflecting increasing market interest rates during
the period between the comparable quarters. Partially offsetting this increase
was a decrease in the average balance of interest-bearing deposits to $53.5
million in 2006 from $54.5 million in 2005.
-11-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
AND 2005 (CONT'D.)
The interest expense on borrowed money increased $116,000 or 64.4% to
$295,000 in 2006 from $180,000 in the comparable 2005 period. The increase in
interest expense is due to an increase of $6.4 million in the average balance of
borrowed money to $26.7 million in 2006 from $20.3 million in 2005 and an
increase in cost of borrowed money to 4.42% in 2006 from 3.55% in 2005.
NET INTEREST INCOME. Net interest income decreased $91,000, or 13.5%,
to $583,000 for the three months ended September 30, 2006 from $673,000 for the
three months ended September 30, 2005. Our interest rate spread decreased to
2.0% in 2006 from 2.74% in 2005, reflecting a 96 basis points increase in the
cost of our interest bearing liabilities that exceeded a 23 basis points
increase in yield on interest-earning assets. Our net interest margin decreased
to 2.49% from 3.08%.
PROVISION FOR LOAN LOSSES. We establish provisions for loan losses,
which are charged to operations, at a level necessary to absorb known and
inherent losses that are both probable and reasonably estimable at the date of
the financial statements. In evaluating the level of the allowance for loan
losses, management considers historical loss experience, the types of loans and
the amount of loans in the loan portfolio, adverse situations that may affect
the borrower's ability to repay, the estimated value of any underlying
collateral, and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision
as more information becomes available or as future events change. Based on our
evaluation of these factors, a recovery $1,000 for loan losses was required for
the three months ended September 30, 2006, compared to a recovery of $22,000 in
provision for loan losses for the three months ended September 30, 2005. We had
no charge-offs during the three month periods ended September 30, 2006 and 2005.
We used the same methodology and generally similar assumptions in assessing the
allowance for both periods. The allowance for loan losses was $161,000, or 0.23%
of gross loans outstanding at September 30, 2006, as compared with $152,000, or
0.24% of gross loans outstanding at September 30, 2005. The level of the
allowance is based on estimates, and the ultimate losses may vary from the
estimates.
NON-INTEREST INCOME. Non-interest income increased 16.0%, to $30,000
for the three months ended September 30, 2006, as compared to $26,000 for the
three months ended September 30, 2005. The primary reason for the increase in
non-interest income is an increase of $4,000 in fees and service charges.
NON-INTEREST EXPENSES. Non-interest expenses were $534,000 and
$452,000 for the three months ended September 30, 2006 and 2005, respectively,
representing an increase of $82,000 or 18.0%. The increase in non-interest
expenses is primarily due to increases of $24,000 in salary and employee
benefits, $11,000 in equipment expense and $47,000 in miscellaneous expenses.
Salary and Employee benefits increased $24,000 or 12.0% for the
quarter ended September 30, 2006 when compared to the September quarter of 2005.
The increase is primarily due to $13,000 in vacation pay to the ex-president,
who is no longer employed with the company, and $10,000 in additional pay to
existing employees. Equipment expenses increased $11,000 or 20.0%, primarily due
to purchases, upgrading and maintenance of software and other equipment.
Miscellaneous expenses increased $47,000 or 31.0% to $202,000 for the three
months ended September 30, 2006, from $155,000 for the same period ending
September 30, 2005. This increase is primarily due to $28,000 in directors'
retirement plan and stock option expense, and an increase of $16,000 in legal
fees.
-12-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
AND 2005 (CONT'D.)
INCOME TAX EXPENSE. The provision for income taxes decreased to
$27,000 for the three months ended September 30, 2006 from $105,000 for the
three months ended September 30, 2005. The decrease in the provision for income
taxes is primarily due to a decrease of $190,000 in income before income taxes
to $80,000 for the three months ended September 30, 2006, as compared to
$270,000 for the three months ended September 30, 2005.
