UNITED STATES
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to_________
Commission File Number 000-32957
Globe Bancorp, Inc.
___________________
(Exact name of small business issuer as specified in its charter)
LOUISIANA (72-1498296)
_________ ____________
(State or other jurisdiction of (I R S Employer
incorporation or organization) Identification No.)
4051 VETERANS BOULEVARD, SUITE 100, METAIRIE, LOUISIANA 70002
____________________________________________________________________
(Address of principal executive offices)
Issuer's telephone number, including area code: 504-887-0057
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past
12 months (or for such shorter period that the issuer was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Shares of common stock, par value $.01 per share, outstanding as
of May 11, 2004: 273,800
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
1
GLOBE BANCORP, INC.
Form 10-QSB
Quarter Ended March 31, 2004
Interim Financial Information required by Rule 10-01 of Regulation S-X and
Item 303 of Regulation S-B is included in this Form 10-QSB as referenced
below:
PART I - FINANCIAL INFORMATION Page
____
Item 1 Financial Statements
Consolidated Statements of Financial Condition at March 31,
2004 (Unaudited) and December 31, 2003 3
Consolidated Statements of Income and Comprehensive Income
(Unaudited) for the Three Months ended March 31, 2004 and 2003 4
Consolidated Statements of Changes in Equity (Unaudited) for the
Three Months ended March 31, 2004 and 2003 6
Consolidated Statements of Cash Flows (Unaudited) for the Three
Months ended March 31, 2004 and 2003 7
Notes to Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis or Plan of Operation 9
Item 3 Controls and Procedures 13
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 14
Item 2 Changes in Securities and Small Business Issuer Purchases of
Equity Securities 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 14
Signatures 14
Exhibit 31.1 Section 302 Certification of the Chief Executive Officer 15
Exhibit 31.2 Section 302 Certification of the Chief Financial Officer 16
Exhibit 32.1 Section 906 Certification of Chief Executive Officer 17
Exhibit 32.1 Section 906 Certification of Chief Financial Officer 18
2
GLOBE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 2004 AND DECEMBER 31, 2003
MARCH DECEMBER
31, 2004 31, 2003
________ ________
(Unaudited)
ASSETS
Cash $ 46,347 $ 56,561
Interest-bearing deposits 982,581 550,518
Federal funds sold 1,246,150 1,042,445
__________ __________
Total cash and cash equivalents 2,275,078 1,649,524
Securities available for sale 2,061,601 3,135,448
Securities held to maturity 1,346,941 1,433,816
Loans receivable, net 24,885,362 24,985,908
Accrued interest receivable 117,313 126,859
Federal Home Loan Bank stock, restricted, at cost 363,400 362,100
Prepaid expenses and other assets 136,019 127,450
Premises and equipment, net 114,747 119,911
__________ __________
Total assets $31,300,461 $31,941,016
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $21,815,710 $22,437,642
Federal Home Loan Bank advances 3,638,837 3,736,533
Advances from borrowers for taxes and insurance 142,333 157,274
Accrued expenses and other liabilities 121,851 59,070
__________ __________
Total liabilities 25,718,731 26,390,519
__________ __________
Preferred stock - $.01 par value, 500,000 shares
authorized, none issued or outstanding - -
Common stock - $.01 par value, 3,000,000 shares
authorized, 304,175 shares issued and outstanding
at March 31, 2004 3,042 3,042
Additional paid-in capital 2,738,142 2,738,142
Retained earnings, substantially restricted 3,519,449 3,492,919
Treasury stock - 30,375 shares, at cost (468,216) (468,216)
Accumulated other comprehensive (loss) (16,015) (20,718)
Unearned compensation (194,672) (194,672)
__________ __________
Total stockholders' equity 5,581,730 5,550,497
__________ __________
Total liabilities and stockholders' equity $31,300,461 $31,941,016
========== ==========
The accompanying notes are an integral part of these financial
statements.
