Dearborn Bancorp (DEAR) 10-Q 1999 Q3 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly period ended September 30, 1999.

Commission file number 000-24478.

DEARBORN BANCORP, INC.

(Exact name of registrant as specified in its charter)

Michigan	38-3073622
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

22290 Michigan Avenue, Dearborn, MI      48123-2247
(Address of principal executive office)      (Zip Code)

(313) 274-1000
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark 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 the number of shares outstanding for each of the issuer's classes of common stock, as of October 31, 1999.

Class	Shares Outstanding
Common Stock	2,473,295

DEARBORN BANCORP, INC.

INDEX

		Page
Part I.	Financial Information:
Item 1.	Financial Statements
	The following consolidated financial statements of Dearborn Bancorp, Inc. and its subsidiary included in this report are:
	Consolidated Balance Sheets - September 30, 1999, December 31, 1998 and September 30, 1998	3
	Consolidated Statements of Income - For the Three and Nine Months Ended September 30, 1999 and 1998	4
	Consolidated Statements of Comprehensive Income (Loss) - For the Three and Nine Months Ended September 30, 1999 and 1998	5
	Consolidated Statements of Cash Flows - For the Nine Months Ended September 30, 1999 and 1998	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital	7-20
Part II.	Other Information:
Pursuant to SEC rules and regulations, the following item(s) are included with the       Form 10-Q Report:
	Item 6. Exhibits and Reports on Form 8-K	21
Pursuant to SEC rules and regulations, the following items are omitted       from this Form 10-Q as inapplicable or to which the answer is none:
	Item 1. Legal Proceedings
	Item 2. Changes in 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
SIGNATURES		22

2

DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

(In thousands)	09/30/99 (unaudited)		12/31/98 (audited)		09/30/98 (unaudited)
ASSETS
Cash and cash equivalents
Cash and due from banks	$1,812		$2,259		$1,955
Federal funds sold	3,276		3,995		13,132
Total cash and cash equivalents	5,088		6,254		15,087
Mortgage loans held for sale	1,128		1,211		444
Investment securities, available for sale	60,914		50,211		45,870
Loans, net
Gross loans	75,624		66,023		61,248
Allowance for possible credit losses	(750	)	(627	)	(594	)
Net loans	74,874		65,396		60,654
Bank premises and equipment, net	2,388		2,378		2,415
Accrued interest receivable	1,157		933		961
Other assets	822		372		380
Total assets	$146,371		$126,755		$125,811
LIABILITIES
Deposits
Non-interest bearing deposits	$ 14,132		$ 11,142		$ 9,320
Interest bearing deposits	103,440		86,468		87,621
Total deposits	117,572		97,610		96,941
Other liabilities
Mortgage payable	499		517		523
Accrued interest payable	371		338		312
Other liabilities	502		559		467
Total liabilities	118,944		99,024		98,243
STOCKHOLDERS' EQUITY
Common stock - 5,000,000 shares authorized,       2,473,295 shares outstanding       at September 30, 1999,       December 31, 1998 and       September 30, 1998	29,015		29,015		28,483
Accumulated deficit	(1,010	)	(1,270	)	(975	)
Accumulated other comprehensive income (loss)	(578	)	(14	)	60
Total stockholders' equity	27,427		27,731		27,568
Total liabilities and stockholders' equity	$146,371		$126,755		$125,811

The accompanying notes are an integral part of these consolidated financial statements.

