10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 0-54271

FRATERNITY COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	27-3683448
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
764 Washington Boulevard, Baltimore, Maryland	21230
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number, including area code: (410) 539-1313

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 13, 2012, the registrant had 1,524,600 shares of common stock issued and outstanding.

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Statements of Financial Condition as of September 30, 2012 (unaudited) and December  31, 2011 (unaudited)		1
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)		2
	Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)		3
	Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2012 and 2011 (unaudited)		4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 (unaudited)		5
	Notes to Consolidated Financial Statements (unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		47
Item 4.	Controls and Procedures		47
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		48
Item 1A.	Risk Factors		48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		48
Item 3.	Defaults Upon Senior Securities		48
Item 4.	Mine Safety Disclosures		48
Item 5.	Other Information		48
Item 6.	Exhibits		49
SIGNATURES

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FRATERNITY COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

ASSETS

	September 30, 2012			December 31, 2011
Cash and cash equivalents:
Cash and due from banks	$	937,685		$	1,033,637
Interest-bearing deposits in other banks		16,405,028			13,889,505
Total cash and cash equivalents		17,342,713			14,923,142
Investment securities:
Available-for-sale - at fair value		24,415,230			31,419,356
Held-to-maturity - at amortized cost (fair value approximates $7,705,022 and $7,970,403, respectively)		7,350,208			7,837,293
Loans - net of allowance for loan losses of $1,395,000 and $1,250,000		109,840,550			111,924,984
Other real estate owned		1,783,484			0
Property and equipment, net		809,718			740,501
Federal Home Loan Bank stock - at cost - restricted		1,275,500			1,306,500
Ground rents - net of valuation allowance of $45,500 (2012 and 2011)		848,346			854,996
Accrued interest receivable		601,479			605,197
Investment in bank-owned life insurance		4,482,563			4,354,252
Deferred income taxes		616,663			630,908
Other assets		799,904			733,956
TOTAL ASSETS	$	170,166,358		$	175,331,085
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	119,003,382		$	121,200,060
Advances from the Federal Home Loan Bank		20,000,000			22,500,000
Advances by borrowers for taxes and insurance		831,884			831,448
Other liabilities		657,604			682,888
Total liabilities		140,492,870			145,214,396
Commitments and contingencies		0			0
Stockholders’ Equity:
Preferred stock, $0.01 par value; authorized 1,000,000; none issued		0			0
Common stock, $0.01 par value; authorized 15,000,000; issued and outstanding, 1,536,600 shares at September 30, 2012, 1,587,000 shares at December 31, 2011		15,366			15,870
Additional paid in capital		14,336,616			14,944,647
Retained earnings - substantially restricted		16,234,028			16,170,684
Unearned ESOP shares		(1,084,450	)		(1,163,800	)
Accumulated other comprehensive income		171,928			149,288
Total stockholders’ equity		29,673,488			30,116,689
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	170,166,358		$	175,331,085

See accompanying notes.

1

FRATERNITY COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
INTEREST INCOME:
Interest and fees on loans:
Real estate loans	$	1,373,143		$	1,441,513		$	4,282,343		$	4,367,016
Other loans		1,119			1,189			3,400			3,661
Interest and dividends on investments and bank deposits		210,731			275,687			745,472			745,120
Income from ground rents owned		9,300			9,849			35,176			34,583
Total interest income		1,594,293			1,728,238			5,066,391			5,150,380
INTEREST EXPENSE:
Interest on deposits		440,962			575,278			1,347,675			1,866,400
Interest on borrowings - short term		18,436			56,222			65,268			167,022
Interest on borrowings - long term		148,158			169,370			441,254			502,586
Total interest expense		607,556			800,870			1,854,197			2,536,008
NET INTEREST INCOME		986,737			927,368			3,212,194			2,614,372
PROVISION FOR LOAN LOSSES		201,920			6,445			380,174			66,961
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		784,817			920,923			2,832,020			2,547,411
NON-INTEREST INCOME:
Gain on sale of investment securities		0			60,020			114,134			107,714
Income on bank-owned life insurance		43,564			45,181			128,311			134,325
Gain on sale of loans		33,407			7,308			60,196			7,308
Gain on sale of other real estate owned		0			9,053			0			9,900
Other income		3,768			10,094			26,168			31,360
Total non-interest income		80,739			131,656			328,809			290,607
NON-INTEREST EXPENSES:
Salaries and employee benefits		573,445			650,482			1,686,627			1,684,738
Occupancy expenses		127,033			121,783			373,888			371,461
Legal fees		39,735			23,301			159,913			61,173
Federal Deposit Insurance premiums		36,635			36,659			105,167			114,169
Accounting and auditing expense		33,842			30,259			101,072			89,250
Data processing expense		104,769			98,013			313,470			302,277
Directors fees		25,567			25,817			74,278			75,951
Other general and administrative expenses		117,587			101,446			339,098			325,192
Total non-interest expenses		1,058,613			1,087,760			3,153,513			3,024,211
(LOSS) INCOME BEFORE INCOME TAX BENEFIT		(193,057	)		(35,181	)		7,316			(186,193	)
INCOME TAX BENEFIT		(101,834	)		(28,030	)		(56,028	)		(121,971	)
NET (LOSS) INCOME	$	(91,223	)	$	(7,151	)	$	63,344		$	(64,222	)
(LOSS) EARNINGS PER COMMON SHARE - BASIC	$	(0.06	)	$	(0.01	)	$	0.04		$	(0.04	)
(LOSS) EARNINGS PER COMMON SHARE - DILUTED	$	(0.06	)	$	(0.01	)	$	0.04		$	(0.04	)

See accompanying notes.

2

FRATERNITY COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
NET INCOME (LOSS)	$	(91,223	)	$	(7,151	)	$	63,344		$	(64,222	)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period		84,410			65,969			151,868			681,262
Less: income taxes on unrealized gains arising during the period		(33,764	)		(26,388	)		(60,747	)		(272,505	)
		50,646			39,581			91,121			408,757
Less: Reclassification adjustment for realized gains		0			(60,019	)		(114,134	)		(107,714	)
Income taxes on reclassification adjustment		0			24,008			45,653			43,086
		0			(36,011	)		(68,481	)		(64,628	)
OTHER COMPREHENSIVE INCOME (LOSS)		50,646			3,570			22,640			344,129
COMPREHENSIVE (LOSS) INCOME	$	(40,577	)	$	(3,581	)	$	85,984		$	279,907

See accompanying notes.

3

Fraternity Community Bancorp, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	Common Stock			Additional Paid In Capital			Retained Earnings			Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance, December 31, 2010	$	0		$	0		$	16,146,785		$	0		$	(160,210	)	$	15,986,575
Net Loss		0			0			(64,222	)		0			0			(64,222	)
Other Comprehensive Income		0			0			0			0			344,129			344,129
Acquisition of unearned ESOP shares		0			0			0			(1,269,600	)		0			(1,269,600	)
ESOP shares released		0			(2,142	)		0			79,350			0			77,208
Issuance of Common Stock		15,870			14,952,740			0			0			0			14,968,610
Balance, September 30, 2011	$	15,870		$	14,950,598		$	16,082,563		$	(1,190,250	)	$	183,919		$	30,042,700
Balance, December 31, 2011	$	15,870		$	14,944,647		$	16,170,684		$	(1,163,800	)	$	149,288		$	30,116,689
Net Income		0			0			63,344			0			0			63,344
Other Comprehensive Income		0			0			0			0			22,640			22,640
Common shares repurchased		(504	)		(612,607	)		0			0			0			(613,111	)
ESOP shares released or committed for release		0			4,576			0			79,350			0			83,926
Balance, September 30, 2012	$	15,366		$	14,336,616		$	16,234,028		$	(1,084,450	)	$	171,928		$	29,673,488

See accompanying notes.

4

FRATERNITY COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	63,344		$	(64,222	)
Adjustments to reconcile net income (loss) provided by operating activities:
Depreciation		65,569			64,822
Gain on sale of available-for-sale securities		(114,134	)		(107,714	)
Gain on sale of other real estate owned		0			(9,900	)
Gain on sale of loans		(60,196	)		(7,308	)
Origination of loans held for sale		(3,240,900	)		(607,500	)
Proceeds from sale of loans held for sale		3,301,096			614,808
Amortization/accretion of premium/discount		476,729			205,611
Increase in value of bank-owned life insurance		(128,311	)		(134,325	)
Increase in value of other real estate owned		0			(302,129	)
Stock based compensation (ESOP)		83,926			77,208
Provision for loan losses		380,174			66,961
Changes in operating assets and liabilities:
Accrued interest receivable and other assets		(62,230	)		444,730
Other liabilities		(25,284	)		93,112
Net cash provided by operating activities		739,783			334,154
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in loans		(413,327	)		1,408,939
Redemption of ground rents		6,650			0
Acquisition of property and equipment		(134,786	)		(60,914	)
Purchase of:
Investment securities available-for-sale		(7,101,050	)		(24,525,876	)
Investment securities held-to-maturity		0			(8,031,518	)
Proceeds from:
Sales and maturities of investment securities available-for-sale		10,187,699			14,644,438
Principal paydowns on investment securities available-for-sale		3,650,960			3,671,718
Principal paydowns on investment securities held-to-maturity		427,892			5,939
Sale of Federal Home Loan Bank stock		31,000			65,800
Sale of other real estate owned		334,103			2,327,938
Net cash provided by (used in) investing activities		6,989,141			(10,493,536	)

5

Fraternity Community Bancorp, Inc.

Consolidated Statements of Cash Flows (Continued)

	2012			2011
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits		(2,196,678	)		(5,234,656	)
Borrowings from the Federal Home Loan Bank		5,000,000			0
Repayments of Federal Home Loan Bank borrowings		(7,500,000	)		(83,333	)
Acquisition of ESOP Shares		0			(1,269,600	)
Repurchase of common shares		(613,111	)		0
Proceeds from issuance of Common Stock, net		0			14,968,610
Increase in advances by borrowers for taxes and insurance		436			296,039
Net cash (used in) provided by financing activities		(5,309,353	)		8,677,060
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,419,571			(1,482,322	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		14,923,142			25,881,831
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	17,342,713		$	24,399,509
Cash paid for interest	$	1,854,533		$	2,536,078
Cash paid for taxes	$	0		$	0
Transfer of loans to other real estate owned	$	2,077,334		$	0

On March 31, 2011, the Company loaned $1,269,600 to the Employee Stock Ownership Plan, which was used to purchase 126,960 shares of common stock. The loan is secured by the shares purchased and is shown as Unearned ESOP shares in the consolidated balance sheets.

See accompanying notes.

6

FRATERNITY COMMUNITY BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FRATERNITY COMMUNITY BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTH PERIODS

ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Fraternity Community Bancorp, Inc. (the “Company”) was incorporated on October 12, 2010 to serve as the holding company for Fraternity Federal Savings and Loan Association (the “Bank”), a federally chartered savings bank. On March 31, 2011, in accordance with a Plan of Conversion adopted by its Board of Directors and approved by its members, the Bank converted from a federal mutual savings bank to a federal stock savings bank and became the wholly owned subsidiary of the Company. The conversion was accomplished through the sale and issuance of 1,587,000 shares of common stock at a price of $10.00 per share, through which the Company received proceeds of approximately $14,968,600, net of offering expenses of approximately $901,400. In connection with the conversion, the Bank’s Board of Directors adopted an employee stock ownership plan (the “ESOP”) which subscribed for 8% of the sum of the number of shares, or 126,960 shares of common stock sold in the offering. All material intercompany accounts and transactions have been eliminated in consolidation.

In accordance with the Office of the Comptroller of the Currency (the “OCC”) regulations, upon the completion of the conversion, the Bank restricted retained earnings by establishing a liquidation account. The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after conversion. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X as promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012, or any other period. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Certain amounts from prior period financial statements have been reclassified to conform to the current period’s presentation.

Nature of Operations

The Bank provides a full range of banking services to individuals and businesses through its main office and three branches in the Baltimore metropolitan area. Its primary deposit products are certificates of deposit and demand, savings, NOW, and money market accounts. Its primary lending products are consumer loans and real estate mortgages.

7

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Earnings per Common Share

Basic earnings per share amounts are based on the weighted average number of shares outstanding for the period and the net income applicable to common stockholders. Weighted average shares excludes unallocated ESOP shares. The Company has no dilutive potential common shares for the three or nine month periods ended September 30, 2012 or 2011.

	Three Months Ended						Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012		September 30, 2011
Net (loss) income	$	(91,223	)	$	(7,151	)	$	63,344	$	(64,222	)
Weighted average common shares outstanding		1,453,158			1,462,685			1,466,069		1,460,922
Basic and diluted earnings (loss) per share	$	(.06	)	$	(.01	)	$	.04	$	(.04	)

2. INVESTMENT SECURITIES

The amortized cost and fair values of investment securities are as follows:

	September 30, 2012 (unaudited)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Bank Notes and Corporate Bonds	$	2,497,895	$	21,665	$	1,500	$	2,518,060
Obligations of U.S. Government Agencies		3,999,005		4,060		16,185		3,986,880
Mortgage-backed securities:
FNMA		4,329,769		130,799		116		4,460,452
GNMA		9,422,086		134,448		0		9,556,534
FHLMC		1,174,958		11,946		0		1,186,904
FNMA CMO		2,392,805		4,167		9,561		2,387,411
Private Label CMO		318,608		381		0		318,989
	$	24,135,126	$	307,466	$	27,362	$	24,415,230

8

	September 30, 2012 (unaudited)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Municipal Bonds	$	545,905	$	35,720	$	0	$	581,625
SBA Pools		1,933,916		23,623		19,977		1,937,562
Mortgage-backed securities:
FNMA		4,870,387		315,448		0		5,185,835
	$	7,350,208	$	374,791	$	19,977	$	7,705,022

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Bank Notes and Corporate Bonds	$	2,495,526	$	7,844	$	16,935	$	2,486,435
Obligations of U.S. Government Agencies		6,696,656		126,082		0		6,822,738
Mortgage-backed securities:
FNMA		9,370,220		119,118		172		9,489,166
GNMA		7,019,669		31,425		41,879		7,009,215
FHLMC		2,334,789		7,438		17,889		2,324,338
FHLMC		2,636,100		67,091		0		2,703,191
Private Label CMO		623,176		5,259		44,162		584,273
	$	31,176,136	$	364,257	$	121,037	$	31,419,356

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Municipal Bonds	$	551,202	$	17,283	$	0	$	568,485
SBA Pools		2,345,921		12,401		0		2,358,322
Mortgage-backed securities:
FNMA		4,940,170		103,426		0		5,043,596
	$	7,837,293	$	133,110	$	0	$	7,970,403

9

The amortized cost and fair value of debt securities at September 30, 2012 and December 31, 2011 by contractual maturities are shown below. Expected maturities may differ from contractual maturities because borrowers may have to call or repay obligations with or without call or prepayment penalties.

	September 30, 2012
	Available-for-Sale (unaudited)
	Amortized Cost		Fair Value
Due in less than one year	$	997,895	$	1,019,560
Due in one year through five years		1,504,291		1,502,734
Due in five years through ten years		1,283,481		1,317,002
Due after ten years		20,349,459		20,575,934
	$	24,135,126	$	24,415,230

	September 30, 2012
	Held-to-Maturity (unaudited)
	Amortized Cost		Fair Value
Due in one year through five years	$	888,698	$	868,722
Due in five years through ten years		4,870,388		5,185,835
Due after ten years		1,591,122		1,650,465
	$	7,350,208	$	7,705,022

	December 31, 2011
	Available-for-Sale
	Amortized Cost		Fair Value
Due in one year through five years	$	2,502,994	$	2,493,771
Due in five years through ten years		6,513,583		6,654,782
Due after ten years		22,159,559		22,270,803
	$	31,176,136	$	31,419,356

	December 31, 2011
	Held-to-Maturity
	Amortized Cost		Fair Value
Due in one year through five years	$	1,243,103	$	1,254,845
Due in five years through ten years		4,940,170		5,043,596
Due after ten years		1,654,020		1,671,962
	$	7,837,293	$	7,970,403

The Bank recognized gross gains on sales of available-for-sale securities of $124,019 and $107,714 for the nine months ended September 30, 2012 and 2011, respectively. The Bank recognized gross losses on sales of available-for-sale securities of $9,885 and $0 for the nine months ended September 30, 2012 and 2011, respectively.

10

Securities with unrealized losses, segregated by length of impairment, as of September 30, 2012 and December 31, 2011 were as follows:

	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
September 30, 2012 (unaudited)
Available-for-sale:
Bank Notes and Corporate Bonds	$	1,498,500	$	1,500	$	0	$	0	$	1,498,500	$	1,500
Obligation of U.S. Government Agencies		1,982,820		16,185		0		0		1,982,820		16,185
Mortgage-backed securities:
FNMA		9,186		31		5,636		85		14,822		116
GNMA		0		0		0		0		0		0
FHLMC		0		0		0		0		0		0
Private Label CMO		914,073		9,561		0		0		914,073		9,561
	$	4,404,579	$	27,277	$	5,636	$	85	$	4,410,215	$	27,362
Held-to-Maturity:	$	868,722	$	19,977	$	0	$	0	$	868,722	$	19,977

	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
December 31, 2011
Available-for-sale:
Bank Notes and Corporate Bonds	$	1,483,065	$	16,935	$	0	$	0	$	1,483,065	$	16,935
Mortgage-backed securities:
FNMA		7,336		132		1,444		40		8,780		172
GNMA		4,022,149		41,879		0		0		4,022,149		41,879
FHLMC		1,598,353		17,889		0		0		1,598,353		17,889
Private Label CMO		0		0		293,611		44,162		293,611		44,162
	$	7,110,903	$	76,835	$	295,055	$	44,202	$	7,405,958	$	121,037
Held-to-Maturity:	$	0	$	0	$	0	$	0	$	0	$	0

Declines in the fair value of investment securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length

11

of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in cost.

Furthermore, as of September 30, 2012, management does not have the intent to sell any of the securities classified as available-for-sale in the table above and believes that it is more likely than not that the Bank will not have to sell any such securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2012, management believes the impairments detailed in the table above are temporary and no impairment loss has been realized in the Bank’s consolidated income statement.

3. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans and allowance for loan losses consisted of the following:

	September 30, 2012 (unaudited)			December 31, 2011
Real Estate Loans:
Owner Occupied One-to-four family	$	69,239,731		$	75,958,333
Non Owner Occupied One-to-four family		12,746,801			11,932,813
Home Equity Lines of Credit		10,301,657			9,501,693
Commercial Real Estate		12,633,089			10,040,391
Residential Construction		4,316,409			3,088,974
Land		1,915,196			2,584,476
Total Real Estate Loans		111,152,883			113,106,680
Consumer Loans		66,341			50,486
Commercial Loans		16,326			17,818
Total Loans		111,235,550			113,174,984
Less:
Allowance for loan losses		(1,395,000	)		(1,250,000	)
Total loans and allowance for loan losses	$	109,840,550		$	111,924,984

Management segregates its loan portfolio into portfolio segments which is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The portfolio segments are segregated based on loan types and the underlying risk factors present in each loan type. These risk factors are periodically reviewed by management and revised as deemed appropriate. The Company’s loan portfolio is segregated into the following portfolio segments:

Owner Occupied One-To-Four Family Residential Loans. This portfolio segment consists of the origination of first mortgage loans and closed end home equity second mortgage loans secured by one-to-four family residential properties located in our market area. The Company offers both fixed and adjustable rate products on properties located in the Company’s primary market area. These loans are generally for terms of 15, 20 and 30 years amortized on a monthly basis. The Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is

12

primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as employment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Non Owner Occupied One-To-Four Family Real Estate Loans. Loans secured by investment properties represent a unique credit risk to us and, as a result, we adhere to special underwriting guidelines. Of primary concern in non-owner occupied real estate lending is the consistency of rental income of the property. Payments on loans secured by rental properties often depend on the maintenance of the property and the payment of rent by its tenants. Payments on loans secured by rental properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. We generally require collateral on these loans to be a first mortgage along with an assignment of rents and leases, although we might accept a second mortgage where the combined loan-to-value ratio is low.

Home Equity Lines of Credit. This portfolio segment consists primarily of open end, second mortgage loans secured by one–to-four family residential properties. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as employment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Commercial Real Estate Loans. This portfolio segment consists primarily of loans secured by commercial real estate. Loans secured by commercial real estate generally may have larger balances and more risk of default than one-to-four family mortgage loans. The increased risk is the result of several factors, including the concentration of principal in a limited number of loans and borrowers, the impact of local and general economic conditions on the borrower’s ability to repay the loan, and the increased difficulty of evaluating and monitoring these types of loans.

Residential Construction Loans. This portfolio includes construction loans to individuals and builders, primarily for the construction of residential properties. Construction financing generally involves greater risk than long-term financing on improved, owner-occupied real estate. Our portfolio consists of both construction/permanent loans to individuals for their principal residence as well as speculative construction loans to builders. Construction loans are underwritten on the basis of the estimated value of the property as completed. For our construction/permanent loans to individuals for their principal residence, repayment is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as employment levels. Repayment can also be impacted by changes in property values on residential properties. For our speculative construction loans to builders, repayment is primarily dependent on the cashflows of the builder and the success of the project. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long term financing.

Land. This portfolio consists primarily of first mortgage loans on developed residential land. Land loans have a higher level of risk than loans for the purchase of existing homes since collateral values can only be estimated at the time the loan is approved.

Consumer Loans. This portfolio segment includes small balance unsecured loans to individuals, automobile loans and deposit account loans. Consumer loans are generally originated at higher interest rates than residential mortgage loans because of their higher risk. Collections are highly dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. In the case where collateral may be present, repossessed collateral for a defaulted loan may not provide an adequate source of repayment as a result of damage, loss or depreciation.

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Commercial Loans. This portfolio segment consists of unsecured lines of credit and closed end loans to business owners that have personal guarantees. These loans generally have higher interest rates and shorter terms than one- to- four family residential loans. These loans have a higher level of risk than one- to- four family residential loans. The increased risk is due to the increased difficulty of monitoring and higher risk of default since their repayment generally depends on the successful operation of the borrower’s business.

The balance of impaired loans was $4,927,398 and $4,101,788 as of September 30, 2012 and December 31, 2011, respectively. We consider an impaired loan to be any loan which is a troubled debt restructuring or any loan on nonaccrual status.

Non-Performing/Past Due Loans - Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations, which typically occurs when principal or interest payments are more than 90 days past due. Non-accrual loans totaled $4,666,653 and $3,838,051 at September 30, 2012 and December 31, 2011, respectively. There were no accruing loans that were more than 90 days past due at September 30, 2012 or December 31, 2011.

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, we have segmented our loan portfolio by product type. Our loan segments are owner occupied one-to-four family residential, non owner occupied one-to-four family residential, home equity lines of credit (“HELOC”), commercial real estate, residential construction, land, consumer and commercial.

To establish the allowance for loan losses, loans are pooled by portfolio class and an historical loss percentage is applied to each class. The historical loss percentage is based upon a rolling 12 month history. This rolling history is utilized so that we have the most current and relevant charge-off trend data. These charge-offs are segregated by loan segment and compared to their respective loan segment average balances for the same period in order to calculate the charge-off percentage. That calculation determines the required allowance for loan loss level. The Company then applies additional loss multipliers to the different segments of loans to reflect various environmental factors. For individually evaluated loans (impaired loans), we do additional analyses to determine the impairment. Management applies judgment to develop its own view of loss probability within that range, using external and internal parameters with the objective of establishing an allowance for loss inherent within these portfolios as of the reporting date.

The Bank’s policies, consistent with regulatory guidelines, provide for the classification of loans and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those assets characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets (or portions of assets) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets that do not expose us to risk sufficient enough to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve close attention, are required to be designated as special mention.

Modifications of terms for our loans and their inclusion as troubled debt restructurings are based on individual facts and circumstances. Loan modifications that are included as troubled debt restructurings may involve either an increase or reduction of the interest rate, extension of the term of the loan, or deferral or forgiveness of principal or interest payments. As of September 30, 2012 there are seven loans totaling $3,558,561 classified as troubled debt restructurings.