3
GLOBE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three Months Ended
March 31, March 31,
2004 2003
(Unaudited) (Unaudited)
INTEREST INCOME:
Loans receivable $360,985 $393,752
Securities available for sale 18,208 31,376
Securities held to maturity 19,508 34,254
Other interest earning assets 5,518 9,816
_______ _______
Total interest income 404,219 469,198
_______ _______
INTEREST EXPENSE:
Deposits 123,347 183,294
Federal Home Loan Bank advances 40,984 48,299
_______ _______
Total interest expense 164,331 231,593
_______ _______
Net interest income 239,888 237,605
Provision for loan losses - -
_______ _______
Net interest income after provision for
loan losses 239,888 237,605
_______ _______
NONINTEREST INCOME:
Service charges 771 1,403
Net realized gain on sales of securities
available for sale - 351
______ _______
Total noninterest income 771 1,754
______ _______
NONINTEREST EXPENSES:
Salaries and employee benefits 90,810 87,650
Occupancy expense 27,938 24,569
Taxes and assessments 18,696 16,974
Professional fees 26,246 16,875
Service bureau expense 11,397 11,524
Office expense 5,391 6,662
General insurance 5,712 4,647
SAIF deposit insurance and
examination fees 4,943 3,827
Other 7,103 858
_______ _______
Total noninterest expenses 198,236 173,586
_______ _______
Income before income taxes 42,423 65,773
Income tax expense 15,893 22,104
_______ _______
NET INCOME $ 26,530 $ 43,669
======= =======
Basic earnings per common share $0.10 $0.17
==== ====
Diluted earnings per common share $0.10 $0.17
==== ====
The accompanying notes are an integral part of these financial
statements.
4
GLOBE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three Months Ended March 31, 2004 and 2003
Three Months Ended
March 31, March 31,
2004 2003
(Unaudited) (Unaudited)
NET INCOME: $26,530 $43,669
COMPREHENSIVE INCOME
Other comprehensive income (loss)
Unrealized gain (loss) on investment securities
available for sale, net of deferred tax (benefit) and
reclassification adjustments 4,703 (1,997)
______ ______
COMPREHENSIVE INCOME $31,233 $41,672
====== ======
The accompanying notes are an integral part of these financial
statements.
5
GLOBE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Three Months Ended March 31, 2004 and 2003
(UNAUDITED)
Retained Accumulated
Additional Earnings Other
Preferred Common Paid-In Substantially Treasury Comprehensive Unearned Total
Stock Stock Capital Restricted Stock (Loss) Income Compensation Equity
_________ ______ __________ _____________ ________ _____________ ____________ ______
Balance, January 1,
2003 $ - $ 3,042 $ 2,725,844 $ 3,422,821 $ (408,984) $ 15,213 $ (210,895) $ 5,547,041
Net income 43,669 43,669
Other comprehensive
loss, net of tax:
Unrealized (loss) on
securities (1,997) (1,997)
_________ _______ ___________ ___________ ___________ __________ ___________ ___________
Balance, March 31,
2003 $ - $ 3,042 $ 2,725,844 $ 3,466,490 $ (408,984) $ 13,216 $ (210,895) $ 5,588,713
========= ======= =========== =========== =========== ========== =========== ===========
Balance, January 1,
2004 $ - $ 3,042 $ 2,738,142 $ 3,492,919 $ (468,216) $ (20,718) $ (194,672) $ 5,550,497
Net income 26,530 26,530
Other comprehensive
income, net of tax:
Unrealized gain on
securities 4,703 4,703
_________ _______ ___________ ___________ ___________ __________ ___________ ___________
Balance, March 31,
2004 $ - $ 3,042 $ 2,738,142 $ 3,519,449 $ (468,216) $ (16,015) $ (194,672) $ 5,581,730
========= ======= =========== =========== =========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
6
GLOBE BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
Three months ended
March 31,
2004 2003
(Unaudited) (Unaudited)
Cash flows from operating activities:
<s> <c> <c>
Net income $ 26,530 $ 43,669
Adjustments to reconcile net income to net cash
provided by operating activities:
Premium and discount amortization on securities 1,999 9,797
Amortization (accretion) on loans 831 (564)
Capitalization of loan origination costs (2,750) (8,975)
Loan fees received - 21,956
Net (gain) on sales of securities available for sale - (351)
Depreciation and amortization 5,164 6,819
Federal Home Loan Bank stock dividends (1,300) (2,100)
Decrease (increase) in accrued interest receivable 9,456 (5,551)
(Increase) in prepaid expenses and other assets (8,569) (5,871)
Increase in other liabilities 60,357 55,557
_________ ___________
Net cash provided by operating activities 91,808 114,386
_________ _________
Cash flows from investing activities:
Loan originations (1,094,579) (2,854,817)
Principal repayments on loans 1,197,044 3,189,654
Purchases of securities available for sale - (2,796,887)
Proceeds from sales of securities available for sale - 477,425
Principal repayments on securities available for sale 1,079,899 691,672
Principal repayments on securities held to maturity 85,951 322,541
Purchases of Federal Home Loan Bank stock - -
_________ _________
Net cash provided by (used in) investing activities 1,268,315 (970,412)
_________ _________
Cash flows from financing activities:
Net (decrease) increase in deposit accounts (621,932) 336,157
Net (decrease) in Federal Home Loan Bank advances (97,696) (89,770)
Net (decrease) in advances from borrowers for taxes and insurance (14,941) (32,329)
_________ _________
Net cash (used in) provided by financing activities (734,569) 214,058
_________ _________
Net increase (decrease) in cash and cash equivalents 625,554 (641,968)
Cash and cash equivalents at beginning of the period 1,649,524 3,724,506
_________ _________
Cash and cash equivalents at end of period $2,275,078 $3,082,538
========= =========
The accompanying notes are an integral part of these financial statements.
