10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File No.: 0-28312

                 First Federal Bancshares of Arkansas, Inc.             

(Exact name of registrant as specified in its charter)

Arkansas	71-0785261
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
1401 Highway 62-65 North Harrison, Arkansas	72601
(Address of principal executive offices)	(Zip Code)

 

Registrant's telephone number, including area code: (870) 741-7641

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  ☐ No ☒ 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of October 30, 2012, there were issued and outstanding 19,302,603 shares of the Registrant's Common Stock, par value $.01 per share.

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

TABLE OF CONTENTS

Part I.	Financial Information	Page
Item 1.	Financial Statements
	Condensed Consolidated Statements of Financial Condition as of September 30, 2012 and December 31, 2011 (unaudited)	1
	Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2012 and 2011 (unaudited)	2
	Condensed Consolidated Statement of Stockholders' Equity for the nine months ended September 30, 2012 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
Part II.	Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	44
Signatures
Exhibit Index

Part I. Financial Information

Item 1. Financial Statements

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except share data)

(Unaudited)

	September 30, 2012			December 31, 2011
ASSETS
Cash and cash equivalents	$	42,380		$	79,799
Interest-bearing time deposits in banks		29,840			27,113
Investment securities available for sale		58,514			62,077
Federal Home Loan Bank stock—at cost		578			576
Loans receivable, net of allowance of $16,432 and $20,818, respectively		339,978			331,453
Loans held for sale		5,790			3,339
Accrued interest receivable		1,732			1,516
Real estate owned - net		20,535			28,113
Office properties and equipment - net		20,917			21,441
Cash surrender value of life insurance		22,799			22,213
Prepaid expenses and other assets		702			1,406
TOTAL	$	543,765		$	579,046
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits	$	466,066		$	498,581
Other borrowings		3,174			6,679
Advance payments by borrowers for taxes and insurance		535			816
Other liabilities		3,780			4,077
Total liabilities		473,555			510,153
STOCKHOLDERS' EQUITY:
Preferred stock, no par value—5,000,000 shares authorized; none issued at September 30, 2012 and December 31, 2011		--			--
Common stock, $.01 par value—30,000,000 shares authorized; 19,302,603 shares issued and outstanding at September 30, 2012 and December 31, 2011		193			193
Additional paid-in capital		90,684			90,572
Accumulated other comprehensive income		850			898
Accumulated deficit		(21,517	)		(22,770	)
Total stockholders' equity		70,210			68,893
TOTAL	$	543,765		$	579,046

See notes to unaudited condensed consolidated financial statements.

1

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except earnings per share)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30, 2012		September 30, 2011			September 30, 2012			September 30, 2011
INTEREST INCOME:
Loans receivable	$	4,318	$	5,005		$	13,381		$	15,511
Investment securities:
Taxable		64		397			336			1,615
Nontaxable		323		194			901			604
Other		135		125			409			209
Total interest income		4,840		5,721			15,027			17,939
INTEREST EXPENSE:
Deposits		1,046		1,572			3,363			4,917
Other borrowings		23		74			86			281
Total interest expense		1,069		1,646			3,449			5,198
NET INTEREST INCOME		3,771		4,075			11,578			12,741
PROVISION FOR LOAN LOSSES		--		21			22			812
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		3,771		4,054			11,556			11,929
NONINTEREST INCOME:
Net gain (loss) on sale of investment securities		--		--			542			(439	)
Deposit fee income		904		1,297			2,975			3,642
Earnings on life insurance policies		198		191			586			575
Gain on sale of loans		250		156			668			440
Other		97		98			369			361
Total noninterest income		1,449		1,742			5,140			4,579
NONINTEREST EXPENSES:
Salaries and employee benefits		2,681		2,749			8,265			8,335
Net occupancy expense		625		661			1,934			1,909
Real estate owned, net		118		2,612			(174	)		6,219
FDIC insurance		286		317			875			1,074
Supervisory assessments		72		76			222			265
Data processing		395		370			1,658			1,111
Professional fees		158		193			748			918
Advertising and public relations		54		109			192			231
Postage and supplies		86		108			377			374
Other		392		634			1,346			1,835
Total noninterest expenses		4,867		7,829			15,443			22,271
INCOME (LOSS) BEFORE INCOME TAXES		353		(2,033	)		1,253			(5,763	)
INCOME TAX		--		--			--			--
NET INCOME (LOSS)	$	353	$	(2,033	)	$	1,253		$	(5,763	)
GAIN ON REDEMPTION OF PREFERRED STOCK		--		--			--			(10,500	)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	353	$	(2,033	)	$	1,253		$	4,737
Basic earnings (loss) per common share	$	0.02	$	(0.11	)	$	0.06		$	0.45
Diluted earnings (loss) per common share	$	0.02	$	(0.11	)	$	0.06		$	0.42
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized holding gains arising during the period	$	236	$	1,140		$	494		$	2,783
Reclassification adjustments for (gain) loss included in net income		--		--			(542	)		439
COMPREHENSIVE INCOME (LOSS)	$	589	$	(893	)	$	1,205		$	(2,541	)

See notes to unaudited condensed consolidated financial statements.