14

The following tables show credit quality indicators, the aging of receivables, and disaggregated balances of loans receivable and the allowance for loan losses as of September 30, 2012 and December 31, 2011:

Credit Risk Analysis of Loans Receivable

As of September 30, 2012 (unaudited)

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
Pass	$	65,372,101	$	11,855,335	$	9,943,664	$	11,442,237	$	4,316,409	$	1,804,696	$	66,341	$	16,326	$	104,817,109
Special Mention		9,482		523,723		27,731		0		0		0		0		0		560,936
Substandard		3,858,148		367,743		330,262		1,190,852		0		110,500		0		0		5,857,505
Total	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550
Credit risk profile based on payment activity:
Performing	$	65,381,583	$	12,379,058	$	9,971,395	$	12,633,089	$	4,316,409	$	1,804,696	$	66,341	$	16,326	$	106,568,897
Nonperforming		3,858,148		367,743		330,262		0		0		110,500		0		0		4,666,653
Total	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550

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Credit Risk Analysis of Loans Receivable

As of December 31, 2011

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
Pass	$	70,944,566	$	10,929,017	$	9,045,770	$	8,835,392	$	1,523,776	$	2,275,454	$	50,486	$	17,818	$	103,622,279
Special Mention		3,618,817		924,975		362,614		1,204,999		0		0		0		0		6,111,405
Substandard		1,394,950		78,821		93,309		0		1,565,198		309,022		0		0		3,441,300
Total	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984
Credit risk profile based on payment activity:
Performing	$	74,563,383	$	11,457,241	$	9,408,384	$	10,040,391	$	1,523,776	$	2,275,454	$	50,486	$	17,818	$	109,336,933
Nonperforming		1,394,950		475,572		93,309		0		1,565,198		309,022		0		0		3,838,051
Total	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984

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Aged Analysis of Past Due Loans Receivable

As of September 30, 2012 (unaudited)

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
30-59 Days Past Due	$	558,061	$	0	$	64,322	$	0	$	0	$	0	$	0	$	0	$	622,383
60-89 Days Past Due		3,530		0		0		0		0		0		0		0		3,530
Greater Than 90 Days Past Due		2,916,203		367,743		92,387		0		0		110,500		0		0		3,486,833
Total Past Due		3,477,794		367,743		156,709		0		0		110,500		0		0		4,112,746
Current		65,761,937		12,379,058		10,144,948		12,633,089		4,316,409		1,804,696		66,341		16,326		107,122,804
Total Loans Receivable	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550
Recorded Investment > 90 Days and Accruing	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

17

Aged Analysis of Past Due Loans Receivable

As of December 31, 2011

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
30-59 Days Past Due	$	40,965	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	40,965
60-89 Days Past Due		3,273		0		29,557		0		0		0		0		0		32,830
Greater Than 90 Days Past Due		1,299,668		78,821		69,528		0		1,565,198		309,022		0		0		3,322,237
Total Past Due		1,343,906		78,821		99,085		0		1,565,198		309,022		0		0		3,396,032
Current		74,614,427		11,853,992		9,402,608		10,040,391		1,523,776		2,275,454		50,486		17,818		109,778,952
Total Loans Receivable	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984
Recorded Investment > 90 Days and Accruing	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

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The following tables represent the allocation of the allowance for loan and lease losses and the related loans by portfolio segment for the three and nine months ended September 30, 2012:

Allowance for Loan Losses and Recorded Investment in Loans Receivable

For The Nine Months Ended September 30, 2012

	Owner Occupied 1-4 Family Residential			Non Owner Occupied 1-4 Family Residential			Home Equity Lines of Credit			Commercial Real Estate			Construction			Land			Consumer			Commercial			Impaired		Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	495,271		$	77,051		$	145,830		$	190,767		$	28,952		$	120,372		$	2,858		$	1,008		$	0	$	187,891		$	1,250,000
Charge-offs		(133,065	)		(59,847	)		0			0			(44,940	)		(20,585	)		(88	)		0			0		0			(258,525	)
Recoveries		20,354			0			2,997			0			0			0			0			0			0		0			23,351
Provision		198,090			195,716			(74,042	)		(13,904	)		59,152			(62,249	)		(1,238	)		(773	)		263,543		(184,121	)		380,174
Ending Balance	$	580,650		$	212,920		$	74,785		$	176,863		$	43,164		$	37,538		$	1,532		$	235		$	263,543	$	3,770		$	1,395,000
Ending Balance
Individually evaluated for impairment	$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	189,862	$	0		$	189,862
Ending Balance
Collectively evaluated for impairment	$	580,650		$	212,920		$	74,785		$	176,863		$	43,164		$	37,538		$	1,532		$	235		$	73,681	$	3,770		$	1,205,138
Loans Receivable:
Ending Balance	$	69,239,731		$	12,746,801		$	10,301,657		$	12,633,089		$	4,316,409		$	1,915,196		$	66,341		$	16,326				$	0		$	111,235,550
Ending Balance
Individually evaluated for impairment	$	4,118,893		$	367,743		$	330,262		$	0		$	0		$	110,500		$	0		$	0				$	0		$	4,927,398
Ending Balance
Collectively evaluated for impairment	$	65,120,838		$	12,379,058		$	9,971,395		$	12,633,089		$	4,316,409		$	1,804,696		$	66,341		$	16,326				$	0		$	106,308,152

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Allowance for Loan Losses and Recorded Investment in Loans Receivable

For The Three Months Ended September 30, 2012

	Owner Occupied 1-4 Family Residential			Non Owner Occupied 1-4 Family Residential			Home Equity Lines of Credit		Commercial Real Estate			Construction		Land		Consumer			Commercial			Impaired		Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	603,447		$	163,854		$	70,890	$	191,178		$	32,968	$	37,210	$	1,003		$	252		$	42,728	$	106,470		$	1,250,000
Charge-offs		0			(59,847	)		0		0			0		0		(88	)		0			0		0			(59,935	)
Recoveries		2,016			0			999		0			0		0		0			0			0		0			3,015
Provision		(24,813	)		108,913			2,896		(14,315	)		10,196		328		617			(17	)		220,815		(102,700	)		201,920
Ending Balance	$	580,650		$	212,920		$	74,785	$	176,863		$	43,164	$	37,538	$	1,532		$	235		$	263,543	$	3,770		$	1,395,000
Ending Balance
Individually evaluated for impairment	$	0		$	0		$	0	$	0		$	0	$	0	$	0		$	0		$	189,862	$	0		$	189,862
Ending Balance
Collectively evaluated for impairment	$	580,650		$	212,920		$	74,785	$	176,863		$	43,164	$	37,538	$	1,532		$	235		$	73,681	$	3,770		$	1,205,138
Loans Receivable:
Ending Balance	$	69,239,731		$	12,746,801		$	10,301,657	$	12,633,089		$	4,316,409	$	1,915,196	$	66,341		$	16,326				$	0		$	111,235,550
Ending Balance
Individually evaluated for impairment	$	4,118,893		$	367,743		$	330,262	$	0		$	0	$	110,500	$	0		$	0				$	0		$	4,927,398
Ending Balance
Collectively evaluated for impairment	$	65,120,838		$	12,379,058		$	9,971,395	$	12,633,089		$	4,316,409	$	1,804,696	$	66,341		$	16,326				$	0		$	106,308,152

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Management reviews and identifies loans and investments that require designation as nonperforming assets and troubled debt restructurings. Nonperforming assets include loans accounted for on a non-accrual basis, loans past due by 90 days or more but still accruing, and other real estate owned. Troubled debt restructurings include loans in which the borrower was having financial difficulty, and we agreed to modify the loan. Information with respect to nonperforming assets and troubled debt restructurings at September 30, 2012 and December 31, 2011 is as follows:

	September 30, 2012			December 31,
	(unaudited)			2011
Non-Accrual Loans:
Owner-occupied one-to-four family	$	3,858,148		$	1,394,950
Non owner-occupied one-to-four family		367,743			475,572
Home Equity Lines of credit		330,262			93,309
Commercial		0			0
Residential Construction		0			1,565,198
Land		110,500			309,022
Total Non-Accrual Loans	$	4,666,653		$	3,838,051
Other Real Estate Owned, net		1,783,484			0
Loans 90 days or more past due and still accruing		0			0
Total Nonperforming Assets	$	6,450,137		$	3,838,051
Troubled Debt Restructurings	$	3,558,561		$	1,562,084
Troubled Debt Restructurings included In Non-Accrual Loans	$	(3,297,816	)	$	(1,298,347	)
Troubled Debt Restructurings and Total Nonperforming Assets	$	6,710,882		$	4,101,788

At September 30, 2012 and December 31, 2011, there were no loans 90 days past due or more and still accruing interest. At September 30, 2012, the Company had twenty seven loans on non-accrual status with foregone interest in the amount of $189,034. At December 31, 2011, the Company had eighteen loans on non-accrual status with foregone interest of $249,839.

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Information on impaired loans for the three and nine months ended September 30, 2012 and 2011 is as follows:

	For the three months ended September 30, 2012				For the nine months ended September 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,880,741	$	27,680	$	1,720,291	$	47,215
Non Owner Occupied one-to-four family residential		421,019		0		448,117		8,128
Home Equity Lines of Credit		326,894		3,564		274,807		11,086
Construction		0		0		782,599		0
Land		111,250		0		209,761		0
Total with no allowance	$	2,739,904	$	31,244	$	3,435,575	$	66,429
With an allowance recorded:
Owner Occupied one-to-four family residential	$	1,148,056	$	4,214	$	574,028	$	79,674
Total with an allowance	$	1,148,056	$	4,214	$	574,028	$	79,674
Grand total:
Owner Occupied one-to-four family residential	$	3,028,797	$	31,894	$	2,294,319	$	126,889
Non Owner Occupied one-to-four family residential		421,019		0		448,117		8,128
Home Equity Lines of Credit		326,894		3,564		274,807		11,086
Construction		0		0		782,599		0
Land		111,250		0		209,761		0
Grand total	$	3,887,960	$	35,458	$	4,009,603	$	146,103

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	For the three months ended September 30, 2011				For the nine months ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,625,904	$	829	$	1,627,055	$	12,359
Non Owner Occupied one-to-four family residential		39,411		0		26,274		1,951
Home Equity Lines of Credit		94,382		0		94,382		554
Construction		1,565,198		0		1,565,198		0
Land		310,772		0		310,855		0
Consumer		220		0		147		35
Total with no allowance	$	3,635,887	$	829	$	3,623,911	$	14,899
With an allowance recorded:
Owner Occupied one-to-four family residential	$	0	$	0	$	0	$	0
Total with an allowance	$	0	$	0	$	0	$	0
Grand total:
Owner Occupied one-to-four family residential	$	1,625,904	$	829	$	1,627,055	$	12,359
Non Owner Occupied one-to-four family residential		39,411		0		26,274		1,951
Home Equity Lines of Credit		94,382		0		94,382		554
Construction		1,565,198		0		1,565,198		0
Land		310,772		0		310,855		0
Consumer		220		0		147		35
Grand total	$	3,635,887	$	829	$	3,623,911	$	14,899

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	As of September 30, 2012						As of December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,822,780	$	1,822,780	$	0	$	1,658,687	$	1,658,687	$	0
Non Owner Occupied one-to-four family residential		367,743		367,743		0		475,572		475,572		0
Home Equity Lines of Credit		330,262		330,262		0		93,309		93,309		0
Construction		0		0		0		1,565,198		1,565,198		0
Land		110,500		110,500		0		309,022		309,022		0
Total with no allowance	$	2,631,285	$	2,631,285	$	0	$	4,101,788	$	4,101,788	$	0
With an allowance recorded:
Owner Occupied one-to-four family residential	$	2,106,251	$	2,296,113	$	189,862	$	0	$	0	$	0
Total with an allowance	$	2,106,251	$	2,296,113	$	189,862	$	0	$	0	$	0
Grand total:
Owner Occupied one-to-four family residential	$	3,929,031	$	4,118,893	$	189,862	$	1,658,687	$	1,658,687	$	0
Non Owner Occupied one-to-four family residential		367,743		367,743		0		475,572		475,572		0
Home Equity Lines of Credit		330,262		330,262		0		93,309		93,309		0
Construction		0		0		0		1,565,198		1,565,198		0
Land		110,500		110,500		0		309,022		309,022		0
Grand total	$	4,737,536	$	4,927,398	$	189,862	$	4,101,788	$	4,101,788	$	0

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The following table reflects impaired loans as of September 30, 2012 and December 31, 2011. We consider an impaired loan to be any loan which is a troubled debt restructuring or any loan on nonaccrual status.

	September 30, 2012		December 31, 2011
Impaired performing loans:
Owner occupied one-to-four family	$	0	$	0
Non owner occupied one-to-four family		0		0
Home equity lines of credit		0		0
Commercial		0		0
Construction		0		0
Land		0		0
Troubled debt restructurings:
Owner occupied one-to-four family		260,745		263,737
Non owner occupied one-to-four family		0		0
Home equity lines of credit		0		0
Commercial		0		0
Construction		0		0
Land		0		0
Total impaired performing loans		260,745		263,737
Impaired nonperforming loans (nonaccrual):
Owner occupied one-to-four family		901,695		698,141
Non owner occupied one-to-four family		367,743		475,572
Home equity lines of credit		99,398		93,309
Commercial		0		0
Construction		0		1,565,198
Land		0		194,022
Troubled debt restructurings:
Owner occupied one-to-four family		2,956,453		696,809
Non owner occupied one-to-four family		0		0
Home equity lines of credit		230,864		0
Commercial		0		0
Construction		0		0
Land		110,500		115,000
Total impaired nonperforming loans (nonaccrual)		4,666,653		3,838,051
Total impaired loans	$	4,927,398	$	4,101,788

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Loans may be periodically modified in a troubled debt restructuring (TDR), where the Company will make concessions to a borrower having financial difficulty to help the borrower remain current on the loan and/or to avoid foreclosure. When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans. If we determine that the value of the modified loan is less than the recorded investment in the loan, impairment is generally recognized through a charge-off through the allowance, however, if a specific reserve has been established, impairment is recognized through the provision for loan losses. At September 30, 2012, we had seven loans that were restructured totaling $3,558,561. Five loans, totaling $3,217,197 were secured by owner-occupied one-to-four family residential properties, one loan totaling $110,500 is secured by a residential lot, and one loan totaling $230,864 is a home equity line of credit. At December 31, 2011, we had five loans totaling $1,562,084 that were restructured. Four loans, totaling $1,447,084 were secured by owner-occupied one-to-four family residential properties, and one loan totaling $115,000 was secured by a residential lot.

The following table is a summary of impaired loans that were modified due to a TDR by class for the three and nine months ending September 30, 2012. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the loan carrying amounts immediately prior to the modification and the carrying amounts immediately after the modification:

Modifications for the Nine Months Ending September 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Owner occupied one-to-four family residential		2	$	2,296,113	$	2,106,251
Home Equity Line of Credit		1		230,864		230,864
Total		3	$	2,526,977	$	2,337,115

Modifications for the Nine Months Ending September 30, 2011

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Land		1	$	116,500	$	116,500

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Modifications for the Three Months Ending September 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Owner occupied one-to-four family residential		2	$	2,296,113	$	2,106,251

Modifications for the Three Months Ending September 30, 2011

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Land		1	$	116,500	$	116,500

The following table presents loans by loan class modified as TDR’s within the previous twelve months from, and for which there was a payment default (90 days or more past due) during the three and nine months ended September 30, 2012 and 2011:

Three Months Ended				Nine Months Ended
September 30, 2012				September 30, 2012
Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	0	$	0		0	$	0

Three Months Ended				Nine Months Ended
September 30, 2011				September 30, 2011
Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	0	$	0		0	$	0

4. EMPLOYEE STOCK OWNERSHIP PLAN

In connection with the conversion to stock form, the Company established an Employee Stock Ownership Plan (ESOP) for the exclusive benefit of eligible employees. The ESOP borrowed funds from the Company in an amount sufficient to purchase 126,960 shares, or 8% of the Common Stock issued in the offering. The shares were acquired at a price of $10.00 per share.

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The loan is secured by the shares purchased and will be repaid by the ESOP with funds from contributions made by the Bank and dividends received by the ESOP, with funds from any contributions on ESOP assets. Contributions will be applied to repay interest on the loan first and the remainder will be applied to principal. The loan is expected to be repaid over a period of 12 years.

Shares purchased with the loan proceeds are held in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion to their compensation, relative to total compensation, of all active participants. Participants will vest their accrued benefits under the employee stock ownership plan at the rate of 33.33% per year beginning in year two. Vesting is accelerated upon retirement, death or disability of the participant, or a change in control of the Bank. Forfeitures will be reallocated to remaining plan participants. Benefits may be payable upon retirement, death, disability, separation of service, or termination of the ESOP.

The debt of the ESOP, in accordance with generally accepted accounting principles, is eliminated in consolidation and the shares pledged as collateral are reported as unearned ESOP shares in the consolidated balance sheet. Contributions to the ESOP shall be sufficient to pay principal and interest currently due under the loan agreement. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average market price of the shares for the respective period, and the shares become outstanding for earnings per share computations. Dividends on allocated ESOP shares are recorded as a reduction of debt and accrued interest. ESOP compensation expense for the nine months ended September 30, 2012 and 2011 was $83,926 and $77,208, respectively.

A summary of ESOP shares at September 30, 2012 is as follows:

Shares released or committed for release		18,515
Unearned shares		108,445
Total ESOP shares		126,960
Fair Value of unearned shares	$	1,344,718

5. REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (OCC). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that if undertaken, could have a direct material effect on the Bank and the consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of: total risk-based capital and Tier I capital to risk-weighted assets (as defined in the regulations), Tier I capital to adjusted total assets (as defined), and tangible capital to adjusted total assets (as defined).

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As of September 30, 2012 and December 31, 2011 (the most recent notification from the OCC), the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. Nothing has come to management’s attention since the institution’s most recent notification of being classified as “well capitalized” that would cause such classification to change. The following table details the Bank’s capital position:

	Actual					For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio
	(dollars in thousands)					(dollars in thousands)
As of September 30, 2012 (unaudited):
Total Risk-Based Capital (to risk-weighted assets)	$	24,906		26.29	%	$	9,474		10.0	%
Tier I Capital (to risk-weighted assets)	$	23,719		25.04	%	$	5,683		6.0	%
Tier I Capital (to adjusted total assets)	$	23,719		13.95	%	$	8,501		5.0	%

	Actual					For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio
	(dollars in thousands)					(dollars in thousands)
As of December 31, 2011:
Total Risk-Based Capital (to risk-weighted assets)	$	24,827		26.46	%	$	9,383		10.0	%
Tier I Capital (to risk-weighted assets)	$	23,654		25.21	%	$	5,630		6.0	%
Tier I Capital (to adjusted total assets)	$	23,654		13.50	%	$	8,761		5.0	%

On May 24, 2012, the Company authorized the repurchase of up to 158,700 shares of its common stock. Repurchases, if any, by the Company pursuant to this authorization are expected to enable the Company to repurchase its shares at an attractive price, and to provide a source of liquidity for the Company’s shares. As of September 30, 2012, there have been 50,400 shares repurchased by the Company, for an aggregate expenditure totaling approximately $613,111, at an average price of $12.16.

6. FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company adopted FASB guidance on Fair Value Measurements which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This guidance applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, the guidance establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

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Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

The following table presents the Bank’s assets measured at fair value on a recurring basis:

	Fair Value at September 30, 2012 (unaudited)		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities:
Bank Notes and Corporate Bonds	$	2,518,060	$	0	$	2,518,060	$	0
Obligations of U.S. Government agencies		3,986,880		0		3,986,880		0
FNMA		4,460,452		0		4,460,452		0
GNMA		9,556,534		0		9,556,534		0
FHLMC		1,186,904		0		1,186,904		0
FNMA CMO		2,387,411		0		2,387,411		0
Private label CMO		318,989		0		318,989		0
	$	24,415,230	$	0	$	24,415,230	$	0
Total assets measured at fair value	$	24,415,230	$	0	$	24,415,230	$	0

	Fair Value at December 31, 2011		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities:
Bank Notes and Corporate Bonds	$	2,486,435	$	0	$	2,486,435	$	0
Obligations of U.S. Government agencies		6,822,738		0		6,822,738		0
FNMA		9,489,166		0		9,489,166		0
GNMA		7,009,215		0		7,009,215		0
FHLMC		2,324,338		0		2,324,338		0
FNMA CMO		2,703,191		0		2,703,191		0
Private label CMO		584,273		0		584,273		0
	$	31,419,356	$	0	$	31,419,356	$	0
Total assets measured at fair value	$	31,419,356	$	0	$	31,419,356	$	0

Securities classified as available-for-sale are reported at fair value utilizing Level 2 Inputs. For these securities, the Bank obtains fair values from an external pricing service or bid quotations received from securities dealers. The observable data may include dealer quotes, cash flows, U.S. Treasury yield curve, trading levels, credit information, and the terms and conditions of the security, among other things.

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Financial Instruments Measured on a Nonrecurring Basis

The Bank may be required, from time to time, to measure certain other financial assets and liabilities at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets.

For assets measured at fair value on a nonrecurring basis as of September 30, 2012 and December 31, 2011, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the assets:

	Fair Value at September 30, 2012 (unaudited)		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:	$	3,929,031	$	0	$	3,929,031	$	0
Owner occupied one-to-four family		367,743		0		367,743		0
Non owner occupied one-to-four family		330,262		0		330,262		0
Home Equity Lines of Credit		110,500		0		110,500		0
Land	$	4,737,536	$	0	$	4,737,536	$	0
Other real estate owned:	$	1,783,484	$	0	$	1,783,484	$	0

	Fair Value at December 31, 2011		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:	$	1,565,198	$	0	$	1,565,198	$	0
Construction		1,658,687		0		1,658,687		0
Owner occupied one-to-four family		475,572		0		475,572		0
Non owner occupied one-to-four family		93,309		0		93,309		0
Home Equity Lines of Credit		309,022		0		309,022		0
Land	$	4,101,788	$	0	$	4,101,788	$	0
Other real estate owned:	$	0	$	0	$	0	$	0

Loans for which it is probable that the Bank will not collect all principal and interest due according to contractual terms are measured for impairment in accordance with FASB guidance. Allowable methods for estimating fair value include using the fair value of the collateral for collateral dependent loans or, where a loan is determined not to be collateral dependent, using the discounted cash flow method. In our determination of fair value, we have categorized both methods of valuation as estimates based on Level 2 inputs.

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If the impaired loan is identified as collateral dependent, then the fair value method measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal or utilizing some other method of valuation for the collateral and applying a discount factor to the value based on our loan review policy and procedures.

If the impaired loan is determined not to be collateral dependent, then the discounted cash flow method is used. This method requires the impaired loan to be recorded at the present value of expected future cash flows discounted at the loan’s effective interest rate. The effective interest rate of a loan is the contractual interest rate adjusted for any net deferred loan fees or costs, premiums, or discounts existing at origination or acquisition of the loan.

Other Real Estate Owned

We record our other real estate owned at the lower of cost or estimated fair value less estimated selling costs. Estimated fair value is generally based upon an independent appraisal of the collateral. We consider these collateral values to be estimated using Level 2 inputs.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates, methods, and assumptions are set forth below for the Bank’s financial instruments as of September 30, 2012 and December 31, 2011.

	September 30, 2012 (unaudited)
			Estimated Fair Value
	Carrying Value		Level One		Level Two		Level Three		Total
Assets:
Cash and cash equivalents	$	17,342,713	$	17,342,713	$	0	$	0	$	17,342,713
Securities - available-for-sale		24,415,230		0		24,415,230		0		24,415,230
Securities - held-to-maturity		7,350,208		0		7,705,022		0		7,705,022
Loans, net of allowance		109,840,550		0		4,737,536		110,521,022		115,258,558
Federal Home Loan Bank stock		1,275,500		0		1,275,500		0		1,275,500
Investment in bank-owned life insurance		4,482,563		4,482,563		0		0		4,482,563
Liabilities:
Deposit accounts and advances by borrowers		119,835,266		0		120,590,084		0		120,590,084
Advances from the FHLB		20,000,000		0		20,890,706		0		20,890,706

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	December 31, 2011
			Estimated Fair Value
	Carrying Value		Level One		Level Two		Level Three		Total
Assets:
Cash and cash equivalents	$	14,923,142	$	14,923,142	$	0	$	0	$	14,923,142
Securities - available-for-sale		31,419,356		0		31,419,356		0		31,419,356
Securities - held-to-maturity		7,837,293		0		7,970,403		0		7,970,403
Loans, net of allowance		111,924,984		0		4,101,788		111,482,563		115,584,351
Federal Home Loan Bank stock		1,306,500		0		1,306,500		0		1,306,500
Investment in bank-owned life insurance		4,354,252		4,354,252		0		0		4,354,252
Liabilities:
Deposit accounts and advances by borrowers		122,031,508		0		122,998,429		0		122,998,429
Advances from the FHLB		22,500,000		0		23,223,703		0		23,223,703

	September 30, 2012 (unaudited)		December 31, 2011
Off-Balance Sheet Instruments:
Commitments to extend credit	$	1,451,000	$	0
Unused lines of credit	$	10,560,270	$	12,006,256

(a) Cash and Cash Equivalents - The carrying amount for cash on hand and in banks approximates fair value due to the short maturity of these instruments.

(b) Securities - The fair value of securities excluding Federal Home Loan Bank stock, is based on bid prices received from an external pricing service or bid quotations received from securities dealers.

(c) Loans - Loans were segmented into portfolios with similar financial characteristics. Loans were also segmented by loan category. Each loan category was further segmented by fixed and adjustable rate interest terms and performing and nonperforming categories. The fair value of residential loans was calculated by discounting anticipated cash flows based on weighted-average contractual maturity, weighted-average coupon, and discount rate.

The fair value for nonperforming loans was determined by reducing the carrying value of nonperforming loans by the Company’s historical loss percentage for each specific loan category.

(d) Federal Home Loan Bank Stock - The fair value of Federal Home Loan Bank stock approximates its carrying value based on the redemption provisions of the Federal Home Loan Bank.

(e) Investments in Bank-Owned Life Insurance - The fair value of the insurance contracts approximates the carrying value.

(f) Deposits and Advances by Borrowers - The fair value of deposits with no stated maturity, such as noninterest bearing deposits, interest-bearing NOW accounts, money market and statement savings accounts, is

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deemed to be equal to the carrying amounts. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate for certificates of deposit was estimated using the rate currently offered for deposits of similar remaining maturities.

(g) Advances from the FHLB - Fair values are estimated by discounting carrying values using a cash flow approach based on market rates as of September 30, 2012 and December 31, 2011.

(h) Off-Balance Sheet Financial Instruments - The Company’s adjustable rate commitments to extend credit move with market rates and are not subject to interest rate risk. The rates and terms of the Company’s fixed rate commitments to extend credit are competitive with others in the various markets in which the Company operates. The fair values of these instruments are immaterial.

(i) Limitations - Fair value estimates are made at a specific point in time, based on relevant market information and information about financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect estimates.

8. RECENT ACCOUNTING PRONOUNCEMENTS

All pending but not yet effective accounting standards updates were evaluated and only those listed below could have a material impact on the Company’s financial condition or results of operations.

ASU 2011-05, “Comprehensive Income (Topic 220) - Presentation of Comprehensive Income.” ASU 2011-05 amends Topic 220, “Comprehensive Income,” to require that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 became effective for the Company on January 1, 2012; however, certain provisions related to the presentation of reclassification adjustments have been deferred by ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” as further discussed below. In connection with the application of ASU 2011-05, the Company’s financial statements now include separate statements of comprehensive income.

ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers changes in ASU 2011-05 that relate to the presentation of reclassification adjustments to allow the FASB time to redeliberate whether to require presentation of such adjustments on the face of the financial statements to show the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income. ASU 2011-12 allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU No. 2011-05. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12. ASU 2011-12 became effective for the Company on January 1, 2012 and did not have a significant impact on the Company’s financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

When used in this Report, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area, competition and information provided by third-party vendors and the matters described under “Part I, Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

General

Fraternity Community Bancorp, Inc. (the “Company”) is a Maryland corporation incorporated on October 12, 2010 by Fraternity Federal Savings and Loan Association (the “Bank”) to be its holding company following the Bank’s conversion from the mutual to the stock form of organization (the “Conversion”). The Conversion was completed on March 31, 2011 and also on that date, the Company completed its public stock offering and issued 1,587,000 shares of its common stock for aggregate proceeds of $15,870,000, and net proceeds of $14,968,600. The Company’s business is the ownership of the outstanding capital stock of the Bank. The Company does not own or lease any property but instead uses the premises, equipment and other property of the Bank with payment of appropriate rental fees as required by applicable law and regulations, under the terms of an expense allocation agreement between the Company and the Bank.