7
GLOBE BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004
(UNAUDITED)
Note 1 - Principals of Consolidation -
The accompanying consolidated financial statements at March
31, 2004 and December 31, 2003 and for the three months ended
March 31, 2004 and 2003 include the accounts of Globe Bancorp,
Inc. (the Company) and its wholly owned subsidiary, Globe
Homestead Savings Bank (the Bank). Currently, the business and
management of Globe Bancorp, Inc. is primarily the business and
management of the Bank. The Company's business is conducted
principally through the Bank. All significant intercompany
transactions and balances have been eliminated in the
consolidation.
Note 2 - Basis of Presentation -
The accompanying unaudited financial statements were
prepared in accordance with instructions for Form 10-QSB and,
therefore, do not include information or footnotes necessary for
a complete presentation of financial position, results of
operations and cash flows in conformity with U.S. generally
accepted accounting principles. However, all adjustments
(consisting only of normal recurring accruals), which, in the
opinion of management, are necessary for a fair presentation of
the financial statements, have been included. The results of
operations for the three months ended March 31, 2004 are not
necessarily indicative of the results to be expected for the year
ended December 31, 2004.
Note 3 - Employee Stock Ownership Plan-
The Company sponsors a leveraged employee stock ownership
plan (ESOP) that covers all employees who have at least one year
of service with the Bank. The ESOP shares were initially pledged
as collateral for its debt. The debt is being repaid based on a
fifteen-year amortization and the shares are being released for
allocation to active employees annually over the fifteen-year
period. The shares pledged as collateral are deducted from
stockholders' equity as unearned ESOP shares in the accompanying
balance sheets.
As shares are released from collateral, the Company reports
compensation expense equal to the current market price of the
shares released. The Bank has accrued $5,900 of ESOP expense
through March 31, 2004.
The ESOP shares as of March 31, 2004 were as follows:
Shares released for allocation or committed to be released 4,867
Unreleased shares 19,467
------
Total ESOP shares 24,334
======
Fair value of unreleased shares $396,932 (1)
======
______________
(1) Based on market price on March 31, 2004.
Note 3 - Earnings Per Share
Basic earnings per share are computed by dividing net income
by the weighted average number of shares of common stock
outstanding, which were 254,333 for the quarter ended March 31,
2004. Diluted earnings per share are calculated by dividing net
income by the weighted average number of shares of common stock
outstanding, including the effect of diluted securities. The
weighted average number of shares was 254,333 for the quarter
ended March 31, 2004.
8
GLOBE BANCORP, INC. AND SUBSIDIARY
Item 2 - Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations
General
The following discussion compares the consolidated financial
condition of Globe Bancorp, Inc. and Subsidiary at March 31, 2004
to December 31, 2003 and the results of operations for the
quarter ended March 31, 2004 with the same period in 2003.
Currently, the business and management of Globe Bancorp, Inc. is
primarily the business and management of the Bank. This
discussion should be read in conjunction with the interim
consolidated financial statements and footnotes included herein.
This quarterly report on Form 10-QSB includes
statements that may constitute forward-looking statements,
usually containing the words "believe", "estimate", "expect",
"intend" or similar expressions. These statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements
inherently involve risk and uncertainties that could cause actual
results to differ materially from those reflected in the forward-
looking statements. Factors that could cause future results to
vary from current expectations include, but are not limited to,
the following: changes in economic conditions (both generally
and more specifically in the markets in which the Company
operates); changes in interest rates, accounting principles,
policies or guidelines and in government legislation and
regulation (which change from time to time and over which the
Company has no control); and other risks detailed in this
quarterly report on Form 10 - QSB and the Company's other
Securities and Exchange Commission filings. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as the date
hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or
circumstances that arise after the date hereof.
