These excerpts taken from the ROME 10-K filed Mar 6, 2009.
Income Tax Expense. Income tax expense was $1.6 million for 2007, an increase of $270,000 from 2006 income tax expense of $1.3 million. The increase is directly attributable to higher pre-tax earnings.
Liquidity and Capital Resources
Liquidity describes our ability to meet the financial obligations that arise during the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Rome Bancorps primary sources of funds consist of deposits, scheduled amortization and prepayments of loans and mortgage-backed securities, maturities and sales of investments, interest bearing deposits at other financial institutions and funds provided from operations. Rome Savings also has a written agreement with the Federal Home Loan Bank of New York that allows it to borrow up to $58.9
million on a line of credit. At December 31, 2008, Rome Savings had outstanding borrowings of $23.7 million against this line of credit, in addition to bullet and amortizing notes totaling $42.6 million.
Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities, and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions, and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds.
Rome Bancorps primary investing activities include the origination of loans and to a lesser extent the purchase of investment securities. In 2008, Rome Bancorp originated approximately $66.4 million in loans compared to approximately $61.7 million in 2007. Purchases of investment securities were $3.6 million in 2008 and $1.0 million in 2007. At December 31, 2008, Rome Bancorp had loan commitments to borrowers of approximately $3.3 million, and customer available letters and lines of credit of approximately $18.7 million.
Total deposits were $205.9 million at December 31, 2008, an increase of 1.4% from $203.0 million at December 31, 2007. Time deposit accounts scheduled to mature within one year were $54.4 million at December 31, 2008. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of these time deposits will remain with Rome Bancorp. We are committed to maintaining a strong liquidity position therefore, Rome Bancorp monitors its liquidity position on a daily basis. Rome Bancorp anticipates that it will have sufficient funds to meet its current funding commitments. The marginal cost of new funding however, whether from deposits or from borrowings from the Federal Home Loan Bank, will be carefully considered as Rome Bancorp monitors its liquidity needs. Therefore, in order to minimize its cost of funds, Rome Bancorp may consider additional borrowings from the Federal Home Loan Bank in the future.
Rome Bancorp repurchased 731,750 outstanding shares of its common stock at a
total cost of $8.2 million. On January 28, 2009 the Companys Board of
Directors authorized the repurchase of 100,000 shares of its common stock. On
February 25, 2009, the Board further authorized the repurchase of an additional
five percent, or approximately 346,000 shares, of the Companys common stock.
At December 31, 2008 and 2007, Rome Savings exceeded each of the applicable regulatory capital requirements. Rome Savings leverage (Tier 1) capital at December 31, 2008 and 2007 was $58.2 million and $64.3 million or 17.15% and 20.24% of adjusted assets, respectively. In order to be classified as well-capitalized by the OTS and the FDIC at December 31, 2008 and 2007, Rome Savings was required to have leverage (Tier 1) capital of $17.0 million and $15.9 million, respectively, or 5.0% of adjusted assets. To be classified as a well-capitalized bank by the OTS and FDIC, Rome Savings must also have a risk-based total capital ratio of 10.0%. At December 31, 2008 and 2007, Rome Savings had a risk-based total capital ratio of 24.45% and 27.73%, respectively.
Rome Bancorp does not anticipate any material capital expenditures, nor does it have any balloon or other payments due on any long-term obligations or any off-balance sheet items other than debt as described in Note 7 of Notes to the Consolidated Financial Statements and the commitments and unused lines and letters of credit noted above.
Rome Bancorp is contractually obligated to make payments as follows:
Income Tax Expense. Income tax expense was
Liquidity and Capital Resources
million on a