Loans Receivable, Net

3 Months Ended

Jun. 30, 2011

Loans Receivable, Net {1}

Loans Receivable, Net

10.       Loans Receivable, Net

Loans receivable, net, at June 30, 2011 and March 31, 2011 consisted of the following:

	June 30, 2011			March 31, 2011
Residential Real Estate	$	107,105,407		$	111,028,021
Consumer		62,907,429			64,862,668
Commercial Business		11,816,035			13,529,957
Commercial Real Estate		299,130,772			306,955,623
Total Loans Held For Investment		480,959,643			496,376,269
Loans Held For Sale		4,052,268			5,166,234
Total Loans Receivable, Gross		485,011,911			501,542,503
Less:
Allowance For Possible Loan Loss		13,502,573			12,501,800
Loans In Process		3,705,371			4,580,059
Deferred Loan Fees		(10,674	)		(9,972	)
		17,197,270			17,071,887
Total Loans Receivable, Net	$	467,814,641		$	484,470,616

The Company uses a risk based approach based on the following credit quality measures when analyzing the loan portfolio: pass, watch, special mention, and substandard. These indicators are used to rate the credit quality of loans for the purposes of determining the Company’s allowance for loan losses. Pass loans are loans that are performing and are deemed adequately protected by the net worth of the borrower or the underlying collateral value. These loans are considered the least risky in terms of determining the allowance for loan losses. Substandard loans are considered the most risky category. These loans typically have an identified weakness or weaknesses and are inadequately protected by the net worth of the borrower or collateral value. All loans 60 days or more past due are automatically classified in this category. The other two categories fall in between these two grades. The following tables list the loan grades used by the Company as credit quality indicators and the balance in each category, excluding loans held for sale for the periods indicated.

	Credit Quality Measures
June 30, 2011	Pass		Watch		Special Mention		Substandard		Total Loans
Residential Real Estate	$	99,274,271	$	-	$	401,128	$	7,430,008	$	107,105,407
Consumer		59,457,693		148,015		8,291		3,293,430		62,907,429
Commercial Business		10,229,767		-		-		1,586,268		11,816,035
Commercial Real Estate		224,149,486		11,632,084		28,284,748		35,064,454		299,130,772
Total	$	393,111,217	$	11,780,099	$	28,694,167	$	47,374,160	$	480,959,643

	Credit Quality Measures
March 31, 2011	Pass		Watch		Special Mention		Substandard		Total Loans
Residential Real Estate	$	104,826,411	$	433,710	$	379,036	$	5,388,864	$	111,028,021
Consumer		61,425,853		97,706		9,180		3,329,929		64,862,668
Commercial Business		12,059,761		6,285		-		1,463,911		13,529,957
Commercial Real Estate		230,031,130		10,786,846		30,462,062		35,675,585		306,955,623
Total	$	408,343,155	$	11,324,547	$	30,850,278	$	45,858,289	$	496,376,269

The following tables present an age analysis of past due balances by category at the periods indicated.

June 30, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Day or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential    Real Estate	$	-	$	1,935,656	$	2,070,803	$	4,006,459	$	103,098,948	$	107,105,407
Consumer		817,420		411,437		1,362,643		2,591,500		60,315,929		62,907,429
Commercial    Business		311,832		83,485		101,988		497,305		11,318,730		11,816,035
Commercial    Real Estate		6,989,728		2,319,786		8,440,108		17,749,622		281,381,150		299,130,772
Total	$	8,118,980	$	4,750,364	$	11,975,542	$	24,844,886	$	456,114,757	$	480,959,643

March 31, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Day or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential    Real Estate	$	1,799,800	$	-	$	1,809,881	$	3,609,681	$	107,418,340	$	111,028,021
Consumer		2,673,973		196,958		1,194,171		4,065,102		60,797,566		64,862,668
Commercial    Business		93,579		133,399		171,901		398,879		13,131,078		13,529,957
Commercial    Real Estate		19,441,992		2,708,373		9,337,385		31,487,750		275,467,873		306,955,623
Total	$	24,009,344	$	3,038,730	$	12,513,338	$	39,561,412	$	456,814,857	$	496,376,269

At June 30, 2011, the Company did not have any loans that were 90 days or more past due and still accruing interest. Our strategy is to work with our borrowers to reach acceptable payment plans while protecting our interests in the existing collateral.  In the event an acceptable arrangement cannot be reached, we may have to acquire these properties through foreclosure or other means and subsequently sell, develop, or liquidate them. The following table shows non-accrual loans by category at June 30, 2011 compared to March 31, 2011.

	At June 30, 2011					At March 31, 2011					$				%
	Amount		Percent (1)			Amount		Percent (1)			Increase (Decrease)			Increase (Decrease)
Non-accrual loans:
Residential real estate	$	2,070,803		0.4	%	$	1,809,881		0.4	%	$	260,922			14.4	%
Commercial business		101,988		-			171,901		-			(69,913	)		(40.7	)
Commercial real estate		8,440,108		1.8			9,337,385		1.9			(897,277	)		(9.6	)
Consumer		1,362,643		0.3			1,194,171		0.2			168,472			14.1
Total non-accural loans	$	11,975,542		2.5	%	$	12,513,338		2.5	%	$	(537,796	)		(4.3	)%

(1) Percent of gross loans receivable, net of deferred fees and loans in process and loans held for sale

The following tables show the activity in the allowance for loan losses by category for the periods indicated.