Founded in 1913, the Bank is a community-oriented financial institution, dedicated to serving the financial service needs of customers and businesses within its market area, which consists of Baltimore City and Baltimore, Carroll and Howard Counties in Maryland. We offer a variety of deposit products and provide loans secured by real estate located in our market area. Our real estate loans consist primarily of one- to four-family mortgage loans, as well as commercial real estate loans, land loans, home equity lines of credit and residential construction loans. We also offer consumer loans and, to a limited extent, commercial business loans. We currently operate out of our corporate headquarters and main office in Baltimore and full-service branch offices located in Cockeysville, Ellicott City and Hampstead, Maryland. We are subject to extensive regulation, examination and supervision by the Office of the Comptroller of the Currency, our primary federal regulator, and the Federal Deposit Insurance Corporation, our deposit insurer.

The Company and the Bank maintain an Internet website at http://www.fraternityfed.com. Information on our website should not be considered a part of this Quarterly Report on Form 10-Q.

Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. The following represent our critical accounting policies:

Allowance for Loan Losses. The allowance for loan losses is the amount estimated by management as necessary to cover losses inherent in the loan portfolio at the balance sheet date. The allowance is established

35

through the provision for loan losses, which is charged to income. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Among the material estimates required to establish the allowance are: loss exposure at default; the amount and timing of future cash flows on impaired loans; value of collateral; and determination of loss factors to be applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. Management reviews the level of the allowance monthly and establishes the provision for loan losses based upon an evaluation of the portfolio, past loss experience, current economic conditions and other factors related to the collectability of the loan portfolio. Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic or other conditions differ substantially from the assumptions used in making the evaluation. In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, periodically reviews our allowance for loan losses and may require us to recognize adjustments to the allowance based on its judgments about information available to it at the time of its examination. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings.

Comparison of Financial Condition at September 30, 2012 and December 31, 2011

Assets. At September 30, 2012, total assets decreased by $5.1 million to $170.2 million at September 30, 2012 from $175.3 million at December 31, 2011. The decrease in assets for the nine months ended September 30, 2012 was due mainly to a $7.5 million decrease in our investment portfolio from $39.3 million at December 31, 2011 to $31.8 million at September 30, 2012, offset, in part, by a $2.4 million increase in cash and cash equivalents from $14.9 million at December 31, 2011 to $17.3 million at September 30, 2012. In addition, loans receivable, net, decreased $2.1 million, from $111.9 million at December 31, 2011 to $109.8 million at September 30, 2012. Other real estate owned increased from $0 at December 31, 2011 to $1.8 million at September 30, 2012.

Loans. Net loans receivable decreased by $2.1 million, or 1.9%, from $111.9 million at December 31, 2011 to $109.8 million at September 30, 2012, primarily as a result of transferring $2.1 million from loans receivable to other real estate owned.

Cash and Cash Equivalents. Cash and cash equivalents increased by $2.4 million, or 16.2%, from $14.9 million at December 31, 2011 to $17.3 million at September 30, 2012 primarily as a result of a decrease in our available for sale investment portfolio due to sales, principal receipts and a security being called.

Securities. Our available for sale securities decreased by $7.0 million, or 22.3%, from $31.4 million at December 31, 2011 to $24.4 million at September 30, 2012. During the nine months ended September 30, 2012 we sold securities totaling $8.5 million, had one security totaling $1.5 million called, purchased securities totaling $7.1 million, and had principal payments of $3.7 million on our securities. Proceeds from the sales of these securities was used to pay off a $2.5 million Federal Home Loan Bank advance. Our held to maturity securities decreased by $487,100, or 6.2%, from $7.8 million at December 31, 2011 to $7.3 million at September 30, 2012.

Deposits. Total deposits decreased by $2.2 million, from $121.2 million at December 31, 2011, to $119.0 million at September 30, 2012, primarily as a result of a decrease in brokered deposits of $1.5 million.

Borrowings. Total borrowings decreased by $2.5 million, or 11.1%, from $22.5 million at December 31, 2011 to $20.0 million at September 30, 2012. During the nine months ended September 30, 2012, one borrowing totaling $2.5 million matured and was paid off.

Results of Operations for the Three Months Ended September 30, 2012 and 2011 (unaudited)

Overview. We had a net loss of $91,200 for the three months ended September 30, 2012, as compared to a net loss of $7,200 for the three months ended September 30, 2011. The increase in net loss between the periods was primarily due to an increase in our provision for loan and lease losses of $195,500 for the three months ended

36

September 30, 2012 as compared to the three months ended September 30, 2011. Our provision for loan losses were $201,900 for the three months ended September 30, 2012 as compared to $6,400 for the three months ended September 30, 2011. This was partially off set by an increase in net interest income of $59,400 or 6.4%. This was mainly due to a large decrease in interest expense, due to the combination of lower average balances of interest bearing liabilities and the fact we were able to take advantage of declining interest rates to reprice maturing certificates of deposit and Federal Home Loan Bank advances at lower rates. Noninterest income decreased by $50,900, or 38.7% from $131,600 for the three months ended September 30, 2011 to $80,700 for the three months ended September 30, 2012. Noninterest expense decreased by $29,200 or 2.7% from $1,087,800 for the three months ended September 30, 2011 to $1,058,600 for the three months ended September 30, 2012. Income tax benefit increased by $73,800, from $28,000 for the three months ended September 30, 2011 to $101,800 for the three months ended September 30, 2012.

Net Interest Income. Net interest income increased by $59,400, or 6.4%, from $927,400 for the three months ended September 30, 2011 to $986,700 for the three months ended September 30, 2012. The increase in net interest income is primarily attributable to the combination of lower average balances of interest bearing liabilities and the fact we were able to take advantage of declining interest rates to reprice maturing certificates of deposit and Federal Home Loan Bank advances at lower rates.

Interest on loans receivable, net decreased by $68,400, or 4.7%, from $1.44 million for the three months ended September 30, 2011 to $1.37 million for the three months ended September 30, 2012, due to a 27 basis point decrease in the average yield. The decrease in the average yield on loans was attributable to market rates remaining at an historically low level. The average balance of loans receivable, net increased by $416,400, or .4%, from $109.0 million at September 30, 2011 to $109.4 million at September 30, 2012.

Interest on investment securities available-for-sale decreased by $91,700, or 41.0%, for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011, as the result of a $4.0 million, or 13.9%, decrease in the average balance of investment securities available-for-sale and a 97 basis point decrease in the average yield. Interest on investment securities held-to-maturity increased by $27,500, or 89.8%, for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011, as the result of a $1.7 million, or 31.1%, increase in the average balance of investment securities held-to-maturity and a 98 basis point increase in the average yield.

Interest on cash and cash equivalents remained low by historical standards during the three months ended September 30, 2012 and 2011 due to the historically low prevailing market rates during those periods.

During the three months ended September 30, 2012, we were able to reduce interest paid on deposits primarily as the result of time deposits being rolled over at lower rates in response to general declines in market interest rates, lower average balances of these time deposits and decreases in the cost of other deposits due to a decline in market rates. Interest on time deposits decreased by $104,700, or 20.0%, from $524,200 for the three months ended September 30, 2011, to $419,500 for the three months ended September 30, 2012, due to a 37 basis point decrease in the average cost of time deposits and a $3.2 million, or 3.2%, decrease in the average balance of time deposits. Interest on brokered deposits decreased by $21,800, or 85.4%, from $25,500 for the three months ended September 30, 2011, to $3,700 for the three months ended September 30, 2012, as the average balance of brokered deposits decreased from $2.3 million for the three months ended September 30, 2011 to $328,500 for the three months ended September 30, 2012. Interest on NOW and money market accounts remained stable during the three months ended September 30, 2012 as compared to the three months ended September 30, 2011, even with a 7.6% increase in the average balance of NOW and money market accounts. Interest on passbook accounts decreased by $8,100, or 36.4%, from $22,200 for the three months ended September 30, 2011 to $14,100 for the three months ended September 30, 2012, due primarily to a 17 basis point decrease in the average cost of passbook accounts. The average balance of passbook accounts decreased during the three months ended September 30, 2012, from $17.3 million as of September 30, 2011 to $16.6 million as of September 30, 2012.

Interest on other interest-bearing liabilities, which consist of Federal Home Loan Bank advances, decreased by $59,000, or 26.2%, for three months ended September 30, 2012 as compared to the three months ended September 30, 2011, due to a decrease of 93 basis points in the average cost of these other interest-bearing liabilities. At September 30, 2012 and December 31, 2011, we had $20.0 million and $22.5 million, respectively, of Federal Home Loan Bank advances.

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Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using monthly balances, and non-accrual loans are included in average balances only. Amortization of net deferred loan fees are included in interest income on loans and are insignificant. No tax-equivalent adjustments were made. Nonaccruing loans have been included in the table as loans carrying a zero yield.

	Three Months Ended September 30,
	2012							2011
	Average Balance		Interest and Dividends		Yield/ Cost			Average Balance		Interest and Dividends		Yield/ Cost
Assets:
Interest-bearing deposits in other banks	$	19,483,978	$	11,483		.24	%	$	24,247,178	$	18,954		.31	%
Loans receivable, net (3)		109,438,408		1,374,262		5.02			109,022,039		1,442,702		5.29
Investment securities available-for-sale (1)		24,981,506		131,787		2.11			28,998,253		223,509		3.08
Investment securities held-to-maturity (2)		7,368,315		58,138		3.16			5,621,632		30,627		2.18
Other interest-earning assets		2,188,412		18,623		3.40			2,198,081		12,446		2.26
Total interest-earning assets		163,460,619		1,594,293		3.90			170,087,183		1,728,238		4.06
Noninterest-earning assets		8,945,391							7,843,370
Total assets	$	172,406,010						$	177,930,553
Liabilities and equity:
Time deposits	$	94,852,608	$	419,515		1.77		$	98,007,152	$	524,242		2.14
NOW and money market		6,031,856		3,580		.24			5,604,650		3,320		.24
Passbook		16,627,077		14,140		.34			17,271,692		22,225		.51
Brokered deposits		328,513		3,727		4.54			2,344,877		25,491		4.35
Federal Home Loan Bank advances		21,666,667		166,594		3.08			22,500,000		225,592		4.01
Total interest-bearing liabilities		139,506,721		607,556		1.74			145,728,371		800,870		2.20
Noninterest-bearing liabilities		2,856,876							2,249,395
Total liabilities		142,363,597							147,977,766
Total equity		30,042,413							29,952,787
Total liabilities and equity	$	172,406,010						$	177,930,553
Net interest income			$	986,737						$	927,368
Interest rate spread						2.16	%						1.86	%
Net interest margin						2.41	%						2.18	%
Ratio of average interest-earning assets to average interest-bearing liabilities						117.17	%						116.72	%

(1) Investment securities available-for-sale are presented at fair market value.

(2) Investment securities held-to-maturity are presented at amortized cost.

(3) Loans placed on non-accrual status are included in average assets.

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Provision and Allowance for Loan Losses. We maintain an allowance at a level necessary to absorb management’s best estimate of probable loan losses in the portfolio. Management considers, among other factors, historical loss experience, type and amount of loans, borrower concentrations and current conditions of the economy. In addition, the allowance considers the level of loans which management monitors as a result of inconsistent repayment patterns. Management has identified commercial real estate loans as an area for expected increased lending. Such loans carry a higher degree of credit risk than our historical single-family lending.

Our provision for loan losses increased by $195,500 to $201,900 for the three months ended September 30, 2012 from $6,400 for the three months ended September 30, 2011. At September 30, 2012 and December 31, 2011, the allowance for loan losses was $1.4 million, or 1.25% and $1.25 million, or 1.10%, of the total loan portfolio.

Non-accrual loans totaled $4.7 million at September 30, 2012 compared to $3.8 million at December 31, 2011. Net loan charge-offs amounted to $56,900 during the three months ended September 30, 2012, compared to $6,400 during the three months ended September 30, 2011. As of December 31, 2011, non-accrual loans included two land loans totaling $309,000, one speculative construction loan totaling $1.6 million, two home equity lines of credit totaling $93,300, seven owner occupied one-to-four family residential loans totaling $1.4 million and six non-owner occupied one-to-four family residential loans totaling $475,600. As of September 30, 2012, nonaccrual loans included one land loan totaling $110,500, seventeen owner-occupied one-to-four family residential loans totaling $3.9 million, five non-owner-occupied one-to-four family residential loans totaling $367,700 and four home equity lines of credit totaling $330,300. The total increase of $2.0 million in the one-to-four family residential loan category is primarily due to two loans to the same borrower totaling $2.3 million. These loans were classified as troubled debt restructurings during this quarter and a specific reserve of $189,900 was established.

Impaired loans totaled $4.9 million at September 30, 2012 compared to $4.1 million at December 31, 2011. As of December 31, 2011, impaired loans included eight one-to-four family owner-occupied residential loans totaling $1.7 million, six non-owner-occupied one-to-four family residential loans totaling $475,600, two home equity line of credit loans totaling $93,300, two land loans totaling $309,000, and one speculative construction loan totaling $1.6 million. As of September 30, 2012, impaired loans included eighteen one-to-four family owner-occupied residential loans totaling $4.1 million, five non-owner-occupied one-to-four family residential loans totaling $367,700, four home equity line of credit loans totaling $330,300, and one land loan totaling $110,500.

Other real estate owned totaled $1.8 million at September 30, 2012 compared to $0 at December 31, 2011. This was as a result of one speculative construction loan, one speculative land loan and one non-owner-occupied one-to-four family residential loan previously reported as non-accrual loans being foreclosed upon during the year.

Management also reviews individual loans for which full collectability may not be reasonably assured and considers, among other matters, the estimated fair value of the underlying collateral. This evaluation is ongoing and results in variations in our provision for loan losses.

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The following table provides information with respect to our nonperforming assets at the dates indicated:

	At
	September 30, 2012			December 31, 2011
	(unaudited)
Nonaccrual loans:
Real estate loans:
Owner occupied one-to four-family	$	3,858,148		$	1,394,950
Non-owner occupied one-to four-family		367,743			475,572
Lines of credit		330,262			93,309
Commercial		0			0
Residential construction		0			1,565,198
Land		110,500			309,022
Commercial		0			0
Consumer		0			0
Total	$	4,666,653		$	3,838,051
Accruing loans past due 90 days or more	$	0		$	0
Total of nonaccrual loans and accruing loans 90 days Or more past due	$	4,666,653		$	3,838,051
Other real estate owned		1,783,484			0
Total nonperforming assets	$	6,450,137		$	3,838,051
Troubled debt restructurings	$	3,558,561		$	1,562,084
Troubled debt restructurings included in non-accrual loans	$	(3,297,816	)	$	(1,298,347	)
Troubled debt restructurings and total nonperforming assets	$	6,710,882		$	4,101,788
Total of nonaccrual loans and accruing loans past due 90 days or more to total loans		4.20	%		3.39	%
Total of nonaccrual loans and accruing loans past due 90 days or more to total assets		2.74	%		2.19	%
Total nonperforming assets to total assets		3.79	%		2.19	%

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Analysis of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the periods indicated.

	Three Months Ended September 30,
	2012			2011
Allowance for loan losses at beginning of period	$	1,250,000		$	1,250,000
Charge-offs:
Real estate loans:
Owner occupied one-to four-family		0			25,455
Non-owner occupied one-to four-family		59,847			0
Lines of credit		0			0
Commercial		0			0
Residential construction		0			0
Land		0			0
Commercial		0			0
Consumer		88			0
Total charge-offs		59,935			25,455
Recoveries		3,015			19,010
Net charge-offs		56,920			6,445
Provision for loan losses		201,920			6,445
Allowance at end of period	$	1,395,000		$	1,250,000
Allowance for loan losses to total loans at the end of the period		1.25	%		1.10	%
Net charge-offs to average loans outstanding during the period		.05	%		.01	%

Noninterest Income. Total noninterest income decreased by $50,900, or 38.7%, from $131,600 for the three months ended September 30, 2011 compared to $80,700 for the three months ended September 30, 2012. The decrease was primarily due to a decrease of $60,000, or 100.0%, in the gain on sale of investments during the three months ended September 30, 2012 compared to the three months ended September 30, 2011.

Noninterest Expenses. Total noninterest expenses decreased by $29,200, or 2.7%, from $1,087,800 for the three months ended September 30, 2011 to $1,058,600 for the three months ended September 30, 2012. The decrease primarily was attributable to a decrease in salaries and employee benefits.

Income Tax Expense. We recognized an income tax benefit of $101,800 during the three months ended September 30, 2012, as compared to an income tax benefit of $28,000 for the three months ended September 30, 2011.

Results of Operations for the Nine Months Ended September 30, 2012 and 2011 (unaudited)

Overview. We had net income of $63,300 for the nine months ended September 30, 2012, as compared to a net loss of $64,200 for the nine months ended September 30, 2011. The increase in net income between the periods was primarily due to an increase in net interest income of $597,800 or 22.9%. This was due to a large decrease in interest expense, due to the combination of lower average balances of interest bearing liabilities and the fact we were able to take advantage of declining interest rates to reprice maturing certificates of deposit and Federal Home Loan Bank advances at lower rates. This was partially offset by an increase in our provision for loan and lease losses of $313,200, from $67,000 for the nine months ended September 30, 2011 to $380,200 for the nine months ended September 30, 2012. Noninterest income increased by $38,200, or 13.1% from $290,600 for the nine months ended September 30, 2011 to $328,800 for the nine months ended September 30, 2012. Noninterest expense increased by $129,300 or 4.3% from $3.0 million for the nine months ended September 30, 2011 to $3.1 million for the nine months ended September 30, 2012. Income tax benefit decreased by $66,000, from an income tax benefit of $122,000 for the nine months ended September 30, 2011 to $56,000 for the nine months ended September 30, 2012.

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Net Interest Income. Net interest income increased by $597,800, or 22.9%, from $2.6 million for the nine months ended September 30, 2011 to $3.2 million for the nine months ended September 30, 2012. The increase in net interest income is primarily attributable to the combination of lower average balances of interest bearing liabilities and the fact we were able to take advantage of declining interest rates to reprice maturing certificates of deposit and Federal Home Loan Bank advances at lower rates.

Interest on loans receivable, net decreased by $84,900, or 1.9%, from $4.37 million for the nine months ended September 30, 2011 to $4.29 million for the nine months ended September 30, 2012, due to a 18 basis point decrease in the average yield. The decrease in the average yield on loans was attributable to market rates remaining at an historically low level. The average balance of loans receivable, net increased by $1.5 million, or 1.4%, from $109.2 million at September 30, 2011 to $110.7 million at September 30, 2012.

Interest on investment securities available-for-sale decreased by $160,400, or 23.7%, for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, as the result of a $3.7 million, or 11.9%, decrease in the average balance of investment securities available-for-sale and a 39 basis point decrease in the average yield. Interest on investment securities held-to-maturity increased by $150,500, or 491.4%, for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2012, as the result of a $5.7 million, or 303.2% increase in the average balance of investment securities held-to-maturity and a 102 basis point increase in the average yield.

Interest on cash and cash equivalents remained low by historical standards during the nine months ended September 30, 2012 and 2011 due to the historically low prevailing market rates during those periods.

During the nine months ended September 30, 2012, we were able to reduce interest paid on deposits primarily as the result of time deposits being rolled over at lower rates in response to general declines in market interest rates, lower average balances of these time deposits and decreases in the cost of other deposits due to a decline in market rates. Interest on time deposits decreased by $432,500, or 25.3%, from $1.7 million for the nine months ended September 30, 2011, to $1.3 million for the nine months ended September 30, 2012, due to a 44 basis point decrease in the average cost of time deposits and a $6.9 million, or 6.8%, decrease in the average balance of time deposits. Interest on brokered deposits decreased by $61,900, or 82.3%, from $75,200 for the nine months ended September 30, 2011, to $13,300 for the nine months ended September 30, 2012, as the average balance of brokered deposits decreased from $2.3 million for the nine months ended September 30, 2011 to $1.1 million for the nine months ended September 30, 2012. Interest on NOW and money market accounts remained stable during the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, even with a 13.7% increase in the average balance of NOW and money market accounts. Interest on passbook accounts decreased by $25,300, or 36.7%, from $69,000 for the nine months ended September 30, 2011 to $43,700 for the nine months ended September 30, 2012, due primarily to a 21 basis point decrease in the average cost of passbook accounts. The average balance of passbook accounts increased during the nine months ended September 30, 2012, from $16.6 million as of September 30, 2011 to $16.9 million as of September 30, 2012.

Interest on other interest-bearing liabilities, which consist of Federal Home Loan Bank advances, decreased by $163,100, or 24.4%, for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, due to a decrease of 93 basis points in the average cost of these other interest-bearing liabilities. At September 30, 2012 and December 31, 2011, we had $20.0 million and $22.5 million, respectively, of Federal Home Loan Bank advances.

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Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using monthly balances, and non-accrual loans are included in average balances only. Amortization of net deferred loan fees are included in interest income on loans and are insignificant. No tax-equivalent adjustments were made. Nonaccruing loans have been included in the table as loans carrying a zero yield.

	Nine Months Ended September 30,
	2012							2011
	Average Balance		Interest and Dividends		Yield/ Cost			Average Balance		Interest and Dividends		Yield/ Cost
Assets:
Interest-bearing deposits in other banks	$	17,383,393	$	29,030		.22	%	$	24,164,694	$	28,923		.16	%
Loans receivable, net (3)		110,675,721		4,285,743		5.16			109,170,451		4,370,676		5.34
Investment securities available-for-sale (1)		27,741,042		516,985		2.48			31,477,320		677,354		2.87
Investment securities held-to-maturity (2)		7,554,820		181,141		3.20			1,873,877		30,627		2.18
Other interest-earning assets		2,203,296		53,492		3.24			2,227,611		42,800		2.56
Total interest-earning assets		165,558,272		5,066,391		4.08			168,913,953		5,150,380		4.07
Noninterest-earning assets		8,359,171							8,594,531
Total assets	$	173,917,443						$	177,508,484
Liabilities and equity:
Time deposits	$	94,378,106	$	1,279,974		1.81		$	101,306,434	$	1,712,484		2.25
NOW and money market		6,030,341		10,723		.24			5,305,858		9,679		.24
Passbook		16,915,059		43,693		.34			16,592,075		69,021		.55
Brokered deposits		1,141,922		13,285		1.55			2,335,900		75,216		4.29
Federal Home Loan Bank advances		22,222,222		506,522		3.04			22,509,259		669,608		3.97
Total interest-bearing liabilities		140,687,650		1,854,197		1.76			148,049,526		2,536,008		2.28
Noninterest-bearing liabilities		3,044,271							2,641,633
Total liabilities		143,731,921							150,691,159
Total equity		30,185,522							26,817,325
Total liabilities and equity	$	173,917,443						$	177,508,484
Net interest income			$	3,212,194						$	2,614,372
Interest rate spread						2.32	%						1.78	%
Net interest margin						2.59	%						2.06	%
Ratio of average interest-earning assets to average interest-bearing liabilities						117.68	%						114.09	%

(1) Investment securities available-for-sale are presented at fair market value.

(2) Investment securities held-to-maturity are presented at amortized cost.

(3) Loans placed on non-accrual status are included in average assets.

43

Provision and Allowance for Loan Losses. We maintain an allowance at a level necessary to absorb management’s best estimate of probable loan losses in the portfolio. Management considers, among other factors, historical loss experience, type and amount of loans, borrower concentrations and current conditions of the economy. In addition, the allowance considers the level of loans which management monitors as a result of inconsistent repayment patterns. Management has identified commercial real estate loans as an area for expected increased lending. Such loans carry a higher degree of credit risk than our historical single-family lending.

Our provision for loan losses increased by $313,200 to $380,200 for the nine months ended September 30, 2012 from $67,000 for the nine months ended September 30, 2011. At September 30, 2012 and December 31, 2011, the allowance for loan losses was $1.4 million, or 1.25%, and $1.25 million, or 1.10%, of the total loan portfolio.

Non-accrual loans totaled $4.7 million at September 30, 2012 compared to $3.8 million at December 31, 2011. Net loan charge-offs amounted to $235,200 during the nine months ended September 30, 2012, compared to $117,000 during the nine months ended September 30, 2011. As of December 31, 2011, non-accrual loans included two land loans totaling $309,000, one speculative construction loan totaling $1.6 million, two home equity lines of credit totaling $93,300, seven owner occupied one-to-four family residential loans totaling $1.4 million and six non-owner occupied one-to-four family residential loans totaling $475,600. As of September 30, 2012, non-accrual loans included one land loan totaling $110,500, seventeen owner-occupied one-to-four family residential loans totaling $3.9 million, five non-owner-occupied one-to-four family residential loans totaling $367,700 and four home equity lines of credit totaling $330,300. The total increase of $2.0 million in the one-to-four family residential loan category is primarily due to two loans to the same borrower totaling $2.3 million. These loans were classified as troubled debt restructurings during this quarter and a specific reserve of $189,900 was established.

Impaired loans totaled $4.9 million at September 30, 2012 compared to $4.1 million at December 31, 2011. As of December 31, 2011, impaired loans included eight one-to-four family owner-occupied residential loans totaling $1.7 million, six non-owner-occupied one-to-four family residential loans totaling $475,600, two home equity line of credit loans totaling $93,300, two land loans totaling $309,000, and one speculative construction loan totaling $1.6 million. As of September 30, 2012, impaired loans included eighteen one-to-four family owner-occupied residential loans totaling $4.1 million, five non-owner-occupied one-to-four family residential loans totaling $367,700, four home equity line of credit loans totaling $330,300, and one land loan totaling $110,500.

Other real estate owned totaled $1.8 million at September 30, 2012 compared to $0 at December 31, 2011. This was as a result of one speculative construction loan, one speculative land loan and one non-owner-occupied one-to-four family residential loan previously reported as non-accrual loans being foreclosed upon during the year.

