Note 4 – Loans Receivable Held-for-Sale

Loans receivable held-for-sale at December 31, 2012 and December 31, 2011 were as follows:


	December 31,
	2012			2011
	(In thousands)
One-to-four units	$	7,916		$	0
Five or more units		5,795			6,395
Commercial real estate		1,358			1,712
Church		4,300			5,550
Valuation allowance for unrealized losses		(318	)		(674	)

Loans receivable held for sale, net	$	19,051		$	12,983

Non-performing loans receivable held for sale (1)	$	10,168		$	5,612
Valuation allowance		0			(382	)

Non-performing loans receivable held for sale, net	$	10,168		$	5,230

Performing loans receivable held for sale	$	9,201		$	8,045
Valuation allowance		(318	)		(292	)

Performing loans receivable held for sale, net	$	8,883		$	7,753

(1)

Net of charge-offs of $2.5 million and $953 thousand at December 31, 2012 and December 31, 2011.

When management decides to sell certain loans held in portfolio, we reclassify them to held-for-sale at the lower of cost or fair value, less estimated selling costs. During the year ended December 31, 2012, 30 non-performing loans secured by one-to-four units, two non-performing loans secured by commercial real estate and two non-performing loans secured by churches, were transferred to held-for-sale. The loans had a carrying amount of $9.7 million, net of charge-offs of $3.6 million.

Certain delinquent and non-performing loans, primarily commercial real estate and church loans, totaling $2.9 million were sold during the year ended December 31, 2012. Net loss on sales of non-performing loans totaled $253 thousand for the year ended December 31, 2012. In February 2013, we sold all of the one-to-four units residential loans that were included in our loans held for sale at December 31, 2012.

During the year ended December 31, 2012, two loans receivable held-for-sale were transferred to REO. The loans were secured by commercial real estate properties, which had a total carrying amount of $334 thousand, net of charge-offs of $327 thousand. Two loans receivable held-for-sale secured by church buildings, which had a total carrying amount of $1.5 million, net of a charge-offs of $1.7 million, were transferred to REO during the year ended December 31, 2011.

Net lower of cost or market recoveries on non-performing loans receivable held-for-sale totaled $109 thousand for the year ended December 31, 2012, compared to $1.6 million of net lower of cost or market write-downs for the same period in 2011. Additionally, during 2012 and 2011, we increased our valuation allowance by $25 thousand and $48 thousand on loans held for sale that are still considered performing loans.