(5) Loans Receivable, Net

A summary of loans receivable at December 31, 2011 and 2010 follows (in thousands):


	December 31,
	2011			2010
Real estate mortgage:
One-to-four family	$	873,253		$	948,389
Commercial real estate, multi-family and land		460,725			435,127
Residential construction		6,657			13,748

		1,340,635			1,397,264
Consumer		192,918			205,725
Commercial		45,889			76,692

Total loans		1,579,442			1,679,681

Loans in process		(2,559	)		(4,055	)
Deferred origination costs, net		4,366			4,862
Allowance for loan losses		(18,230	)		(19,700	)

		(16,423	)		(18,893	)

	$	1,563,019		$	1,660,788

At December 31, 2011, 2010 and 2009 loans in the amount of $44,008,000, $37,537,000, and $28,320,000, respectively, were three or more months delinquent or in the process of foreclosure and the Company was not accruing interest income on these loans. There were no loans ninety days or greater past due and still accruing interest. Non-accrual loans include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified impaired loans.

The Company defines an impaired loan as all non-accrual commercial real estate, multi-family land, construction and commercial loans in excess of $250,000. Impaired loans also include all loans modified as troubled debt restructurings. At December 31, 2011, the impaired loan portfolio totaled $28,491,000 for which there was a specific allocation in the allowance for loan losses of $2,165,000. At December 31, 2010, the impaired loan portfolio totaled $19,191,000 for which there was a specific allocation in the allowance for loan losses of $2,667,000. The average balance of impaired loans for the years ended December 31, 2011, 2010 and 2009 was $25,472,000, $16,342,000 and $5,789,000, respectively. If interest income on non-accrual loans and impaired loans had been current in accordance with their original terms, approximately $2,125,000, $1,467,000 and $1,441,000 of interest income for the years ended December 31, 2011, 2010 and 2009, respectively, would have been recorded. At December 31, 2011, there were no commitments to lend additional funds to borrowers whose loans are in non-accrual status.

An analysis of the allowance for loan losses for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):


	Years Ended December 31,
	2011			2010			2009
Balance at beginning of year	$	19,700		$	14,723		$	11,665
Provision charged to operations		7,750			8,000			5,700
Charge-offs		(9,249	)		(3,276	)		(2,688	)
Recoveries		29			253			46

Balance at end of year	$	18,230		$	19,700		$	14,723

The following table presents an analysis of the allowance for loan losses for the year ended December 31, 2011, the balance in the allowance for loan loses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2011 and 2010 (in thousands):


	Residential Real Estate			Commercial Real Estate			Consumer			Commercial			Unallocated			Total
For the year ended December 31, 2011
Allowance for loan losses:
Balance at beginning of year	$	5,977		$	6,837		$	3,264		$	962		$	2,660		$	19,700
Provision (benefit) charged to operations		4,025			3,938			177			245			(635	)		7,750
Charge-offs		(4,643	)		(2,301	)		(1,982	)		(323	)		—			(9,249	)
Recoveries		11			—			2			16			—			29

Balance at end of year	$	5,370		$	8,474		$	1,461		$	900		$	2,025		$	18,230


December 31, 2011
Allowance for loan losses:
Ending allowance balance attributed to loans:
Individually evaluated for impairment	$	45		$	1,978		$	142		$	—		$	—		$	2,165
Collectively evaluated for impairment		5,325			6,496			1,319			900			2,025			16,065

Total ending allowance balance	$	5,370		$	8,474		$	1,461		$	900		$	2,025		$	18,230


Loans:
Loans individually evaluated for impairment	$	16,902		$	10,178		$	859		$	552		$	—		$	28,491
Loans collectively evaluated for impairment		863,008			450,547			192,059			45,337			—			1,550,951

Total ending loan balance	$	879,910		$	460,725		$	192,918		$	45,889		$	—		$	1,579,442


December 31, 2010
Allowance for loan losses:
Ending allowance balance attributed to loans:
Individually evaluated for impairment	$	436		$	1,988		$	243		$	—		$	—		$	2,667
Collectively evaluated for impairment		5,541			4,849			3,021			962			2,660			17,033

Total ending allowance balance	$	5,977		$	6,837		$	3,264		$	962		$	2,660		$	19,700


Loans:
Loans individually evaluated for impairment	$	14,196		$	4,673		$	322		$	—		$	—		$	19,191
Loans collectively evaluated for impairment		947,941			430,454			205,403			76,692			—			1,660,490

Total ending loan balance	$	962,137		$	435,127		$	205,725		$	76,692		$	—		$	1,679,681

