As discussed in Note 1, the allowance for loan losses may consist of specific and general components. The Bank's periodic evaluation of its allowance for loan losses (specific or general) has traditionally been comprised of three primary components: (1) impaired loans; (2) special mention loans; and (3) pass graded loans. Within these components, the Company has identified the following portfolio segments for purposes of assessing its allowance for loan losses (specific or general): 1) real estate loans; and 2) consumer loans. Within the segments, the Bank analyzes the allowance based upon the underlying collateral type (classes). Consumer loans represent a nominal portion of the Company's loan portfolio, and were thus evaluated in aggregate as of both December 31, 2011 and 2010.

All multifamily residential, mixed use, commercial real estate and construction loans that are deemed to meet the definition of impaired are individually evaluated for impairment. In addition, all cooperative unit and one- to four-family residential loans in excess of the FNMA Limits are individually evaluated for impairment. Impairment is measured using the difference between the outstanding loan principal balance and either: 1) the likely realizable value of a note sale; 2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected solely from liquidation of the collateral; or 3) the present value of estimated future cash flows using the loan's existing rate. For impaired loans on non-accrual status, either of the initial two measurements are utilized.

All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any. If a TDR is substantially performing in accordance with its restructured terms, management will look to either the present value of the expected cash flows from the debt service or the potential net liquidation proceeds of the underlying collateral property in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, the likely realizable net proceeds from either a note sale or the liquidation of the collateral is generally considered when measuring impairment. While measured impairment on TDRs is typically charged off immediately, impairment measured from a reduction in the present value of expected cash flows of a performing TDR was reflected as an allocated reserve within the allowance for loan losses at both December 31, 2011 and 2010.

At December 31, 2011, there were $2,175 of allocated reserves within the allowance for loan losses associated with impaired loans. There were no allocated reserves associated with impaired loans at December 31, 2010. Charge-offs recognized on impaired loans totaled $5,807 and $13,542 during the years ended December 31, 2011 and 2010, respectively.

At both December 31, 2011 and 2010, the reserve allocated within the allowance for loan losses associated with loans internally classified as Special Mention (as defined in Note 5 to the consolidated financial statements) reflected an expected loss percentage on the Bank's pool of such loans that was derived based upon an analysis of historical losses. At December 31, 2010, the loss percentage approximated 4.1%, and represented a loss history analysis on the Bank's pool of such loans from January 1, 2010 through December 31, 2010. The loss percentage resulting from this analysis was then applied to the aggregate pool of Special Mention loans at December 31, 2010. At December 31, 2011, the loss percentage approximated 4.2%, and represented a loss history analysis on its pool of Special Mention loans from July 1, 2010 through June 30, 2011. The loss percentage resulting from this analysis was then applied to the aggregate pool of Special Mention loans at December 31, 2011. Based upon this methodology, increases or decreases in the amount of Special Mention loans will impact the estimated portion of the allowance for loan losses associated with such loans. As a result, the allowance for loan losses associated with Special Mention loans is subject to volatility. Should management elect to change its 12-month loss measurement timeframe from the currently utilized July 1, 2010 though June 30, 2011 period, the magnitude of charge-offs recognized within the 12 months prior to the assessment date would also impact the level of reserves determined on Special Mention loans, subjecting it to greater volatility.

The portion of the allowance for loan losses attributable to Special Mention loans (excluding impaired loans internally designated as Special Mention) declined from $1,880 at December 31, 2010 to $800 at December 31, 2011, primarily reflecting a reduction of $14,789 in Special Mention loans from December 31, 2010 to December 31, 2011.

The Bank initially looks to the underlying collateral type when determining the allowance for loan losses associated with performing real estate loans. The following underlying collateral types are analyzed separately: 1) one- to four family residential and cooperative unit; 2) multifamily residential and residential mixed use; 3) mixed use commercial real estate, 4) commercial real estate; and 5) construction and land acquisition. Within each of the analyses of the underlying collateral types, the following elements are additionally considered and provided weighting in determining the allowance for loan losses for performing loans:

(i) Charge-off experience - Loans within the performing loan portfolio are segmented by significant common characteristics, against which historical loss rates are applied. In late 2010, the Bank updated the historical period used in this methodology. Previously, 1992 to 1996 experience factors were used, since that period represented the most recent complete loss cycle experienced by the Bank for its geography and type of collateral. During the final quarter of 2010, the Bank updated its experience factors to include only the current credit cycle, which began for the Bank in 2009.