3

DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

(In thousands, except share and per share data)	Three Months Ended		Nine Months Ended
	09/30/99	09/30/98	09/30/99	09/30/98
Interest income
Interest on loans	$1,624	$1,375	$4,538	$3,830
Interest on investment securities,       available for sale	839	773	2,357	1,862
Interest on federal funds       and deposits with banks	39	121	178	387
Total interest income	2,502	2,269	7,073	6,079
Interest expense
Interest on deposits	1,231	1,162	3,472	3,271
Interest on other liabilities	9	10	26	32
Total interest expense	1,240	1,172	3,498	3,303
Net interest income	1,262	1,097	3,575	2,776
Provision for possible credit losses	40	37	707	79
Net interest income after provision    for possible credit losses	1,222	1,060	2,868	2,697
Non-interest income
Service charges on deposit accounts	53	39	142	102
Fees for other services to customers	7	6	21	18
Gain on the sale of loans	83	63	261	156
Gain on the sale of investment securities	--	20	--	36
Other income	3	1	3	4
Total non-interest income	146	129	427	316
Non-interest expenses
Salaries and employee benefits	574	471	1,647	1,259
Occupancy and equipment expense	112	101	329	292
Advertising and marketing	22	17	78	62
Stationery and supplies	59	26	164	94
Professional services	101	39	219	100
Data processing	41	35	124	88
FDIC insurance premiums	3	3	9	7
Other operating expenses	72	67	264	169
Total non-interest expenses	984	759	2,834	2,071
Income before income tax provision	384	430	461	942
Income tax provision	161	146	201	228
Net income	$223	$284	$260	$714
Share and per share data:
Net income - basic	$0.09	$0.11	$0.11	$0.36
Net income - diluted	$0.09	$0.11	$0.10	$0.36
Weighted average number of       shares outstanding - basic	2,473,295	2,473,295	2,473,295	1,973,184
Weighted average number of       shares outstanding - diluted	2,473,295	2,484,450	2,477,599	1,989,439

The accompanying notes are an integral part of these consolidated financial statements.

4

DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(In thousands)	Three months ended				Nine months ended
	09/30/99		09/30/98		09/30/99		09/30/98
Net income	$223		$284		$260		$714
Other comprehensive income, net of tax
Unrealized gains (losses) on       securities, available for sale
Unrealized holding gains (losses)             arising during period	(248	)	6		(855	)	114
Less: reclassification adjustment             for gains included in net income	--		(20	)	--		(36	)
Tax effects	84		5		291		(27	)
Total other comprehensive             income (loss)	(164	)	(9	)	(564	)	51
Comprehensive income (loss)	$59		$275		$(304	)	$765

The accompanying notes are an integral part of these consolidated financial statements.

5

DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(In thousands)	Nine Months Ended
	9/30/99		9/30/98
Cash flows from operating activities
Interest and fees received	$6,849		$5,947
Interest paid	(3,464	)	(3,301	)
Proceeds from sale of mortgages held for sale	17,138		17,342
Origination of mortgages held for sale	(16,472	)	(12,228	)
Participations purchased in mortgages held for sale	--		(5,054	)
Cash paid to suppliers and employees	(3,250	)	(1,969	)
Net cash provided by operating activities	801		737
Cash flows from investing activities
Proceeds from maturities of       securities available for sale	29,952		30,864
Proceeds from sales of securities       available for sale	2,400		30,043
Purchases of securities available for sale	(44,015	)	(76,820	)
Increase in loans, net of payments received	(10,047	)	(9,116	)
Purchases of property and equipment	(201	)	(288	)
Net cash (used in) investing activities	(21,911	)	(25,317	)
Cash flows from financing activities
Net increase in non-interest bearing deposits	2,990		733
Net increase in interest bearing deposits	16,972		20,811
Decrease in federal funds purchased	--		(1,500	)
Principal payments on mortgage payable	(18	)	(14	)
Sale of common stock, net of offerings costs	--		17,977
Net cash provided by financing activities	19,944		38,007
Increase (decrease) in cash and cash equivalents	(1,166	)	13,427
Cash and cash equivalents at the beginning of the period	6,254		1,660
Cash and cash equivalents at the end of the period	$5,088		$15,087
Reconciliation of net income to net cash provided by       (used in) operating activities
Net income	$260		$714
Adjustments to reconcile net income to net cash       provided by (used in) operating activities
Provision for possible credit losses	707		79
Depreciation and amortization expense	346		174
Accretion of discount on investment securities	(3	)	(17	)
Amortization of premium on investment securities	106		1
Gain on sale of investment securities	--		(36	)
(Increase) decrease in mortgages held for sale	83		(97	)
(Increase) in accrued interest receivable	(224	)	(238	)
Increase (decrease) in accrued interest payable	33		2
(Increase) in other assets	(450	)	(155	)
Increase (decrease) in other liabilities	(57	)	310
Net cash provided by (used in) operating activities	$801		$737

The accompanying notes are an integral part of these consolidated financial statements.