Management also reviews individual loans for which full collectability may not be reasonably assured and considers, among other matters, the estimated fair value of the underlying collateral. This evaluation is ongoing and results in variations in our provision for loan losses.

44

The following table provides information with respect to our nonperforming assets at the dates indicated:

	At
	September 30, 2012			December 31, 2011
	(unaudited)
Nonaccrual loans:
Real estate loans:
Owner occupied one-to four-family	$	3,858,148		$	1,394,950
Non-owner occupied one-to four-family		367,743			475,572
Lines of credit		330,262			93,309
Commercial		0			0
Residential construction		0			1,565,198
Land		110,500			309,022
Commercial		0			0
Consumer		0			0
Total	$	4,666,653		$	3,838,051
Accruing loans past due 90 days or more	$	0		$	0
Total of nonaccrual loans and accruing loans 90 days Or more past due	$	4,666,653		$	3,838,051
Other real estate owned		1,783,484			0
Total nonperforming assets	$	6,450,137		$	3,838,051
Troubled debt restructurings	$	3,558,561		$	1,562,084
Troubled debt restructurings included in non-accrual loans	$	(3,297,816	)	$	(1,298,347	)
Troubled debt restructurings and total nonperforming assets	$	6,710,882		$	4,101,788
Total of nonaccrual loans and accruing loans past due 90 days or more to total loans		4.20	%		3.39	%
Total of nonaccrual loans and accruing loans past due 90 days or more to total assets		2.74	%		2.19	%
Total nonperforming assets to total assets		3.79	%		2.19	%

45

Analysis of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the periods indicated.

	Nine Months Ended September 30,
	2012			2011
Allowance for loan losses at beginning of period	$	1,250,000		$	1,300,000
Charge-offs:
Real estate loans:
Owner occupied one-to four-family		133,065			61,929
Non-owner occupied one-to four-family		59,847			0
Lines of credit		0			0
Commercial		0			0
Residential construction		44,940			0
Land		20,585			75,718
Commercial		0			0
Consumer		88			0
Total charge-offs		258,525			137,647
Recoveries		23,351			20,686
Net charge-offs		235,174			116,961
Provision for loan losses		380,174			66,961
Allowance at end of period	$	1,395,000		$	1,250,000
Allowance for loan losses to total loans at the end of the period		1.25	%		1.13	%
Net charge-offs to average loans outstanding during the period		.21	%		.11	%

Noninterest Income. Total noninterest income increased by $38,200, or 13.1%, from $290,600 for the nine months ended September 30, 2011 compared to $328,800 for the nine months ended September 30, 2012. The increase was primarily due to an increase of $52,900 in the gain on sale of loans and a decrease of $9,900 in the gain on sale of other real estate owned during the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011.

Noninterest Expenses. Total noninterest expenses increased by $129,300, or 4.3%, from $3.02 million for the nine months ended September 30, 2011 to $3.15 million for the nine months ended September 30, 2012. The increase primarily was attributable to an increase in legal fees and accounting and auditing fees.

Income Tax Expense. We recognized an income tax benefit of $56,000 during the nine months ended September 30, 2012, compared to an income tax benefit of $122,000 for the nine months ended September 30, 2011.

Liquidity Management. Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds available to meet short-term liquidity needs consist of deposit inflows, loan repayments and maturities and sales of investment securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

We regularly adjust our investments in liquid assets available to meet short-term liquidity needs based upon our assessment of (i) expected loan demand, (ii) expected deposit flows, (iii) yields available on interest-earning deposits and securities and (iv) the objectives of our asset/liability management policy. We do not have long-term debt or other financial obligations that would create long-term liquidity concerns.

Our most liquid assets are cash and cash equivalents. The level of these assets depends on our operating, financing, lending and investing activities during any given period. At September 30, 2012, cash and cash equivalents totaled $17.3 million. Securities classified as available-for-sale, amounting to $24.4 million at September 30, 2012, provides an additional source of liquidity. In addition, at September 30, 2012, we had the

46

ability to borrow a total of approximately $52.4 million from the Federal Home Loan Bank of Atlanta and had $20.0 million in Federal Home Loan Bank advances outstanding. For additional liquidity, if needed, we have a $3.0 million line of credit with another bank, on which we had no outstanding balance at September 30, 2012.

Certificates of deposit due within one year of September 30, 2012 totaled $46.2 million, or 48.7%, of certificates of deposit. We believe the large percentage of certificates of deposit that mature within one year reflects customers’ hesitancy to invest their funds for long periods due to the recent low interest rate environment and local competitive pressures. If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before September 30, 2013. We believe, however, based on past experience, that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Capital Management. We are subject to various regulatory capital requirements administered by the Office of the Comptroller of the Currency, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At September 30, 2012, we exceeded all of our regulatory capital requirements and were considered “well capitalized” under regulatory guidelines.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, unused lines of credit and letters of credit. For the nine months ended September 30, 2012, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

This item is not applicable as the Company is a smaller reporting company.

Item 4. Controls and Procedures

As of the end of the period covered by this report, management of the Company carried out an evaluation, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures as that term is defined in Rule 13a-5(e). Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

It should be noted that the design of the Company’s disclosure controls and procedures is based in part upon certain reasonable assumptions about the likelihood of future events, and there can be no reasonable assurance that any design of disclosure controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote, but the Company’s principal executive and financial officers have concluded that the Company’s disclosure controls and procedures are, in fact, effective at a reasonable assurance level.

47

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities and Exchange Commission Rule 13a-15 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Periodically, there may be various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors

For information regarding the Company’s risk factors, see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed with the Securities and Exchange Commission on March 26, 2012. As of the date of this filing, the risk factors of the Company have not changed materially from those reported in the Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information regarding stock repurchases during the periods indicated:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares  Purchased As Part of a Publicly Announced Repurchase Program (1)		Maximum Number of Shares That May Yet Be Purchased Under the Repurchase Program (1)
July 1-31, 2012		0	$	0		0		157,200
August 1-31, 2012		17,500		11.99		17,500		139,700
September 1-30, 2012		31,400		12.32		31,400		108,300
TOTAL		48,900		12.20		48,900		108,300

(1) On May 24, 2012, Fraternity Community Bancorp, Inc. announced that it had approved a stock repurchase program to acquire up to 158,700 shares, or 10%, of the Company’s outstanding common stock.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The Company’s 2013 Annual Meeting of Shareholders will be held on May 14, 2013.

48

Item 6. Exhibits

No.	Description
3.1	Articles of Incorporation of Fraternity Community Bancorp, Inc. (1)
3.2	Bylaws of Fraternity Community Bancorp, Inc. (1)
31.0	Rule 13a-14(a) Certification of Chief Executive Officer and Chief Financial Officer
32.0	Section 1350 Certifications
101.0*	The following materials from Fraternity Community Bancorp’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Financial Condition; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Changes in Stockholders’ Equity; (iv) the Consolidated Statements of Cash Flows; and (v) the related Notes.

(1) Incorporated herein by reference to the Company’s Registration Statement on Form S-1, as amended (File No. 333-170215).

* Furnished, not filed.

49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FRATERNITY COMMUNITY BANCORP, INC.
November 13, 2012
		By:	/s/ Thomas K. Sterner
			Thomas K. Sterner
			Chairman of the Board, Chief Executive Officer and Chief Financial Officer

EX-31.0

Exhibit 31.0

CERTIFICATION

I, Thomas K. Sterner, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Fraternity Community Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2012	/s/ Thomas K. Sterner
	Thomas K. Sterner Chairman of the Board, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Accounting and Financial Officer)

EX-32.0

Exhibit 32.0

CERTIFICATION PURSUANT TO 18. U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

The undersigned executive officer of Fraternity Community Bancorp, Inc. (the “Company”) hereby certifies that this Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

By:	/s/ Thomas K. Sterner
	Name:	Thomas K. Sterner
	Title:	Chairman of the Board, Chief Executive Officer and Chief Financial Officer

Date: November 13, 2012

XML

Loan Class Modified as Troubled Debt Restructuring (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012 Contract	Sep. 30, 2011 Contract	Sep. 30, 2012 Contract	Sep. 30, 2011 Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0	0	0
Recorded Investment	$ 0	$ 0	$ 0	$ 0

XML

Fair Value Estimates, Methods, and Assumptions for Financial Instruments (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Assets, carrying value
Cash and cash equivalents, carrying value	$ 17,342,713	$ 14,923,142	$ 24,399,509	$ 25,881,831
Securities - available-for-sale, carrying value	24,415,230	31,419,356
Securities - held-to-maturity, carrying value	7,350,208	7,837,293
Loans, net of allowance, carrying value	109,840,550	111,924,984
Federal Home Loan Bank stock, carrying value	1,275,500	1,306,500
Investment in bank-owned life insurance, carrying value	4,482,563	4,354,252
Liabilities, carrying value
Deposit accounts and advances by borrowers, carrying value	119,835,266	122,031,508
Advances from the FHLB, carrying value	20,000,000	22,500,000
Assets, estimated fair value
Cash and cash equivalents, estimated fair value	17,342,713	14,923,142
Securities - available-for-sale, estimated fair value	24,415,230	31,419,356
Securities - held-to-maturity, estimated fair value	7,705,022	7,970,403
Loans, net of allowance, estimated fair value	115,258,558	115,584,351
Federal Home Loan Bank stock, estimated fair value	1,275,500	1,306,500
Investment in bank-owned life insurance, estimated fair value	4,482,563	4,354,252
Liabilities, estimated fair value
Deposit accounts and advances by borrowers, estimated fair value	120,590,084	122,998,429
Advances from the FHLB, estimated fair value	20,890,706	23,223,703
Off-Balance Sheet Instruments:
Commitments to extend credit	1,451,000	0
Unused lines of credit	10,560,270	12,006,256
Level One
Assets, estimated fair value
Cash and cash equivalents, estimated fair value	17,342,713	14,923,142
Securities - available-for-sale, estimated fair value	0	0
Securities - held-to-maturity, estimated fair value	0	0
Loans, net of allowance, estimated fair value	0	0
Federal Home Loan Bank stock, estimated fair value	0	0
Investment in bank-owned life insurance, estimated fair value	4,482,563	4,354,252
Liabilities, estimated fair value
Deposit accounts and advances by borrowers, estimated fair value	0	0
Advances from the FHLB, estimated fair value	0	0
Level Two
Assets, estimated fair value
Cash and cash equivalents, estimated fair value	0	0
Securities - available-for-sale, estimated fair value	24,415,230	31,419,356
Securities - held-to-maturity, estimated fair value	7,705,022	7,970,403
Loans, net of allowance, estimated fair value	4,737,536	4,101,788
Federal Home Loan Bank stock, estimated fair value	1,275,500	1,306,500
Investment in bank-owned life insurance, estimated fair value	0	0
Liabilities, estimated fair value
Deposit accounts and advances by borrowers, estimated fair value	120,590,084	122,998,429
Advances from the FHLB, estimated fair value	20,890,706	23,223,703
Level Three
Assets, estimated fair value
Cash and cash equivalents, estimated fair value	0	0
Securities - available-for-sale, estimated fair value	0	0
Securities - held-to-maturity, estimated fair value	0	0
Loans, net of allowance, estimated fair value	110,521,022	111,482,563
Federal Home Loan Bank stock, estimated fair value	0	0
Investment in bank-owned life insurance, estimated fair value	0	0
Liabilities, estimated fair value
Deposit accounts and advances by borrowers, estimated fair value	0	0
Advances from the FHLB, estimated fair value	$ 0	$ 0

XML

Aged Analysis of Past Due Loans Receivable (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	$ 622,383	$ 40,965
60-89 Days Past Due	3,530	32,830
Greater Than 90 Days Past Due	3,486,833	3,322,237
Total Past Due	4,112,746	3,396,032
Current	107,122,804	109,778,952
Loans Receivable	111,235,550	113,174,984
Recorded Investment > 90 Days and Accruing	0	0
Owner occupied one-to-four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	558,061	40,965
60-89 Days Past Due	3,530	3,273
Greater Than 90 Days Past Due	2,916,203	1,299,668
Total Past Due	3,477,794	1,343,906
Current	65,761,937	74,614,427
Loans Receivable	69,239,731	75,958,333
Recorded Investment > 90 Days and Accruing	0	0
Non owner occupied one-to-four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days Past Due	367,743	78,821
Total Past Due	367,743	78,821
Current	12,379,058	11,853,992
Loans Receivable	12,746,801	11,932,813
Recorded Investment > 90 Days and Accruing	0	0
Home Equity Lines of Credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	64,322	0
60-89 Days Past Due	0	29,557
Greater Than 90 Days Past Due	92,387	69,528
Total Past Due	156,709	99,085
Current	10,144,948	9,402,608
Loans Receivable	10,301,657	9,501,693
Recorded Investment > 90 Days and Accruing	0	0
Commercial Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days Past Due	0	0
Total Past Due	0	0
Current	12,633,089	10,040,391
Loans Receivable	12,633,089	10,040,391
Recorded Investment > 90 Days and Accruing	0	0
Residential construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days Past Due	0	1,565,198
Total Past Due	0	1,565,198
Current	4,316,409	1,523,776
Loans Receivable	4,316,409	3,088,974
Recorded Investment > 90 Days and Accruing	0	0
Land
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days Past Due	110,500	309,022
Total Past Due	110,500	309,022
Current	1,804,696	2,275,454
Loans Receivable	1,915,196	2,584,476
Recorded Investment > 90 Days and Accruing	0	0
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days Past Due	0	0
Total Past Due	0	0
Current	66,341	50,486
Loans Receivable	66,341	50,486
Recorded Investment > 90 Days and Accruing	0	0
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days Past Due	0	0
Total Past Due	0	0
Current	16,326	17,818
Loans Receivable	16,326	17,818
Recorded Investment > 90 Days and Accruing	$ 0	$ 0

XML

Earnings Per Common Share (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Earnings Per Share Disclosure [Line Items]
Net (loss) income	$ (91,223)	$ (7,151)	$ 63,344	$ (64,222)
Weighted average common shares outstanding	1,453,158	1,462,685	1,466,069	1,460,922
Basic and diluted earnings (loss) per share	$ (0.06)	$ (0.01)	$ 0.04	$ (0.04)

XML

Capital Position (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Risk-Based Capital, Actual Amount	$ 24,906	$ 24,827
Tier I Capital, Actual Amount	23,719	23,654
Tier I Capital, Actual Amount	23,719	23,654
Total Risk-Based Capital to risk-weighted assets, Actual Ratio	26.29%	26.46%
Tier I Capital to risk-weighted assets, Actual Ratio	25.04%	25.21%
Tier I Capital to adjusted total asset, Actual Ratio	13.95%	13.50%
Total Risk-Based Capital, For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions, Amount	9,474	9,383
Tier I Capital, For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions, Amount	5,683	5,630
Tier I Capital, For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions, Amount	$ 8,501	$ 8,761
Total Risk-Based Capital to Risk-Weighted Assets, For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions, Ratio	10.00%	10.00%
Tier I Capital to Risk-Weighted Assets, For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions, Ratio	6.00%	6.00%
Tier I Capital to Adjusted Total Assets, For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions, Ratio	5.00%	5.00%

XML

Impaired Loan Considered to be any Loan which is Troubled Debt Restructuring or on Nonaccrual Status (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	$ 4,666,653	$ 3,838,051
Total impaired loans	4,927,398	4,101,788
Troubled Debt Restructurings, Non-Accrual	3,297,816	1,298,347
Owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	3,858,148	1,394,950
Non owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	367,743	475,572
Home Equity Lines of Credit
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	330,262	93,309
Residential construction
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	0	1,565,198
Land
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	110,500	309,022
Performing
Financing Receivable, Impaired [Line Items]
Total impaired performing loans	260,745	263,737
Performing | Owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Impaired performing loans	0	0
Troubled Debt Restructurings	260,745	263,737
Performing | Non owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Impaired performing loans	0	0
Troubled Debt Restructurings	0	0
Performing | Home Equity Lines of Credit
Financing Receivable, Impaired [Line Items]
Impaired performing loans	0	0
Troubled Debt Restructurings	0	0
Performing | Commercial Real Estate
Financing Receivable, Impaired [Line Items]
Impaired performing loans	0	0
Troubled Debt Restructurings	0	0
Performing | Residential construction
Financing Receivable, Impaired [Line Items]
Impaired performing loans	0	0
Troubled Debt Restructurings	0	0
Performing | Land
Financing Receivable, Impaired [Line Items]
Impaired performing loans	0	0
Troubled Debt Restructurings	0	0
Non-Performing | Owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	901,695	698,141
Troubled Debt Restructurings, Non-Accrual	2,956,453	696,809
Non-Performing | Non owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	367,743	475,572
Troubled Debt Restructurings, Non-Accrual	0	0
Non-Performing | Home Equity Lines of Credit
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	99,398	93,309
Troubled Debt Restructurings, Non-Accrual	230,864	0
Non-Performing | Commercial Real Estate
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	0	0
Troubled Debt Restructurings, Non-Accrual	0	0
Non-Performing | Residential construction
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	0	1,565,198
Troubled Debt Restructurings, Non-Accrual	0	0
Non-Performing | Land
Financing Receivable, Impaired [Line Items]
Non-Accrual Loans	0	194,022
Troubled Debt Restructurings, Non-Accrual	$ 110,500	$ 115,000

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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2012

INVESTMENT SECURITIES

2. INVESTMENT SECURITIES

The amortized cost and fair values of investment securities are as follows:

	September 30, 2012 (unaudited)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Bank Notes and Corporate Bonds	$	2,497,895	$	21,665	$	1,500	$	2,518,060
Obligations of U.S. Government Agencies		3,999,005		4,060		16,185		3,986,880
Mortgage-backed securities:
FNMA		4,329,769		130,799		116		4,460,452
GNMA		9,422,086		134,448		0		9,556,534
FHLMC		1,174,958		11,946		0		1,186,904
FNMA CMO		2,392,805		4,167		9,561		2,387,411
Private Label CMO		318,608		381		0		318,989
	$	24,135,126	$	307,466	$	27,362	$	24,415,230
Held-to-maturity:
Municipal Bonds	$	545,905	$	35,720	$	0	$	581,625
SBA Pools		1,933,916		23,623		19,977		1,937,562
Mortgage-backed securities:
FNMA		4,870,387		315,448		0		5,185,835
	$	7,350,208	$	374,791	$	19,977	$	7,705,022

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Bank Notes and Corporate Bonds	$	2,495,526	$	7,844	$	16,935	$	2,486,435
Obligations of U.S. Government Agencies		6,696,656		126,082		0		6,822,738
Mortgage-backed securities:
FNMA		9,370,220		119,118		172		9,489,166
GNMA		7,019,669		31,425		41,879		7,009,215
FHLMC		2,334,789		7,438		17,889		2,324,338
FHLMC		2,636,100		67,091		0		2,703,191
Private Label CMO		623,176		5,259		44,162		584,273
	$	31,176,136	$	364,257	$	121,037	$	31,419,356

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Municipal Bonds	$	551,202	$	17,283	$	0	$	568,485
SBA Pools		2,345,921		12,401		0		2,358,322
Mortgage-backed securities:
FNMA		4,940,170		103,426		0		5,043,596
	$	7,837,293	$	133,110	$	0	$	7,970,403

The amortized cost and fair value of debt securities at September 30, 2012 and December 31, 2011 by contractual maturities are shown below. Expected maturities may differ from contractual maturities because borrowers may have to call or repay obligations with or without call or prepayment penalties.

	September 30, 2012
	Available-for-Sale (unaudited)
	Amortized Cost		Fair Value
Due in less than one year	$	997,895	$	1,019,560
Due in one year through five years		1,504,291		1,502,734
Due in five years through ten years		1,283,481		1,317,002
Due after ten years		20,349,459		20,575,934
	$	24,135,126	$	24,415,230

	September 30, 2012
	Held-to-Maturity (unaudited)
	Amortized Cost		Fair Value
Due in one year through five years	$	888,698	$	868,722
Due in five years through ten years		4,870,388		5,185,835
Due after ten years		1,591,122		1,650,465
	$	7,350,208	$	7,705,022

	December 31, 2011
	Available-for-Sale
	Amortized Cost		Fair Value
Due in one year through five years	$	2,502,994	$	2,493,771
Due in five years through ten years		6,513,583		6,654,782
Due after ten years		22,159,559		22,270,803
	$	31,176,136	$	31,419,356

	December 31, 2011
	Held-to-Maturity
	Amortized Cost		Fair Value
Due in one year through five years	$	1,243,103	$	1,254,845
Due in five years through ten years		4,940,170		5,043,596
Due after ten years		1,654,020		1,671,962
	$	7,837,293	$	7,970,403

The Bank recognized gross gains on sales of available-for-sale securities of $124,019 and $107,714 for the nine months ended September 30, 2012 and 2011, respectively. The Bank recognized gross losses on sales of available-for-sale securities of $9,885 and $0 for the nine months ended September 30, 2012 and 2011, respectively.

Securities with unrealized losses, segregated by length of impairment, as of September 30, 2012 and December 31, 2011 were as follows:

	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
September 30, 2012 (unaudited)
Available-for-sale:
Bank Notes and Corporate Bonds	$	1,498,500	$	1,500	$	0	$	0	$	1,498,500	$	1,500
Obligation of U.S. Government Agencies		1,982,820		16,185		0		0		1,982,820		16,185
Mortgage-backed securities:
FNMA		9,186		31		5,636		85		14,822		116
GNMA		0		0		0		0		0		0
FHLMC		0		0		0		0		0		0
Private Label CMO		914,073		9,561		0		0		914,073		9,561
	$	4,404,579	$	27,277	$	5,636	$	85	$	4,410,215	$	27,362
Held-to-Maturity:	$	868,722	$	19,977	$	0	$	0	$	868,722	$	19,977

	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
December 31, 2011
Available-for-sale:
Bank Notes and Corporate Bonds	$	1,483,065	$	16,935	$	0	$	0	$	1,483,065	$	16,935
Mortgage-backed securities:
FNMA		7,336		132		1,444		40		8,780		172
GNMA		4,022,149		41,879		0		0		4,022,149		41,879
FHLMC		1,598,353		17,889		0		0		1,598,353		17,889
Private Label CMO		0		0		293,611		44,162		293,611		44,162
	$	7,110,903	$	76,835	$	295,055	$	44,202	$	7,405,958	$	121,037
Held-to-Maturity:	$	0	$	0	$	0	$	0	$	0	$	0

Declines in the fair value of investment securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in cost.

Furthermore, as of September 30, 2012, management does not have the intent to sell any of the securities classified as available-for-sale in the table above and believes that it is more likely than not that the Bank will not have to sell any such securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2012, management believes the impairments detailed in the table above are temporary and no impairment loss has been realized in the Bank’s consolidated income statement.

