Loans Receivable

3 Months Ended

Mar. 31, 2012

Loans Receivable [Abstract]

Loans Receivable

NOTE (6) – Loans Receivable

Loans at March 31, 2012 and December 31, 2011 were as follows:

	March 31, 2012			December 31, 2011
	(In thousands)
Real estate:
One to four units	$	76,168		$	76,682
Five or more units		103,617			108,161
Commercial real estate		49,445			54,259
Church		87,413			89,099
Construction		3,746			3,790
Commercial:
Sports		1,990			1,996
Other		4,638			4,900
Consumer:
Loan on savings		13			821
Other		107			108
Total gross loans receivable		327,137			339,816
Less:
Loans in process		117			202
Net deferred loan fees (costs)		(328	)		(473	)
Unamortized discounts		18			18
Allowance for loan losses		17,752			17,299
Loans receivable, net	$	309,578		$	322,270

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31, 2012
	One to four units			Five or more  units		Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,855		$	2,972	$	3,108		$	5,742		$	249		$	247		$	126		$	17,299
Provision for loan losses		336			41		(206	)		979			(16	)		(133	)		(42	)		959
Recoveries		—			—		15			4			—			117			2			138
Loans charged off		(355	)		—		(58	)		(231	)		—			—			—			(644	)
Ending balance	$	4,836		$	3,013	$	2,859		$	6,494		$	233		$	231		$	86		$	17,752

	For the three months ended March 31, 2011
	One to four units			Five or more units		Commercial			Church			Construction			Commercial		Consumer			Total
	(In thousands)
Beginning balance	$	4,579		$	2,469	$	3,493		$	6,909		$	74		$	1,300	$	1,634		$	20,458
Provision for loan losses		(564	)		153		646			523			(20	)		298		204			1,240
Recoveries		0			0		0			0			0			0		2			2
Loans charged off		(38	)		0		(609	)		(45	)		0			0		(17	)		(709	)
Ending balance	$	3,977		$	2,622	$	3,530		$	7,387		$	54		$	1,598	$	1,823		$	20,991

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2012 and December 31, 2011:

	March 31, 2012
	One to four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,564	$	157	$	250	$	1,781	$	91	$	—	$	70	$	3,913
Collectively evaluated for impairment		3,272		2,856		2,609		4,713		142		231		16		13,839
Total ending allowance balance	$	4,836	$	3,013	$	2,859	$	6,494	$	233	$	231	$	86	$	17,752
Loans:
Loans individually evaluated for impairment	$	14,035	$	3,814	$	7,839	$	32,901	$	296	$	—	$	70	$	58,955
Loans collectively evaluated for impairment		62,133		99,803		41,606		54,512		3,450		6,628		50		268,182
Total ending loans balance	$	76,168	$	103,617	$	49,445	$	87,413	$	3,746	$	6,628	$	120	$	327,137

	December 31, 2011
	One to four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,678	$	161	$	255	$	1,683	$	97	$	—	$	70	$	3,944
Collectively evaluated for impairment		3,177		2,811		2,853		4,059		152		247		56		13,355
Total ending allowance balance	$	4,855	$	2,972	$	3,108	$	5,742	$	249	$	247	$	126	$	17,299
Loans:
Loans individually evaluated for impairment	$	13,246	$	3,837	$	7,396	$	31,494	$	302	$	—	$	70	$	56,345
Loans collectively evaluated for impairment		63,436		104,324		46,863		57,605		3,488		6,896		859		283,471
Total ending loans balance	$	76,682	$	108,161	$	54,259	$	89,099	$	3,790	$	6,896	$	929	$	339,816

The following table presents information related to impaired loans by class of loans as of and for the three months ended March 31, 2012 and 2011:

	March 31, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
With no related allowance recorded:
One to four units	$	9,938	$	7,842	$	—	$	7,687	$	40
Five or more units		2,940		2,852		—		2,862		6
Commercial real estate		9,640		5,902		—		5,535		60
Church		26,154		21,979		—		21,479		128
Commercial:
Sports		4,000		—		—		—		—
Other		285		—		—		—		—
With an allowance recorded:
One to four units		6,302		6,194		1,564		5,790		84
Five or more units		962		962		157		964		16
Commercial real estate		1,936		1,936		250		1,941		24
Church		10,922		10,922		1,781		10,289		163
Construction		296		296		91		300		5
Commercial:
Other		70		70		70		70		1
Total	$	73,445	$	58,955	$	3,913	$	56,917	$	527

	March 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
With no related allowance recorded:
One to four units	$	6,920	$	5,758	$	—	$	5,762	$	15
Five or more units		205		205		—		194		—
Commercial real estate		7,734		7,320		—		7,620		20
Church		14,367		13,847		—		11,857		50
Construction		320		320		—		320		—
With an allowance recorded:
One to four units		6,808		3,641		475		3,603		50
Five or more units		1,673		1,673		69		1,674		—
Commercial real estate		5,193		4,998		812		4,538		32
Church		16,943		16,806		3,086		16,097		181
Commercial:
Sports		4,000		3,698		948		3,751		—
Other		288		288		288		218		—
Consumer:
Loan on savings		1,778		1,778		1,778		2,131		—
Total	$	63,229	$	60,332	$	7,456	$	57,765	$	348

The following table presents information related to impaired loans by class of loans as of and for year ended December 31, 2011:

	December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
With no related allowance recorded:
One to four units	$	6,904	$	4,636	$	—	$	5,329	$	79
Five or more units		2,946		2,871		—		2,405		89
Commercial real estate		9,105		5,449		—		9,724		386
Church		24,680		20,560		—		20,757		740
Commercial:
Sports		4,000		—		—		2,566		—
Other		285		—		—		243		10
Consumer:
Loan on savings		—		—		—		796		—
With an allowance recorded:
One to four units		8,610		8,610		1,678		5,507		407
Five or more units		966		966		161		794		64
Commercial real estate		1,947		1,947		255		1,963		97
Church		10,934		10,934		1,683		9,391		705
Construction		302		302		97		314		23
Commercial:
Other		70		70		70		54		6
Total	$	70,749	$	56,345	$	3,944	$	59,843	$	2,606

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs. Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans. Interest income that would have been recognized for the three months ended March 31, 2012 had loans performed in accordance with their original terms was $1.2 million.

The following table presents the recorded investment in non-accrual loans by class of loans as of March 31, 2012 and December 31, 2011:

	March 31, 2012		December 31, 2011
	(In thousands)
Loans receivable, held for sale:
Five or more units	$	2,473	$	2,496
Commercial real estate		333		338
Church		2,749		2,778
Loans receivable, net:
One to four-units		8,792		7,974
Five or more units		3,429		3,450
Commercial real estate		5,902		5,449
Church		23,388		21,891
Construction		296		302
Consumer:
Other		70		70
Total non-accrual loans	$	47,432	$	44,748

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2012 or December 31, 2011.

The following tables present the aging of the recorded investment in past due loans, including loans held for sale, as of March 31, 2012 and December 31, 2011 by class of loans:

	March 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Loans Not Past Due
	(In thousands)
Loans receivable, held for sale:
Five or more units	$	658	$	—	$	2,473	$	3,131	$	3,227
Commercial real estate		—		—		333		333		1,370
Church		—		—		2,749		2,749		2,765
Loans receivable, net:
One to four units		2,804		—		8,792		11,596		64,572
Five or more units		499		—		3,429		3,928		99,689
Commercial real estate		991		835		5,902		7,728		41,717
Church		936		383		23,388		24,707		62,706
Construction		—		—		296		296		3,450
Commercial:
Sports		—		—		—		—		1,990
Other		—		98		—		98		4,540
Consumer:
Loan on savings		—		—		—		—		13
Other		—		—		70		70		37
Total	$	5,888	$	1,316	$	47,432	$	54,636	$	286,076