A summary of impaired loans at December 31, 2011 and 2010 is as follows (in thousands):


	December 31,
	2011		2010
Year-end impaired loans with no allocated allowance for loan losses	$	19,186	$	10,534
Year-end impaired loans with allocated allowance for loan losses		9,305		8,657

	$	28,491	$	19,191


Amount of the allowance for loan losses allocated	$	2,165	$	2,667

At December 31, 2011, impaired loans include troubled debt restructuring loans of $27,609,000 of which $13,118,000 were performing in accordance with their restructured terms and were accruing interest. At December 31, 2010, impaired loans include troubled debt restructuring loans of $15,847,000 of which $12,529,000 were performing in accordance with their restructured terms and were accruing interest.

The summary of loans individually evaluated for impairment by class of loans for the year ended December 31, 2011 and as of December 31, 2011 and 2010 follows (in thousands):


	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
Year ended and as of December 31, 2011
With no related allowance recorded:
Residential real estate:
Originated by Bank	$	9,491	$	9,247	$	—	$	9,170	$	383
Originated by mortgage company		4,803		4,771		—		4,468		218
Originated by mortgage company - non-prime		2,794		2,494		—		2,468		1
Commercial real estate:
Commercial		1,438		1,405		—		1,554		35
Construction and land		—		—		—		—		—
Consumer		742		717		—		652		34
Commercial		558		552		—		289		8

	$	19,826	$	19,186	$	—	$	18,601	$	679


With an allowance recorded:
Residential real estate:
Originated by Bank	$	—	$	—	$	—	$	—	$	—
Originated by mortgage company		402		390		45		321		13
Originated by mortgage company - non-prime		—		—		—		—		—
Commercial real estate:
Commercial		9,105		8,773		1,978		5,633		96
Construction and land		—		—		—		856		—
Consumer		142		142		142		61		6
Commercial		—		—		—		—		—

	$	9,649	$	9,305	$	2,165	$	6,871	$	115


	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
December 31, 2010
With no related allowance recorded:
Residential real estate:
Originated by Bank	$	4,773	$	4,650	$	—
Originated by mortgage company		3,466		3,443		—
Originated by mortgage company - non-prime		2,461		2,441		—
Commercial real estate:
Commercial		—		—		—
Construction and land		—		—		—
Consumer		—		—		—
Commercial		—		—		—

	$	10,700	$	10,534	$	—

With an allowance recorded:
Residential real estate:
Originated by Bank	$	3,674	$	3,662	$	436
Originated by mortgage company		—		—		—
Originated by mortgage company - non-prime		—		—		—
Commercial real estate:
Commercial		2,104		2,104		988
Construction and land		2,569		2,569		1,000
Consumer		331		322		243
Commercial		—		—		—

	$	8,678	$	8,657	$	2,667

The following table presents the recorded investment in non-accrual loans by class of loans as of December 31, 2011 and 2010(in thousands):


	December 31,
	2011		2010
Residential real estate:
Originated by Bank	$	15,874	$	14,227
Originated by mortgage company		9,768		8,480
Originated by mortgage company - non-prime		3,551		3,870
Residential construction		43		368
Commercial real estate:
Commercial		10,552		3,280
Construction and land		—		2,569
Consumer		3,653		4,626
Commercial		567		117

	$	44,008	$	37,537

As used in these footnotes, loans "Originated by mortgage company" are mortgage loans originated under the Bank's underwriting guidelines by the Bank's shuttered mortgage company, and retained as part of the Bank's mortgage portfolio. These loans have significantly higher delinquency rates than similar loans originated by the Bank. Loans "Originated by mortgage company – non-prime" are subprime or Alt-A loans which were originated for sale into the secondary market.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2011 and 2010 by class of loans (in thousands):


	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total

December 31, 2011
Residential real estate:
Originated by Bank	$	6,449	$	2,024	$	14,491	$	22,964	$	704,925	$	727,889
Originated by mortgage company		4,265		1,228		8,710		14,203		126,288		140,491
Originated by mortgage company - non-prime		59		—		3,551		3,610		1,263		4,873
Residential construction		—		—		43		43		6,614		6,657
Commercial real estate:
Commercial		7		746		373		1,126		442,322		443,448
Construction and land		—		—		—		—		17,277		17,277
Consumer		2,375		312		3,127		5,814		187,104		192,918
Commercial		—		—		15		15		45,874		45,889

