Note 4: Loans and Allowance for Loan Losses

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

	September 30, 2011			December 31, 2010
Real estate - residential mortgage:
One to four family units	$	99,108,679		$	103,052,035
Multi-family		41,065,548			44,138,034
Real estate - construction		54,269,064			63,308,397
Real estate - commercial		185,171,726			195,889,801
Commercial loans		95,637,142			85,427,589
Consumer and other loans		22,209,661			23,425,843
Total loans		497,461,820			515,241,699
Less:
Allowance for loan losses		(13,557,076	)		(13,082,703	)
Deferred loan fees/costs, net		(228,282	)		(178,611	)
Net loans	$	483,676,462		$	501,980,385

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

As of September 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	$	315	$	259	$	243	$	817	$	98,292	$	99,109	$	-
Multi-family		-		-		-		-		41,065		41,065		-
Real estate - construction		968		248		-		1,216		53,053		54,269		-
Real estate - commercial		-		1,193		357		1,550		183,622		185,172		-
Commercial loans		29		346		1,047		1,422		94,215		95,637		-
Consumer and other loans		24		19		3		46		22,164		22,210		-
Total	$	1,336	$	2,065	$	1,650	$	5,051	$	492,411	$	497,462	$	-

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:

	September 30, 2011		December 31, 2010
Real estate - residential mortgage:
One to four family units	$	2,146,332	$	3,119,760
Multi-family		-		-
Real estate - construction		11,221,778		8,934,666
Real estate - commercial		6,949,190		2,980,117
Commercial loans		3,061,587		7,743,116
Consumer and other loans		215,985		234,475
Total	$	23,594,872	$	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 nine months ended September 30, 2011 and the year ended December 31, 2010:

Three months ended September 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	$	5,036		$	3,053		$	2,156		$	522		$	2,270		$	470		$	441		$	13,948
Provision charged to expense		(146	)		949			(7	)		(141	)		354			(46	)		(63	)	$	900
Losses charged off		(7	)		(128	)		(637	)		-			(463	)		(131	)		-		$	(1,366	)
Recoveries		1			13			31			-			14			16			-		$	75
Balance, end of period	$	4,884		$	3,887		$	1,543		$	381		$	2,175		$	309		$	378		$	13,557

Nine months ended September 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		408			2,335			699			(147	)		590			(1,463	)		378	$	2,800
Losses charged off		(83	)		(1,603	)		(902	)		-			(989	)		(195	)		-	$	(3,772	)
Recoveries		12			30			33			-			91			1,280			-	$	1,446
Balance, end of period	$	4,884		$	3,887		$	1,543		$	381		$	2,175		$	309		$	378	$	13,557

As of September 30, 2011
Ending balance: individually evaluated for impairment	$	3,626	$	1,209	$	138	$	-	$	623	$	46	$	-	$	5,642
Ending balance: collectively evaluated for impairment	$	1,258	$	2,678	$	1,405	$	381	$	1,552	$	263	$	378	$	7,915
Loans:
Ending balance: individually evaluated for impairment	$	11,607	$	8,569	$	2,536	$	-	$	2,868	$	590	$	-	$	26,170
Ending balance: collectively evaluated for impairment	$	42,662	$	176,603	$	96,573	$	41,065	$	92,769	$	21,620	$	-	$	471,292

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 nine months ended September 30, 2010:

	September 30, 2010

Balance, beginning of period	$	14,076,123
Provision charged to expense		2,750,000
Losses charged off, net of recoveries		(4,285,533	)
Balance, end of period	$	12,540,590

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

September 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	$	2,536	$	2,540	$	138	$	3,700	$	20	$	4,208	$	79
Multi-family		-		-		-		-		-		-		-
Real estate - construction		11,607		11,901		3,626		11,597		8		11,584		10
Real estate - commercial		8,569		9,908		1,209		8,697		21		7,101		60
Commercial loans		2,868		3,429		623		2,968		37		4,723		106
Consumer and other loans		590		593		46		644		20		971		56
Total	$	26,170	$	28,371	$	5,642	$	27,606	$	106	$	28,587	$	311

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

At September 30, 2011, the Bank's impaired loans shown in the table above included loans that were classified as troubled debt restructurings (TDR). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

In assessing whether or not a borrower is experiencing financial difficulties, the Bank considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the debtor is currently in payment default on any of its debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the debtor has declared or is in the process of declaring bankruptcy and (iv) the debtor's projected cash flow is sufficient to satisfy the contractual payments due under the original terms of the loan without a modification.

The Bank considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by the Bank include the debtor's ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan. The most common concessions granted by the Bank generally include one or more modifications to the terms of the debt, such as (i) a reduction in the interest rate for the remaining life of the debt, (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (iii) a reduction on the face amount or maturity amount of the debt as stated in the original loan, (iv) a temporary period of interest-only payments, (v) a reduction in accrued interest, and (vi) an extension of amortization.

The following table summarizes the loans that were modified as a TDR during the three and nine months ended September 30, 2011:

	Quarter To Date						Year To Date
	Number		Pre-modification Recorded Investment		Post-modification Recorded Investment		Number		Pre-modification Recorded Investment		Post-modification Recorded Investment
			(In Thousands)						(In Thousands)
Real estate - residential mortgage:
One to four family units		-	$	-	$	-		1	$	450	$	200
Real estate - construction		3	$	10,343	$	10,742		3	$	10,343	$	10,742
Real estate - commercial		-		-		-		3		6,526		4,591
Total		3	$	10,343	$	10,742		7	$	17,319	$	15,533

The borrowers referenced in the above TDR table were granted one or more of the following concessions; (i) a reduction in the interest rate for the remaining life of the debt, (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (iii) a reduction on the face amount or maturity amount of the debt as stated in the original loan, (iv) a reduction in accrued interest, and (vi) an extension of amortization.

There were no loans modified as a TDR within the last 12 months and for which there was a payment default during the three and nine months ended September 30, 2011. A default for purposes of this disclosure is a TDR loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral.

As of September 30, 2011, the Bank has no commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

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

September 30, 2011	Construction		Commercial Real Estate		One to four family		Multi-family		Commercial		Consumer and Other		Total
	(In Thousands)
Rating:
Pass	$	34,931	$	149,568	$	91,488	$	40,564	$	88,048	$	20,974	$	425,573
Special Mention		5,236		13,664		3,308		501		1,741		210		24,660
Substandard		14,102		21,940		4,313		-		5,848		1,026		47,229
Total	$	54,269	$	185,172	$	99,109	$	41,065	$	95,637	$	22,210	$	497,462

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