	December 31, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Loans Not Past Due
	(In thousands)
Loans receivable, held for sale:
Five or more units	$	—	$	—	$	2,496	$	2,496	$	3,899
Commercial real estate		—		—		338		338		1,374
Church		—		—		2,778		2,778		2,772
Loans receivable, net:
One to four units		921		2,464		7,974		11,359		65,323
Five or more units		1,324		63		3,450		4,837		103,324
Commercial real estate		2,247		525		5,449		8,221		46,038
Church		2,647		1,440		21,891		25,978		63,121
Construction		—		264		302		566		3,224
Commercial:
Sports		—		—		—		—		1,996
Other		125		—		—		125		4,775
Consumer:
Loan on savings		—		—		—		—		821
Other		—		—		70		70		38
Total	$	7,264	$	4,756	$	44,748	$	56,768	$	296,705

Troubled Debt Restructurings

The Company has allocated $2.6 million of specific reserves for loans the terms of which have been modified in troubled debt restructurings and were performing as of March 31, 2012 and December 31, 2011. At March 31, 2012, loans classified as a TDR totaled $38.1 million, of which $20.5 million were included in non-accrual loans and $17.6 million were on accrual status. At December 31, 2011, loans classified as a TDR totaled $37.1 million, of which $19.4 million were included in non-accrual loans and $17.7 million were on accrual status. TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time, and for which the Bank anticipates full repayment of both principal and interest. TDRs that are on non-accrual can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments as modified. As of March 31, 2012 and December 31, 2011, the Company has no commitment to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

During the three months ended March 31, 2012, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.

Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from 2 years to 5 years. The modification involving an extension of the maturity date was for a 2 year period.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended March 31, 2012:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial real estate		1	$	229	$	229
Church		3		1,013		1,013
Total		4	$	1,242	$	1,242

The troubled debt restructurings described above increased the allowance for loan losses by $87 thousand during the three months ended March 31, 2012.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three months ended March 31, 2012:

	Number of Loans		Pre-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Church		1	$	100
Total		1	$	100

The terms of certain other loans were modified during the three months ended March 31, 2012 that did not meet the definition of a troubled debt restructuring. These loans have a total recorded investment as of March 31, 2012 of $3.2 million. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. For one-to-four family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance. Information about payment status is disclosed elsewhere. The Company analyzes all other loans individually by classifying the loans as to credit risk. This analysis is performed at least on a quarterly basis. The Company uses the following definitions for risk ratings:

• Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

• Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

• Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

• Loss. Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans as of March 31, 2012 and December 31, 2011 is as follows:

	March 31, 2012
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One to four units	$	62,183	$	3,025	$	10,784	$	176	$	—
Five or more units		90,876		5,710		6,882		149		—
Commercial real estate		31,290		6,305		11,778		72		—
Church		36,342		10,723		39,842		506		—
Construction		489		2,961		296		—		—
Commercial:
Sports		—		1,990		—		—		—
Other		2,303		2,237		98		—		—
Consumer:
Loan on savings		13		—		—		—		—
Other		37		—		70		—		—
Total	$	223,533	$	32,951	$	69,750	$	903	$	—

	December 31, 2011
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One to four units	$	63,483	$	3,044	$	9,846	$	309	$	—
Five or more units		95,621		7,450		4,939		151		—
Commercial real estate		36,098		6,721		11,364		76		—
Church		37,532		13,100		37,873		594		—
Construction		500		2,988		302		—		—
Commercial:
Sports		—		1,996		—		—		—
Other		2,363		2,369		168		—		—
Consumer:
Loan on savings		821		—		—		—		—
Other		108		—		—		—		—
Total	$	236,526	$	37,668	$	64,492	$	1,130	$	—