	June 30, 2011
Allowance For Loan Losses	Residential Real Estate			Consumer			Commercial Business			Commercial Real Estate			Total
Beginning Balance	$	1,702,864		$	1,122,055		$	924,149			8,752,732		$	12,501,800
Provision		231,632			24,893			(211,990	)		2,255,465			2,300,000
Charge-Offs		(171,039	)		(54,738	)		(72,811	)		(1,023,274	)		(1,321,862	)
Recoveries		-			10,557			12,078			-			22,635
Ending Balance	$	1,763,457		$	1,102,767		$	651,426		$	9,984,923		$	13,502,573

	March 31, 2011
Allowance For Loan Losses	Residential Real Estate			Consumer			Commercial Business			Commercial Real Estate			Total
Beginning Balance	$	1,944,257		$	988,634		$	678,728			8,695,775		$	12,307,394
Provision		644,032			649,542			539,264			5,967,162			7,800,000
Charge-Offs		(1,009,937	)		(584,600	)		(320,960	)		(6,201,170	)		(8,116,667	)
Recoveries		124,512			68,479			27,117			290,965			511,073
Ending Balance	$	1,702,864		$	1,122,055		$	924,149			8,752,732		$	12,501,800

The following tables present information related to impaired loans evaluated individually for impairment and collectively evaluated for impairment in the allowance for loan losses for the periods indicated.

	Allowance For Loan Losses
June 30, 2011	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	-	$	1,763,457	$	1,763,457
Consumer		41,100		1,061,667		1,102,767
Commercial Business		289,404		362,022		651,426
Commercial Real Estate		915,617		9,069,306		9,984,923
Total	$	1,246,121	$	12,256,452	$	13,502,573

	Allowance For Loan Losses
March 31, 2011	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	-	$	1,702,864	$	1,702,864
Consumer		41,100		1,080,955		1,122,055
Commercial Business		240,648		683,501		924,149
Commercial Real Estate		490,728		8,262,004		8,752,732
Total	$	772,476	$	11,729,324	$	12,501,800

The following tables present information related to impaired loans evaluated individually for impairment and collectively evaluated for impairment in loans receivable for the periods indicated.

	Loans Receivable
June 30, 2011	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,062,745	$	105,042,662	$	107,105,407
Consumer		2,395,244		60,512,185		62,907,429
Commercial Business		865,540		10,950,495		11,816,035
Commercial Real Estate		27,191,570		271,939,202		299,130,772
Total	$	32,515,099	$	448,444,544	$	480,959,643

	Loans Receivable
March 31, 2011	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,278,966	$	108,749,055	$	111,028,021
Consumer		1,436,829		63,425,839		64,862,668
Commercial Business		770,011		12,759,946		13,529,957
Commercial Real Estate		28,811,862		278,143,761		306,955,623
Total	$	33,297,668	$	463,078,601	$	496,376,269

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired management measures impairment and records the loan at fair value. Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sale, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method. Typically, the Company reviews the most recent appraisal and if it is over 24 months old will request a new third party appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal and the value of the collateral relative to the recorded investment in the loan, management may order an independent appraisal immediately or, in some instances, may elect to perform an internal analysis.

The following table is a summary of information related to impaired loans as of June 30, 2011.

Impaired Loans	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance    recorded:
Residential Real Estate	$	2,062,745	$	2,624,745	$	-	$	2,170,856	$	10,577
Consumer Loans		2,334,576		2,519,576		-		1,855,369		32,768
Commercial Business		546,225		546,225		-		522,853		6,945
Commercial Real Estate		22,689,953		24,634,653		-		24,538,560		222,374
With an allowance recorded:
Residential Real Estate		-		-		-		-		-
Consumer Loans		60,668		60,668		41,100		60,668		-
Commercial Business		319,315		319,315		289,404		294,923		2,172
Commercial Real Estate		4,501,617		4,821,617		915,617		3,463,156		35,892
Total
Residential Real Estate		2,062,745		2,624,745		-		2,170,856		10,577
Consumer Loans		2,395,244		2,580,244		41,100		1,916,037		32,768
Commercial Business		865,540		865,540		289,404		817,776		9,117
Commercial Real Estate		27,191,570		29,456,270		915,617		28,001,716		258,266

The following table is a summary of information related to impaired loans as of March 31, 2011.

Impaired Loans	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance    recorded:
Residential Real Estate	$	2,278,966	$	2,683,966	$	-	$	1,458,882	$	51,267
Consumer Loans		1,376,161		1,583,160		-		729,889		56,764
Commercial Business		499,481		499,481		-		327,785		14,790
Commercial Real Estate		26,387,167		27,948,568		-		30,244,873		1,361,177
With an allowance recorded:
Residential Real Estate		-		-		-		41,879		-
Consumer Loans		60,668		60,668		41,100		124,089		-
Commercial Business		270,530		270,530		240,648		207,073		4,833
Commercial Real Estate		2,424,695		2,614,695		490,728		4,018,967		44,337
Total
Residential Real Estate		2,278,966		2,683,966		-		1,500,761		51,267
Consumer Loans		1,436,829		1,643,828		41,100		853,978		56,764
Commercial Business		770,011		770,011		240,648		534,858		19,623
Commercial Real Estate		28,811,862		30,563,263		490,728		34,263,840		1,405,514

TDRs included in impaired loans at June 30, 2011 and March 31, 2011 were $11.9 million and $12.2 million, respectively. Interest earned during the quarter ended June 30, 2011 and fiscal 2011 on these loans amounted to $100,997 and $649,348, respectively.

At June 30, 2011 and March 31, 2011, the Bank did not have any loans 90 days delinquent and still accruing interest.