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[GREATER ATLANTIC FINANCIAL CORP. LETTERHEAD]
May 18, 2007
William C-L Friar
Senior Financial Analyst
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-0408
Re: Greater Atlantic Financial Corp.
Form 10-K for September 30, 2006, Filed February 2, 2007 File Number
0-26467
Dear Mr. Friar:
This is in reply to your letter of April 23, 2007, providing comments with
respect to the subject filing. For your convenience in reviewing this matter, we
have set forth your comment followed by our response.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations, page 30
- --------------------------
Financial Condition, page 33
- ----------------------------
General
- -------
1. We have reviewed your response to comment 8 of our letter dated March
23, 2007. Please confirm that you will incorporate the discussion
included in your response to this comment in MD&A in future filings.
o We included the discussion in the Form 10-Q for the period ended
March 31, 2007, filed on May 15, 2007, and confirm that we will
incorporate the discussion included in our response to this
comment in the MD&A in future filings.
Note 1. Summary or Significant Accounting Policies
- --------------------------------------------------
Note 12. Income Taxes, Page 80
- ------------------------------
2. We have reviewed your response to comment 12 of our letter dated March
23, 2007. The analysis provided appears to focus primarily on your 2006
estimate. Please provide us with a comprehensive analysis that supports
your conclusion that you will have sufficient taxable income available
in future periods to realize the portion of the deferred tax assets not
provided for and justify why a full valuation allowance was not
required at December 31, 2005. Refer to paragraphs 21-26 of SFAS 109.
o With regard to the justification why a full valuation allowance
was not required at September 30, 2005, we provide you with the
following information:
At the conclusion of the Company's fiscal year ended September 30,
2005, the net loss from continuing operations, as restated was
$523,000. The amount of that loss, when compared with that sustained in
the prior fiscal year, was due in part to the gain recognized on the
sale of three branch offices of the bank. The Company then believed
that it was in a position to grow and produce a steady stream of
earnings on a going forward basis. At September 30, 2005 the Company
had a good capital position with tangible and core capital of 7.01% and
a risk-based capital ratio of 11.26%, which provided a sound base from
which to grow the Company.
In fiscal year 2005 the Board of Directors commissioned a major review
of the bank's retail function by an experienced independent consultant
and implemented his recommendations. Those included a new marketing
campaign, a renewed focus on developing relationships with small
business clients, a revised incentive plan for branch employees and an
expanded sales force at the remaining branches. It also included the
hiring of new managers and assistant managers at many of the bank's
branch locations. As a result of the implementation of the plan, the
growth in core deposits improved
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through September 30, 2005, and was projected to improve in future
periods which would allow the bank to curtail its utilization of
brokered and wholesale deposits.
The forecasted financial statements used to justify the deferred tax
asset demonstrate how the bank intended to obtain core profitability
using its existing capital base. To that end the bank's plans going
forward included the following:
o Continued emphasis on the prudent growth of the loan portfolio.
o Active pursuit of growth in the bank's retail deposit base
through its retail performance improvement program.
o Continued maintenance of tight control on operating expenses.
o Substantial improvement in net interest margin and net earnings.
The interest rate forecast used in developing the projections was based
on interest rates rising from September 30, 2005 through June 30, 2006
with the Prime rate reaching 7.75% and then gradually declining to 7%
by June 30, 2008, the 30 month time horizon for the projections.
Inasmuch as the bank was asset sensitive, the more favorable forecast
would have been to project increasing rates throughout the projection
period, but the company used the then most current economic forecast.
Investments:
-----------
We projected the amount to be held in investments and mortgage-backed
securities as approximately $125 million by June 30, 2008, an increase
of $10 million from the $115 million held at September 30, 2005. While
our actual purchases of investments could vary based on market
conditions at the time of purchase, the principal types of securities
to be acquired were adjustable rate collateralized mortgage
obligations, Small Business Administration adjustable-rate certificates
and 15-year, fixed-rate, mortgage-backed securities. The bank
recognized that the return available from lending activities would be
substantially greater than could be obtained from a portfolio of
investment securities and therefore lending activities were to take
precedence over investment activities.
Lending:
--------
We believed that, in order to improve the bank's net interest margin
and net earnings, we would have to continue to emphasize prudent growth
in the bank's loan portfolio. Following are items that we included in
the forecast to meet that objective:
o Hiring an additional commercial lending officer.
o Hiring two residential loan officers with a view to originating
and selling approximately $2 million of conforming single family
loans per month.
o Continuing to pursue the origination of loans
guaranteed by the United States Department of Agriculture
("USDA") because of their low risk weight and the ability to
originate larger loans. The guaranteed portion of loans
guaranteed by the USDA is excluded in the computation of loans
to one borrower and risk-weighted assets.
o Purchasing
approximately $5.0 million in adjustable-rate, single-family
loans each quarter.