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND
2005
GENERAL. Net income decreased $214,000, or 47.8%, to $234,000 for the
nine months ended September 30, 2006, compared with $449,000 for the same 2005
period. The decrease in net income during the 2006 period resulted primarily
from an increase in interest expense and non-interest expense, partially offset
by increases in total interest income and non-interest income and decreases in
income taxes.
INTEREST INCOME. Interest income increased $420,000 or 13.0%, to $3.7
million for the nine months ended September 30, 2006, from $3.3 million for the
nine months ended September 30, 2005. The increase in interest income is
primarily due to an increase of $399,000 in interest income from loans and an
increase of $17,000 in interest income on securities.
Interest income from loans increased by $399,000, or 16.4%, to $2.8
million for the nine months ended September 30, 2006, from $2.4 million for the
same 2005 period. The increase was due to a $7.5 million or 12.5% increase in
the average balance of loans to $68.0 million in 2006 from $60.1 million in
2005. The average yield on loans increased to 5.60% in 2006 from 5.41% in 2005.
Interest income from securities, including available for sale and held to
maturity, increased $17,000, or 2.3%, to $794,000 for the nine months ended
September 30, 2006, from $777,000 for the nine months ended September 30, 2005.
The average balance of securities decreased to $23.2 million in 2006 when
compared to $23.5 million in 2005. The decrease in the average balance of
securities was offset by an increase of 16 basis points in the average yield.
The average yield on securities for the nine months ended September 30, 2006 was
4.57% when compared to 4.41% for the same period in 2005. Interest income from
other interest-earning assets increased $3,000 or 9.2% to $40,000 for the nine
months ended September 30, 2006 when compared to $37,000 for the nine months
ended September 30, 2005. The average balance of other interest earning assets
decreased to $1.7 million during the nine months ended September 30, 2006, when
compared to $2.2 million during the nine months ended in September of 2005,
partially offset by an increase in the average yield. The average yield on other
interest earning assets for the nine months ended September 30, 2006 was 3.14%
when compared to 2.29 % for the same period in 2005.
INTEREST EXPENSE. Total interest expense increased $647,000, or 53.2%,
to $1.9 million for the nine months ended September 30, 2006, from $1.2 million
for the nine months ended September 30, 2005. The interest expense on
interest-bearing deposits increased by $286,000 or 38.3% to $1.0 million in 2006
when compared with $747,000 in the comparable 2005 period. The increase in
interest expense resulted from an increase in the average cost of
interest-bearing deposits to 2.57% from 1.81%, reflecting an increase in market
interest rates during the period between the comparable periods. Partially
offsetting this increase was a decrease in the average balance of
interest-bearing deposits to $53.7 million in 2006 from $55.1 million in 2005.
The interest expense on borrowed money increased $360,000 or 77.0% to $828,000
in 2006 from $468,000 in the comparable 2005 period. The increase resulted from
an increase of $7.6 million in the average balance of borrowed money to $26.2
million in 2006 from $18.6 million in 2005, as well as an increase of 86 basis
points in the cost of borrowed money to 4.22% in 2006 from 3.36% in 2005.
-13-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND
2005 (CONT'D.)
NET INTEREST INCOME. Net interest income decreased $227,000, or 11.1%,
to $1.8 million for the nine months ended September 30, 2006 from $2.0 million
for the nine months ended September 30, 2005. Our interest rate spread decreased
to 2.18% in 2006 from 2.86% in 2005, reflecting an increase of 91 basis points
in the cost of our interest-bearing liabilities that exceeded an increase of 23
basis points in the yield on interest-earning assets. Our net interest margin
decreased to 2.61% from 3.17%. The decrease was primarily due to an increase in
total interest expense of $647,000, which was partially offset by an increase of
$420,000 in total interest income.
PROVISION FOR LOAN LOSSES. Based on our evaluation, we recorded
provision for loan losses of $2,600 for the nine months ended September 30,
2006, and a recovery of $4,000 for the nine months ended September 30, 2005. We
had no charge-offs during the nine month periods ended September 30, 2006 and
2005. We used the same methodology and generally similar assumptions in
assessing the allowance for both periods. The allowance for loan losses was
$161,000, or 0.23% of gross loans outstanding at September 30, 2006, as compared
with $152,000, or 0.24% of gross loans outstanding at September 30, 2005. The
level of the allowance is based on estimates, and the ultimate losses may vary
from the estimates.
