Restatement of Financial Statements

12 Months Ended

Dec. 31, 2011

Restatement of Financial Statements [Abstract]

Restatement of Financial Statements

Note 2 – Restatement of Financial Statements

Subsequent to the issuance of our 2011 consolidated financial statements and the filing of our Annual Report on Form 10-K on March 30, 2012, management became aware of certain errors in the preparation of the Company’s 2011 consolidated financial statements. The errors included failure in connection with preparation of our financial statements to obtain and take into account certain appraisals of the values of properties securing impaired loans that had been ordered and received by the Bank prior to the issuance date of the Company’s consolidated financial statements and failure to follow appropriate methods for calculating expected future payments on loans in connection with the discounted cash flow analysis for measuring impairment of loans deemed to be troubled debt restructurings. In addition, certain appraisals received after year-end 2011 indicated that impairment losses that had been determined using values based on broker provided opinions of value (“BPOs”) understated the losses inherent in those loans. As a result, the Company corrected these errors and restated its consolidated financial statements for the year ended December 31, 2011 in this Report. The cumulative effect of these corrections is an increase in net losses of $4.7 million. Following is a summary of the effects of these corrections on the Company’s consolidated balance sheet as of December 31, 2011 and the Company’s consolidated statement of operations for fiscal the year ended December 31, 2011:

	As Originally  Filed December 31, 2011			Adjustments			As Restated December 31, 2011
	(In thousands, except per share)
BALANCE SHEET
Loans receivable held for sale, net	$	13,857		$	(874	)	$	12,983
Loans receivable, net	$	326,323		$	(3,553	)	$	322,770
Real estate owned (REO)	$	7,010		$	(311	)	$	6,699
Stockholders’ Equity	$	23,013		$	(4,737	)	$	18,276
STATEMENT OF OPERATIONS
Provision for loan losses	$	8,600		$	3,553		$	12,153
Provision for losses on loans held for sale	$	738		$	874		$	1,612
Provision for losses on REO	$	2,343		$	311		$	2,654
Net loss	$	9,517		$	4,738		$	14,255
Comprehensive loss	$	9,209		$	4,738		$	13,947
Earnings (loss) per common share-basic	$	(6.10	)	$	(2.71	)	$	(8.81	)
Earnings (loss) per common share-diluted	$	(6.10	)	$	(2.71	)	$	(8.81	)

Some of the notes to the consolidated financial statements had been revised to correct the errors.