Note 4: Loans and Allowance for Loan Losses

Categories of loans at June 30, 2011 and December 31, 2010 include:

	June 30,			December 31,
	2011			2010
Real estate - residential mortgage:
One to four family units	$	102,150,104		$	103,052,035
Multi-family		48,884,126			44,138,034
Real estate - construction		53,960,942			63,308,397
Real estate - commercial		193,703,722			195,889,801
Commercial loans		89,213,299			85,427,589
Consumer and other loans		23,823,038			23,425,843
Total loans		511,735,231			515,241,699
Less:
Allowance for loan losses		(13,947,899	)		(13,082,703	)
Deferred loan fees/costs, net		(242,243	)		(178,611	)
Net loans	$	497,545,089		$	501,980,385

Classes of loans by aging at June 30, 2011 and December 31, 2010 were as follows:

As of June 30, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	96	$	221	$	2,527	$	2,844	$	99,306	$	102,150	$	-
Multi-family		-		-		-		-		48,884		48,884		-
Real estate - construction		191		762		-		953		53,008		53,961		-
Real estate - commercial		378		-		2,812		3,190		190,514		193,704		-
Commercial loans		-		413		166		579		88,634		89,213		-
Consumer and other loans		70		458		51		579		23,244		23,823		-
Total	$	735	$	1,854	$	5,556	$	8,145	$	503,590	$	511,735	$	-

As of December 31, 2010
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	1,158	$	562	$	1,591	$	3,311	$	99,741	$	103,052	$	-
Multi-family		-		-		-		-		44,138		44,138		-
Real estate - construction		1,969		89		311		2,369		60,939		63,308		-
Real estate - commercial		-		234		-		234		195,656		195,890		-
Commercial loans		2,571		-		2,021		4,592		80,836		85,428		-
Consumer and other loans		100		25		29		154		23,272		23,426		-
Total	$	5,798	$	910	$	3,952	$	10,660	$	504,582	$	515,242	$	-

Nonaccruing loans are summarized as follows:

	June 30,		December 31,
	2011		2010
Real estate - residential mortgage:
One to four family units	$	4,908,201	$	3,119,760
Multi-family		-		-
Real estate - construction		11,360,907		8,934,666
Real estate - commercial		7,517,708		2,980,117
Commercial loans		3,121,510		7,743,116
Consumer and other loans		825,981		234,475
Total	$	27,734,307	$	23,012,134

The following tables present the activity in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of and for the three months and six months ended June 30, 2011 and the year ended December 31, 2010:

Three months ended June 30, 2011	Construction			Commercial Real Estate		One to four family		Multi-family		Commercial			Consumer and Other			Unallocated			Total
Allowance for loan losses:	(In Thousands)
Balance, beginning of period	$	5,291		$	1,926	$	1,966	$	521	$	2,011		$	409		$	785		$	12,909
Provision charged to expense		(250	)		1,113		188		1		224			68			(344	)	$	1,000
Losses charged off		(6	)		-		-		-		(8	)		(24	)		-		$	(38	)
Recoveries		1			14		2		-		43			17			-		$	77
Balance, end of period	$	5,036		$	3,053	$	2,156	$	522	$	2,270		$	470		$	441		$	13,948

Six months ended June 30, 2011	Construction			Commercial Real Estate			One to four family			Multi-family			Commercial			Consumer and Other			Unallocated		Total
Allowance for loan losses:	(In Thousands)
Balance, beginning of period	$	4,547		$	3,125		$	1,713		$	528		$	2,483		$	687		$	-	$	13,083
Provision charged to expense		554			1,386			706			(6	)		236			(1,417	)		441	$	1,900
Losses charged off		(76	)		(1,475	)		(265	)		-			(526	)		(64	)		-	$	(2,406	)
Recoveries		11			17			2			-			77			1,264			-	$	1,371
Balance, end of period	$	5,036		$	3,053		$	2,156		$	522		$	2,270		$	470		$	441	$	13,948

As of June 30, 2011

Ending balance: individually evaluated for impairment	$	3,469	$	1,297	$	713	$	-	$	787	$	138	$	-	$	6,404
Ending balance: collectively evaluated for impairment	$	1,567	$	1,756	$	1,443	$	522	$	1,483	$	332	$	441	$	7,544
Loans:
Ending balance: individually evaluated for impairment	$	11,758	$	9,145	$	5,407	$	-	$	3,296	$	1,189	$	-	$	30,795
Ending balance: collectively evaluated for impairment	$	42,203	$	184,559	$	96,743	$	48,884	$	85,917	$	22,634	$	-	$	480,940