Our profitability depends primarily on our net interest
income, which is the difference between interest and dividend
income on interest-earning assets, principally loans, investment
securities and interest-earning deposits in other institutions,
and interest expense on interest-bearing deposits and borrowings
from the Federal Home Loan Bank of Dallas. Net interest income is
dependent upon the level of interest rates and the extent to
which such rates are changing. Our profitability also depends, to
a lesser extent, on noninterest income, provision for loan
losses, noninterest expenses and federal income taxes. During
the period reported herein, net interest income after provision
for loan losses exceeded total noninterest expense. Total
noninterest expense consists of general, administrative and other
expenses, such as compensation and benefits, occupancy and
equipment expense, deposit insurance premiums and miscellaneous
other expenses.
Globe Bancorp, Inc. is the holding company for the Bank.
Substantially all of the Company's assets are currently held in,
and its operations are conducted through, its sole subsidiary,
the Bank. Historically, the Company's business has consisted
primarily of originating single-family real estate loans secured
by property in its market area. The Company's loans are
primarily funded by certificates of deposit, which typically have
higher rates than transaction accounts. Typically, single-family
loans involve a lower degree of risk and carry a lower yield than
commercial real estate, construction and consumer loans. The
combination of these factors has resulted in historically lower
interest rate spreads and returns on equity. Although the
Company may attempt to expand its loan products by emphasizing
certain consumer lending, Globe Bancorp, Inc. presently
anticipates that its business will continue to primarily consist
of originating single-family loans funded primarily by deposits.
Our operations and profitability are subject to changes in
interest rates, applicable statutes and regulations and general
economic conditions, as well as other factors beyond our control.
9
GLOBE BANCORP, INC. AND SUBSIDIARY
Changes in Financial Condition
Total assets decreased by $641,000 or 2.01% from December
31, 2003 to March 31, 2004. The decrease was primarily due to
decreases of $1,074,000 or 34.25% in securities available for
sale, $87,000 or 6.06% in securities held to maturity and
$101,000 or 0.40% in net loans receivable partially offset by an
increase of $626,000 or 37.92%% in cash and cash equivalents.
The decrease in securities available for sale was due to the
securities being repaid or called during the period.
The Bank did not have any classified assets on March 31,
2004 or December 31, 2003.
Deposits decreased by $622,000 or 2.77% from December 31,
2003 to March 31, 2004. The decrease was made up entirely by
deceases in interest-bearing deposits.
Federal Home Loan Bank ("FHLB") advances decreased $98,000
or 2.61% from December 31, 2003 to March 31, 2004. The decrease
was due to normal loan amortization during the quarter.
Total stockholders' equity increased by $31,000 or 0.56% in
the first three months of 2004. Equity was increased by net
income of $27,000 and by $5,000 in accumulated other
comprehensive income during the period. Stockholders' equity at
March 31, 2004 totaled $5,582,000 or 17.83% of total assets
compared to $5,550,000 or 17.38% of assets at December 31, 2003.
Liquidity and Capital Resources
Federal regulations require that a savings institution
maintain sufficient liquidity to ensure the safety and soundness
of its operations. At March 31, 2004, the Bank had $4,337,000, or
13.85% of total assets, in cash, cash equivalents and securities
available for sale. The Bank believes that it maintains
sufficient liquidity to operate in a safe and sound manner.
At March 31, 2004, the Bank had commitments under unused
lines of credit and loans in process of $511,000. As of March
31, 2004, the total amount of certificates of deposit and Federal
Home Loan Bank advances that were scheduled to mature in the
following twelve months were $8,873,000 and $401,000,
respectively. The Bank believes that it has adequate resources to
fund all of its commitments and that it can retain maturing
deposits. If the Bank requires funds beyond its internal funding
capabilities, advances from the Federal Home Loan Bank of Dallas
are available as an additional source of funds.
The Bank is required to maintain regulatory capital
sufficient to meet tangible, core and risk-based capital ratios
of at least 1.5%, 4.0% and 8.0%, respectively. At March 31,
2004, the Bank exceeded each of its capital requirements with
ratios of 16.05%, 16.05% and 36.23%, respectively.
Results of Operations
Net income decreased by $17,000 or 39.25% in the quarter
ended March 31, 2004 compared to the respective period in 2003.
The decrease in net income for the period was primarily due to an
increase in net noninterest expense partially offset by an
increase in net interest income and a decrease in income tax
expense.
