The Company acquired loans in a transfer during the fiscal year ended June 30, 2011. At acquisition, certain transferred loans evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

The carrying amount of those loans is included in the balance sheet amounts of loans receivable at December 31 and June 30, 2013. The amounts of these loans at December 31 and June 30, 2013, are as follows:

	December 31, 2013	June 30, 2013
Real Estate Loans:
Residential	$2,085,113	$2,096,135
Construction	-	-
Commercial	1,299,293	1,323,361
Consumer loans	-	-
Commercial loans	1,401,778	1,707,442
Outstanding balance	$4,786,184	$5,126,938
Carrying amount, net of fair value adjustment of $917,433 and $1,021,542 at December 31 and June 30, 2013, respectively	$3,868,751	$4,105,396

	Three-month period ending
	December 31, 2013	December 31, 2012
Balance at beginning of period	$711,312	$489,356
Additions	-	-
Accretion	(74,826)	(147,606)
Reclassification from nonaccretable difference	774	496,299
Disposals	-	-
Balance at end of period	$637,260	$838,049

	Six-month period ending
	December 31, 2013	December 31, 2012
Balance at beginning of period	$798,789	$489,356
Additions	-	-
Accretion	(164,477)	(147,606)
Reclassification from nonaccretable difference	2,948	496,299
Disposals	-	-
Balance at end of period	$637,260	$838,049

During the three- and six-month periods ended December 31, 2013, the Company increased the allowance for loan losses by a charge to the income statement of $74,314 and $0, respectively, related to these purchased credit impaired loans, as compared to $24,223 and $166,000, respectively, during the same periods of the prior fiscal year. During the three- and six-month periods ended December 31, 2013, allowance for loan losses of $0 and $57,489, respectively, was reversed, as compared to $3,300 and $5,300, respectively, during the same periods of the prior fiscal year.