(ii) Economic conditions - At both December 31, 2011 and December 31, 2010, the Bank assigned an expected loss rate to its entire performing mortgage loan portfolio based, in part, upon a review of economic conditions affecting the local real estate market. Specifically, the Bank considered both the level of, and recent trends in: 1) the local unemployment rate, 2) residential and commercial vacancy rates, 3) real estate sales and pricing, and 4) delinquencies in the Bank's loan portfolio. Based upon this analysis, the Bank derived the same expected loss rate for performing loans at both December 31, 2011 and 2010.

(iii) Underwriting standards or experience - Underwriting standards are reviewed to ensure that changes in the Bank's lending policies and practices are adequately evaluated for risk and reflected in its analysis of potential credit losses. Different loss expectations are then incorporated into the methodology. The Bank modified only certain less critical underwriting practices during the years ended December 31, 2011 and 2010, and this component thus did not impact the methodology at either December 31, 2011 or December 31, 2010.

(v) Loan Seasoning - The Bank analyzes its charge-off history in order to determine whether loans that are over three years past their origination date (referred to as seasoned loans) have experienced lower loss levels, and would thus warrant a lower expected loss percentage. This element was given minimal consideration in the December 31, 2011 and December 31, 2010 evaluations. The minimal consideration resulted from an analysis of the loss experience recognized during the 2009 to 2011 recessionary period (to which the Company migrated late in 2010), which concluded that the age or seasoning of a loan did not inversely correlate to the Bank's loss experience.

Due to their small individual balances, the Bank does not evaluate individual consumer loans for impairment. Loss percentages are applied to aggregate consumer loans based upon both their delinquency status and loan type. These loss percentages are derived from a combination of the Company's historical loss experience and/or nationally published loss data on these loans. Consumer loans in excess of 120 days delinquent are typically fully charged off against the allowance for loan losses.

	Year Ended December 31,
	2011			2010			2009
Balance at beginning of period	$	19,166		$	21,505		$	17,454
Provision for loan losses		6,846			11,210			13,152
Loans charged off		(6,340	)		(13,885	)		(9,012	)
Recoveries		415			64			19
Transfer from (to) reserves on loan commitments		167			272			(108	)
Balance at end of period	$	20,254		$	19,166		$	21,505

At or for the Year Ended December 31, 2011
	Real Estate Loans						Consumer Loans
	One- to Four Family Residential and Cooperative Unit	Multifamily Residential and Residential Mixed Use	Mixed Use Commercial Real Estate	Commercial Real Estate	Construction	Total Real Estate
	(Dollars in Thousands)
Beginning balance	$409	$14,226	$1,331	$2,821	$345	$19,132	$34
Charge-offs	(129)	(2,803)	(697)	(1,720)	(962)	(6,311)	(29)
Recoveries	-	220	48	147	-	415	-
Transfer from (to) reserve for loan commitments	-	165	(15)	(13)	30	167	-
Provision	200	2,505	861	2,548	711	6,825	21
Ending balance	$480	$14,313	$1,528	$3,783	$124	$20,228	$26

Ending balance - loans individually evaluated for impairment	$2,547	$10,028	$6,739	$51,070	-	$70,384	$-
Ending balance - loans collectively evaluated for impairment	98,165	2,592,891	331,531	362,246	3,199	3,388,032	2,449
Allowance balance associated with loans individually evaluated for impairment	130	45	73	1,927	-	2,175	-
Allowance balance associated with loans collectivelly evaluated for impairment	350	14,268	1,455	1,856	124	18,053	26

At or for the Year Ended December 31, 2010
	Real Estate Loans						Consumer Loans
	One- to Four Family Residentail and Cooperative Unit	Multifamily Residential and Residential Mixed Use	Mixed Use Commercial Real Estate	Commercial Real Estate	Construction	Total Real Estate
Beginning balance	$1,047	$13,547	$1,833	$3,918	$1,130	$21,475	$30
Charge-offs	(266)	(10,062)	(469)	(1,964)	(1,111)	(13,872)	(13)
Recoveries	-	55	-	9	-	64	-
Transfer from (to) reserve for commitments	-	188	65	(17)	36	272	-
Provision (reduction)	(372)	10,498	(98)	875	290	11,193	17
Ending balance	$409	$14,226	$1,331	$2,821	$345	$19,132	$34