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Regulatory Matters - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	May 24, 2012
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Maximum number of shares of common stock authorized for repurchase			158,700
Common stock repurchased, shares	50,400
Common stock repurchased, amount	$ 613,111	$ 1,269,600
Common stock repurchased, average price per share	$ 12.16

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Securities with Unrealized Losses, Segregated by Length of Impairment (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Held to maturity, Estimated Fair Value Less than 12 Months	$ 868,722	$ 0
Held to maturity, Unrealized Losses Less than 12 Months	19,977	0
Held to maturity, Estimated Fair Value More than 12 Months	0	0
Held to maturity, Unrealized Losses More than 12 Months	0	0
Held to maturity, Total Estimated Fair Value	868,722	0
Held to maturity, Total Unrealized Losses	19,977	0
Available-for-sale securities, Estimated Fair Value Less than 12 Months	4,404,579	7,110,903
Available-for-sale securities, Unrealized Losses Less than 12 Months	27,277	76,835
Available-for-sale securities, Estimated Fair Value More than 12 Months	5,636	295,055
Available-for-sale securities, Unrealized Losses More than 12 Months	85	44,202
Available-for-sale securities, Total Estimated Fair Value	4,410,215	7,405,958
Available-for-sale securities, Total Unrealized Losses	27,362	121,037
Bank Notes and Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value Less than 12 Months	1,498,500	1,483,065
Available-for-sale securities, Unrealized Losses Less than 12 Months	1,500	16,935
Available-for-sale securities, Estimated Fair Value More than 12 Months	0	0
Available-for-sale securities, Unrealized Losses More than 12 Months	0	0
Available-for-sale securities, Total Estimated Fair Value	1,498,500	1,483,065
Available-for-sale securities, Total Unrealized Losses	1,500	16,935
Mortgage-backed securities | FNMA
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value Less than 12 Months	9,186	7,336
Available-for-sale securities, Unrealized Losses Less than 12 Months	31	132
Available-for-sale securities, Estimated Fair Value More than 12 Months	5,636	1,444
Available-for-sale securities, Unrealized Losses More than 12 Months	85	40
Available-for-sale securities, Total Estimated Fair Value	14,822	8,780
Available-for-sale securities, Total Unrealized Losses	116	172
Mortgage-backed securities | GNMA
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value Less than 12 Months	0	4,022,149
Available-for-sale securities, Unrealized Losses Less than 12 Months	0	41,879
Available-for-sale securities, Estimated Fair Value More than 12 Months	0	0
Available-for-sale securities, Unrealized Losses More than 12 Months	0	0
Available-for-sale securities, Total Estimated Fair Value	0	4,022,149
Available-for-sale securities, Total Unrealized Losses	0	41,879
Mortgage-backed securities | FHLMC
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value Less than 12 Months	0	1,598,353
Available-for-sale securities, Unrealized Losses Less than 12 Months	0	17,889
Available-for-sale securities, Estimated Fair Value More than 12 Months	0	0
Available-for-sale securities, Unrealized Losses More than 12 Months	0	0
Available-for-sale securities, Total Estimated Fair Value	0	1,598,353
Available-for-sale securities, Total Unrealized Losses	0	17,889
Mortgage-backed securities | Private Label CMO
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value Less than 12 Months	914,073	0
Available-for-sale securities, Unrealized Losses Less than 12 Months	9,561	0
Available-for-sale securities, Estimated Fair Value More than 12 Months	0	293,611
Available-for-sale securities, Unrealized Losses More than 12 Months	0	44,162
Available-for-sale securities, Total Estimated Fair Value	914,073	293,611
Available-for-sale securities, Total Unrealized Losses	9,561	44,162
Obligations of U.S. Government Agencies
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value Less than 12 Months	1,982,820
Available-for-sale securities, Unrealized Losses Less than 12 Months	16,185
Available-for-sale securities, Estimated Fair Value More than 12 Months	0
Available-for-sale securities, Unrealized Losses More than 12 Months	0
Available-for-sale securities, Total Estimated Fair Value	1,982,820
Available-for-sale securities, Total Unrealized Losses	$ 16,185

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Investment Securities - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross gains on sales of available-for-sale securities	$ 124,019	$ 107,714
Gross losses on sales available-for-sale securities	$ 9,885	$ 0

XML

Assets Measured at Fair Value on Recurring Basis (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	$ 24,415,230	$ 31,419,356
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	24,415,230	31,419,356
Total assets measured at fair value	24,415,230	31,419,356
Fair Value, Measurements, Recurring | Bank Notes and Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	2,518,060	2,486,435
Fair Value, Measurements, Recurring | Obligations of U.S. Government Agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	3,986,880	6,822,738
Fair Value, Measurements, Recurring | FNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	4,460,452	9,489,166
Fair Value, Measurements, Recurring | GNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	9,556,534	7,009,215
Fair Value, Measurements, Recurring | FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	1,186,904	2,324,338
Fair Value, Measurements, Recurring | FNMA CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	2,387,411	2,703,191
Fair Value, Measurements, Recurring | Private Label CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	318,989	584,273
Level One | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Total assets measured at fair value	0	0
Level One | Fair Value, Measurements, Recurring | Bank Notes and Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level One | Fair Value, Measurements, Recurring | Obligations of U.S. Government Agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level One | Fair Value, Measurements, Recurring | FNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level One | Fair Value, Measurements, Recurring | GNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level One | Fair Value, Measurements, Recurring | FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level One | Fair Value, Measurements, Recurring | FNMA CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level One | Fair Value, Measurements, Recurring | Private Label CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level Two | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	24,415,230	31,419,356
Total assets measured at fair value	24,415,230	31,419,356
Level Two | Fair Value, Measurements, Recurring | Bank Notes and Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	2,518,060	2,486,435
Level Two | Fair Value, Measurements, Recurring | Obligations of U.S. Government Agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	3,986,880	6,822,738
Level Two | Fair Value, Measurements, Recurring | FNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	4,460,452	9,489,166
Level Two | Fair Value, Measurements, Recurring | GNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	9,556,534	7,009,215
Level Two | Fair Value, Measurements, Recurring | FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	1,186,904	2,324,338
Level Two | Fair Value, Measurements, Recurring | FNMA CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	2,387,411	2,703,191
Level Two | Fair Value, Measurements, Recurring | Private Label CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	318,989	584,273
Level Three | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Total assets measured at fair value	0	0
Level Three | Fair Value, Measurements, Recurring | Bank Notes and Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level Three | Fair Value, Measurements, Recurring | Obligations of U.S. Government Agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level Three | Fair Value, Measurements, Recurring | FNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level Three | Fair Value, Measurements, Recurring | GNMA
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level Three | Fair Value, Measurements, Recurring | FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level Three | Fair Value, Measurements, Recurring | FNMA CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	0	0
Level Three | Fair Value, Measurements, Recurring | Private Label CMO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale - at fair value	$ 0	$ 0

XML

Loans and Allowance for Loan Losses (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 111,235,550	$ 113,174,984
Allowance for loan losses	(1,395,000)	(1,250,000)
Total loans and allowance for loan losses	109,840,550	111,924,984
Owner occupied one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	69,239,731	75,958,333
Non owner occupied one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,746,801	11,932,813
Home Equity Lines of Credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	10,301,657	9,501,693
Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,633,089	10,040,391
Residential construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	4,316,409	3,088,974
Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,915,196	2,584,476
Real Estate Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	111,152,883	113,106,680
Real Estate Loans | Owner occupied one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	69,239,731	75,958,333
Real Estate Loans | Non owner occupied one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,746,801	11,932,813
Real Estate Loans | Home Equity Lines of Credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	10,301,657	9,501,693
Real Estate Loans | Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,633,089	10,040,391
Real Estate Loans | Residential construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	4,316,409	3,088,974
Real Estate Loans | Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,915,196	2,584,476
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	66,341	50,486
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 16,326	$ 17,818

XML

Loans and Allowance for Loan Losses - Additional Information (Detail) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012 Investment Loan	Dec. 31, 2011 Investment Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance of impaired loans	$ 4,927,398	$ 4,101,788
Non-Accrual Loans	4,666,653	3,838,051
Accruing loans 90 days or more past due	0	0
Troubled debt restructurings	3,558,561	1,562,084
Number of loans classified as troubled debt restructurings	7	7
Number of loans on non-accrual status	27	18
Interest forgone from loans on non-accrual status	189,034	249,839
Post-Modification Outstanding Recorded Investments	3,558,561	1,562,084
Owner occupied one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance of impaired loans	4,118,893	1,658,687
Number of loans classified as troubled debt restructurings	5	4
Post-Modification Outstanding Recorded Investments	3,217,197	1,447,084
Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance of impaired loans	110,500	309,022
Number of loans classified as troubled debt restructurings	1	1
Post-Modification Outstanding Recorded Investments	110,500	115,000
Home Equity Lines of Credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance of impaired loans	330,262	93,309
Number of loans classified as troubled debt restructurings	1
Post-Modification Outstanding Recorded Investments	$ 230,864

XML

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2012

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Fraternity Community Bancorp, Inc. (the “Company”) was incorporated on October 12, 2010 to serve as the holding company for Fraternity Federal Savings and Loan Association (the “Bank”), a federally chartered savings bank. On March 31, 2011, in accordance with a Plan of Conversion adopted by its Board of Directors and approved by its members, the Bank converted from a federal mutual savings bank to a federal stock savings bank and became the wholly owned subsidiary of the Company. The conversion was accomplished through the sale and issuance of 1,587,000 shares of common stock at a price of $10.00 per share, through which the Company received proceeds of approximately $14,968,600, net of offering expenses of approximately $901,400. In connection with the conversion, the Bank’s Board of Directors adopted an employee stock ownership plan (the “ESOP”) which subscribed for 8% of the sum of the number of shares, or 126,960 shares of common stock sold in the offering. All material intercompany accounts and transactions have been eliminated in consolidation.

In accordance with the Office of the Comptroller of the Currency (the “OCC”) regulations, upon the completion of the conversion, the Bank restricted retained earnings by establishing a liquidation account. The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after conversion. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X as promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012, or any other period. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Certain amounts from prior period financial statements have been reclassified to conform to the current period’s presentation.

Nature of Operations

The Bank provides a full range of banking services to individuals and businesses through its main office and three branches in the Baltimore metropolitan area. Its primary deposit products are certificates of deposit and demand, savings, NOW, and money market accounts. Its primary lending products are consumer loans and real estate mortgages.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Earnings per Common Share

Basic earnings per share amounts are based on the weighted average number of shares outstanding for the period and the net income applicable to common stockholders. Weighted average shares excludes unallocated ESOP shares. The Company has no dilutive potential common shares for the three or nine month periods ended September 30, 2012 or 2011.

	Three Months Ended						Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012		September 30, 2011
Net (loss) income	$	(91,223	)	$	(7,151	)	$	63,344	$	(64,222	)
Weighted average common shares outstanding		1,453,158			1,462,685			1,466,069		1,460,922
Basic and diluted earnings (loss) per share	$	(.06	)	$	(.01	)	$	.04	$	(.04	)

XML

Credit Risk Analysis of Loans Receivable (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 111,235,550	$ 113,174,984
Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	104,817,109	103,622,279
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	560,936	6,111,405
Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	5,857,505	3,441,300
Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	106,568,897	109,336,933
Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,666,653	3,838,051
Owner occupied one-to-four family
Financing Receivable, Recorded Investment [Line Items]
Total Loans	69,239,731	75,958,333
Owner occupied one-to-four family | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	65,372,101	70,944,566
Owner occupied one-to-four family | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	9,482	3,618,817
Owner occupied one-to-four family | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,858,148	1,394,950
Owner occupied one-to-four family | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	65,381,583	74,563,383
Owner occupied one-to-four family | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,858,148	1,394,950
Non owner occupied one-to-four family
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,746,801	11,932,813
Non owner occupied one-to-four family | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	11,855,335	10,929,017
Non owner occupied one-to-four family | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	523,723	924,975
Non owner occupied one-to-four family | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	367,743	78,821
Non owner occupied one-to-four family | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,379,058	11,457,241
Non owner occupied one-to-four family | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	367,743	475,572
Home Equity Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total Loans	10,301,657	9,501,693
Home Equity Lines of Credit | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	9,943,664	9,045,770
Home Equity Lines of Credit | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	27,731	362,614
Home Equity Lines of Credit | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	330,262	93,309
Home Equity Lines of Credit | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	9,971,395	9,408,384
Home Equity Lines of Credit | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	330,262	93,309
Commercial Real Estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,633,089	10,040,391
Commercial Real Estate | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	11,442,237	8,835,392
Commercial Real Estate | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	1,204,999
Commercial Real Estate | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,190,852	0
Commercial Real Estate | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,633,089	10,040,391
Commercial Real Estate | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Residential construction
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,316,409	3,088,974
Residential construction | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,316,409	1,523,776
Residential construction | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Residential construction | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	1,565,198
Residential construction | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,316,409	1,523,776
Residential construction | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	1,565,198
Land
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,915,196	2,584,476
Land | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,804,696	2,275,454
Land | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Land | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	110,500	309,022
Land | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,804,696	2,275,454
Land | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	110,500	309,022
Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	66,341	50,486
Consumer | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	66,341	50,486
Consumer | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Consumer | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Consumer | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	66,341	50,486
Consumer | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Commercial
Financing Receivable, Recorded Investment [Line Items]
Total Loans	16,326	17,818
Commercial | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	16,326	17,818
Commercial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Commercial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Commercial | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	16,326	17,818
Commercial | Non-Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 0	$ 0

XML

Employee Stock Ownership Plan - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended
	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Total shares in employee stock ownership plan	126,960	126,960
Shares subscribed for employee stock ownership plan, percent to sum of shares offered		8.00%
Common stock issuance, price per share	$ 10.00	$ 10.00
ESOP borrowed fund, repayment period		12 years
Employee stock ownership plan, vesting percentage beginning in year two		33.33%
ESOP compensation expense		$ 83,926	$ 77,208

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (USD $)	Sep. 30, 2012	Dec. 31, 2011
Cash and cash equivalents:
Cash and due from banks	$ 937,685	$ 1,033,637
Interest-bearing deposits in other banks	16,405,028	13,889,505
Total cash and cash equivalents	17,342,713	14,923,142
Investment securities:
Available-for-sale - at fair value	24,415,230	31,419,356
Held-to-maturity - at amortized cost (fair value approximates $7,705,022 and $7,970,403, respectively)	7,350,208	7,837,293
Loans - net of allowance for loan losses of $1,395,000 and $1,250,000	109,840,550	111,924,984
Other real estate owned	1,783,484	0
Property and equipment, net	809,718	740,501
Federal Home Loan Bank stock - at cost - restricted	1,275,500	1,306,500
Ground rents - net of valuation allowance of $45,500 (2012 and 2011)	848,346	854,996
Accrued interest receivable	601,479	605,197
Investment in bank-owned life insurance	4,482,563	4,354,252
Deferred income taxes	616,663	630,908
Other assets	799,904	733,956
TOTAL ASSETS	170,166,358	175,331,085
Liabilities:
Deposits	119,003,382	121,200,060
Advances from the Federal Home Loan Bank	20,000,000	22,500,000
Advances by borrowers for taxes and insurance	831,884	831,448
Other liabilities	657,604	682,888
Total liabilities	140,492,870	145,214,396
Commitments and contingencies	0	0
Stockholders' Equity:
Preferred stock, $0.01 par value; authorized 1,000,000; none issued	0	0
Common stock, $0.01 par value; authorized 15,000,000; issued and outstanding, 1,536,600 shares at September 30, 2012, 1,587,000 shares at December 31, 2011	15,366	15,870
Additional paid in capital	14,336,616	14,944,647
Retained earnings - substantially restricted	16,234,028	16,170,684
Unearned ESOP shares	(1,084,450)	(1,163,800)
Accumulated other comprehensive income	171,928	149,288
Total stockholders' equity	29,673,488	30,116,689
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 170,166,358	$ 175,331,085

XML

Level of Valuation Assumptions used to Determine Adjustment and Carrying Value of Assets (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	$ 4,927,398	$ 4,101,788
Other real estate owned:	1,783,484	0
Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	4,737,536	4,101,788
Other real estate owned:	1,783,484	0
Fair Value, Measurements, Nonrecurring | Owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	3,929,031	1,658,687
Fair Value, Measurements, Nonrecurring | Non owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	367,743	475,572
Fair Value, Measurements, Nonrecurring | Home Equity Lines of Credit
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	330,262	93,309
Fair Value, Measurements, Nonrecurring | Land
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	110,500	309,022
Fair Value, Measurements, Nonrecurring | Residential construction
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans		1,565,198
Level One | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Other real estate owned:	0	0
Level One | Fair Value, Measurements, Nonrecurring | Owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level One | Fair Value, Measurements, Nonrecurring | Non owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level One | Fair Value, Measurements, Nonrecurring | Home Equity Lines of Credit
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level One | Fair Value, Measurements, Nonrecurring | Land
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level One | Fair Value, Measurements, Nonrecurring | Residential construction
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans		0
Level Two | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	4,737,536	4,101,788
Other real estate owned:	1,783,484	0
Level Two | Fair Value, Measurements, Nonrecurring | Owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	3,929,031	1,658,687
Level Two | Fair Value, Measurements, Nonrecurring | Non owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	367,743	475,572
Level Two | Fair Value, Measurements, Nonrecurring | Home Equity Lines of Credit
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	330,262	93,309
Level Two | Fair Value, Measurements, Nonrecurring | Land
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	110,500	309,022
Level Two | Fair Value, Measurements, Nonrecurring | Residential construction
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans		1,565,198
Level Three | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Other real estate owned:	0	0
Level Three | Fair Value, Measurements, Nonrecurring | Owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level Three | Fair Value, Measurements, Nonrecurring | Non owner occupied one-to-four family
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level Three | Fair Value, Measurements, Nonrecurring | Home Equity Lines of Credit
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level Three | Fair Value, Measurements, Nonrecurring | Land
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	0	0
Level Three | Fair Value, Measurements, Nonrecurring | Residential construction
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans		$ 0

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)	Total	Common Stock	Additional Paid In Capital	Retained Earnings	Unearned ESOP Shares	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2010	$ 15,986,575	$ 0	$ 0	$ 16,146,785	$ 0	$ (160,210)
Net income (loss)	(64,222)	0	0	(64,222)	0	0
Other Comprehensive Income	344,129	0	0	0	0	344,129
Acquisition of unearned ESOP shares/common shares repurchased	(1,269,600)	0	0	0	(1,269,600)	0
ESOP shares released or committed for release	77,208	0	(2,142)	0	79,350	0
Issuance of Common Stock	14,968,610	15,870	14,952,740	0	0	0
Ending Balance at Sep. 30, 2011	30,042,700	15,870	14,950,598	16,082,563	(1,190,250)	183,919
Beginning Balance at Dec. 31, 2011	30,116,689	15,870	14,944,647	16,170,684	(1,163,800)	149,288
Net income (loss)	63,344	0	0	63,344	0	0
Other Comprehensive Income	22,640	0	0	0	0	22,640
Acquisition of unearned ESOP shares/common shares repurchased	(613,111)	(504)	(612,607)	0	0	0
ESOP shares released or committed for release	83,926	0	4,576	0	79,350	0
Ending Balance at Sep. 30, 2012	$ 29,673,488	$ 15,366	$ 14,336,616	$ 16,234,028	$ (1,084,450)	$ 171,928

XML

Nonperforming Assets and Troubled Debt Restructurings (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Non-Accrual Loans	$ 4,666,653	$ 3,838,051
Other Real Estate Owned, net	1,783,484	0
Loans 90 days or more past due and still accruing	0	0
Total Nonperforming Assets	6,450,137	3,838,051
Troubled debt restructurings	3,558,561	1,562,084
Troubled Debt Restructurings included In Non-Accrual Loans	(3,297,816)	(1,298,347)
Troubled Debt Restructurings and Total Nonperforming Assets	6,710,882	4,101,788
Owner occupied one-to-four family
Financing Receivable, Allowance for Credit Losses [Line Items]
Non-Accrual Loans	3,858,148	1,394,950
Loans 90 days or more past due and still accruing	0	0
Non owner occupied one-to-four family
Financing Receivable, Allowance for Credit Losses [Line Items]
Non-Accrual Loans	367,743	475,572
Loans 90 days or more past due and still accruing	0	0
Home Equity Lines of Credit
Financing Receivable, Allowance for Credit Losses [Line Items]
Non-Accrual Loans	330,262	93,309
Loans 90 days or more past due and still accruing	0	0
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Non-Accrual Loans	0	0
Loans 90 days or more past due and still accruing	0	0
Residential construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Non-Accrual Loans	0	1,565,198
Loans 90 days or more past due and still accruing	0	0
Land
Financing Receivable, Allowance for Credit Losses [Line Items]
Non-Accrual Loans	110,500	309,022
Loans 90 days or more past due and still accruing	$ 0	$ 0

XML

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2012

Assets Measured at Fair Value on Recurring Basis

The following table presents the Bank’s assets measured at fair value on a recurring basis:

	Fair Value at September 30, 2012 (unaudited)		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities:
Bank Notes and Corporate Bonds	$	2,518,060	$	0	$	2,518,060	$	0
Obligations of U.S. Government agencies		3,986,880		0		3,986,880		0
FNMA		4,460,452		0		4,460,452		0
GNMA		9,556,534		0		9,556,534		0
FHLMC		1,186,904		0		1,186,904		0
FNMA CMO		2,387,411		0		2,387,411		0
Private label CMO		318,989		0		318,989		0
	$	24,415,230	$	0	$	24,415,230	$	0
Total assets measured at fair value	$	24,415,230	$	0	$	24,415,230	$	0

	Fair Value at December 31, 2011		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities:
Bank Notes and Corporate Bonds	$	2,486,435	$	0	$	2,486,435	$	0
Obligations of U.S. Government agencies		6,822,738		0		6,822,738		0
FNMA		9,489,166		0		9,489,166		0
GNMA		7,009,215		0		7,009,215		0
FHLMC		2,324,338		0		2,324,338		0
FNMA CMO		2,703,191		0		2,703,191		0
Private label CMO		584,273		0		584,273		0
	$	31,419,356	$	0	$	31,419,356	$	0
Total assets measured at fair value	$	31,419,356	$	0	$	31,419,356	$	0

Level of Valuation Assumptions used to Determine Adjustment and Carrying Value of Assets

For assets measured at fair value on a nonrecurring basis as of September 30, 2012 and December 31, 2011, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the assets:

	Fair Value at September 30, 2012 (unaudited)		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:	$	3,929,031	$	0	$	3,929,031	$	0
Owner occupied one-to-four family		367,743		0		367,743		0
Non owner occupied one-to-four family		330,262		0		330,262		0
Home Equity Lines of Credit		110,500		0		110,500		0
Land	$	4,737,536	$	0	$	4,737,536	$	0
Other real estate owned:	$	1,783,484	$	0	$	1,783,484	$	0

	Fair Value at December 31, 2011		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:	$	1,565,198	$	0	$	1,565,198	$	0
Construction		1,658,687		0		1,658,687		0
Owner occupied one-to-four family		475,572		0		475,572		0
Non owner occupied one-to-four family		93,309		0		93,309		0
Home Equity Lines of Credit		309,022		0		309,022		0
Land	$	4,101,788	$	0	$	4,101,788	$	0
Other real estate owned:	$	0	$	0	$	0	$	0

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Impaired Loans (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Average recorded investment	$ 3,887,960	$ 3,635,887	$ 4,009,603	$ 3,623,911
Loans With an allowance recorded, Recorded Investment	2,106,251		2,106,251		0
Interest income recognized	35,458	829	146,103	14,899
Loans with With an allowance recorded, Unpaid Principal Balance	2,296,113		2,296,113		0
Loans with no allowance recorded, Recorded Investment	2,631,285		2,631,285		4,101,788
Loans with no allowance recorded, Unpaid Principal Balance	2,631,285		2,631,285		4,101,788
Loans with no allowance recorded, Related Allowance	0		0		0
Recorded Investment, Total	4,737,536		4,737,536		4,101,788
Unpaid Principal Balance, Total	4,927,398		4,927,398		4,101,788
Loans With an allowance recorded, Related Allowance	189,862		189,862		0
Owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Average recorded investment	3,028,797	1,625,904	2,294,319	1,627,055
Loans With an allowance recorded, Recorded Investment	2,106,251		2,106,251		0
Interest income recognized	31,894	829	126,889	12,359
Loans with With an allowance recorded, Unpaid Principal Balance	2,296,113		2,296,113		0
Loans with no allowance recorded, Recorded Investment	1,822,780		1,822,780		1,658,687
Loans with no allowance recorded, Unpaid Principal Balance	1,822,780		1,822,780		1,658,687
Loans with no allowance recorded, Related Allowance	0		0		0
Recorded Investment, Total	3,929,031		3,929,031		1,658,687
Unpaid Principal Balance, Total	4,118,893		4,118,893		1,658,687
Loans With an allowance recorded, Related Allowance	189,862		189,862		0
Non owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Average recorded investment	421,019	39,411	448,117	26,274
Interest income recognized	0	0	8,128	1,951
Loans with no allowance recorded, Recorded Investment	367,743		367,743		475,572
Loans with no allowance recorded, Unpaid Principal Balance	367,743		367,743		475,572
Loans with no allowance recorded, Related Allowance	0		0		0
Recorded Investment, Total	367,743		367,743		475,572
Unpaid Principal Balance, Total	367,743		367,743		475,572
Loans With an allowance recorded, Related Allowance	0		0		0
Home Equity Lines of Credit
Financing Receivable, Impaired [Line Items]
Average recorded investment	326,894	94,382	274,807	94,382
Interest income recognized	3,564	0	11,086	554
Loans with no allowance recorded, Recorded Investment	330,262		330,262		93,309
Loans with no allowance recorded, Unpaid Principal Balance	330,262		330,262		93,309
Loans with no allowance recorded, Related Allowance	0		0		0
Recorded Investment, Total	330,262		330,262		93,309
Unpaid Principal Balance, Total	330,262		330,262		93,309
Loans With an allowance recorded, Related Allowance	0		0		0
Residential construction
Financing Receivable, Impaired [Line Items]
Average recorded investment	0	1,565,198	782,599	1,565,198
Interest income recognized	0	0	0	0
Loans with no allowance recorded, Recorded Investment	0		0		1,565,198
Loans with no allowance recorded, Unpaid Principal Balance	0		0		1,565,198
Loans with no allowance recorded, Related Allowance	0		0		0
Recorded Investment, Total	0		0		1,565,198
Unpaid Principal Balance, Total	0		0		1,565,198
Loans With an allowance recorded, Related Allowance	0		0		0
Land
Financing Receivable, Impaired [Line Items]
Average recorded investment	111,250	310,772	209,761	310,855
Interest income recognized	0	0	0	0
Loans with no allowance recorded, Recorded Investment	110,500		110,500		309,022
Loans with no allowance recorded, Unpaid Principal Balance	110,500		110,500		309,022
Loans with no allowance recorded, Related Allowance	0		0		0
Recorded Investment, Total	110,500		110,500		309,022
Unpaid Principal Balance, Total	110,500		110,500		309,022
Loans With an allowance recorded, Related Allowance	0		0		0
Consumer
Financing Receivable, Impaired [Line Items]
Average recorded investment		220		147
Interest income recognized		0		35
Impaired Financing Receivables with No Related Allowance
Financing Receivable, Impaired [Line Items]
Average recorded investment	2,739,904	3,635,887	3,435,575	3,623,911
Interest income recognized	31,244	829	66,429	14,899
Impaired Financing Receivables with No Related Allowance | Owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Average recorded investment	1,880,741	1,625,904	1,720,291	1,627,055
Interest income recognized	27,680	829	47,215	12,359
Impaired Financing Receivables with No Related Allowance | Non owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Average recorded investment	421,019	39,411	448,117	26,274
Interest income recognized	0	0	8,128	1,951
Impaired Financing Receivables with No Related Allowance | Home Equity Lines of Credit
Financing Receivable, Impaired [Line Items]
Average recorded investment	326,894	94,382	274,807	94,382
Interest income recognized	3,564	0	11,086	554
Impaired Financing Receivables with No Related Allowance | Residential construction
Financing Receivable, Impaired [Line Items]
Average recorded investment	0	1,565,198	782,599	1,565,198
Interest income recognized	0	0	0	0
Impaired Financing Receivables with No Related Allowance | Land
Financing Receivable, Impaired [Line Items]
Average recorded investment	111,250	310,772	209,761	310,855
Interest income recognized	0	0	0	0
Impaired Financing Receivables with No Related Allowance | Consumer
Financing Receivable, Impaired [Line Items]
Average recorded investment		220		147
Interest income recognized		0		35
Impaired Financing Receivables with Related Allowance
Financing Receivable, Impaired [Line Items]
Average recorded investment	1,148,056	0	574,028	0
Interest income recognized	4,214	0	79,674	0
Impaired Financing Receivables with Related Allowance | Owner occupied one-to-four family
Financing Receivable, Impaired [Line Items]
Average recorded investment	1,148,056	0	574,028	0
Interest income recognized	$ 4,214	$ 0	$ 79,674	$ 0

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Nature of Operations and Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended
	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Basis of Presentation [Line Items]
Date of incorporation	Oct. 12, 2010
Issuance of Common Stock (in shares)	1,587,000	1,536,600		1,587,000
Common stock issuance, price per share	$ 10.00	$ 10.00
Proceeds from issuance of common stock, net of offering expenses	$ 14,968,600	$ 0	$ 14,968,610
Issuance of common stock, offering expenses	$ 901,400
Shares subscribed for employee stock ownership plan, percent to sum of shares offered	8.00%
Total shares in employee stock ownership plan	126,960	126,960

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 63,344	$ (64,222)
Adjustments to reconcile net income (loss) provided by operating activities:
Depreciation	65,569	64,822
Gain on sale of available-for-sale securities	(114,134)	(107,714)
Gain on sale of other real estate owned	0	(9,900)
Gain on sale of loans	(60,196)	(7,308)
Origination of loans held for sale	(3,240,900)	(607,500)
Proceeds from sale of loans held for sale	3,301,096	614,808
Amortization/accretion of premium/discount	476,729	205,611
Increase in value of bank-owned life insurance	(128,311)	(134,325)
Increase in value of other real estate owned	0	(302,129)
Stock based compensation (ESOP)	83,926	77,208
Provision for loan losses	380,174	66,961
Changes in operating assets and liabilities:
Accrued interest receivable and other assets	(62,230)	444,730
Other liabilities	(25,284)	93,112
Net cash provided by operating activities	739,783	334,154
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in loans	(413,327)	1,408,939
Redemption of ground rents	6,650	0
Acquisition of property and equipment	(134,786)	(60,914)
Purchase of:
Investment securities available-for-sale	(7,101,050)	(24,525,876)
Investment securities held-to-maturity	0	(8,031,518)
Proceeds from:
Sales and maturities of investment securities available-for-sale	10,187,699	14,644,438
Principal paydowns on investment securities available-for-sale	3,650,960	3,671,718
Principal paydowns on investment securities held-to-maturity	427,892	5,939
Sale of Federal Home Loan Bank stock	31,000	65,800
Sale of other real estate owned	334,103	2,327,938
Net cash provided by (used in) investing activities	6,989,141	(10,493,536)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits	(2,196,678)	(5,234,656)
Borrowings from the Federal Home Loan Bank	5,000,000	0
Repayments of Federal Home Loan Bank borrowings	(7,500,000)	(83,333)
Acquisition of ESOP Shares	0	(1,269,600)
Repurchase of common shares	(613,111)	0
Proceeds from issuance of Common Stock, net	0	14,968,610
Increase in advances by borrowers for taxes and insurance	436	296,039
Net cash (used in) provided by financing activities	(5,309,353)	8,677,060
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	2,419,571	(1,482,322)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	14,923,142	25,881,831
CASH AND CASH EQUIVALENTS AT END OF PERIOD	17,342,713	24,399,509
Cash paid for interest	1,854,533	2,536,078
Cash paid for taxes	0	0
Transfer of loans to other real estate owned	$ 2,077,334	$ 0

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Held-to-maturity - at amortized cost, fair value approximates	$ 7,705,022	$ 7,970,403
Loans, allowance for loan losses	1,395,000	1,250,000
Ground rents, valuation allowance	$ 45,500	$ 45,500
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	1,000,000	1,000,000
Preferred stock, issued
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	15,000,000	15,000,000
Common stock, issued	1,536,600	1,587,000
Common stock, outstanding	1,536,600	1,587,000

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2012

Earnings per Common Share

The Company has no dilutive potential common shares for the three or nine month periods ended September 30, 2012 or 2011.