2

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(In thousands, except share data)

(Unaudited)

	Issued Common Stock
	Shares		Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
BALANCE – January 1, 2012		19,302,603	$	193	$	90,572	$	898		$	(22,770	)	$	68,893
Net income		--		--		--		--			1,253			1,253
Other comprehensive loss		--		--		--		(48	)		--			(48	)
Stock compensation expense		--		--		112		--			--			112
BALANCE – September 30, 2012		19,302,603	$	193	$	90,684	$	850		$	(21,517	)	$	70,210

See notes to unaudited condensed consolidated financial statements.

3

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2012			2011
OPERATING ACTIVITIES:
Net income (loss)	$	1,253		$	(5,763	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Provision for loan losses		22			812
Provision for real estate losses		585			4,837
Deferred tax provision		1,318			408
Deferred tax valuation allowance		(1,318	)		(408	)
Net amortization (accretion) of investment securities		19			(25	)
Federal Home Loan Bank stock dividends		(2	)		(4	)
Gain on sale of fixed assets, net		(149	)		(15	)
(Gain) loss on sale of real estate owned, net		(1,135	)		777
(Gain) loss on sales of investment securities, net		(542	)		439
Originations of loans held for sale		(35,388	)		(21,153	)
Proceeds from sales of loans held for sale		33,605			23,030
Gain on sale of loans originated to sell		(668	)		(440	)
Depreciation		1,089			1,017
Amortization of deferred loan costs, net		56			166
Stock compensation		112			29
Earnings on life insurance policies		(586	)		(575	)
Changes in operating assets and liabilities:
Accrued interest receivable		(216	)		590
Prepaid expenses and other assets		704			1,402
Other liabilities		(98	)		(121	)
Net cash (used in) provided by operating activities		(1,339	)		5,003
INVESTING ACTIVITIES:
Purchases of interest-bearing time deposits in banks		(4,470	)		(22,885	)
Redemptions of interest-bearing time deposits in banks		1,743			--
Purchases of investment securities available for sale		(22,499	)		(21,065	)
Proceeds from sales, maturities, and calls of investment securities available for sale		26,338			42,296
Purchases of Federal Home Loan Bank stock		--			(633	)
Loan (originations) repayments, net		(11,270	)		24,770
Loan participations purchased		(1,662	)		(704	)
Loan participations sold		--			7,000
Proceeds from sales of real estate owned		12,648			6,647
Improvements to real estate owned		(191	)		(67	)
Proceeds from sales of office properties and equipment		272			20
Purchases of office properties and equipment		(688	)		(273	)
Net cash provided by investing activities		221			35,106

(Continued)

4

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2012			2011
FINANCING ACTIVITIES:
Net decrease in deposits	$	(32,515	)	$	(36,142	)
Repayment of advances from Federal Home Loan Bank		(3,505	)		(9,339	)
Net (decrease) increase in advance payments by borrowers for taxes and insurance		(281	)		40
Proceeds from issuance of common stock		--			47,592
Net cash (used in) provided by financing activities		(36,301	)		2,151
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(37,419	)		42,260
CASH AND CASH EQUIVALENTS:
Beginning of period		79,799			36,407
End of period	$	42,380		$	78,667
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION—
Cash paid for:
Interest	$	3,475		$	5,261
Income taxes	$	--		$	--
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Real estate and other assets acquired in settlement of loans	$	5,707		$	7,815
Sales of real estate owned financed by the Bank	$	1,378		$	4,042
Investment securities purchased—not settled	$	1,435		$	1,759
Preferred dividends cancelled	$	--		$	930

See notes to unaudited condensed consolidated financial statements. (Concluded)

5

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation—First Federal Bancshares of Arkansas, Inc. (the “Company”) is a unitary holding company that owns all of the stock of First Federal Bank (the “Bank”). The Company is principally in the business of community banking and therefore is considered a banking operation with no separately reportable segments. The Bank provides a broad line of financial products to individuals and small- to medium-sized businesses. The consolidated financial statements also include the accounts of the Bank's wholly owned subsidiary, First Harrison Service Corporation (“FHSC”), which is inactive.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and the Bank. Intercompany transactions have been eliminated in consolidation. Certain reclassifications of prior period amounts have been made to conform with the current period presentation. These reclassifications had no impact on previously reported net income.