	$	13,155	$	4,310	$	30,310	$	47,775	$	1,531,667	$	1,579,442


December 31, 2010
Residential real estate:
Originated by Bank	$	5,833	$	875	$	13,219	$	19,927	$	759,966	$	779,893
Originated by mortgage company		3,399		1,083		7,752		12,234		149,470		161,704
Originated by mortgage company - non-prime		953		1,532		3,240		5,725		1,067		6,792
Residential construction		—		—		368		368		13,380		13,748
Commercial real estate:
Commercial		870		—		2,611		3,481		406,549		410,030
Construction and land		—		—		2,569		2,569		22,528		25,097
Consumer		2,036		241		4,093		6,370		199,355		205,725
Commercial		—		—		117		117		76,575		76,692

	$	13,091	$	3,731	$	33,969	$	50,791	$	1,628,890	$	1,679,681

The Company categorizes all commercial and commercial real estate loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation and current economic trends, among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass related loans. Loans not rated are included in groups of homogeneous loans. As of December 31, 2011 and 2010, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):


	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2011
Commercial real estate:
Commercial	$	416,706	$	2,329	$	24,413	$	—	$	443,448
Construction and land		15,079		2,198		—		—		17,277
Commercial		41,589		—		4,232		68		45,889

	$	473,374	$	4,527	$	28,645	$	68	$	506,614


December 31, 2010
Commercial real estate:
Commercial	$	376,902	$	10,856	$	22,272	$	—	$	410,030
Construction and land		22,528		—		1,100		1,469		25,097
Commercial		71,797		1,974		2,921		—		76,692

	$	471,227	$	12,830	$	26,293	$	1,469	$	511,819

For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of December 31, 2011 and 2010 (in thousands):


	Residential Real Estate
	Originated by Bank		Originated by mortgage company		Originated by mortgage company – non-prime		Residential construction		Consumer
December 31, 2011
Performing	$	712,015	$	130,723	$	1,322	$	6,614	$	189,265
Non-performing		15,874		9,768		3,551		43		3,653

	$	727,889	$	140,491	$	4,873	$	6,657	$	192,918

December 31, 2010
Performing	$	765,666	$	153,224	$	2,922	$	13,380	$	201,099
Non-performing		14,227		8,480		3,870		368		4,626

	$	779,893	$	161,704	$	6,792	$	13,748	$	205,725

The Company classifies certain loans as troubled debt restructurings ("TDR") when credit terms to a borrower in financial difficulty are modified. The modifications may include a reduction in rate, an extension in term and/or the capitalization of past due amounts. Included in the non-accrual loan total at December 31, 2011, 2010 and 2009 were $14,491,000, $3,318,000 and $1,592,000 respectively, of troubled debt restructurings. At December 31, 2011, 2010 and 2009 the Company has allocated $1,985,000, $569,000 and $175,000, respectively, of specific reserves to loans which are classified as troubled debt restructurings. Non-accrual loans which become troubled debt restructurings are returned to accrual status after six months of performance. In addition to the troubled debt restructurings included in non-accrual loans, the Company also has loans classified as troubled debt restructuring which are accruing at December 31, 2011, 2010 and 2009 which totaled $13,118,000, $12,529,000 and $8,723,000, respectively. Troubled debt restructurings with six months of performance are considered in the allowance for loan losses similar to other performing loans. Troubled debt restructurings which are non-accrual or classified are considered in the allowance for loan losses similar to other non-accrual or classified loans.

The Company adopted Accounting Standards Update No. 2011-02 which clarified the guidance on a creditor's evaluation of whether it has granted a concession and whether a restructuring constitutes a troubled debt restructuring. The adoption of the Accounting Standards Update did not result in a material change to the Company's consolidated financial statements.

The following table presents information about troubled debt restructurings which occurred during the year ended December 31, 2011 and troubled debt restructurings modified within the previous year and which defaulted during the year ended December 31, 2011 (in thousands):


	Number of Loans		Pre-modification Recorded Investment		Post-modification Recorded Investment
Year ended December 31, 2011
Troubled Debt Restructurings:
Residential real estate:
Originated by Bank		15	$	2,843	$	2,718
Originated by mortgage company		8		1,984		1,973
Commercial real estate:
Commercial		7		9,129		8,765
Consumer		3		395		381
Commercial		1		302		296

	Number of Loans		Recorded Investment
Troubled Debt Restructurings
Which Subsequently Defaulted:
Residential real estate:
Originated by Bank		1	$	695
Commercial real estate:
Commercial		1		611

The Bank's mortgage loans are pledged to secure FHLB advances.