	Three Months Ended						Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012		September 30, 2011
Net (loss) income	$	(91,223	)	$	(7,151	)	$	63,344	$	(64,222	)
Weighted average common shares outstanding		1,453,158			1,462,685			1,466,069		1,460,922
Basic and diluted earnings (loss) per share	$	(.06	)	$	(.01	)	$	.04	$	(.04	)

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 13, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	FRTR
Entity Registrant Name	FRATERNITY COMMUNITY BANCORP INC
Entity Central Index Key	0001503063
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,524,600

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INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2012

Amortized Cost and Fair Value of Investment Securities

The amortized cost and fair values of investment securities are as follows:

	September 30, 2012 (unaudited)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Bank Notes and Corporate Bonds	$	2,497,895	$	21,665	$	1,500	$	2,518,060
Obligations of U.S. Government Agencies		3,999,005		4,060		16,185		3,986,880
Mortgage-backed securities:
FNMA		4,329,769		130,799		116		4,460,452
GNMA		9,422,086		134,448		0		9,556,534
FHLMC		1,174,958		11,946		0		1,186,904
FNMA CMO		2,392,805		4,167		9,561		2,387,411
Private Label CMO		318,608		381		0		318,989
	$	24,135,126	$	307,466	$	27,362	$	24,415,230
Held-to-maturity:
Municipal Bonds	$	545,905	$	35,720	$	0	$	581,625
SBA Pools		1,933,916		23,623		19,977		1,937,562
Mortgage-backed securities:
FNMA		4,870,387		315,448		0		5,185,835
	$	7,350,208	$	374,791	$	19,977	$	7,705,022

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Bank Notes and Corporate Bonds	$	2,495,526	$	7,844	$	16,935	$	2,486,435
Obligations of U.S. Government Agencies		6,696,656		126,082		0		6,822,738
Mortgage-backed securities:
FNMA		9,370,220		119,118		172		9,489,166
GNMA		7,019,669		31,425		41,879		7,009,215
FHLMC		2,334,789		7,438		17,889		2,324,338
FHLMC		2,636,100		67,091		0		2,703,191
Private Label CMO		623,176		5,259		44,162		584,273
	$	31,176,136	$	364,257	$	121,037	$	31,419,356

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Municipal Bonds	$	551,202	$	17,283	$	0	$	568,485
SBA Pools		2,345,921		12,401		0		2,358,322
Mortgage-backed securities:
FNMA		4,940,170		103,426		0		5,043,596
	$	7,837,293	$	133,110	$	0	$	7,970,403

Amortized Cost and Fair Value of Debt Securities by Contractual Maturities

The amortized cost and fair value of debt securities at September 30, 2012 and December 31, 2011 by contractual maturities are shown below. Expected maturities may differ from contractual maturities because borrowers may have to call or repay obligations with or without call or prepayment penalties.

	September 30, 2012
	Available-for-Sale (unaudited)
	Amortized Cost		Fair Value
Due in less than one year	$	997,895	$	1,019,560
Due in one year through five years		1,504,291		1,502,734
Due in five years through ten years		1,283,481		1,317,002
Due after ten years		20,349,459		20,575,934
	$	24,135,126	$	24,415,230

	September 30, 2012
	Held-to-Maturity (unaudited)
	Amortized Cost		Fair Value
Due in one year through five years	$	888,698	$	868,722
Due in five years through ten years		4,870,388		5,185,835
Due after ten years		1,591,122		1,650,465
	$	7,350,208	$	7,705,022

	December 31, 2011
	Available-for-Sale
	Amortized Cost		Fair Value
Due in one year through five years	$	2,502,994	$	2,493,771
Due in five years through ten years		6,513,583		6,654,782
Due after ten years		22,159,559		22,270,803
	$	31,176,136	$	31,419,356

	December 31, 2011
	Held-to-Maturity
	Amortized Cost		Fair Value
Due in one year through five years	$	1,243,103	$	1,254,845
Due in five years through ten years		4,940,170		5,043,596
Due after ten years		1,654,020		1,671,962
	$	7,837,293	$	7,970,403

Securities with Unrealized Losses, Segregated by Length of Impairment

Securities with unrealized losses, segregated by length of impairment, as of September 30, 2012 and December 31, 2011 were as follows:

	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
September 30, 2012 (unaudited)
Available-for-sale:
Bank Notes and Corporate Bonds	$	1,498,500	$	1,500	$	0	$	0	$	1,498,500	$	1,500
Obligation of U.S. Government Agencies		1,982,820		16,185		0		0		1,982,820		16,185
Mortgage-backed securities:
FNMA		9,186		31		5,636		85		14,822		116
GNMA		0		0		0		0		0		0
FHLMC		0		0		0		0		0		0
Private Label CMO		914,073		9,561		0		0		914,073		9,561
	$	4,404,579	$	27,277	$	5,636	$	85	$	4,410,215	$	27,362
Held-to-Maturity:	$	868,722	$	19,977	$	0	$	0	$	868,722	$	19,977

	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
December 31, 2011
Available-for-sale:
Bank Notes and Corporate Bonds	$	1,483,065	$	16,935	$	0	$	0	$	1,483,065	$	16,935
Mortgage-backed securities:
FNMA		7,336		132		1,444		40		8,780		172
GNMA		4,022,149		41,879		0		0		4,022,149		41,879
FHLMC		1,598,353		17,889		0		0		1,598,353		17,889
Private Label CMO		0		0		293,611		44,162		293,611		44,162
	$	7,110,903	$	76,835	$	295,055	$	44,202	$	7,405,958	$	121,037
Held-to-Maturity:	$	0	$	0	$	0	$	0	$	0	$	0

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CONSOLIDATED STATEMENTS OF INCOME (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest and fees on loans:
Real estate loans	$ 1,373,143	$ 1,441,513	$ 4,282,343	$ 4,367,016
Other loans	1,119	1,189	3,400	3,661
Interest and dividends on investments and bank deposits	210,731	275,687	745,472	745,120
Income from ground rents owned	9,300	9,849	35,176	34,583
Total interest income	1,594,293	1,728,238	5,066,391	5,150,380
INTEREST EXPENSE:
Interest on deposits	440,962	575,278	1,347,675	1,866,400
Interest on borrowings - short term	18,436	56,222	65,268	167,022
Interest on borrowings - long term	148,158	169,370	441,254	502,586
Total interest expense	607,556	800,870	1,854,197	2,536,008
NET INTEREST INCOME	986,737	927,368	3,212,194	2,614,372
Provision for loan losses	201,920	6,445	380,174	66,961
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	784,817	920,923	2,832,020	2,547,411
NON-INTEREST INCOME:
Gain on sale of investment securities	0	60,020	114,134	107,714
Income on bank-owned life insurance	43,564	45,181	128,311	134,325
Gain on sale of loans	33,407	7,308	60,196	7,308
Gain on sale of other real estate owned	0	9,053	0	9,900
Other income	3,768	10,094	26,168	31,360
Total non-interest income	80,739	131,656	328,809	290,607
NON-INTEREST EXPENSES:
Salaries and employee benefits	573,445	650,482	1,686,627	1,684,738
Occupancy expenses	127,033	121,783	373,888	371,461
Legal fees	39,735	23,301	159,913	61,173
Federal Deposit Insurance premiums	36,635	36,659	105,167	114,169
Accounting and auditing expense	33,842	30,259	101,072	89,250
Data processing expense	104,769	98,013	313,470	302,277
Directors fees	25,567	25,817	74,278	75,951
Other general and administrative expenses	117,587	101,446	339,098	325,192
Total non-interest expenses	1,058,613	1,087,760	3,153,513	3,024,211
(LOSS) INCOME BEFORE INCOME TAX BENEFIT	(193,057)	(35,181)	7,316	(186,193)
INCOME TAX BENEFIT	(101,834)	(28,030)	(56,028)	(121,971)
NET (LOSS) INCOME	$ (91,223)	$ (7,151)	$ 63,344	$ (64,222)
(LOSS) EARNINGS PER COMMON SHARE - BASIC	$ (0.06)	$ (0.01)	$ 0.04	$ (0.04)
(LOSS) EARNINGS PER COMMON SHARE - DILUTED	$ (0.06)	$ (0.01)	$ 0.04	$ (0.04)

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REGULATORY MATTERS

9 Months Ended

Sep. 30, 2012

REGULATORY MATTERS

5. REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (OCC). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that if undertaken, could have a direct material effect on the Bank and the consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of: total risk-based capital and Tier I capital to risk-weighted assets (as defined in the regulations), Tier I capital to adjusted total assets (as defined), and tangible capital to adjusted total assets (as defined).

As of September 30, 2012 and December 31, 2011 (the most recent notification from the OCC), the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. Nothing has come to management’s attention since the institution’s most recent notification of being classified as “well capitalized” that would cause such classification to change. The following table details the Bank’s capital position:

	Actual					For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio
	(dollars in thousands)					(dollars in thousands)
As of September 30, 2012 (unaudited):
Total Risk-Based Capital (to risk-weighted assets)	$	24,906		26.29	%	$	9,474		10.0	%
Tier I Capital (to risk-weighted assets)	$	23,719		25.04	%	$	5,683		6.0	%
Tier I Capital (to adjusted total assets)	$	23,719		13.95	%	$	8,501		5.0	%

	Actual					For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio
	(dollars in thousands)					(dollars in thousands)
As of December 31, 2011:
Total Risk-Based Capital (to risk-weighted assets)	$	24,827		26.46	%	$	9,383		10.0	%
Tier I Capital (to risk-weighted assets)	$	23,654		25.21	%	$	5,630		6.0	%
Tier I Capital (to adjusted total assets)	$	23,654		13.50	%	$	8,761		5.0	%

On May 24, 2012, the Company authorized the repurchase of up to 158,700 shares of its common stock. Repurchases, if any, by the Company pursuant to this authorization are expected to enable the Company to repurchase its shares at an attractive price, and to provide a source of liquidity for the Company’s shares. As of September 30, 2012, there have been 50,400 shares repurchased by the Company, for an aggregate expenditure totaling approximately $613,111, at an average price of $12.16.

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EMPLOYEE STOCK OWNERSHIP PLAN

9 Months Ended

Sep. 30, 2012

EMPLOYEE STOCK OWNERSHIP PLAN

4. EMPLOYEE STOCK OWNERSHIP PLAN

In connection with the conversion to stock form, the Company established an Employee Stock Ownership Plan (ESOP) for the exclusive benefit of eligible employees. The ESOP borrowed funds from the Company in an amount sufficient to purchase 126,960 shares, or 8% of the Common Stock issued in the offering. The shares were acquired at a price of $10.00 per share.

The loan is secured by the shares purchased and will be repaid by the ESOP with funds from contributions made by the Bank and dividends received by the ESOP, with funds from any contributions on ESOP assets. Contributions will be applied to repay interest on the loan first and the remainder will be applied to principal. The loan is expected to be repaid over a period of 12 years.

Shares purchased with the loan proceeds are held in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion to their compensation, relative to total compensation, of all active participants. Participants will vest their accrued benefits under the employee stock ownership plan at the rate of 33.33% per year beginning in year two. Vesting is accelerated upon retirement, death or disability of the participant, or a change in control of the Bank. Forfeitures will be reallocated to remaining plan participants. Benefits may be payable upon retirement, death, disability, separation of service, or termination of the ESOP.

The debt of the ESOP, in accordance with generally accepted accounting principles, is eliminated in consolidation and the shares pledged as collateral are reported as unearned ESOP shares in the consolidated balance sheet. Contributions to the ESOP shall be sufficient to pay principal and interest currently due under the loan agreement. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average market price of the shares for the respective period, and the shares become outstanding for earnings per share computations. Dividends on allocated ESOP shares are recorded as a reduction of debt and accrued interest. ESOP compensation expense for the nine months ended September 30, 2012 and 2011 was $83,926 and $77,208, respectively.

A summary of ESOP shares at September 30, 2012 is as follows:

Shares released or committed for release		18,515
Unearned shares		108,445
Total ESOP shares		126,960
Fair Value of unearned shares	$	1,344,718

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Estimates, Methods, and Assumptions for Financial Instruments

Fair value estimates, methods, and assumptions are set forth below for the Bank’s financial instruments as of September 30, 2012 and December 31, 2011.

	September 30, 2012 (unaudited)
			Estimated Fair Value
	Carrying Value		Level One		Level Two		Level Three		Total
Assets:
Cash and cash equivalents	$	17,342,713	$	17,342,713	$	0	$	0	$	17,342,713
Securities - available-for-sale		24,415,230		0		24,415,230		0		24,415,230
Securities - held-to-maturity		7,350,208		0		7,705,022		0		7,705,022
Loans, net of allowance		109,840,550		0		4,737,536		110,521,022		115,258,558
Federal Home Loan Bank stock		1,275,500		0		1,275,500		0		1,275,500
Investment in bank-owned life insurance		4,482,563		4,482,563		0		0		4,482,563
Liabilities:
Deposit accounts and advances by borrowers		119,835,266		0		120,590,084		0		120,590,084
Advances from the FHLB		20,000,000		0		20,890,706		0		20,890,706

	December 31, 2011
			Estimated Fair Value
	Carrying Value		Level One		Level Two		Level Three		Total
Assets:
Cash and cash equivalents	$	14,923,142	$	14,923,142	$	0	$	0	$	14,923,142
Securities - available-for-sale		31,419,356		0		31,419,356		0		31,419,356
Securities - held-to-maturity		7,837,293		0		7,970,403		0		7,970,403
Loans, net of allowance		111,924,984		0		4,101,788		111,482,563		115,584,351
Federal Home Loan Bank stock		1,306,500		0		1,306,500		0		1,306,500
Investment in bank-owned life insurance		4,354,252		4,354,252		0		0		4,354,252
Liabilities:
Deposit accounts and advances by borrowers		122,031,508		0		122,998,429		0		122,998,429
Advances from the FHLB		22,500,000		0		23,223,703		0		23,223,703

	September 30, 2012 (unaudited)		December 31, 2011
Off-Balance Sheet Instruments:
Commitments to extend credit	$	1,451,000	$	0
Unused lines of credit	$	10,560,270	$	12,006,256

(a) Cash and Cash Equivalents - The carrying amount for cash on hand and in banks approximates fair value due to the short maturity of these instruments.

(b) Securities - The fair value of securities excluding Federal Home Loan Bank stock, is based on bid prices received from an external pricing service or bid quotations received from securities dealers.

(c) Loans - Loans were segmented into portfolios with similar financial characteristics. Loans were also segmented by loan category. Each loan category was further segmented by fixed and adjustable rate interest terms and performing and nonperforming categories. The fair value of residential loans was calculated by discounting anticipated cash flows based on weighted-average contractual maturity, weighted-average coupon, and discount rate.

The fair value for nonperforming loans was determined by reducing the carrying value of nonperforming loans by the Company’s historical loss percentage for each specific loan category.

(d) Federal Home Loan Bank Stock - The fair value of Federal Home Loan Bank stock approximates its carrying value based on the redemption provisions of the Federal Home Loan Bank.

(e) Investments in Bank-Owned Life Insurance - The fair value of the insurance contracts approximates the carrying value.

(f) Deposits and Advances by Borrowers - The fair value of deposits with no stated maturity, such as noninterest bearing deposits, interest-bearing NOW accounts, money market and statement savings accounts, is deemed to be equal to the carrying amounts. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate for certificates of deposit was estimated using the rate currently offered for deposits of similar remaining maturities.

(g) Advances from the FHLB - Fair values are estimated by discounting carrying values using a cash flow approach based on market rates as of September 30, 2012 and December 31, 2011.

(h) Off-Balance Sheet Financial Instruments - The Company’s adjustable rate commitments to extend credit move with market rates and are not subject to interest rate risk. The rates and terms of the Company’s fixed rate commitments to extend credit are competitive with others in the various markets in which the Company operates. The fair values of these instruments are immaterial.

(i) Limitations - Fair value estimates are made at a specific point in time, based on relevant market information and information about financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect estimates.

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2012

Loans And Allowance For Loan Losses

Loans and allowance for loan losses consisted of the following:

	September 30, 2012 (unaudited)			December 31, 2011
Real Estate Loans:
Owner Occupied One-to-four family	$	69,239,731		$	75,958,333
Non Owner Occupied One-to-four family		12,746,801			11,932,813
Home Equity Lines of Credit		10,301,657			9,501,693
Commercial Real Estate		12,633,089			10,040,391
Residential Construction		4,316,409			3,088,974
Land		1,915,196			2,584,476
Total Real Estate Loans		111,152,883			113,106,680
Consumer Loans		66,341			50,486
Commercial Loans		16,326			17,818
Total Loans		111,235,550			113,174,984
Less:
Allowance for loan losses		(1,395,000	)		(1,250,000	)
Total loans and allowance for loan losses	$	109,840,550		$	111,924,984

Credit Risk Analysis of Loans Receivable

The following tables show credit quality indicators, the aging of receivables, and disaggregated balances of loans receivable and the allowance for loan losses as of September 30, 2012 and December 31, 2011:

Credit Risk Analysis of Loans Receivable

As of September 30, 2012 (unaudited)

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
Pass	$	65,372,101	$	11,855,335	$	9,943,664	$	11,442,237	$	4,316,409	$	1,804,696	$	66,341	$	16,326	$	104,817,109
Special Mention		9,482		523,723		27,731		0		0		0		0		0		560,936
Substandard		3,858,148		367,743		330,262		1,190,852		0		110,500		0		0		5,857,505
Total	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550
Credit risk profile based on payment activity:
Performing	$	65,381,583	$	12,379,058	$	9,971,395	$	12,633,089	$	4,316,409	$	1,804,696	$	66,341	$	16,326	$	106,568,897
Nonperforming		3,858,148		367,743		330,262		0		0		110,500		0		0		4,666,653
Total	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550

Credit Risk Analysis of Loans Receivable

As of December 31, 2011

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
Pass	$	70,944,566	$	10,929,017	$	9,045,770	$	8,835,392	$	1,523,776	$	2,275,454	$	50,486	$	17,818	$	103,622,279
Special Mention		3,618,817		924,975		362,614		1,204,999		0		0		0		0		6,111,405
Substandard		1,394,950		78,821		93,309		0		1,565,198		309,022		0		0		3,441,300
Total	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984
Credit risk profile based on payment activity:
Performing	$	74,563,383	$	11,457,241	$	9,408,384	$	10,040,391	$	1,523,776	$	2,275,454	$	50,486	$	17,818	$	109,336,933
Nonperforming		1,394,950		475,572		93,309		0		1,565,198		309,022		0		0		3,838,051
Total	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984

Aged Analysis of Past Due Loans Receivable

Aged Analysis of Past Due Loans Receivable

As of September 30, 2012 (unaudited)

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
30-59 Days Past Due	$	558,061	$	0	$	64,322	$	0	$	0	$	0	$	0	$	0	$	622,383
60-89 Days Past Due		3,530		0		0		0		0		0		0		0		3,530
Greater Than 90 Days Past Due		2,916,203		367,743		92,387		0		0		110,500		0		0		3,486,833
Total Past Due		3,477,794		367,743		156,709		0		0		110,500		0		0		4,112,746
Current		65,761,937		12,379,058		10,144,948		12,633,089		4,316,409		1,804,696		66,341		16,326		107,122,804
Total Loans Receivable	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550
Recorded Investment > 90 Days and Accruing	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Aged Analysis of Past Due Loans Receivable

As of December 31, 2011

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
30-59 Days Past Due	$	40,965	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	40,965
60-89 Days Past Due		3,273		0		29,557		0		0		0		0		0		32,830
Greater Than 90 Days Past Due		1,299,668		78,821		69,528		0		1,565,198		309,022		0		0		3,322,237
Total Past Due		1,343,906		78,821		99,085		0		1,565,198		309,022		0		0		3,396,032
Current		74,614,427		11,853,992		9,402,608		10,040,391		1,523,776		2,275,454		50,486		17,818		109,778,952
Total Loans Receivable	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984
Recorded Investment > 90 Days and Accruing	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Allocation of Allowance for Loan and Lease Losses and Related Loans by Portfolio Segment

The following tables represent the allocation of the allowance for loan and lease losses and the related loans by portfolio segment for the three and nine months ended September 30, 2012:

Allowance for Loan Losses and Recorded Investment in Loans Receivable

For The Nine Months Ended September 30, 2012

	Owner Occupied 1-4 Family Residential			Non Owner Occupied 1-4 Family Residential			Home Equity Lines of Credit			Commercial Real Estate			Construction			Land			Consumer			Commercial			Impaired		Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	495,271		$	77,051		$	145,830		$	190,767		$	28,952		$	120,372		$	2,858		$	1,008		$	0	$	187,891		$	1,250,000
Charge-offs		(133,065	)		(59,847	)		0			0			(44,940	)		(20,585	)		(88	)		0			0		0			(258,525	)
Recoveries		20,354			0			2,997			0			0			0			0			0			0		0			23,351
Provision		198,090			195,716			(74,042	)		(13,904	)		59,152			(62,249	)		(1,238	)		(773	)		263,543		(184,121	)		380,174
Ending Balance	$	580,650		$	212,920		$	74,785		$	176,863		$	43,164		$	37,538		$	1,532		$	235		$	263,543	$	3,770		$	1,395,000
Ending Balance
Individually evaluated for impairment	$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	189,862	$	0		$	189,862
Ending Balance
Collectively evaluated for impairment	$	580,650		$	212,920		$	74,785		$	176,863		$	43,164		$	37,538		$	1,532		$	235		$	73,681	$	3,770		$	1,205,138
Loans Receivable:
Ending Balance	$	69,239,731		$	12,746,801		$	10,301,657		$	12,633,089		$	4,316,409		$	1,915,196		$	66,341		$	16,326				$	0		$	111,235,550
Ending Balance
Individually evaluated for impairment	$	4,118,893		$	367,743		$	330,262		$	0		$	0		$	110,500		$	0		$	0				$	0		$	4,927,398
Ending Balance
Collectively evaluated for impairment	$	65,120,838		$	12,379,058		$	9,971,395		$	12,633,089		$	4,316,409		$	1,804,696		$	66,341		$	16,326				$	0		$	106,308,152

Allowance for Loan Losses and Recorded Investment in Loans Receivable

For The Three Months Ended September 30, 2012

	Owner Occupied 1-4 Family Residential			Non Owner Occupied 1-4 Family Residential			Home Equity Lines of Credit		Commercial Real Estate			Construction		Land		Consumer			Commercial			Impaired		Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	603,447		$	163,854		$	70,890	$	191,178		$	32,968	$	37,210	$	1,003		$	252		$	42,728	$	106,470		$	1,250,000
Charge-offs		0			(59,847	)		0		0			0		0		(88	)		0			0		0			(59,935	)
Recoveries		2,016			0			999		0			0		0		0			0			0		0			3,015
Provision		(24,813	)		108,913			2,896		(14,315	)		10,196		328		617			(17	)		220,815		(102,700	)		201,920
Ending Balance	$	580,650		$	212,920		$	74,785	$	176,863		$	43,164	$	37,538	$	1,532		$	235		$	263,543	$	3,770		$	1,395,000
Ending Balance
Individually evaluated for impairment	$	0		$	0		$	0	$	0		$	0	$	0	$	0		$	0		$	189,862	$	0		$	189,862
Ending Balance
Collectively evaluated for impairment	$	580,650		$	212,920		$	74,785	$	176,863		$	43,164	$	37,538	$	1,532		$	235		$	73,681	$	3,770		$	1,205,138
Loans Receivable:
Ending Balance	$	69,239,731		$	12,746,801		$	10,301,657	$	12,633,089		$	4,316,409	$	1,915,196	$	66,341		$	16,326				$	0		$	111,235,550
Ending Balance
Individually evaluated for impairment	$	4,118,893		$	367,743		$	330,262	$	0		$	0	$	110,500	$	0		$	0				$	0		$	4,927,398
Ending Balance
Collectively evaluated for impairment	$	65,120,838		$	12,379,058		$	9,971,395	$	12,633,089		$	4,316,409	$	1,804,696	$	66,341		$	16,326				$	0		$	106,308,152