NON-INTEREST INCOME. Non-interest income increased $14,000, or 19.3%,
to $88,000 for the nine months ended September 30, 2006, as compared to $74,000
for the nine months ended September 30, 2005. The increase in non-interest
income was primarily due to a gain of $10,000 on the sale of available for sale
securities, as compared to a loss of $7,000 on the call of securities held to
maturity in 2005. Fees and service charges and other miscellaneous income
decreased by $3,000 or 13.4% for the nine months ended September 30, 2006 when
compared with the same period in September 2005.
NON-INTEREST EXPENSES. Non-interest expenses were $1.5 million and
$1.4 million for the nine months ended September 30, 2006 and 2005,
respectively, representing an increase of $144,000 or 10.4%. The increase in
non-interest expenses is primarily due to increases of $92,000 in other
non-interest expense, $42,000 in salaries and employee benefits and $26,000 in
equipment expense. This increase was offset by decreases of $7,000 in
advertising expenses and $9,000 in occupancy expense.
Miscellaneous expenses increased $92,000 or 19.0% to $582,000 in 2006
from $489,000 in 2005, primarily due to expenses associated with the
implementation of the stock-based incentive plan, directors' retirement plan,
and additional legal expenses.
INCOME TAX EXPENSE. The provision for income taxes decreased to
$138,000 for the nine months ended September 30, 2006 from $287,000 for the nine
months ended September 30, 2005. The decrease in the provision for income taxes
is primarily due to a decrease in income before income taxes of $363,000 to
$372,000 for the nine months ended September 30, 2006, as compared to $736,000
for the nine months ended September 30, 2005.
-14-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
MANAGEMENT OF MARKET RISK
GENERAL. The majority of our assets and liabilities are monetary in
nature. Consequently, our most significant form of market risk is interest rate
risk. Our assets, consisting primarily of mortgage loans, have longer maturities
than our liabilities, consisting primarily of deposits. As a result, a principal
part of our business strategy is to manage interest rate risk and reduce the
exposure of our net interest income to changes in market interest rates. Our
full board of directors is responsible for evaluating the interest rate risk
inherent in our assets and liabilities, for determining the level of risk that
is appropriate, given our business strategy, operating environment, capital,
liquidity and performance objectives, and for managing this risk consistent with
the guidelines approved by the board of directors. Senior management monitors
the level of interest rate risk and reports to the board of directors on a
regular basis with respect to our asset/liability policies and interest rate
risk position.
We have emphasized the origination of fixed-rate mortgage loans for
retention in our portfolio in order to maximize our net interest income. We
accept increased exposure to interest rate fluctuations as a result of our
investment in such loans. In a period of rising interest rates, our net interest
rate spread and net interest income may be negatively affected. In addition, we
have sought to manage and mitigate our exposure to interest rate risks in the
following ways:
o We maintain moderate levels of short-term liquid assets. At September
30, 2006, our short-term liquid assets totaled $2.0 million;
o We originate for portfolio adjustable-rate mortgage loans and
adjustable home equity lines of credit. At September 30, 2006, our
adjustable-rate mortgage loans totaled $15.2 million and our
adjustable home equity lines of credit totaled $6.5 million;
o We attempt to increase the maturity of our liabilities as market
conditions allow. In particular, since 2004, we have emphasized
intermediate- to long-term FHLB advances as a source of funds. At
September 30, 2006 we had $4.8 million of FHLB advances with terms to
maturity of between three and fifteen years; and
o We invest in securities with step-up rate features providing for
increased interest rates prior to maturity according to a
pre-determined schedule and formula. However, these step-up rates may
not keep pace with rising interest rates in the event of a rapidly
rising rate environment. In addition, these investments may be called
at the option of the issuer.