The results of operations for the nine months ended September 30, 2012, are not necessarily indicative of the results to be expected for the year ending December 31, 2012. The unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2011, contained in the Company's 2011 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).

2.      RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. The ASU expands ASC 820's disclosure requirements, particularly for Level 3 inputs, including (1) a quantitative disclosure of the unobservable inputs and assumptions used, (2) a description of the valuation process in place and (3) a narrative description of the sensitivity of the fair value to changes in unobservable inputs. The ASU is effective for the Company's reporting periods beginning after December 15, 2011. As this ASU amends only the disclosure requirements for fair value measurements, the adoption of this ASU did not have a material impact on the Company's financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. In December 2011, FASB issued ASU 2011-12, which defers certain provisions of ASU 2011-05. One of ASU 2011-05's provisions requires the Company to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. ASU 2011-12 defers this requirement indefinitely. All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. The ASU does not amend the components that must be reported in other comprehensive income. Both ASUs are effective for the Company's reporting periods beginning after December 15, 2011. The Company adopted this ASU beginning in the quarter ended March 31, 2012.

3.      INVESTMENT SECURITIES AVAILABLE FOR SALE

Investment securities available for sale consisted of the following as of the dates indicated (in thousands):

	September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	44,657	$	953	$	(16	)	$	45,594
Corporate debt securities		8,000		--		(87	)		7,913
U.S. Government sponsored agency securities		5,007		--		--			5,007
Total	$	57,664	$	953	$	(103	)	$	58,514

 

6

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	35,590	$	1,033	$	(10	)	$	36,613
Corporate debt securities		6,000		--		(190	)		5,810
U.S. Government sponsored agency securities		19,589		65		--			19,654
Total	$	61,179	$	1,098	$	(200	)	$	62,077

 

The following tables summarize the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired (“OTTI”) (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	September 30, 2012
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	1,975	$	16	$	--	$	--	$	1,975	$	16
Corporate debt securities		3,992		8		3,921		79		7,913		87
Total	$	5,967	$	24	$	3,921	$	79	$	9,888	$	103

 

	December 31, 2011
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	1,812	$	10	$	--	$	--	$	1,812	$	10
Corporate debt securities		3,810		190		--		--		3,810		190
Total	$	5,622	$	200	$	--	$	--	$	5,622	$	200

 

On a quarterly basis, management conducts a formal review of securities for the presence of OTTI.  Management assesses whether an OTTI is present when the fair value of a security is less than its amortized cost basis at the balance sheet date.  For such securities, OTTI is considered to have occurred if the Company intends to sell the security, if it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis or if the present values of expected cash flows is not sufficient to recover the entire amortized cost.

The unrealized losses are primarily a result of increases in market yields since the time of purchase.  In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired.  Additionally, the unrealized losses are also considered temporary because scheduled coupon payments have been made, it is anticipated that the entire principal balance will be collected as scheduled, and management neither intends to sell the securities nor is it more likely than not that the Company will be required to sell the securities before the recovery of the remaining amortized cost amount.

The Company has pledged investment securities available for sale with carrying values of approximately $1.6 million for the period ended September 30, 2012 and $1.2 million for the period ended December 31, 2011, as collateral for certain deposits in excess of $250,000. In addition the Company has pledged investment securities available for sale with carrying values of approximately $12.9 million and $8.9 million at September 30, 2012 and December 31, 2011, respectively, as collateral at the Federal Reserve Bank to secure transaction settlements. Effective October 9, 2012, the Company is no longer required to pledge collateral to secure transaction settlements.

7

The scheduled contractual maturities of debt securities at September 30, 2012 are shown below (in thousands). Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2012
	Amortized Cost		Fair Value		Weighted Average Rate
Within one year	$	5,282	$	5,283		0.37	%
Due from one year to five years		16,305		16,313		2.40	%
Due from five years to ten years		21,525		21,941		2.59	%
Due after ten years		14,552		14,977		3.84	%
Total	$	57,664	$	58,514		2.65	%

 

As of September 30, 2012 and December 31, 2011, investments with amortized cost of approximately $37.4 million and $48.5 million, respectively, have call options held by the issuer, of which approximately $8.0 million and $26.6 million, respectively, are or were callable within one year.