Nonperforming Assets and Troubled Debt Restructurings

Information with respect to nonperforming assets and troubled debt restructurings at September 30, 2012 and December 31, 2011 is as follows:

	September 30, 2012			December 31,
	(unaudited)			2011
Non-Accrual Loans:
Owner-occupied one-to-four family	$	3,858,148		$	1,394,950
Non owner-occupied one-to-four family		367,743			475,572
Home Equity Lines of credit		330,262			93,309
Commercial		0			0
Residential Construction		0			1,565,198
Land		110,500			309,022
Total Non-Accrual Loans	$	4,666,653		$	3,838,051
Other Real Estate Owned, net		1,783,484			0
Loans 90 days or more past due and still accruing		0			0
Total Nonperforming Assets	$	6,450,137		$	3,838,051
Troubled Debt Restructurings	$	3,558,561		$	1,562,084
Troubled Debt Restructurings included In Non-Accrual Loans	$	(3,297,816	)	$	(1,298,347	)
Troubled Debt Restructurings and Total Nonperforming Assets	$	6,710,882		$	4,101,788

Impaired Loans

Information on impaired loans for the three and nine months ended September 30, 2012 and 2011 is as follows:

	For the three months ended September 30, 2012				For the nine months ended September 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,880,741	$	27,680	$	1,720,291	$	47,215
Non Owner Occupied one-to-four family residential		421,019		0		448,117		8,128
Home Equity Lines of Credit		326,894		3,564		274,807		11,086
Construction		0		0		782,599		0
Land		111,250		0		209,761		0
Total with no allowance	$	2,739,904	$	31,244	$	3,435,575	$	66,429
With an allowance recorded:
Owner Occupied one-to-four family residential	$	1,148,056	$	4,214	$	574,028	$	79,674
Total with an allowance	$	1,148,056	$	4,214	$	574,028	$	79,674
Grand total:
Owner Occupied one-to-four family residential	$	3,028,797	$	31,894	$	2,294,319	$	126,889
Non Owner Occupied one-to-four family residential		421,019		0		448,117		8,128
Home Equity Lines of Credit		326,894		3,564		274,807		11,086
Construction		0		0		782,599		0
Land		111,250		0		209,761		0
Grand total	$	3,887,960	$	35,458	$	4,009,603	$	146,103

	For the three months ended September 30, 2011				For the nine months ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,625,904	$	829	$	1,627,055	$	12,359
Non Owner Occupied one-to-four family residential		39,411		0		26,274		1,951
Home Equity Lines of Credit		94,382		0		94,382		554
Construction		1,565,198		0		1,565,198		0
Land		310,772		0		310,855		0
Consumer		220		0		147		35
Total with no allowance	$	3,635,887	$	829	$	3,623,911	$	14,899
With an allowance recorded:
Owner Occupied one-to-four family residential	$	0	$	0	$	0	$	0
Total with an allowance	$	0	$	0	$	0	$	0
Grand total:
Owner Occupied one-to-four family residential	$	1,625,904	$	829	$	1,627,055	$	12,359
Non Owner Occupied one-to-four family residential		39,411		0		26,274		1,951
Home Equity Lines of Credit		94,382		0		94,382		554
Construction		1,565,198		0		1,565,198		0
Land		310,772		0		310,855		0
Consumer		220		0		147		35
Grand total	$	3,635,887	$	829	$	3,623,911	$	14,899

	As of September 30, 2012						As of December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,822,780	$	1,822,780	$	0	$	1,658,687	$	1,658,687	$	0
Non Owner Occupied one-to-four family residential		367,743		367,743		0		475,572		475,572		0
Home Equity Lines of Credit		330,262		330,262		0		93,309		93,309		0
Construction		0		0		0		1,565,198		1,565,198		0
Land		110,500		110,500		0		309,022		309,022		0
Total with no allowance	$	2,631,285	$	2,631,285	$	0	$	4,101,788	$	4,101,788	$	0
With an allowance recorded:
Owner Occupied one-to-four family residential	$	2,106,251	$	2,296,113	$	189,862	$	0	$	0	$	0
Total with an allowance	$	2,106,251	$	2,296,113	$	189,862	$	0	$	0	$	0
Grand total:
Owner Occupied one-to-four family residential	$	3,929,031	$	4,118,893	$	189,862	$	1,658,687	$	1,658,687	$	0
Non Owner Occupied one-to-four family residential		367,743		367,743		0		475,572		475,572		0
Home Equity Lines of Credit		330,262		330,262		0		93,309		93,309		0
Construction		0		0		0		1,565,198		1,565,198		0
Land		110,500		110,500		0		309,022		309,022		0
Grand total	$	4,737,536	$	4,927,398	$	189,862	$	4,101,788	$	4,101,788	$	0

Impaired Loan Considered to be any Loan which is Troubled Debt Restructuring or on Nonaccrual Status

The following table reflects impaired loans as of September 30, 2012 and December 31, 2011. We consider an impaired loan to be any loan which is a troubled debt restructuring or any loan on nonaccrual status.

	September 30, 2012		December 31, 2011
Impaired performing loans:
Owner occupied one-to-four family	$	0	$	0
Non owner occupied one-to-four family		0		0
Home equity lines of credit		0		0
Commercial		0		0
Construction		0		0
Land		0		0
Troubled debt restructurings:
Owner occupied one-to-four family		260,745		263,737
Non owner occupied one-to-four family		0		0
Home equity lines of credit		0		0
Commercial		0		0
Construction		0		0
Land		0		0
Total impaired performing loans		260,745		263,737
Impaired nonperforming loans (nonaccrual):
Owner occupied one-to-four family		901,695		698,141
Non owner occupied one-to-four family		367,743		475,572
Home equity lines of credit		99,398		93,309
Commercial		0		0
Construction		0		1,565,198
Land		0		194,022
Troubled debt restructurings:
Owner occupied one-to-four family		2,956,453		696,809
Non owner occupied one-to-four family		0		0
Home equity lines of credit		230,864		0
Commercial		0		0
Construction		0		0
Land		110,500		115,000
Total impaired nonperforming loans (nonaccrual)		4,666,653		3,838,051
Total impaired loans	$	4,927,398	$	4,101,788

Troubled Debt Restructurings

The following table is a summary of impaired loans that were modified due to a TDR by class for the three and nine months ending September 30, 2012. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the loan carrying amounts immediately prior to the modification and the carrying amounts immediately after the modification:

Modifications for the Nine Months Ending September 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Owner occupied one-to-four family residential		2	$	2,296,113	$	2,106,251
Home Equity Line of Credit		1		230,864		230,864
Total		3	$	2,526,977	$	2,337,115

Modifications for the Nine Months Ending September 30, 2011

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Land		1	$	116,500	$	116,500

Modifications for the Three Months Ending September 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Owner occupied one-to-four family residential		2	$	2,296,113	$	2,106,251

Modifications for the Three Months Ending September 30, 2011

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Land		1	$	116,500	$	116,500

Loan Class Modified as Troubled Debt Restructuring

The following table presents loans by loan class modified as TDR’s within the previous twelve months from, and for which there was a payment default (90 days or more past due) during the three and nine months ended September 30, 2012 and 2011:

Three Months Ended				Nine Months Ended
September 30, 2012				September 30, 2012
Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	0	$	0		0	$	0

Three Months Ended				Nine Months Ended
September 30, 2011				September 30, 2011
Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	0	$	0		0	$	0

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2012

RECENT ACCOUNTING PRONOUNCEMENTS

8. RECENT ACCOUNTING PRONOUNCEMENTS

All pending but not yet effective accounting standards updates were evaluated and only those listed below could have a material impact on the Company’s financial condition or results of operations.

ASU 2011-05, “Comprehensive Income (Topic 220) - Presentation of Comprehensive Income.” ASU 2011-05 amends Topic 220, “Comprehensive Income,” to require that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 became effective for the Company on January 1, 2012; however, certain provisions related to the presentation of reclassification adjustments have been deferred by ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” as further discussed below. In connection with the application of ASU 2011-05, the Company’s financial statements now include separate statements of comprehensive income.

ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers changes in ASU 2011-05 that relate to the presentation of reclassification adjustments to allow the FASB time to redeliberate whether to require presentation of such adjustments on the face of the financial statements to show the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income. ASU 2011-12 allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU No. 2011-05. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12. ASU 2011-12 became effective for the Company on January 1, 2012 and did not have a significant impact on the Company’s financial statements.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2012

FAIR VALUE MEASUREMENTS

6. FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company adopted FASB guidance on Fair Value Measurements which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This guidance applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, the guidance establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

The following table presents the Bank’s assets measured at fair value on a recurring basis:

	Fair Value at September 30, 2012 (unaudited)		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities:
Bank Notes and Corporate Bonds	$	2,518,060	$	0	$	2,518,060	$	0
Obligations of U.S. Government agencies		3,986,880		0		3,986,880		0
FNMA		4,460,452		0		4,460,452		0
GNMA		9,556,534		0		9,556,534		0
FHLMC		1,186,904		0		1,186,904		0
FNMA CMO		2,387,411		0		2,387,411		0
Private label CMO		318,989		0		318,989		0
	$	24,415,230	$	0	$	24,415,230	$	0
Total assets measured at fair value	$	24,415,230	$	0	$	24,415,230	$	0

	Fair Value at December 31, 2011		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities:
Bank Notes and Corporate Bonds	$	2,486,435	$	0	$	2,486,435	$	0
Obligations of U.S. Government agencies		6,822,738		0		6,822,738		0
FNMA		9,489,166		0		9,489,166		0
GNMA		7,009,215		0		7,009,215		0
FHLMC		2,324,338		0		2,324,338		0
FNMA CMO		2,703,191		0		2,703,191		0
Private label CMO		584,273		0		584,273		0
	$	31,419,356	$	0	$	31,419,356	$	0
Total assets measured at fair value	$	31,419,356	$	0	$	31,419,356	$	0

Securities classified as available-for-sale are reported at fair value utilizing Level 2 Inputs. For these securities, the Bank obtains fair values from an external pricing service or bid quotations received from securities dealers. The observable data may include dealer quotes, cash flows, U.S. Treasury yield curve, trading levels, credit information, and the terms and conditions of the security, among other things.

Financial Instruments Measured on a Nonrecurring Basis

The Bank may be required, from time to time, to measure certain other financial assets and liabilities at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets.

For assets measured at fair value on a nonrecurring basis as of September 30, 2012 and December 31, 2011, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the assets:

	Fair Value at September 30, 2012 (unaudited)		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:	$	3,929,031	$	0	$	3,929,031	$	0
Owner occupied one-to-four family		367,743		0		367,743		0
Non owner occupied one-to-four family		330,262		0		330,262		0
Home Equity Lines of Credit		110,500		0		110,500		0
Land	$	4,737,536	$	0	$	4,737,536	$	0
Other real estate owned:	$	1,783,484	$	0	$	1,783,484	$	0

	Fair Value at December 31, 2011		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:	$	1,565,198	$	0	$	1,565,198	$	0
Construction		1,658,687		0		1,658,687		0
Owner occupied one-to-four family		475,572		0		475,572		0
Non owner occupied one-to-four family		93,309		0		93,309		0
Home Equity Lines of Credit		309,022		0		309,022		0
Land	$	4,101,788	$	0	$	4,101,788	$	0
Other real estate owned:	$	0	$	0	$	0	$	0

Loans for which it is probable that the Bank will not collect all principal and interest due according to contractual terms are measured for impairment in accordance with FASB guidance. Allowable methods for estimating fair value include using the fair value of the collateral for collateral dependent loans or, where a loan is determined not to be collateral dependent, using the discounted cash flow method. In our determination of fair value, we have categorized both methods of valuation as estimates based on Level 2 inputs.

If the impaired loan is identified as collateral dependent, then the fair value method measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal or utilizing some other method of valuation for the collateral and applying a discount factor to the value based on our loan review policy and procedures.

If the impaired loan is determined not to be collateral dependent, then the discounted cash flow method is used. This method requires the impaired loan to be recorded at the present value of expected future cash flows discounted at the loan’s effective interest rate. The effective interest rate of a loan is the contractual interest rate adjusted for any net deferred loan fees or costs, premiums, or discounts existing at origination or acquisition of the loan.

Other Real Estate Owned

We record our other real estate owned at the lower of cost or estimated fair value less estimated selling costs. Estimated fair value is generally based upon an independent appraisal of the collateral. We consider these collateral values to be estimated using Level 2 inputs.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2012

FAIR VALUE OF FINANCIAL INSTRUMENTS

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates, methods, and assumptions are set forth below for the Bank’s financial instruments as of September 30, 2012 and December 31, 2011.

	September 30, 2012 (unaudited)
			Estimated Fair Value
	Carrying Value		Level One		Level Two		Level Three		Total
Assets:
Cash and cash equivalents	$	17,342,713	$	17,342,713	$	0	$	0	$	17,342,713
Securities - available-for-sale		24,415,230		0		24,415,230		0		24,415,230
Securities - held-to-maturity		7,350,208		0		7,705,022		0		7,705,022
Loans, net of allowance		109,840,550		0		4,737,536		110,521,022		115,258,558
Federal Home Loan Bank stock		1,275,500		0		1,275,500		0		1,275,500
Investment in bank-owned life insurance		4,482,563		4,482,563		0		0		4,482,563
Liabilities:
Deposit accounts and advances by borrowers		119,835,266		0		120,590,084		0		120,590,084
Advances from the FHLB		20,000,000		0		20,890,706		0		20,890,706

	December 31, 2011
			Estimated Fair Value
	Carrying Value		Level One		Level Two		Level Three		Total
Assets:
Cash and cash equivalents	$	14,923,142	$	14,923,142	$	0	$	0	$	14,923,142
Securities - available-for-sale		31,419,356		0		31,419,356		0		31,419,356
Securities - held-to-maturity		7,837,293		0		7,970,403		0		7,970,403
Loans, net of allowance		111,924,984		0		4,101,788		111,482,563		115,584,351
Federal Home Loan Bank stock		1,306,500		0		1,306,500		0		1,306,500
Investment in bank-owned life insurance		4,354,252		4,354,252		0		0		4,354,252
Liabilities:
Deposit accounts and advances by borrowers		122,031,508		0		122,998,429		0		122,998,429
Advances from the FHLB		22,500,000		0		23,223,703		0		23,223,703

	September 30, 2012 (unaudited)		December 31, 2011
Off-Balance Sheet Instruments:
Commitments to extend credit	$	1,451,000	$	0
Unused lines of credit	$	10,560,270	$	12,006,256

(a) Cash and Cash Equivalents - The carrying amount for cash on hand and in banks approximates fair value due to the short maturity of these instruments.

(b) Securities - The fair value of securities excluding Federal Home Loan Bank stock, is based on bid prices received from an external pricing service or bid quotations received from securities dealers.

(c) Loans - Loans were segmented into portfolios with similar financial characteristics. Loans were also segmented by loan category. Each loan category was further segmented by fixed and adjustable rate interest terms and performing and nonperforming categories. The fair value of residential loans was calculated by discounting anticipated cash flows based on weighted-average contractual maturity, weighted-average coupon, and discount rate.

The fair value for nonperforming loans was determined by reducing the carrying value of nonperforming loans by the Company’s historical loss percentage for each specific loan category.

(d) Federal Home Loan Bank Stock - The fair value of Federal Home Loan Bank stock approximates its carrying value based on the redemption provisions of the Federal Home Loan Bank.

(e) Investments in Bank-Owned Life Insurance - The fair value of the insurance contracts approximates the carrying value.

(f) Deposits and Advances by Borrowers - The fair value of deposits with no stated maturity, such as noninterest bearing deposits, interest-bearing NOW accounts, money market and statement savings accounts, is deemed to be equal to the carrying amounts. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate for certificates of deposit was estimated using the rate currently offered for deposits of similar remaining maturities.

(g) Advances from the FHLB - Fair values are estimated by discounting carrying values using a cash flow approach based on market rates as of September 30, 2012 and December 31, 2011.

(h) Off-Balance Sheet Financial Instruments - The Company’s adjustable rate commitments to extend credit move with market rates and are not subject to interest rate risk. The rates and terms of the Company’s fixed rate commitments to extend credit are competitive with others in the various markets in which the Company operates. The fair values of these instruments are immaterial.

(i) Limitations - Fair value estimates are made at a specific point in time, based on relevant market information and information about financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect estimates.

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2012

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Earnings per Common Share

Earnings per Common Share

Basic earnings per share amounts are based on the weighted average number of shares outstanding for the period and the net income applicable to common stockholders. Weighted average shares excludes unallocated ESOP shares. The Company has no dilutive potential common shares for the three or nine month periods ended September 30, 2012 or 2011.

	Three Months Ended						Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012		September 30, 2011
Net (loss) income	$	(91,223	)	$	(7,151	)	$	63,344	$	(64,222	)
Weighted average common shares outstanding		1,453,158			1,462,685			1,466,069		1,460,922
Basic and diluted earnings (loss) per share	$	(.06	)	$	(.01	)	$	.04	$	(.04	)

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Allocation of Allowance for Loan and Lease Losses and Related Loans by Portfolio Segment (Detail) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Allowance for loan losses:
Beginning Balance	$ 1,250,000	$ 1,250,000
Charge-offs	(59,935)	(258,525)
Recoveries	3,015	23,351
Provision	201,920	380,174
Ending balance	1,395,000	1,395,000
Ending Balance Individually evaluated for impairment	189,862	189,862
Ending Balance Collectively evaluated for impairment	1,205,138	1,205,138
Loans Receivable:
Ending Balance	111,235,550	111,235,550	113,174,984
Ending Balance Individually evaluated for impairment	4,927,398	4,927,398
Ending Balance Collectively evaluated for impairment	106,308,152	106,308,152
Owner occupied one-to-four family
Allowance for loan losses:
Beginning Balance	603,447	495,271
Charge-offs	0	(133,065)
Recoveries	2,016	20,354
Provision	(24,813)	198,090
Ending balance	580,650	580,650
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	580,650	580,650
Loans Receivable:
Ending Balance	69,239,731	69,239,731	75,958,333
Ending Balance Individually evaluated for impairment	4,118,893	4,118,893
Ending Balance Collectively evaluated for impairment	65,120,838	65,120,838
Non owner occupied one-to-four family
Allowance for loan losses:
Beginning Balance	163,854	77,051
Charge-offs	(59,847)	(59,847)
Recoveries	0	0
Provision	108,913	195,716
Ending balance	212,920	212,920
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	212,920	212,920
Loans Receivable:
Ending Balance	12,746,801	12,746,801	11,932,813
Ending Balance Individually evaluated for impairment	367,743	367,743
Ending Balance Collectively evaluated for impairment	12,379,058	12,379,058
Home Equity Lines of Credit
Allowance for loan losses:
Beginning Balance	70,890	145,830
Charge-offs	0	0
Recoveries	999	2,997
Provision	2,896	(74,042)
Ending balance	74,785	74,785
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	74,785	74,785
Loans Receivable:
Ending Balance	10,301,657	10,301,657	9,501,693
Ending Balance Individually evaluated for impairment	330,262	330,262
Ending Balance Collectively evaluated for impairment	9,971,395	9,971,395
Commercial Real Estate
Allowance for loan losses:
Beginning Balance	191,178	190,767
Charge-offs	0	0
Recoveries	0	0
Provision	(14,315)	(13,904)
Ending balance	176,863	176,863
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	176,863	176,863
Loans Receivable:
Ending Balance	12,633,089	12,633,089	10,040,391
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	12,633,089	12,633,089
Residential construction
Allowance for loan losses:
Beginning Balance	32,968	28,952
Charge-offs	0	(44,940)
Recoveries	0	0
Provision	10,196	59,152
Ending balance	43,164	43,164
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	43,164	43,164
Loans Receivable:
Ending Balance	4,316,409	4,316,409	3,088,974
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	4,316,409	4,316,409
Land
Allowance for loan losses:
Beginning Balance	37,210	120,372
Charge-offs	0	(20,585)
Recoveries	0	0
Provision	328	(62,249)
Ending balance	37,538	37,538
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	37,538	37,538
Loans Receivable:
Ending Balance	1,915,196	1,915,196	2,584,476
Ending Balance Individually evaluated for impairment	110,500	110,500
Ending Balance Collectively evaluated for impairment	1,804,696	1,804,696
Consumer
Allowance for loan losses:
Beginning Balance	1,003	2,858
Charge-offs	(88)	(88)
Recoveries	0	0
Provision	617	(1,238)
Ending balance	1,532	1,532
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	1,532	1,532
Loans Receivable:
Ending Balance	66,341	66,341	50,486
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	66,341	66,341
Commercial
Allowance for loan losses:
Beginning Balance	252	1,008
Charge-offs	0	0
Recoveries	0	0
Provision	(17)	(773)
Ending balance	235	235
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	235	235
Loans Receivable:
Ending Balance	16,326	16,326	17,818
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	16,326	16,326
Impaired
Allowance for loan losses:
Beginning Balance	42,728	0
Charge-offs	0	0
Recoveries	0	0
Provision	220,815	263,543
Ending balance	263,543	263,543
Ending Balance Individually evaluated for impairment	189,862	189,862
Ending Balance Collectively evaluated for impairment	73,681	73,681
Unallocated
Allowance for loan losses:
Beginning Balance	106,470	187,891
Charge-offs	0	0
Recoveries	0	0
Provision	(102,700)	(184,121)
Ending balance	3,770	3,770
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	3,770	3,770
Loans Receivable:
Ending Balance	0	0
Ending Balance Individually evaluated for impairment	0	0
Ending Balance Collectively evaluated for impairment	$ 0	$ 0

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REGULATORY MATTERS (Tables)

9 Months Ended

Sep. 30, 2012

Capital Position

The following table details the Bank’s capital position:

	Actual					For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio
	(dollars in thousands)					(dollars in thousands)
As of September 30, 2012 (unaudited):
Total Risk-Based Capital (to risk-weighted assets)	$	24,906		26.29	%	$	9,474		10.0	%
Tier I Capital (to risk-weighted assets)	$	23,719		25.04	%	$	5,683		6.0	%
Tier I Capital (to adjusted total assets)	$	23,719		13.95	%	$	8,501		5.0	%

	Actual					For Capital Adequacy Purposes and to be Well Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio
	(dollars in thousands)					(dollars in thousands)
As of December 31, 2011:
Total Risk-Based Capital (to risk-weighted assets)	$	24,827		26.46	%	$	9,383		10.0	%
Tier I Capital (to risk-weighted assets)	$	23,654		25.21	%	$	5,630		6.0	%
Tier I Capital (to adjusted total assets)	$	23,654		13.50	%	$	8,761		5.0	%

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Amortized Cost and Fair Values of Investment Securities (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	$ 24,135,126	$ 31,176,136
Available-for-sale, Gross Unrealized Gains	307,466	364,257
Available-for-sale, Gross Unrealized Losses	27,362	121,037
Available-for-sale, fair value	24,415,230	31,419,356
Held-to-maturity, Amortized Cost	7,350,208	7,837,293
Held-to-maturity, Gross Unrealized Gains	374,791	133,110
Held-to-maturity, Gross Unrealized Losses	19,977	0
Held-to-maturity, Fair Value	7,705,022	7,970,403
Bank Notes and Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	2,497,895	2,495,526
Available-for-sale, Gross Unrealized Gains	21,665	7,844
Available-for-sale, Gross Unrealized Losses	1,500	16,935
Available-for-sale, fair value	2,518,060	2,486,435
Mortgage-backed securities | FNMA
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	4,329,769	9,370,220
Available-for-sale, Gross Unrealized Gains	130,799	119,118
Available-for-sale, Gross Unrealized Losses	116	172
Available-for-sale, fair value	4,460,452	9,489,166
Held-to-maturity, Amortized Cost	4,870,387	4,940,170
Held-to-maturity, Gross Unrealized Gains	315,448	103,426
Held-to-maturity, Gross Unrealized Losses	0	0
Held-to-maturity, Fair Value	5,185,835	5,043,596
Mortgage-backed securities | GNMA
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	9,422,086	7,019,669
Available-for-sale, Gross Unrealized Gains	134,448	31,425
Available-for-sale, Gross Unrealized Losses	0	41,879
Available-for-sale, fair value	9,556,534	7,009,215
Mortgage-backed securities | FHLMC
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	1,174,958	2,334,789
Available-for-sale, Gross Unrealized Gains	11,946	7,438
Available-for-sale, Gross Unrealized Losses	0	17,889
Available-for-sale, fair value	1,186,904	2,324,338
Mortgage-backed securities | FNMA CMO
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	2,392,805	2,636,100
Available-for-sale, Gross Unrealized Gains	4,167	67,091
Available-for-sale, Gross Unrealized Losses	9,561	0
Available-for-sale, fair value	2,387,411	2,703,191
Mortgage-backed securities | Private Label CMO
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	318,608	623,176
Available-for-sale, Gross Unrealized Gains	381	5,259
Available-for-sale, Gross Unrealized Losses	0	44,162
Available-for-sale, fair value	318,989	584,273
Obligations of U.S. Government Agencies
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	3,999,005	6,696,656
Available-for-sale, Gross Unrealized Gains	4,060	126,082
Available-for-sale, Gross Unrealized Losses	16,185	0
Available-for-sale, fair value	3,986,880	6,822,738
Municipal Bonds
Schedule of Available-for-sale Securities [Line Items]
Held-to-maturity, Amortized Cost	545,905	551,202
Held-to-maturity, Gross Unrealized Gains	35,720	17,283
Held-to-maturity, Gross Unrealized Losses	0	0
Held-to-maturity, Fair Value	581,625	568,485
SBA Pools
Schedule of Available-for-sale Securities [Line Items]
Held-to-maturity, Amortized Cost	1,933,916	2,345,921
Held-to-maturity, Gross Unrealized Gains	23,623	12,401
Held-to-maturity, Gross Unrealized Losses	19,977	0
Held-to-maturity, Fair Value	$ 1,937,562	$ 2,358,322

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Summary of Employee Stock Ownership Plan Shares (Detail) (USD $)	Sep. 30, 2012	Mar. 31, 2011
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Shares released or committed for release	18,515
Unearned shares	108,445
Total ESOP shares	126,960	126,960
Fair Value of unearned shares	$ 1,344,718

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income (loss)	$ (91,223)	$ (7,151)	$ 63,344	$ (64,222)
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	84,410	65,969	151,868	681,262
Less: income taxes on unrealized gains arising during the period	(33,764)	(26,388)	(60,747)	(272,505)
Other Comprehensive Income, Unrealized Holding Gain (Loss) on Securities and Derivatives Arising During Period, Net of Tax, Total	50,646	39,581	91,121	408,757
Less: Reclassification adjustment for realized gains	0	(60,019)	(114,134)	(107,714)
Income taxes on reclassification adjustment	0	24,008	45,653	43,086
Other Comprehensive Income Reclassification Adjustment For Gains (Losses) Included In Net Income	0	(36,011)	(68,481)	(64,628)
OTHER COMPREHENSIVE INCOME (LOSS)	50,646	3,570	22,640	344,129
COMPREHENSIVE (LOSS) INCOME	$ (40,577)	$ (3,581)	$ 85,984	$ 279,907

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LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2012

LOANS AND ALLOWANCE FOR LOAN LOSSES

3. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans and allowance for loan losses consisted of the following:

	September 30, 2012 (unaudited)			December 31, 2011
Real Estate Loans:
Owner Occupied One-to-four family	$	69,239,731		$	75,958,333
Non Owner Occupied One-to-four family		12,746,801			11,932,813
Home Equity Lines of Credit		10,301,657			9,501,693
Commercial Real Estate		12,633,089			10,040,391
Residential Construction		4,316,409			3,088,974
Land		1,915,196			2,584,476
Total Real Estate Loans		111,152,883			113,106,680
Consumer Loans		66,341			50,486
Commercial Loans		16,326			17,818
Total Loans		111,235,550			113,174,984
Less:
Allowance for loan losses		(1,395,000	)		(1,250,000	)
Total loans and allowance for loan losses	$	109,840,550		$	111,924,984

Management segregates its loan portfolio into portfolio segments which is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The portfolio segments are segregated based on loan types and the underlying risk factors present in each loan type. These risk factors are periodically reviewed by management and revised as deemed appropriate. The Company’s loan portfolio is segregated into the following portfolio segments:

Owner Occupied One-To-Four Family Residential Loans. This portfolio segment consists of the origination of first mortgage loans and closed end home equity second mortgage loans secured by one-to-four family residential properties located in our market area. The Company offers both fixed and adjustable rate products on properties located in the Company’s primary market area. These loans are generally for terms of 15, 20 and 30 years amortized on a monthly basis. The Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as employment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Non Owner Occupied One-To-Four Family Real Estate Loans. Loans secured by investment properties represent a unique credit risk to us and, as a result, we adhere to special underwriting guidelines. Of primary concern in non-owner occupied real estate lending is the consistency of rental income of the property. Payments on loans secured by rental properties often depend on the maintenance of the property and the payment of rent by its tenants. Payments on loans secured by rental properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. We generally require collateral on these loans to be a first mortgage along with an assignment of rents and leases, although we might accept a second mortgage where the combined loan-to-value ratio is low.