NET PORTFOLIO VALUE. The Company utilizes an outside vendor to prepare
the computation of accounts by which the net present value of the Bank's cash
flow from assets, liabilities and off-balance sheet items (the Bank's net
portfolio value or "NPV") would change in the event of a range of assumed
changes in market interest rates. The vendor provides the Company with an
interest rate sensitivity report of net portfolio value by utilizing a
simulation model that uses a discounted cash flow analysis and an option-based
pricing approach to measuring the interest rate sensitivity of net portfolio
value. The model estimates the economic value of each type of asset, liability
and off-balance sheet contract under the assumption that the yield curve
increases or decreases instantaneously by 100 and 200 basis points. A basis
point equals one-hundredth of one percent, and 100 basis points equals one
percent. An increase in interest rates from 3% to 5% would mean, for example, a
200 basis point increase in the change of interest rates.
-15-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
MANAGEMENT OF MARKET RISK (CONT'D.)
The following table sets forth the Bank's NPV as of September 30,
2006, the most recent date the Bank's NPV was calculated.
CHANGE IN
INTEREST RATES NET PORTFOLIO VALUE NET PORTFOLIO VALUE AS A PERCENTAGE OF PRESENT
(BASIS POINTS) (Dollars in Thousands) VALUE OF ASSETS
-------------- ----------------------------------------- ----------------------------------------------
ESTIMATED AMOUNT OF
NPV CHANGE PERCENT OF CHANGE NPV RATIO CHANGE IN BASIS POINTS
----------------------------------------- ----------------------------------
+200 $13,763 $(3,881) (22.0)% 16.05% (301) basis points
+100 15,814 (1,830) (10.4) 17.72 (134) basis points
0 17,644 - - 19.06 - basis points
-100 19,495 1,851 10.5 20.30 124 basis points
-200 20,712 3,068 17.4 20.93 187 basis points
The table above indicates that at September 30, 2006 in the event of a
200 basis point decrease in interest rates, we would experience a 17.4% increase
in net portfolio value. In the event of a 200 basis point increase in interest
rates, we would experience a 22.0% decrease in net portfolio value.
Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurement. Modeling changes in net portfolio value require
making certain assumptions that may or may not reflect the manner in which
actual yields and costs respond to changes in market interest rates. In this
regard, the net portfolio value table presented assumes that the composition of
our interest-sensitive assets and liabilities existing at the beginning of a
period remains constant over the period being measured and assumes that a
particular change in interest rates is reflected uniformly across the yield
curve regardless of the duration or repricing of specific assets and
liabilities. Accordingly, although the net portfolio value table provides an
indication of our interest rate risk exposure at a particular point in time,
such measurements are not intended to and do not provide a precise forecast of
the effect of changes in market interest rates on its net interest income and
will differ from actual results.
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain levels of liquid assets sufficient to
ensure the Bank's safe and sound operation. Liquidity is the ability to meet
current and future financial obligations of a short-term nature. The Bank
adjusts its liquidity levels in order to meet funding needs for deposit
outflows, payment of real estate taxes from escrow accounts on mortgage loans,
repayment of borrowings, when applicable, and loan funding commitments. The Bank
also adjusts its liquidity level as appropriate to meet its asset/liability
objectives.
The Bank's primary sources of funds are deposits, amortization and
prepayments of loans and mortgage-backed securities principal, FHLB advances,
maturities of investment securities and funds provided from operations. While
scheduled loan and mortgage-backed securities amortization and maturing
investment securities are a relatively predictable source of funds, deposit flow
and loan and mortgage-backed securities prepayments are greatly influenced by
market interest rates, economic conditions and competition.
The Bank's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities.
-16-
LINCOLN PARK BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES (CONT'D.)
The primary sources of investing activity are lending and the purchase
of mortgage-backed securities. Net loans amounted to $69.0 million and $66.4
million at September 30, 2006 and December 31, 2005, respectively. Securities
available for sale totaled $2.6 million and $3.0 million at September 30, 2006
and December 31, 2005, respectively. Securities held to maturity totaled $19.0
million and $18.8 million at September 30, 2006 and December 31, 2005,
respectively. In addition to funding new loan production and securities
purchases through operating and financing activities, such activities were
funded by principal repayments on existing loans, mortgage-backed securities,
and borrowings from FHLB.
