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Profile: Georgetown Bancorp Inc (GTWN.OQ)

GTWN.OQ on NASDAQ Stock Exchange Capital Market

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Georgetown Bancorp, Inc., incorporated on January 27, 2004, is the holding company for Georgetown Bank. The Bank is a federally chartered savings bank headquartered in Georgetown, Massachusetts. The Company's principal business consists of attracting deposits from businesses and the general public primarily in Essex County, Massachusetts and investing those deposits, together with borrowings and funds generated from operations, in commercial and multi-family real estate loans, one- to four-family investment property loans and commercial business loans, one- to four-family residential real estate loans, home equity loans and lines of credit and consumer loans, as well as investing in investment securities. The Company primarily originates loans in eastern Massachusetts (which includes the Boston metropolitan area) and southern New Hampshire. The Company primarily serves communities located in Essex County, Massachusetts, eastern Massachusetts (which includes the Boston metropolitan area) and southern New Hampshire for deposit and lending products.

Lending Activities

The Bank's lending activities consist of the origination of commercial and multi-family real estate loans, one- to four-family investment property loans and commercial business loans. The Bank's commercial loan portfolio, including construction loans, was $132.2 million, or 56.7% of its total loan portfolio as of December 31, 2014. The Bank also originates consumer loans that are not secured by real estate, including automobile loans, deposit account loans and unsecured personal loans. As of December 31, 2014, $84.2 million, or 36.1% of its loan portfolio consisted of one-to four-family residential mortgage loans. The Bank also offers adjustable-rate mortgage loans for one- to four-family properties, primarily with an interest rate based on the one-year LIBOR Index, which adjusts annually from the outset of the loan or which adjusts annually after a three-or five-year initial fixed-rate period. The Bank originated $1.4 million of adjustable-rate, one- to four-family residential loans during the year ended December 31, 2014 and $29.5 million of fixed-rate one- to four-family residential loans during the same period. As of December 31, 2014, $21.7 million, or 25.8% of its one- to four-family residential loans, had adjustable rates of interest. The Bank also offers home equity loans and home equity lines of credit, both of which are secured by one- to four-family residences. As of December 31, 2014, home equity loans and equity lines of credit totaled $16.5 million, or 7.1% of total loans. Additionally, as of December 31, 2014, the unadvanced amounts of home equity lines of credit totaled $8.8 million.

The Bank originates commercial real estate loans, including commercial lines of credit, generally in its primary lending market area, that are secured by properties used for business purposes, such as small office buildings, retail facilities and owner-occupied properties. At December 31, 2014, commercial real estate loans totaled $62.2 million, which amounted to 26.7% of total loans. The Bank's real estate underwriting policies provide that such loans may be made in amounts of up to 80% of the appraised value of the property, provided such loans comply with its loans-to-one borrower limit for these types of loans. The Bank's loans-to-one borrower limit is 15% of Georgetown Bank's unimpaired capital, which limit was $4.4 million, at December 31, 2014, but it generally targets commercial real estate loans with balances of up to $3.0 million. At December 31, 2014, the Bank's average commercial real estate loan had a balance of $724,000. The Bank's commercial real estate loans may be made with terms of up to 10 years with an amortization of 25 years, are offered with interest rates that are fixed or adjust periodically, and are generally indexed to Federal Home Loan Bank of Boston borrowing rates.

The Bank originates commercial real estate loans on one- to four-family investment properties. As of December 31, 2014, one- to four-family investment property loans totaled $8.3 million, which amounted to 3.6% of total loans. The Bank's real estate underwriting policies provide that such loans may be made in amounts of up to 80% of the appraised value of the property, provided such loans comply with its loans-to-one borrower limit for these types of loans. The Bank generally targets one- to four-family investment property loans with balances up to $750,000. As of December 31, 2014, the Bank's average one- to four-family investment property loan had a balance of $177,500. The Bank's loans for one- to four-family investment properties may be made with terms of up to 10 years with an amortization period of up to 25 years, are offered with interest rates that are fixed or adjust periodically, and are generally indexed to Federal Home Loan Bank of Boston advance rates.