December 31, 2010	Construction			Commercial Real Estate			One to four family			Multi-family		Commercial			Consumer and Other			Unallocated		Total
Allowance for loan losses:	(In Thousands)
Balance, beginning of year	$	2,810		$	2,923		$	1,646		$	393	$	3,554		$	2,750		$	-	$	14,076
Provision charged to expense		5,620			563			948			135		716			(2,782	)		-	$	5,200
Losses charged off		(3,893	)		(373	)		(906	)		-		(1,847	)		(366	)		-	$	(7,385	)
Recoveries		10			12			25			-		60			1,085			-	$	1,192
Balance, end of year	$	4,547		$	3,125		$	1,713		$	528	$	2,483		$	687		$	-	$	13,083
Ending balance: individually evaluated for impairment	$	3,134		$	1,384		$	149		$	-	$	1,052		$	307		$	-	$	6,026
Ending balance: collectively evaluated for impairment	$	1,413		$	1,741		$	1,564		$	528	$	1,431		$	380		$	-	$	7,057
Loans:
Ending balance: individually evaluated for impairment	$	9,281		$	5,150		$	3,363		$	-	$	8,409		$	1,008		$	-	$	27,211
Ending balance: collectively evaluated for impairment	$	54,027		$	190,740		$	99,689		$	44,138	$	77,019		$	22,418		$	-	$	488,031

Activity in the allowance for loan losses was as follows for six months ended June 30, 2010:

	June 30,
	2010

Balance, beginning of period	$	14,076,123
Provision charged to expense		1,900,000
Losses charged off, net of recoveries		(4,039,283	)
Balance, end of period	$	11,936,840

The following tables present impaired loans as of and for the three months and six months ended June 30, 2011 and the year ended December 31, 2010:

June 30, 2011							Quarter To Date				Year To Date
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	5,407	$	5,831	$	713	$	5,128	$	25	$	4,463	$	59
Multi-family		-		-		-		-		-		-		-
Real estate - construction		11,758		11,991		3,469		11,951		1		11,577		2
Real estate - commercial		9,145		10,484		1,297		7,699		28		6,302		39
Commercial loans		3,296		3,744		787		3,794		34		5,601		69
Consumer and other loans		1,189		1,190		138		1,178		18		1,134		36
Total	$	30,795	$	33,240	$	6,404	$	29,750	$	106	$	29,077	$	205

December 31, 2010	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	3,363	$	3,380	$	149	$	4,521	$	185
Multi-family		-		-		-		1,007		-
Real estate - construction		9,281		10,683		3,134		7,221		9
Real estate - commercial		5,150		5,150		1,384		3,671		30
Commercial loans		8,409		10,364		1,052		8,383		41
Consumer and other loans		1,008		1,011		307		4,193		93
Total	$	27,211	$	30,588	$	6,026	$	28,996	$	358

The following tables provide information about the credit quality of the loan portfolio using the Bank's internal rating system as of June 30, 2011 and December 31, 2010:

June 30, 2011	Construction		Commercial Real Estate		One to four family		Multi-family		Commercial		Consumer and Other		Total
	(In Thousands)
Rating:
Pass	$	34,581	$	165,493	$	92,469	$	48,380	$	81,303	$	21,794	$	444,020
Special Mention		5,167		6,203		2,994		504		1,840		203		16,911
Substandard		14,213		22,008		6,687		-		6,070		1,826		50,804
Total	$	53,961	$	193,704	$	102,150	$	48,884	$	89,213	$	23,823	$	511,735

December 31, 2010	Construction		Commercial Real Estate		One to four family		Multi-family		Commercial		Consumer and Other		Total
	(In Thousands)
Rating:
Pass	$	45,307	$	173,210	$	93,816	$	44,138	$	73,291	$	21,580	$	451,342
Special Mention		4,621		7,604		2,962		-		1,028		4		16,219
Substandard		13,380		15,076		6,274		-		11,109		1,842		47,681
Total	$	63,308	$	195,890	$	103,052	$	44,138	$	85,428	$	23,426	$	515,242