Liquidity management is both a daily and long-term function of
business management. Excess liquidity is generally invested in short-term
investments, such as federal funds and interest-bearing deposits. If the Bank
requires funds beyond its ability to generate them internally, borrowing
agreements exist with the FHLB which provide an additional source of funds. At
September 30, 2006 advances from the FHLB amounted to $26.0 million.
The Bank anticipates that it will have sufficient funds available to
meet its current loan commitments. At September 30, 2006, the Bank had
outstanding commitments to originate loans of $2.0 million, and unused lines of
credit of $9.0 million. Certificates of deposit scheduled to mature in one year
or less at September 30, 2006, totaled $22.0 million. Management believes that,
based upon its experience and the Bank's deposit flow history, a significant
portion of such deposits will remain with the Bank.
The following table sets forth the Bank's capital position at
September 30, 2006, as compared to the minimum regulatory capital requirements:
To Be Well
Capitalized
Under Prompt
Minimum Capital Corrective
Actual Requirements Actions Provisions
--------------- ---------------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ------ ------ ----- ------ -----
(dollars in thousands)
Total Capital
(to risk-weighted assets) $9,639 18.57% $4,154 8.00% $5,192 10.00%
Tier 1 Capital
(to risk-weighted assets) 9,478 18.26% - - 3,115 6.00%
Core (Tier 1) Capital
(to average total assets) 9,478 10.27% 3,691 4.00% 4,613 5.00%
Tangible Capital
(to adjusted average assets) 9,478 10.27% 1,384 1.50% - -
-17-
LINCOLN PARK BANCORP AND SUBSIDIARY
CONTROLS AND PROCEDURES
-----------------------
ITEM 3.
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report. Based
upon that evaluation, the Chief Executive Officer and the Chief Financial
Officer has concluded that, as of the end of the period covered by this report,
our disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports that the Company files or submits under
the Securities Exchange Act of 1934, is recorded, processed, summarized and
reported within the applicable time periods specified by the SEC's rules and
forms. There has been no change in the Company's internal control over financial
reporting during the Company's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
-18-
LINCOLN PARK BANCORP
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
-------------------------
Neither the Company nor the Bank is involved in any pending legal
proceedings other than routine legal proceedings occurring in the ordinary
course of business, which involve amounts in the aggregate believed by
management to be immaterial to the financial condition of the Company and
the Bank.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
-------------------------------------------------------------------
a) Not applicable
b) Not applicable
Information regarding the Company's purchases of its equity securities (common
stock) during the three months ended September 30, 2006 is summarized below:
Total Number of
Shares Purchased Maximum Number of
Total Number Average Price Under a Publicly Shares That May Yet
of Shares Paid For Announced Be Purchased Under
Purchased Shares Repurchase Plan Repurchased Plan
------------ ------------- ---------------- -------------------
July 1- July 31 - - - -
August 1 - August 31 - - - -
September 1 - September 30 - - - -
As of September 30, 2006, the Company has purchased 36,289 shares to fund the
restricted stock of the Company's 2005 Stock-Based Incentive Plan.
ITEM 3. Defaults Upon Senior Securities
---------------------------------------
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
Not applicable.
ITEM 5. Other Information
-------------------------
Not applicable.
-19-
LINCOLN PARK BANCORP
ITEM 6. Exhibits and Reports on Form 8-K
----------------------------------------
The following Exhibits are filed as part of this report.
11.0 Computation of earnings per share.
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 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-20-
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LINCOLN PARK BANCORP
Date: November 9, 2006 /s/ David G. Baker
---------------- --------------------------------------
David G. Baker
President and Chief Executive Officer
Date: November 9, 2006 /s/ Nandini Mallya
---------------- --------------------------------------
Nandini Mallya
Vice President and Treasurer
(Principal Accounting Officer and
Interim Chief Financial Officer)
-21-