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Deposits:
--------
The retail banking plan was to build franchise value by improving the
performance of the retail bank operation by continuing to grow
deposits, with the primary focus on core deposits (transaction
accounts, money fund accounts and interest and non-interest -bearing
checking accounts). That was to be accomplished by strengthening sales
and marketing, business development outreach and adding sales and
customer service resources, while upgrading staff quality. Another
objective was to increase loan volume and diversify referrals beyond
home equity loans to commercial loans by enhancing the business
capability of the retail banking department. Under the plan, total
deposits were to increase from $238 million at September 2005 to $258
million by June 30, 2008, after reducing brokered and wholesale
deposits by $53 million over the time horizon of the plan.
Borrowings:
----------
We intended to increase the level of borrowings from $76 million at
September 30, 2005 period to $233 million at June 30, 2008. With the
reduction in brokered and wholesale deposits of $53 million, the
overall increase in wholesale funding was to be $104 million.
Earnings:
--------
Based on the information above, the net earnings of the bank for the 12
months ended September 2006 and 2007 were projected to be $251,000 and
$2.3 million, respectively, with earnings in the nine months ended June
30, 2008 (the time horizon for the forecast) of $3.1 million. After
reduction for the expenses of Greater Atlantic Financial Corp (GAFC),
which consist of the interest on Trust Preferred Securities (and
certain minor operating expenses) the net earnings for the Company were
forecast to be $4.5 million for the 33 month period of the forecast.
PLEASE NOTE THAT THE COMPANY SEPARATES THE EARNINGS OF THE BANK FROM
THE OVERALL EARNINGS OF THE COMPANY IN PREPARING ITS FORECAST IN ORDER
TO FACILITATE COMMUNICATION WITH ITS REGULATORY AGENCY AND TO BE ABLE
TO ANALYZE EFFECTIVELY THE BANK'S EARNINGS. AFTER DETERMINING THE
BANK'S EARNINGS, A REDUCTION FOR THE EXPENSE OF THE HOLDING COMPANY
(GAFC) IS MADE TO DETERMINE THE OVERALL COMPANY EARNINGS.
Net Interest Income:
-------------------
We projected the bank's net interest margin to grow gradually during
the forecast periods from 2.35% in the quarter ending December 31,
2005,to 2.76% in the quarter ending June 30, 2008. The growth in net
interest income relied more on the leverage in the balance sheet than
on a significantly higher net interest margin.
Other operating income:
----------------------
Service charges on loans and deposits were projected to increase
gradually over the time horizon of the forecast based on growth in
loans receivable and deposits, supplemented by miscellaneous loan fees
from the bank's expected loan origination and sales activity. With a
reduced income stream from Greater Atlantic Mortgage Corporation from
prior
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periods, the bank intended to employ loan officers on a commission
basis for the purpose of originating single family loans for sale into
the secondary market. The operation was intended to be relatively small
with the originations and sales only amounting to $2.0 million per
month at a net gain on sale of 75 basis points after making provision
for loan officer commissions and the costs of origination. The bank has
existing staff in place to handle that level of production and the
management to supervise the activity.
We projected the gain on sale of investments, derivatives and other
real estate owned to be $215,000 for the 33-month time horizon of the
forecast.
Greater Atlantic Mortgage Corporation:
-------------------------------------
Effective October 1, 2004, Greater Atlantic Mortgage entered into an
agreement with the manager of its mortgage banking subsidiary designed
to reduce the bank's exposure to losses from mortgage banking
operations. The agreement provided for the manager to reimburse 100% of
the losses incurred by Greater Atlantic Mortgage in return for 80% of
net earnings with provision made for settlement on a quarterly basis.
As required by that agreement, the manager reimbursed Greater Atlantic
Mortgage $363,000 and posted $1,300,000 in escrow to cover Greater
Atlantic Mortgage's future losses. The agreement contained a provision
that the manager's obligation to fund losses did not exceed the amount
in the escrow.
Under a proposed revised agreement, we expected the following impact on
the bank during the forecast period:
o The bank would earn a minimum return of approximately $30,000,
quarterly.
o The bank would earn net interest income of approximately $252,000,
annually, on the warehouse line provided to Greater Atlantic
Mortgage .
o We projected a loss of $250,000 from operations during the March,
2006 quarter with recovery of that loss in the June, 2006,
quarter.