Home Equity Lines of Credit. This portfolio segment consists primarily of open end, second mortgage loans secured by one–to-four family residential properties. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as employment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Commercial Real Estate Loans. This portfolio segment consists primarily of loans secured by commercial real estate. Loans secured by commercial real estate generally may have larger balances and more risk of default than one-to-four family mortgage loans. The increased risk is the result of several factors, including the concentration of principal in a limited number of loans and borrowers, the impact of local and general economic conditions on the borrower’s ability to repay the loan, and the increased difficulty of evaluating and monitoring these types of loans.

Residential Construction Loans. This portfolio includes construction loans to individuals and builders, primarily for the construction of residential properties. Construction financing generally involves greater risk than long-term financing on improved, owner-occupied real estate. Our portfolio consists of both construction/permanent loans to individuals for their principal residence as well as speculative construction loans to builders. Construction loans are underwritten on the basis of the estimated value of the property as completed. For our construction/permanent loans to individuals for their principal residence, repayment is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as employment levels. Repayment can also be impacted by changes in property values on residential properties. For our speculative construction loans to builders, repayment is primarily dependent on the cashflows of the builder and the success of the project. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long term financing.

Land. This portfolio consists primarily of first mortgage loans on developed residential land. Land loans have a higher level of risk than loans for the purchase of existing homes since collateral values can only be estimated at the time the loan is approved.

Consumer Loans. This portfolio segment includes small balance unsecured loans to individuals, automobile loans and deposit account loans. Consumer loans are generally originated at higher interest rates than residential mortgage loans because of their higher risk. Collections are highly dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. In the case where collateral may be present, repossessed collateral for a defaulted loan may not provide an adequate source of repayment as a result of damage, loss or depreciation.

Commercial Loans. This portfolio segment consists of unsecured lines of credit and closed end loans to business owners that have personal guarantees. These loans generally have higher interest rates and shorter terms than one- to- four family residential loans. These loans have a higher level of risk than one- to- four family residential loans. The increased risk is due to the increased difficulty of monitoring and higher risk of default since their repayment generally depends on the successful operation of the borrower’s business.

The balance of impaired loans was $4,927,398 and $4,101,788 as of September 30, 2012 and December 31, 2011, respectively. We consider an impaired loan to be any loan which is a troubled debt restructuring or any loan on nonaccrual status.

Non-Performing/Past Due Loans - Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations, which typically occurs when principal or interest payments are more than 90 days past due. Non-accrual loans totaled $4,666,653 and $3,838,051 at September 30, 2012 and December 31, 2011, respectively. There were no accruing loans that were more than 90 days past due at September 30, 2012 or December 31, 2011.

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, we have segmented our loan portfolio by product type. Our loan segments are owner occupied one-to-four family residential, non owner occupied one-to-four family residential, home equity lines of credit (“HELOC”), commercial real estate, residential construction, land, consumer and commercial.

To establish the allowance for loan losses, loans are pooled by portfolio class and an historical loss percentage is applied to each class. The historical loss percentage is based upon a rolling 12 month history. This rolling history is utilized so that we have the most current and relevant charge-off trend data. These charge-offs are segregated by loan segment and compared to their respective loan segment average balances for the same period in order to calculate the charge-off percentage. That calculation determines the required allowance for loan loss level. The Company then applies additional loss multipliers to the different segments of loans to reflect various environmental factors. For individually evaluated loans (impaired loans), we do additional analyses to determine the impairment. Management applies judgment to develop its own view of loss probability within that range, using external and internal parameters with the objective of establishing an allowance for loss inherent within these portfolios as of the reporting date.

The Bank’s policies, consistent with regulatory guidelines, provide for the classification of loans and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those assets characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets (or portions of assets) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets that do not expose us to risk sufficient enough to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve close attention, are required to be designated as special mention.

Modifications of terms for our loans and their inclusion as troubled debt restructurings are based on individual facts and circumstances. Loan modifications that are included as troubled debt restructurings may involve either an increase or reduction of the interest rate, extension of the term of the loan, or deferral or forgiveness of principal or interest payments. As of September 30, 2012 there are seven loans totaling $3,558,561 classified as troubled debt restructurings.

The following tables show credit quality indicators, the aging of receivables, and disaggregated balances of loans receivable and the allowance for loan losses as of September 30, 2012 and December 31, 2011:

Credit Risk Analysis of Loans Receivable

As of September 30, 2012 (unaudited)

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
Pass	$	65,372,101	$	11,855,335	$	9,943,664	$	11,442,237	$	4,316,409	$	1,804,696	$	66,341	$	16,326	$	104,817,109
Special Mention		9,482		523,723		27,731		0		0		0		0		0		560,936
Substandard		3,858,148		367,743		330,262		1,190,852		0		110,500		0		0		5,857,505
Total	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550
Credit risk profile based on payment activity:
Performing	$	65,381,583	$	12,379,058	$	9,971,395	$	12,633,089	$	4,316,409	$	1,804,696	$	66,341	$	16,326	$	106,568,897
Nonperforming		3,858,148		367,743		330,262		0		0		110,500		0		0		4,666,653
Total	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550

Credit Risk Analysis of Loans Receivable

As of December 31, 2011

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
Pass	$	70,944,566	$	10,929,017	$	9,045,770	$	8,835,392	$	1,523,776	$	2,275,454	$	50,486	$	17,818	$	103,622,279
Special Mention		3,618,817		924,975		362,614		1,204,999		0		0		0		0		6,111,405
Substandard		1,394,950		78,821		93,309		0		1,565,198		309,022		0		0		3,441,300
Total	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984
Credit risk profile based on payment activity:
Performing	$	74,563,383	$	11,457,241	$	9,408,384	$	10,040,391	$	1,523,776	$	2,275,454	$	50,486	$	17,818	$	109,336,933
Nonperforming		1,394,950		475,572		93,309		0		1,565,198		309,022		0		0		3,838,051
Total	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984

Aged Analysis of Past Due Loans Receivable

As of September 30, 2012 (unaudited)

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
30-59 Days Past Due	$	558,061	$	0	$	64,322	$	0	$	0	$	0	$	0	$	0	$	622,383
60-89 Days Past Due		3,530		0		0		0		0		0		0		0		3,530
Greater Than 90 Days Past Due		2,916,203		367,743		92,387		0		0		110,500		0		0		3,486,833
Total Past Due		3,477,794		367,743		156,709		0		0		110,500		0		0		4,112,746
Current		65,761,937		12,379,058		10,144,948		12,633,089		4,316,409		1,804,696		66,341		16,326		107,122,804
Total Loans Receivable	$	69,239,731	$	12,746,801	$	10,301,657	$	12,633,089	$	4,316,409	$	1,915,196	$	66,341	$	16,326	$	111,235,550
Recorded Investment > 90 Days and Accruing	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Aged Analysis of Past Due Loans Receivable

As of December 31, 2011

	Owner Occupied 1-4 Family Residential		Non Owner Occupied 1-4 Family Residential		Home Equity Lines of Credit		Commercial Real Estate		Construction		Land		Consumer		Commercial		Total
30-59 Days Past Due	$	40,965	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	40,965
60-89 Days Past Due		3,273		0		29,557		0		0		0		0		0		32,830
Greater Than 90 Days Past Due		1,299,668		78,821		69,528		0		1,565,198		309,022		0		0		3,322,237
Total Past Due		1,343,906		78,821		99,085		0		1,565,198		309,022		0		0		3,396,032
Current		74,614,427		11,853,992		9,402,608		10,040,391		1,523,776		2,275,454		50,486		17,818		109,778,952
Total Loans Receivable	$	75,958,333	$	11,932,813	$	9,501,693	$	10,040,391	$	3,088,974	$	2,584,476	$	50,486	$	17,818	$	113,174,984
Recorded Investment > 90 Days and Accruing	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

The following tables represent the allocation of the allowance for loan and lease losses and the related loans by portfolio segment for the three and nine months ended September 30, 2012:

Allowance for Loan Losses and Recorded Investment in Loans Receivable

For The Nine Months Ended September 30, 2012

	Owner Occupied 1-4 Family Residential			Non Owner Occupied 1-4 Family Residential			Home Equity Lines of Credit			Commercial Real Estate			Construction			Land			Consumer			Commercial			Impaired		Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	495,271		$	77,051		$	145,830		$	190,767		$	28,952		$	120,372		$	2,858		$	1,008		$	0	$	187,891		$	1,250,000
Charge-offs		(133,065	)		(59,847	)		0			0			(44,940	)		(20,585	)		(88	)		0			0		0			(258,525	)
Recoveries		20,354			0			2,997			0			0			0			0			0			0		0			23,351
Provision		198,090			195,716			(74,042	)		(13,904	)		59,152			(62,249	)		(1,238	)		(773	)		263,543		(184,121	)		380,174
Ending Balance	$	580,650		$	212,920		$	74,785		$	176,863		$	43,164		$	37,538		$	1,532		$	235		$	263,543	$	3,770		$	1,395,000
Ending Balance
Individually evaluated for impairment	$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	189,862	$	0		$	189,862
Ending Balance
Collectively evaluated for impairment	$	580,650		$	212,920		$	74,785		$	176,863		$	43,164		$	37,538		$	1,532		$	235		$	73,681	$	3,770		$	1,205,138
Loans Receivable:
Ending Balance	$	69,239,731		$	12,746,801		$	10,301,657		$	12,633,089		$	4,316,409		$	1,915,196		$	66,341		$	16,326				$	0		$	111,235,550
Ending Balance
Individually evaluated for impairment	$	4,118,893		$	367,743		$	330,262		$	0		$	0		$	110,500		$	0		$	0				$	0		$	4,927,398
Ending Balance
Collectively evaluated for impairment	$	65,120,838		$	12,379,058		$	9,971,395		$	12,633,089		$	4,316,409		$	1,804,696		$	66,341		$	16,326				$	0		$	106,308,152

Allowance for Loan Losses and Recorded Investment in Loans Receivable

For The Three Months Ended September 30, 2012

	Owner Occupied 1-4 Family Residential			Non Owner Occupied 1-4 Family Residential			Home Equity Lines of Credit		Commercial Real Estate			Construction		Land		Consumer			Commercial			Impaired		Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	603,447		$	163,854		$	70,890	$	191,178		$	32,968	$	37,210	$	1,003		$	252		$	42,728	$	106,470		$	1,250,000
Charge-offs		0			(59,847	)		0		0			0		0		(88	)		0			0		0			(59,935	)
Recoveries		2,016			0			999		0			0		0		0			0			0		0			3,015
Provision		(24,813	)		108,913			2,896		(14,315	)		10,196		328		617			(17	)		220,815		(102,700	)		201,920
Ending Balance	$	580,650		$	212,920		$	74,785	$	176,863		$	43,164	$	37,538	$	1,532		$	235		$	263,543	$	3,770		$	1,395,000
Ending Balance
Individually evaluated for impairment	$	0		$	0		$	0	$	0		$	0	$	0	$	0		$	0		$	189,862	$	0		$	189,862
Ending Balance
Collectively evaluated for impairment	$	580,650		$	212,920		$	74,785	$	176,863		$	43,164	$	37,538	$	1,532		$	235		$	73,681	$	3,770		$	1,205,138
Loans Receivable:
Ending Balance	$	69,239,731		$	12,746,801		$	10,301,657	$	12,633,089		$	4,316,409	$	1,915,196	$	66,341		$	16,326				$	0		$	111,235,550
Ending Balance
Individually evaluated for impairment	$	4,118,893		$	367,743		$	330,262	$	0		$	0	$	110,500	$	0		$	0				$	0		$	4,927,398
Ending Balance
Collectively evaluated for impairment	$	65,120,838		$	12,379,058		$	9,971,395	$	12,633,089		$	4,316,409	$	1,804,696	$	66,341		$	16,326				$	0		$	106,308,152

Management reviews and identifies loans and investments that require designation as nonperforming assets and troubled debt restructurings. Nonperforming assets include loans accounted for on a non-accrual basis, loans past due by 90 days or more but still accruing, and other real estate owned. Troubled debt restructurings include loans in which the borrower was having financial difficulty, and we agreed to modify the loan. Information with respect to nonperforming assets and troubled debt restructurings at September 30, 2012 and December 31, 2011 is as follows:

	September 30, 2012			December 31,
	(unaudited)			2011
Non-Accrual Loans:
Owner-occupied one-to-four family	$	3,858,148		$	1,394,950
Non owner-occupied one-to-four family		367,743			475,572
Home Equity Lines of credit		330,262			93,309
Commercial		0			0
Residential Construction		0			1,565,198
Land		110,500			309,022
Total Non-Accrual Loans	$	4,666,653		$	3,838,051
Other Real Estate Owned, net		1,783,484			0
Loans 90 days or more past due and still accruing		0			0
Total Nonperforming Assets	$	6,450,137		$	3,838,051
Troubled Debt Restructurings	$	3,558,561		$	1,562,084
Troubled Debt Restructurings included In Non-Accrual Loans	$	(3,297,816	)	$	(1,298,347	)
Troubled Debt Restructurings and Total Nonperforming Assets	$	6,710,882		$	4,101,788

At September 30, 2012 and December 31, 2011, there were no loans 90 days past due or more and still accruing interest. At September 30, 2012, the Company had twenty seven loans on non-accrual status with foregone interest in the amount of $189,034. At December 31, 2011, the Company had eighteen loans on non-accrual status with foregone interest of $249,839.

Information on impaired loans for the three and nine months ended September 30, 2012 and 2011 is as follows:

	For the three months ended September 30, 2012				For the nine months ended September 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,880,741	$	27,680	$	1,720,291	$	47,215
Non Owner Occupied one-to-four family residential		421,019		0		448,117		8,128
Home Equity Lines of Credit		326,894		3,564		274,807		11,086
Construction		0		0		782,599		0
Land		111,250		0		209,761		0
Total with no allowance	$	2,739,904	$	31,244	$	3,435,575	$	66,429
With an allowance recorded:
Owner Occupied one-to-four family residential	$	1,148,056	$	4,214	$	574,028	$	79,674
Total with an allowance	$	1,148,056	$	4,214	$	574,028	$	79,674
Grand total:
Owner Occupied one-to-four family residential	$	3,028,797	$	31,894	$	2,294,319	$	126,889
Non Owner Occupied one-to-four family residential		421,019		0		448,117		8,128
Home Equity Lines of Credit		326,894		3,564		274,807		11,086
Construction		0		0		782,599		0
Land		111,250		0		209,761		0
Grand total	$	3,887,960	$	35,458	$	4,009,603	$	146,103

	For the three months ended September 30, 2011				For the nine months ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,625,904	$	829	$	1,627,055	$	12,359
Non Owner Occupied one-to-four family residential		39,411		0		26,274		1,951
Home Equity Lines of Credit		94,382		0		94,382		554
Construction		1,565,198		0		1,565,198		0
Land		310,772		0		310,855		0
Consumer		220		0		147		35
Total with no allowance	$	3,635,887	$	829	$	3,623,911	$	14,899
With an allowance recorded:
Owner Occupied one-to-four family residential	$	0	$	0	$	0	$	0
Total with an allowance	$	0	$	0	$	0	$	0
Grand total:
Owner Occupied one-to-four family residential	$	1,625,904	$	829	$	1,627,055	$	12,359
Non Owner Occupied one-to-four family residential		39,411		0		26,274		1,951
Home Equity Lines of Credit		94,382		0		94,382		554
Construction		1,565,198		0		1,565,198		0
Land		310,772		0		310,855		0
Consumer		220		0		147		35
Grand total	$	3,635,887	$	829	$	3,623,911	$	14,899

	As of September 30, 2012						As of December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no allowance recorded:
Owner Occupied one-to-four family residential	$	1,822,780	$	1,822,780	$	0	$	1,658,687	$	1,658,687	$	0
Non Owner Occupied one-to-four family residential		367,743		367,743		0		475,572		475,572		0
Home Equity Lines of Credit		330,262		330,262		0		93,309		93,309		0
Construction		0		0		0		1,565,198		1,565,198		0
Land		110,500		110,500		0		309,022		309,022		0
Total with no allowance	$	2,631,285	$	2,631,285	$	0	$	4,101,788	$	4,101,788	$	0
With an allowance recorded:
Owner Occupied one-to-four family residential	$	2,106,251	$	2,296,113	$	189,862	$	0	$	0	$	0
Total with an allowance	$	2,106,251	$	2,296,113	$	189,862	$	0	$	0	$	0
Grand total:
Owner Occupied one-to-four family residential	$	3,929,031	$	4,118,893	$	189,862	$	1,658,687	$	1,658,687	$	0
Non Owner Occupied one-to-four family residential		367,743		367,743		0		475,572		475,572		0
Home Equity Lines of Credit		330,262		330,262		0		93,309		93,309		0
Construction		0		0		0		1,565,198		1,565,198		0
Land		110,500		110,500		0		309,022		309,022		0
Grand total	$	4,737,536	$	4,927,398	$	189,862	$	4,101,788	$	4,101,788	$	0

The following table reflects impaired loans as of September 30, 2012 and December 31, 2011. We consider an impaired loan to be any loan which is a troubled debt restructuring or any loan on nonaccrual status.

	September 30, 2012		December 31, 2011
Impaired performing loans:
Owner occupied one-to-four family	$	0	$	0
Non owner occupied one-to-four family		0		0
Home equity lines of credit		0		0
Commercial		0		0
Construction		0		0
Land		0		0
Troubled debt restructurings:
Owner occupied one-to-four family		260,745		263,737
Non owner occupied one-to-four family		0		0
Home equity lines of credit		0		0
Commercial		0		0
Construction		0		0
Land		0		0
Total impaired performing loans		260,745		263,737
Impaired nonperforming loans (nonaccrual):
Owner occupied one-to-four family		901,695		698,141
Non owner occupied one-to-four family		367,743		475,572
Home equity lines of credit		99,398		93,309
Commercial		0		0
Construction		0		1,565,198
Land		0		194,022
Troubled debt restructurings:
Owner occupied one-to-four family		2,956,453		696,809
Non owner occupied one-to-four family		0		0
Home equity lines of credit		230,864		0
Commercial		0		0
Construction		0		0
Land		110,500		115,000
Total impaired nonperforming loans (nonaccrual)		4,666,653		3,838,051
Total impaired loans	$	4,927,398	$	4,101,788

Loans may be periodically modified in a troubled debt restructuring (TDR), where the Company will make concessions to a borrower having financial difficulty to help the borrower remain current on the loan and/or to avoid foreclosure. When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans. If we determine that the value of the modified loan is less than the recorded investment in the loan, impairment is generally recognized through a charge-off through the allowance, however, if a specific reserve has been established, impairment is recognized through the provision for loan losses. At September 30, 2012, we had seven loans that were restructured totaling $3,558,561. Five loans, totaling $3,217,197 were secured by owner-occupied one-to-four family residential properties, one loan totaling $110,500 is secured by a residential lot, and one loan totaling $230,864 is a home equity line of credit. At December 31, 2011, we had five loans totaling $1,562,084 that were restructured. Four loans, totaling $1,447,084 were secured by owner-occupied one-to-four family residential properties, and one loan totaling $115,000 was secured by a residential lot.

The following table is a summary of impaired loans that were modified due to a TDR by class for the three and nine months ending September 30, 2012. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the loan carrying amounts immediately prior to the modification and the carrying amounts immediately after the modification:

Modifications for the Nine Months Ending September 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Owner occupied one-to-four family residential		2	$	2,296,113	$	2,106,251
Home Equity Line of Credit		1		230,864		230,864
Total		3	$	2,526,977	$	2,337,115

Modifications for the Nine Months Ending September 30, 2011

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Land		1	$	116,500	$	116,500

Modifications for the Three Months Ending September 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Owner occupied one-to-four family residential		2	$	2,296,113	$	2,106,251

Modifications for the Three Months Ending September 30, 2011

	Number of Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Troubled Debt Restructuring:
Land		1	$	116,500	$	116,500

The following table presents loans by loan class modified as TDR’s within the previous twelve months from, and for which there was a payment default (90 days or more past due) during the three and nine months ended September 30, 2012 and 2011:

Three Months Ended				Nine Months Ended
September 30, 2012				September 30, 2012
Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	0	$	0		0	$	0

Three Months Ended				Nine Months Ended
September 30, 2011				September 30, 2011
Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	0	$	0		0	$	0

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Amortized Cost and Fair Value of Debt Securities by Contractual Maturities (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Available-for-sale, Amortized Cost
Due in less than one year	$ 997,895
Due in one year through five years	1,504,291	2,502,994
Due in five years through ten years	1,283,481	6,513,583
Due after ten years	20,349,459	22,159,559
Available-for-sale, Amortized Cost	24,135,126	31,176,136
Available-for-sale, Fair Value
Due in less than one year	1,019,560
Due in one year through five years	1,502,734	2,493,771
Due in five years through ten years	1,317,002	6,654,782
Due after ten years	20,575,934	22,270,803
Available-for-sale, fair value	24,415,230	31,419,356
Held-to-maturity, Amortized Cost
Due in one year through five years	888,698	1,243,103
Due in five years through ten years	4,870,388	4,940,170
Due after ten years	1,591,122	1,654,020
Held-to-maturity, Amortized Cost	7,350,208	7,837,293
Held-to-maturity, fair value
Due in one year through five years	868,722	1,254,845
Due in five years through ten years	5,185,835	5,043,596
Due after ten years	1,650,465	1,671,962
Held-to-maturity, Fair Value	$ 7,705,022	$ 7,970,403

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Troubled Debt Restructurings (Detail) (USD $)	9 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2012 Contract	Sep. 30, 2012 Owner occupied one-to-four family Contract	Sep. 30, 2012 Owner occupied one-to-four family Contract	Sep. 30, 2012 Home Equity Lines of Credit Contract	Sep. 30, 2011 Land Contract	Sep. 30, 2011 Land Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts	3	2	2	1	1	1
Pre-Modification Principal Balance	$ 2,526,977	$ 2,296,113	$ 2,296,113	$ 230,864	$ 116,500	$ 116,500
Post-Modification Principal Balance	$ 2,337,115	$ 2,106,251	$ 2,106,251	$ 230,864	$ 116,500	$ 116,500

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EMPLOYEE STOCK OWNERSHIP PLAN (Tables)

9 Months Ended

Sep. 30, 2012

Summary of ESOP Shares

A summary of ESOP shares at September 30, 2012 is as follows:

Shares released or committed for release		18,515
Unearned shares		108,445
Total ESOP shares		126,960
Fair Value of unearned shares	$	1,344,718