The Bank originates commercial real estate loans on multi-family properties. As of December 31, 2014, multi-family real estate loans totaled $15.0 million, which amounted to 6.4% of total loans. As of December 31, 2014, the Bank's average multi-family real estate loan had a balance of $790,500. The Bank's loans for multi-family real estate properties may be made with terms of up to 10 years with an amortization of up to 25 years and are offered with interest rates that are fixed or adjust periodically and are generally indexed to Federal Home Loan Bank of Boston advance rates. As of December 31, 2014, the Bank had $17.8 million in commercial business loans, which amounted to 7.7% of total loans. The Bank makes commercial business loans in its primary lending market area to a range of professionals, sole proprietorships and small businesses. The Bank originates construction loans for the development of one- to four and multi-family residential properties and non-residential properties located in its primary lending market area to experienced local developers and to individuals for the construction of their personal residences. As of December 31, 2014, one- to four-family residential construction loans amounted to $13.1 million, or 5.6% of total loans. The Bank originates one- to four and multi-family residential construction loans with a maximum loan-to-value ratio of 90% for single unit owner occupied construction projects, provided that the borrower obtains private mortgage insurance on the loan if the loan balance exceeds 80% of the appraised value or sales price, whichever is less, of the secured property.

The Bank offers consumer loans to customers residing in its primary lending market area with acceptable credit ratings. The Bank's consumer loans generally consist of loans on new and used automobiles, loans secured by deposit accounts and unsecured personal loans. Consumer loans totaled $289,000 or 0.1% of its total loan portfolio as of December 31, 2014. The Bank originates both adjustable-rate and fixed-rate loans. As of December 31, 2014, the Bank had $5.3 million in loan participation interests in which it was the lead bank and $2.5 million in loan participation interests in which it was the participating bank.

Investment Activities

The Bank invests in various types of assets, including government-sponsored enterprise obligations, securities of various federal agencies, residential mortgage-backed securities, certain certificates of deposit of insured financial institutions, overnight and short-term loans to other banks, corporate debt instruments and debt instruments of municipalities. The Bank's investment portfolio, as of December 31, 2014, at amortized cost, included $2.5 million in state and municipal securities. The Bank also invests in residential mortgage-backed securities, which consist of United States Government agencies and government-sponsored enterprise obligations. As of December 31, 2014, the Bank owned $2.9 million in Federal Home Loan Bank of Boston stock.

Sources of Funds

The Bank's sources of funds primarily include deposits, which have been in use for lending and investment activities. The Bank also use borrowings, primarily Federal Home Loan Bank of Boston advances and to a lesser extent brokered deposits, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, its funds are derived from scheduled loan payments, investment maturities, loan prepayments, loan sales, retained earnings and income on earning assets. The Bank's deposits are generated primarily from residents within its primary deposit market area, as 72.1% of total deposits, as of December 31, 2014, were from Essex County. The Bank offers a selection of deposit accounts, including demand accounts, negotiable order of withdrawal (NOW) accounts, money market accounts, savings accounts and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. As of December 31, 2014, brokered deposits totaled $1.2 million and certificate accounts obtained through a listing service totaled $27.8 million. As of December 31, 2014, $59.0 million, or 32.4% of its deposit accounts were certificates of deposit, of which $25.0 million had maturities of one year or less. The Bank's borrowings consist primarily of advances from the Federal Home Loan Bank of Boston. As of December 31, 2014, the Bank had Federal Home Loan Bank of Boston advances in the amount of $54.6 million, which represented 22.7% of total liabilities and had a weighted average maturity of 1.22 years.

Subsidiary Activities

The Bank operates through its wholly owned subsidiary, Georgetown Securities Corporation. Georgetown Securities Corporation is engaged in the buying, selling and holding of securities.

Company Address

Georgetown Bancorp Inc

2 E Main St
GEORGETOWN   MA   01833-2006
P: +1978.3528600
F: +1302.6365454

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