Operating Expenses:
------------------
Operating expenses were forecast to grow from approximately $2.6
million, or 2.82% of average assets, in the quarter ending December 31,
2005, to $2.8 million or 2.14% of then average assets in the quarter
ending June 30, 2008. Over all, operating expenses were projected to
increase, but the operating expense ratio would decline because of the
projected leverage of the Balance Sheet.
Deferred Tax Asset:
------------------
Based on the forgoing, the Company projected future earnings that would
absorb a portion of the Company's net operating loss carryforwards and
justify the deferred tax asset recorded at September 30, 2005.
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FORECASTED FINANCIAL STATEMENTS FOR THE PERIODS INDICATED
9 MONTHS
12 MONTHS ENDING ENDING
SEPTEMBER 30, JUNE 30,
2006 2007 2008 TOTAL
---- ---- ---- -----
Interest income 23,329 28,428 23,687 75,444
Interest expense (14,283) (17,035) (13,711) (45,029)
Interest rate swaps and caps 457 286 44 787
---------- ---------- ---------- ----------
Net interest income 9,503 11,679 10,020 31,202
Provision for loan losses (150) (300) (225) (675)
Other operating income 1,375 1,656 1,570 4,601
Operating expenses (10,477) (10,696) (8,268) (29,441)
---------- ---------- ---------- ----------
Net earning (loss) Bank 251 2,339 3,097 5,687
Net earnings (loss) GAFC (1) (784) (292) (96) (1,172)
---------- ---------- ---------- ----------
Net earnings (loss) Consolidate (533) 2,047 3,001 4,515
========== ========== ========== ==========
(1) Assumes conversion of convertible trust preferred securities to common
stock in January 2007.
SUBSEQUENT EVENT WITH AN ADVERSE IMPACT ON EARNINGS AND CAPITAL FROM
THE TERMINATION OF A CONTRACT TO MANAGE THE COMPANY'S MORTGAGE BANKING
SUBSIDIARY.
Under the agreement with the manager of Greater Atlantic Mortgage, if
the Corporation sustained losses in excess of the amount in the escrow,
and the manager did not restore those losses within 15 days of demand,
Greater Atlantic Mortgage's recourse was to terminate the agreement. At
June 30, 2005, the $1,300,000 in the escrow had been depleted, the
manager contributed $108,000 to Greater Atlantic Mortgage to make up
the deficiency and the agreement was continued for the next three
months.
During the three months ended September 30, 2005, the losses at Greater
Atlantic Mortgage continued and reached approximately $993,000. Because
the escrow account was depleted and the manager had not posted
sufficient collateral to securitize the account receivable due from
him, the Bank's earnings were reduced by the $993,000 loss.
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The manager expressed concern that Greater Atlantic Mortgage would
terminate the 2004 agreement if it did not make up the loss incurred
during the September 30, 2005 quarter, and, in order to institute
negotiations, and obtain security, which would substantially improve
Greater Atlantic Mortgage's position, the manager was provided
extensions of time for the payment of the loss sustained in the
September 2005 quarter. During the negotiations, the manager indicated
that he would be willing to make up the loss but only if Greater
Atlantic Mortgage continued operations.
Working under extensions to the agreement, Greater Atlantic Mortgage
attempted to obtain an acceptable amendment to the agreement,
additional collateral and sought regulatory approval.
The Bank was unable to receive regulatory approval, the negotiations
with the manager failed and, in late January 2006, the Company chose to
close Greater Atlantic Mortgage. Additional losses of $1.7 million were
recognized in the December 2005 quarter both from operations and an
impairment charge and additional losses were recognized in the March,
2006 quarter. The losses incurred substantially curtailed the bank's
regulatory capital and required a new strategy and projections for the
operations of the bank.
In February, 2006, the Company engaged Sandler O'Neil & Partners, L.P.
to develop a strategy either to sell the company or sell branches so
that the bank could continue operations on the basis of a much smaller
foot print. That became the standard for analyzing the deferred tax
asset for the balance of the fiscal year ended September 30, 2006 and
beyond.
