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 March 31, 2012 and December 31, 2011.

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 is 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 March 31, 2012 and December 31, 2011.

At March 31, 2012, there was $603 of allocated reserve within the allowance for loan losses associated with impaired loans. At December 31, 2011, there was $2,175 of allocated reserve within the allowance for loan losses associated with impaired loans. Charge-offs recognized on impaired loans totaled $1,970 and $1,126 during the three months ended March 31, 2012 and 2011, respectively.

Large groups of smaller balance homogeneous real estate loans, such as cooperative unit and one-to four-family residential real estate loans with balances equal to or less than the FNMA Limits, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

At both March 31, 2012 and December 31, 2011, the reserve allocated within the allowance for loan losses associated with loans internally classified as Special Mention 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, 2011, the loss percentage approximated 4.2%, and represented a loss history analysis on its pool of Special Mention loans during the measurement timeframe. The loss percentage resulting from this analysis was then applied to the aggregate pool of Special Mention loans at March 31, 2012. 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, 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) increased from $800 at December 31, 2011 to $835 at March 31, 2012, due to an increase of $852 in such Special Mention loans from December 31, 2011 to March 31, 2012.

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 the analysis of each underlying collateral type, the following elements are additionally considered and provided weighting in determining the allowance for loan losses for performing loans:

(ii) Economic conditions - At both March 31, 2012 and December 31, 2011, the Bank assigned a loss allocation 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 and national unemployment rate, 2) residential and commercial vacancy rates, 3) real estate sales and pricing, and 4) delinquencies in the Bank's loan portfolio.

(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 March 31, 2012 and December 31, 2011, and this component thus did not impact the methodology at either March 31, 2012 or December 31, 2011.

(iv) Concentrations of credit - The Bank regularly reviews its loan concentrations (borrower, collateral type and location) in order to ensure that heightened risk has not evolved that has not been captured through other factors. The risk component of loan concentrations is regularly evaluated for reserve adequacy.

(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 March 31, 2012 and December 31, 2011 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.

At or for the Three Months Ended March 31, 2012
	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
Beginning balance	$480	$14,313	$1,528	$3,783	$124	$20,228	$26
Charge-offs	(531)	(897)	(526)	(323)	(3)	(2,280)	(8)
Recoveries	1	23	-	1	-	25	-
Transfer from (to) reserve for loan commitments	-	33	(4)	(9)	-	20	-
Provision (reduction)	363	399	1,251	(441)	(121)	1,451	6
Ending balance	$313	$13,871	$2,249	$3,011	$-	$19,444	$24

Ending balance - loans individually evaluated for impairment	$1,072	$7,212	$1,980	$50,922	-	$61,186	$-
Ending balance - loans collectively evaluated for impairment	93,333	2,577,298	332,969	352,294	592	3,356,486	2,063
Allowance balance associated with loans individually evaluated for impairment	-	-	-	603	-	603	-
Allowance balance associated with loans collectively evaluated for impairment	313	13,871	2,249	2,408	-	18,841	24

At or for the Three Months Ended March 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
Beginning balance	$409	$14,226	$1,331	$2,821	$345	$19,132	$34
Charge-offs	(75)	(366)	(203)	(557)	-	(1,201)	-
Recoveries	-	121	3	97	-	221	-
Transfer from (to) reserve for loan commitments	-	97	(39)	(15)	8	51	-
Provision (reduction)	(54)	347	(18)	1,186	(35)	1,426	-
Ending balance	$280	$14,425	$1,074	$3,532	$318	$19,629	$34

	As of 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
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 collectively evaluated for impairment	350	14,268	1,455	1,856	124	18,053	26

The following tables summarize impaired real estate loans for the periods indicated (by collateral type within the real estate loan segment as of or for the periods indicated). For purposes of these tables, adjustments between the unpaid principal balance and recorded investment (including accrued interest receivable) are deemed to be immaterial:

At March 31, 2012
	Unpaid Principal Balance at Period End	Recorded Investment at Period End	Reserve Balance Allocated within the Allowance for Loan Losses at Period End
One- to Four Family Residential and Cooperative Unit
With no allocated reserve	$1,072	$1,072	$-
With an allocated reserve	-	-	-
Multifamily Residential and Residential Mixed Use
With no allocated reserve	7,212	7,212	-
With an allocated reserve	-	-	-
Mixed Use Commercial Real Estate
With no allocated reserve	1,980	1,980	-
With an allocated reserve	-	-	-
Commercial Real Estate
With no allocated reserve	35,590	35,590	-
With an allocated reserve	15,332	15,332	603
Construction
With no allocated reserve	-	-	-
With an allocated reserve	-	-	-
Total
With no allocated reserve	$45,854	$45,854	$-
With an allocated reserve	$15,332	$15,332	$603

At 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
One- to Four Family Residential and Cooperative Unit
With no allocated reserve	$1,136	$1,136	$-
With an allocated reserve	1,411	1,411	130
Multifamily Residential and Residential Mixed Use
With no allocated reserve	9,338	9,338	-
With an allocated reserve	690	690	45
Mixed Use Commercial Real Estate
With no allocated reserve	5,780	5,780	-
With an allocated reserve	959	959	73
Commercial Real Estate
With no allocated reserve	11,812	11,812	-
With an allocated reserve	39,258	39,258	1,927
Construction
With no allocated reserve	-	-	-
With an allocated reserve	-	-	-
Total
With no allocated reserve	$28,066	$28,066	$-
With an allocated reserve	$42,318	$42,318	$2,175

	Three Months Ended March 31, 2012		Three Months Ended March 31, 2011
	Average Recorded Investment	Interest Income Recognized	Average Recorded Investment	Interest Income Recognized
One- to Four Family Residential and Cooperative Unit
With no allocated reserve	$1,104	$12	$1,828	$7
With an allocated reserve	706	-	-	-
Multifamily Residential and Residential Mixed Use
With no allocated reserve	7,569	131	12,920	116
With an allocated reserve	1,050	-	-	-
Mixed Use Commercial Real Estate
With no allocated reserve	3,880	24	3,731	36
With an allocated reserve	480	-	-	-
Commercial Real Estate
With no allocated reserve	23,701	498	14,909	47
With an allocated reserve	27,295	190	5,846	157
Construction
With no allocated reserve	-	-	3,392	91
With an allocated reserve	-	-	-	-
Total
With no allocated reserve	$36,254	$665	$36,780	$297
With an allocated reserve	$29,531	$190	$5,846	$157

The Bank maintains a reserve liability in relation to the First Loss Position that reflects estimated losses associated with loans to which the First Loss Position applies 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 Three Months Ended March 31,
	2012			2011
Outstanding balance of multifamily loans serviced for FNMA at period end	$	300,347		$	360,971
Total First Loss Position at end of period		16,356			16,789
Reserve Liability on the First Loss Position
Balance at beginning of period	$	2,993		$	2,993
Transfer of specific reserve for serviced loans re-acquired by the Bank		-			-
Provision for losses on problem loans(1)		-			-
Charge-offs and other net reductions in balance		(35	)		-
Balance at period end	$	2,958		$	2,993

The Bank has elected to periodically repurchase problematic or non-problematic loans from within the FNMA serviced loan pool. The repurchase of problematic loans is made in order to expedite their resolution and control losses. All such elections have been made on an individual loan/borrower basis. All repurchases from FNMA are made at par, and any reserves recognized on the re-acquired loan within the FNMA reserve analysis reduce the recorded balance of the loan when it is transferred to the Bank's portfolio. In most instances, all economic losses realized by the Bank on the re-acquired loans can be applied against the First Loss Position, and any material exceptions for individual loans are disclosed in the Company's public filings. Since the Bank is fully responsible for all losses on FNMA serviced loans up to the First Loss Position, it has greater incentive to minimize losses. Had the resolution of these loans been left to FNMA to manage, management believes that the ultimate losses recognized would have been greater. During the three months ended March 31, 2012, the Bank re-acquired one $757 problematic loan within the pool of loans serviced for FNMA. The Bank did not re-acquire any problematic loans within the pool of loans serviced for FNMA during the three months ended March 31, 2011.