10
GLOBE BANCORP, INC. AND SUBSIDIARY
Interest income decreased $65,000 or 13.85% for the quarter
ended March 31, 2004 over the comparable 2003 period. This was
due to decreases in income from securities and other interest-
earning assets and income from loans receivable. The average
balance of loans receivable increased to $24,821,000 for the
quarter ended March 31, 2004 compared to $23,234,000 for the
quarter ended March 31, 2003. This increase of 6.83% in the
average balance of loans receivable was attributable to the
origination of loans, offset by repayments. The average yield
decreased to 5.82% for the quarter ended March 31, 2004 compared
to 6.78% for the quarter ended March 31, 2003 reflecting the
declining interest rate environment. The decrease in interest
income on investment securities of $28,000 or 42.53% for the
quarter ended March 31, 2004 was due to a decrease in both the
yield on such assets and the average balance of such assets.
The average balance of investment securities decreased to
$4,100,000 for the quarter ended March 31, 2004 compared to
$6,846,000 for the quarter ended March 31, 2003. The decrease of
40.11% in investment securities was attributable to the average
balance of and repayments on investment securities. The average
yield decreased to 3.71% for the quarter ended March 31, 2004
compared to 3.80% for the quarter ended March 31, 2003 reflecting
the declining interest rate environment. The decrease in
interest income on other interest-earning assets of $4,000 or
43.78% for the quarter ended March 31, 2004 compared to the same
period in 2003 was due to a decrease in short-term interest rates
that caused the average yield on other interest-earning assets to
decrease from 1.26% for the three month period ended March 31,
2003 to .92% for the quarter ended March 31, 2004. The average
balance of such assets decreased from $3,166,000 for the quarter
ended March 31, 2003 to $2,179,000 for the quarter ended March
31, 2004.
Interest expense decreased $67,000 or 29.04% in the three
months ended March 31, 2004 compared to the comparable 2003
period. This decrease was due to decreases in interest expense
on deposits and FHLB advances. The decrease in interest expense
on deposits of $60,000 or 32.70% for the quarter ended March 31,
2004 was due to a decrease in the average rate paid on deposits
and by a decrease in the average balance of such deposits. The
average rate paid on deposits decreased to 2.23% for the quarter
ended March 31, 2004 from 3.06% for the quarter ended March 31,
2003. Such decrease reflects the declining interest rate
environment. The average balance of deposits decreased to
$22,088,000 for the quarter ended March 31, 2004 compared to
$23,912,000 for the quarter ended March 31, 2003 due to the
withdrawal of time deposits as a result of declining interest
rates. Interest expense on FHLB advances decreased $7,000 or
15.15% for the quarter ended March 31, 2004 compared to the same
period in 2003. The decrease for the 2004 quarter was due to a
decrease in the average balance of such liabilities to $3,688,000
for the quarter ended March 31, 2004 from $4,061,000 for the
quarter ended March 31, 2003. This decrease in the average
balance was due to regular amortization. A decline in short-term
interest rates caused the average rate paid on FHLB advances to
decrease from 4.73% for the quarter ended March 31, 2003 to 4.45%
for the quarter ended March 31, 2004.
Net interest income increased $2,000 or .96% in
the three months ended March 31, 2004 over the comparable 2003
period. This was primarily due to an increase in the interest
rate spread and an increase in the ratio of average interest-
earning assets to average interest-bearing liabilities. The
interest rate spread increased to 2.65% for the quarter ended
March 31, 2004 from 2.34% for the quarter ended March 31, 2003.
The ratio of average interest-earning assets to average interest-
bearing liabilities increased to 120.65% for the three months
ended March 31, 2004 from 118.85% for the three months ended
March 31, 2003. The net interest margin was 3.09% for the
three months ended March 31, 2004 compared to 2.86% for the three
months ended March 31, 2003.
There was no provision for loan losses for either the
three months ended March 31, 2004 or the same period in 2003. At
March 31, 2004 and March 31, 2003 the Bank did not have any non-
accruing loans. The allowance for loan losses amounted to
$100,000 at March 31, 2004, representing 0.40% of the total loans
outstanding. The allowance for loan losses did not change for the
quarter ended March 31, 2004. Although, the Bank believes its
allowance for loan losses was sufficient as of March 31, 2004, to
cover interest losses in the loan portfolio, future additions to
the allowance may be necessary due to changes in economic
conditions and other factors.
11
GLOBE BANCORP, INC. AND SUBSIDIARY
Non-interest income decreased $1,000 or 56.06% for the three
months ended March 31, 2004 compared to the respective period in
2003. The decrease for the three months ended March 31, 2004 was
attributable to decreases in the gain on trading account
securities and service charges.