3. Regarding your 2006 analysis, we note management's taxable income
projections for 2006 were based in part, upon hiring an investment
management firm to find various strategic alternatives for the Company
and the impact of those strategies. We also note management concurred
with the investment banking firm's strategy of the sale of three
branches and that the resulting gains from the sale of those branches,
the reduced operating expenses as a result of those sales and
elimination of the losses incurred by the mortgage banking operating
through its closing, led management to believe that a portion of the
deferred tax asset could be realized. Please provide us with a more
comprehensive analysis including the following information:
o The specific periods in which you expect to realize the net
operating loss carryforwards and any other material deferred
tax assets not provided for:
o A portion of the realized net operating loss
carryforwards not provided for were to be recognized
in the company's fiscal year ending September 30,
2007 in the amount of $1.534 million. That included
the projected $5.3 million gain from branch sales.
The balance of the net operating loss carryforwards,
$787,000 and $2.480 million, respectively, were
projected to be realized in fiscal years 2008 and
2009.
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In the fiscal year ending September 30, 2007 the Bank
was also taking one time charges to earnings of $2.3
million, which consisted of a $600,000 charge as an
estimate to settle the arbitration proceeding, the
write off of goodwill associated with the sale of two
of the branches in the amount of $956,000 and a
prepayment penalty incurred to pay off Federal Home
Loan Bank advances of $784,000. Paying off those
advances was designed to improve the Bank's net
interest margin. The $600,000 payment in settlement
of the arbitration was charged to Fiscal 2006
earnings with no change to the projections.
o The specific periods in which you expect the branch sales to
occur;
o The branch sales were projected to occur in the March 2007
quarter with the recognition that they could be moved to
the June 2007 quarter.
It should be noted that, in a press release issued April
12, 2007 the Company announced that it had entered into a
definitive agreement to sell its Pasadena branch to
Bay-Vanguard Federal Savings Bank with the balance of the
Company being sold to Summit Financial Group. Any action
on the sale of the three branches was put on hold in
connection with the negotiations for the sale of the
company.
In the event that the sale of the company should not be
consummated, which currently seems highly unlikely, the
company takes the position that it will sell two
additional locations. Such a sale would provide the needed
capital and a reduction in operating costs and provide for
future earnings.
o Whether you have any existing contracts in place for the
expected branch sales and if so, when those contracts were
entered into:
o When the projections were prepared for the justification
of the deferred tax asset the company had received bids
for the locations, but had not entered into a contract(s).
As indicated above the company has entered into a
definitive agreement to sell its Pasadena branch location.
o The amounts of expected gains on sales of branches, the specific
timing of those gains as included in your projections, and a
description of the method(s) used by the investment banking firm
to determine the sales prices of the branches;
o The expected gain from the branch sales amounted to
approximately $5.347 million with those gains being
projected as being recognized in the March, 2007 quarter.
The investment banking firm used a competitive bidding
process and received letters of intent for each location,
which provided the
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basis for determining the amount of gain on sale that
would be included in the projections.
o The amounts and types of any other expected operating income, the
specific timing of that income as included in your projections and
a description of the methods(s) used to determine those amounts;
o Attached as Exhibit A is a schedule showing other expected
operating income that was included in our projections and
the fiscal year in which that income was to be recognized.
Following are the methods used to determine those amounts:
SERVICE FEES ON LOANS - projected based on the monthly
average for fiscal year 2006 adjusted for the growth in
the loan portfolio and supplemented by miscellaneous loan
fees from the bank's loan origination and sales activity.
SERVICE FEES ON DEPOSITS - projected based on the monthly
average for fiscal year 2006 adjusted for the estimated
increase in the retail deposit base. That monthly income
stream was reduced by the deposit fees associated with the
branches sold based on the historical fees earned by each
branch.
GAIN ON SALE OF LOANS - with the closing of Greater
Atlantic Mortgage Corporation, the bank intends to employ
additional loan officers on a commission basis for the
purpose of originating single family loans for sale into
the secondary market. The operation is intended to be
relatively small with originations and sales only
amounting to $2.0 million per month at a net gain on sale
of 75 basis points after providing for loan officer
commissions and the cost of origination. The bank has
existing staff in place to handle that level of production
and the management to supervise the activity.
LOSS ON SALE OF INVESTMENTS- we anticipate that lower
yielding investment securities would be sold to fund the
branch sales at a loss of approximately $100,000.
o The amounts of expected operating expenses (including the amounts
of reduced operating expenses due to the sale of branches and
elimination of losses incurred by the mortgage banking operation
taken into consideration when determining those amounts), the
specific timing of those expenses as included in your projections,
and a description of the method(s) used to determine those
amounts.
o Attached as Exhibits B thru D are the expected operating
expenses of the company and the periods in which they are
projected to occur. Exhibit B reflects the forecast
expenses without consideration of any branch sales or
other charges; Exhibit C is the forecast of operating
expenses for the company
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that were included in the projections. Exhibit D contains
the reductions in those operating expenses forecast as a
result of the branch sales and other charges that would be
incurred. Exhibit D also breaks down the reductions in
operating expenses as to those associated directly with
the branches and the portion that would be a reduction in
administrative cost.