Ending balance - loans individually evaluated for impairment	$-	$16,368	$2,387	$20,842	$4,500	$44,097	$-
Ending balance - loans collectively evaluated for impairment	116,886	2,486,372	362,678	446,873	10,738	3,423,547	2,540
Allowance balance associated with loans individually evaluated for impairment	-	-	-	-	-	-	-
Allowance balance associated with loans collectivelly evaluated for impairment	409	14,226	1,331	2,821	345	19,132	34

The following table summarizes impaired real estate loans for the periods indicated (by collateral type within the real estate loan segment as of or for the year ended December 31, 2011 and as of December 31, 2010, and in aggregate for the entire real estate loan segment for the year ended December 31, 2010). For purposes of this table, adjustments between the unpaid principal balance and recorded investment (including accrued interest receivable) are deemed to be immaterial:

At December 31, 2011				For the Year Ended Ended December 31, 2011
	Unpaid Principal Balance at Period End	Recorded Investment at Period End	Reserve Balance Allocated within the Allowance for Loan Losses at Period End	Average Recorded Investment	Interest Income Recognized
	(Dollars in Thousands)
One- to Four Family Residential and Cooperative Unit
With no allocated reserve	$1,136	$1,136	$-	$1,406	$38
With an allocated reserve	1,411	1,411	130	565	31
Multifamily Residential and Residential Mixed Use
With no allocated reserve	9,338	9,338	-	11,194	795
With an allocated reserve	690	690	45	3,040	86
Mixed Use Commercial Real Estate
With no allocated reserve	5,780	5,780	-	3,901	191
With an allocated reserve	959	959	73	1,893	11
Commercial Real Estate
With no allocated reserve	11,812	11,812	-	15,243	407
With an allocated reserve	39,258	39,258	1,927	15,620	868
Construction
With no allocated reserve	-	-	-	3,835	227
With an allocated reserve	-	-	-	-	-
Total
With no allocated reserve	$28,066	$28,066	$-	$35,579	$1,658
With an allocated reserve	$42,318	$42,318	$2,175	$21,118	$996

At December 31, 2010
	Unpaid Principal Balance at Period End	Recorded investment at Period End	Reserve Balance Allocated within the Allowance for Loan Losses at Period End
	(Dollars in Thousands)
Multifamily Residential and Residential Mixed Use
With no allocated reserve	$19,460	$16,368	$-
With an allocated reserve	-	-	-
Mixed Use Commercial Real Estate
With no allocated reserve	2,387	2,387	-
With an allocated reserve	-	-	-
Commercial Real Estate
With no allocated reserve	23,771	20,842	-
With an allocated reserve	-	-	-
Construction
With no allocated reserve	4,500	4,500	-
With an allocated reserve	-	-	-
Total
With no allocated reserve	$50,118	$44,097	$-
With an allocated reserve	$-	$-	$-

Period	Unpaid Principal Balance at Period End	Recorded investment at Period End	Reserve Balance Allocated within the Allowance for Loan Losses at Period End	Average Investment	Interest Income Recognized
At or for the Year Ended December 31, 2010
With no allocated reserve	$50,119	$44,097	-	$8,945	$2,628
With an allocated reserve	-	-	-	22,915	-
Total	$ 50,119	$44,097	-	$31,860	$2,628

The Bank maintains a reserve liability in relation to the First Loss Position that reflects estimated losses on this loan pool at each period end. For performing loans within the FNMA serviced pool, the reserve recognized is the present value of the estimated losses calculated based upon the historical loss experience for comparable multifamily loans owned by the Bank. For problem loans within the pool, the estimated losses are determined in a manner consistent with impaired loans within the Bank's loan portfolio.

	At or for the Year Ended December 31,
	2011		2010			2009
Outstanding balance of multifamily loans serviced for FNMA at period end	$	308,104	$	371,887		$	437,805
Total First Loss Position at end of period		16,356		16,789			20,246
Reserve Liability on the First Loss Position
Balance at beginning of period	$	2,993	$	4,373		$	5,573
Additions for loans sold to FNMA during the period 1		-		-			15
Transfer to reduction of Bank loan balance for serviced loans re-acquired by the Bank		-		(1,123	)		(3,545	)
Provision for losses on problem loans1		-		-			3,303
Charge-offs		-		(257	)		(973	)
Balance at period end	$	2,993	$	2,993		$	4,373