Non-interest expenses increased $25,000 or 14.20% in the
three months ended March 31, 2004 compared to the respective
period in 2003. The increase in non-interest expenses was
primarily due to an increase of $3,000 or 3.61% in salaries and
employee benefits, $3,000 or 13.71% in occupancy expense, $9,000
or 55.54% in professional fees, $1,000 or 22.93% in general
insurance, $1,000 or 29.15% in SAIF deposit insurance and exam
fees, $2,000 or 10.14% in taxes and assessments and $5,000 or
621% in other expense. The increases were partially offset by
decreases of $1,000 or 19.08% in office expense. The increase in
professional fees and other expenses was due to the additional
reporting requirements of a public company both recurring and
resulting from the resignation of the Bank's president and CEO on
March 19, 2004.
Income tax expense decreased in the three months ended March
31, 2004 due to a decrease in income before income taxes,
compared to the same period in 2003. The effective tax rate for
the three months ended March 31, 2004 and 2003 was 37.5% and
33.6%, respectively.
Impact of Inflation and Changing Prices
The financial statements and related financial data
presented herein regarding the Company have been prepared in
accordance with U.S. generally accepted accounting principles,
which generally require the measurement of financial position and
operating results in terms of historical dollars, without
considering changes in relative purchasing power over time due to
inflation. Unlike most industrial companies, virtually all of the
Company's assets and liabilities are monetary in nature. As a
result, interest rates generally have a more significant impact
on the Company's performance than does the effect of inflation.
Interest rates do not necessarily move in the same direction or
in the same magnitude as the prices of goods and services, since
such prices are affected by inflation to a larger extent than
interest rates.
12
GLOBE BANCORP, INC. AND SUBSIDIARY
Item 3 - Controls and Procedures
Our management evaluated, with the participation of our
Chief Executive Officer and Chief Financial Officer, the
effectiveness of our disclosure controls and procedures (as
defined in Rules 13a - 15 (e) under the Securities Exchange Act
of 1934) as of March 31, 2004 Based on such evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that
our disclosure controls and procedures are designed to ensure
that information required to be disclosed by us is recorded,
processed, summarized and reported within the time periods
specified in the SEC's rules and regulations and are operating in
an effective manner.
No Change in our internal control over financial reporting
(as defined in Rules 13a - 15 (f) and 15 (d) - 15 (f) under the
Securities Exchange Act of 1934) occurred during the first three
months of fiscal 2004 that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting.
Critical Accounting Policies
The Company's consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the
United States of America and follow general practices within the
industry in which it operates. Various elements of our
accounting policies, by their nature, are inherently subject to
estimation techniques, valuation assumptions and other subjective
assessments. In particular, the methodology for the
determination of our allowance for loan losses, due to the
judgments, estimates and assumptions inherent in that policy, is
critical to preparation of our financial consolidated statements.
The allowance for loan losses represents management's estimate of
probable credit losses inherent in the loan portfolio.
Determining the amount of the allowance for loan losses is
considered a critical accounting estimate because it requires
significant judgment and the use of subjective measurements
including management's assessment of the internal risk
classification of loans, changes in the nature of the loan
portfolio and the impact of current local, regional and national
economic factors on the quality of the loan portfolio. Change in
these estimates and assumptions are reasonably possible and may
have a material impact on the Company's consolidated financial
statements, results of operations or liquidity.
13
GLOBE BANCORP, INC.
Form 10-QSB
Quarter Ended March 31, 2004
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities and Small Business Issuer Purchases of Equity
Securities:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders:
There are no matters required to be reported under this item.
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
(a) the following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
31.1 Section 302 Certification of the Chief Executive Officer
31.2 Section 302 Certification of the Chief Financial Officer
32.1 Section 906 Certification of Chief Executive Officer
32.2 Section 906 Certification of Chief Financial Officer
There are no other matters required to be reported under this item.
(b) Reports on Form 8-K:
On February 12, 2004 a Form 8-K was filed by the Registrant
pertaining to a press release announcing the Company's
earnings for the fourth quarter and year ended December 31,
2003.
On March 19, 2004 a Form 8-K was filed by the Registrant pertaining
to a press release announcing the resignation of Thomas J. Exnicios
as President, CEO and as a member of the Board of Directors.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GLOBE BANCORP, INC.
Registrant
Date: May 11, 2004 By:/s/ Joseph McCarthy, III
________________________
Joseph McCarthy, III
Chief Accounting Officer
14