With respect to Exhibit D, the cost reductions for the
branches were based on the cost to operate each of the
branches assuming a 3% annual increase for each of the
operating expense categories. The reductions in other
administrative cost were primarily in compensation of
$1.364 million, professional fees of $420,000 and other
operating expenses of $60,000 for a total reduction of
$1.844 million in administrative cost over the three year
time horizon. The primary reduction for compensation
occurred in back office operations of retail banking and
the reduction of non-essential lending personnel if the
Bank is to operate from a smaller footprint. Professional
fees includes reductions for audit, legal and network
management fees.
The other charges incurred in Fiscal Year 2007 was for the
estimated settlement of the arbitration, the required
write off of goodwill associated with the branches being
sold and a prepayment penalty on the early payoff of high
cost Federal Home Loan Bank Advances designed to improve
the bank's net interest margin. The charge for the
arbitration was actually taken in fiscal year 2006, but
the projections were not changed.
As to Exhibit B, following are the assumptions used in
developing the operating expense projections:
COMPENSATION AND BENEFITS - were determined based on
salaries in place on September 30, 2006 adjusted for a 4%
annual increase each year. The projection assumes no major
change in the number of employees occurs and includes a
reduction after the December 2006 quarter-end for the
bank's then retail banking consultant of $96,000 and
temporary compensation of $80,000 for the personnel hired
to analyze the accounting difference at Greater Atlantic
Mortgage Corporation (GAMC).
OCCUPANCY - was based on the amount incurred in fiscal
2006 adjusted for a 5% annual increase.
PROFESSIONAL SERVICES - was based on an analysis of the
estimated cost for legal, audit, network management fees
and a provision of $9,000 for contingency cost. The
December 2006 quarter of the fiscal 2007 projections
included $146,000 in professional fees for legal and
accounting associated with the arbitration and the
accounting difference at GAMC. There were no charges for
those items in subsequent quarters of fiscal 2007 and
beyond.
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ADVERTISING - was reduced from the amount incurred in
fiscal 2006 to an amount more appropriate for an
institution the bank's size. It should be noted that the
reduced cost has not had an impact on the company's
ability to attract and retain retail deposits.
DEPOSIT INSURANCE - was based on the projected deposit
balances over the time horizon of the projections and
reduced in fiscal 2007 by $103,000 for the one time FDIC
assessment credit due the bank.
FURNITURE, FIXTURES, AND EQUIPMENT, DATA PROCESSING AND
OTHER OPERATING EXPENSES - were based on the annualized
average of the monthly expenses incurred in fiscal 2006
adjusted for a 3% annual cost increase.
o If you have a history of tax credit carryforwards expiring unused;
o The Company had approximately $57,000 of tax credit
carryforwards expiring unused for the fiscal year ended
September 30, 2006. No other tax credit carryforward expired
unused.
o Any other positive evidence you relied upon under paragraph 24 of
SFAS No. 109;
o The gain recognized from the sale of the branches, the ability
to restructure the balance sheet and the reduction in the cost
to operate allow the company to become profitable and use tax
credit carryforwards.
o That the company has entered into a definitive agreement to
sell its Pasadena, Maryland, branch at a substantial gain
supports the projections developed to justify the deferred tax
asset.
o How, in light of your past and continuing net losses, the above
and any additional information provided supports your
determination that it is more likely than not that the portion of
deferred tax assets not provided for at December 31, 2006 will be
realized. Alternatively, revise as necessary.
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o Based on the information provided above, we believe that the
bank has prepared reasonable projections to demonstrate its
ability to realize on the portion of the deferred tax asset
not provided for. The gain on the sale of the branches
replaces the capital loss either through operations or the
losses incurred in closing Greater Atlantic Mortgage
Corporation. With the sale of the branches, the bank would be
able to adjust its deposit base to a level that supports its
existing loans receivable and would be able to lower its
operating expenses to a level more in line with the level of
earning assets. Absent the sale of branches, the number of
branches exceeds the company's ability to generate the
required loans. That factor, coupled with the losses incurred
reduced the capital needed to support future growth. The
projections first turn the bank into a much smaller
institution and then provide a basis to allow it to grow at a
reasonable operating cost.
Very truly yours,
/s/ David E. Ritter
David E. Ritter
Senior Vice President and
Chief Financial Officer
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GREATER ATLANTIC FINANCIAL CORP EXHIBIT A
FORECASTED OTHER OPERATING INCOME
ACUTAL FORECASTED
FISCAL FISCAL FISCAL FISCAL
2006 2007 2008 2009
---- ---- ---- ----
(DOLLARS IN THOUSANDS)
----------------------
Service Fees on Loans $ 186 $ 214 $ 264 $ 266
Service Fees on Deposits 424 421 437 450
Reduction for branch sales (126) (257) (270)
------- ------ ------ ------
Adjusted service fees on
deposits after branch sales 424 295 180 180
Gain on Sale of Loans - 62 180 180
Loss on sale of investments - (100) - -
------- ------ ------ ------
Total other income excluding
Gain on sale of branches $ 424 $ 471 $ 624 $ 626
======= ====== ====== ======
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GREATER ATLANTIC FINANCIAL CORP EXHIBIT B
FORECASTED OTHER OPERATING INCOME
FORECASTED EXPENSES
WITHOUT CONSDERATION OF BRANCH SALES
ACTUAL ------------------------------------------------
FISCAL FISCAL FISCAL FISCAL
2006 2007 2008 2009
---- ---- ---- ----
(DOLLARS IN THOUSANDS)
----------------------
Compensation and benefits 4,718 5,040 4,806 4,962
Occupancy 1,337 1,386 1,458 1,535
Professional services 1,227 868 711 726
Advertising 628 321 381 381
Deposit insurance 101 38 111 96
Furniture, fixtures and equipment 554 583 597 611
Data processing 919 980 978 1,006
Other operating 1,101 (1) 1,021 1,050 1,079
Other items:
Settlement lawsuit - - - -
Write of Goodwill - - - -
Penalty P/O FHLB Adv - - - -
--------- --------- --------- ---------
Total 10,585 10,237 10,092 10,396
--------- --------- --------- ---------
Net Loss Greater
Atlantic Mortgage (2,488) - - -
--------- --------- --------- ---------
(1) Excludes the charge of $500,000 settlement for the Stamm arbritration
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GREATER ATLANTIC FINANCIAL CORP EXHIBIT C
FORECASTED OTHER OPERATING INCOME
FORECASTED EXPENSES AS INCLUDED
IN THE PROJECTIONS
FISCAL FISCAL FISCAL
2007 2008 2009
---- ---- ----
(DOLLARS IN THOUSANDS)
----------------------
Compensation and benefits 4,278 3,606 3,726
Occupancy 1,262 1,201 1,263
Professional services 784 543 558
Advertising 243 195 195
Deposit insurance 24 74 72
Furniture, fixtures and equipment 511 453 467
Data processing 787 582 600
Other operating 961 930 959
Other items:
Settlement lawsuit 600 - -
Write of Goodwill 956 - -
Penalty P/O FHLB Adv 784 - -
-------- ------- --------
Total 11,190 7,584 7,840
-------- ------- --------
Net Loss Greater
Atlantic Mortgage - - -
-------- ------- --------
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GREATER ATLANTIC FINANCIAL CORP EXHIBIT D
FORECASTED OTHER OPERATING INCOME
FORECASTED (REDUCTIONS) CHARGES AS A
Result of the Branch Sales
Fiscal Fiscal Fiscal
2007 2008 2009
---- ---- ----
(DOLLARS IN THOUSANDS)
----------------------
Compensation and benefits (762) (1,200) (1,236)
Occupancy (124) (257) (272)
Professional services (84) (168) (168)
Advertising (78) (186) (186)
Deposit insurance (14) (37) (24)
Furniture, fixtures and equipment (72) (144) (144)
Data processing (193) (396) (406)
Other operating (60) (120) (120)
Other items:
Settlement lawsuit 600 - -
Write of Goodwill 956 - -
Penalty P/O FHLB Adv 784 - -
--------- -------- ---------
Total 953 (2,508) (2,556)
--------- -------- ---------
Net Loss Greater
Atlantic Mortgage - - -
--------- -------- ---------
(REDUCTIONS) CHARGES RELATED TO:
Brach cost (885) (1,844) (1,878)
Other administrative cost (502) (664) (678)
Other restructing items 2,340 - -
--------- -------- ---------
Total 953 (2,508) (2,556)
--------- -------- ---------