Sales of the Company's investment securities available for sale are summarized as follows (in thousands):

	Nine Months Ended September 30,
	2012		2011
Sales proceeds	$	5,387	$	18,931
Gross realized gains	$	542	$	128
Gross realized losses		--		(567	)
Net gains (losses) on sales of investment securities	$	542	$	(439	)

 

8

4.       LOANS RECEIVABLE 

The following tables present age analyses of loans, including both accruing and nonaccrual loans, as of the dates indicated (in thousands):

September 30, 2012	30-89 Days Past Due		90 Days or More Past Due		Current		Total (1)
One- to four-family residential	$	1,738	$	4,738	$	144,619	$	151,095
Home equity and second mortgage		36		437		9,149		9,622
Multifamily residential		--		--		22,931		22,931
Commercial real estate		411		3,746		126,861		131,018
One- to four-family construction		--		250		1,383		1,633
Other construction and land		--		3,498		11,479		14,977
Commercial		17		385		19,778		20,180
Consumer		19		15		6,181		6,215
Total (1)	$	2,221	$	13,069	$	342,381	$	357,671

 

December 31, 2011	30-89 Days Past Due		90 Days or More Past Due		Current		Total (1)
One- to four-family residential	$	8,319	$	5,604	$	169,235	$	183,158
Home equity and second mortgage		126		437		11,939		12,502
Multifamily residential		31		--		20,445		20,476
Commercial real estate		1,371		4,752		89,797		95,920
One- to four-family construction		--		--		2,391		2,391
Other construction and land		191		1,344		21,908		23,443
Commercial		--		388		7,215		7,603
Consumer		23		5		7,987		8,015
Total (1)	$	10,061	$	12,530	$	330,917	$	353,508

 

(1) Gross of undisbursed loan funds, unearned discounts and net loan fees and the allowance for loan and lease losses.

There was one loan over 90 days past due and still accruing at December 31, 2011, totaling $388,000 and no such loans at September 30, 2012. Restructured loans totaled $8.5 million and $13.9 million as of September 30, 2012 and December 31, 2011, respectively, with $2.7 million and $8.7 million of such restructured loans on nonaccrual status at September 30, 2012 and December 31, 2011, respectively.

9

The following table presents age analyses of nonaccrual loans as of the dates indicated (in thousands):

September 30, 2012	30-89 Days Past Due		90 Days or More Past Due		Current		Total
One- to four-family residential	$	707	$	4,738	$	1,826	$	7,271
Home equity and second mortgage		25		437		173		635
Multifamily residential		--		--		--		--
Commercial real estate		--		3,746		2,678		6,424
One- to four-family construction		--		250		--		250
Other construction and land		--		3,498		1,019		4,517
Commercial		17		385		--		402
Consumer		--		15		1		16
Total	$	749	$	13,069	$	5,697	$	19,515

December 31, 2011	30-89 Days Past Due		90 Days or More Past Due		Current		Total
One- to four-family residential	$	1,870	$	5,604	$	4,262	$	11,736
Home equity and second mortgage		57		437		270		764
Multifamily residential		--		--		4,645		4,645
Commercial real estate		203		4,752		8,283		13,238
One- to four-family construction		--		--		--		--
Other construction and land		164		1,344		1,893		3,401
Commercial		--		--		72		72
Consumer		--		5		93		98
Total	$	2,294	$	12,142	$	19,518	$	33,954

 

10

The following tables summarize information pertaining to impaired loans as of September 30, 2012 and December 31, 2011, and for three and nine month periods ended September 30, 2012 and 2011 (in thousands):

	September 30, 2012						For the Three and Nine Months Ended September 30, 2012
	Unpaid Principal Balance		Recorded Investment		Valuation Allowance		Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
Impaired loans with a valuation allowance:							(Three Months)		(Nine Months)		(Three Months)		(Nine Months)
One- to four-family residential	$	1,462	$	1,269	$	193	$	1,376	$	2,394	$	--	$	--
Home equity and second mortgage		212		20		192		20		22		--		--
Multifamily residential		--		--		--		--		564		--		--
Commercial real estate		1,921		1,381		540		2,405		2,346		--		40
One- to four-family construction		--		--		--		--		--		--		--
Other construction and land		634		468		166		1,121		1,257		--		9
Commercial		380		230		150		115		58		--		--
Consumer		--		--		--		--		6		--		--
		4,609		3,368		1,241		5,037		6,647		--		49
Impaired loans without a valuation allowance:
One- to four-family residential		6,914		6,914		--		6,691		7,369		18		70
Home equity and second mortgage		442		442		--		446		531		--		5
Multifamily residential		3,466		3,466		--		1,873		3,173		42		49
Commercial real estate		5,761		5,761		--		5,570		6,834		18		102
One- to four-family construction		250		250		--		125		63		--		--
Other construction and land		3,883		3,883		--		5,202		3,721		--		89
Commercial		22		22		--		212		245		--		--
Consumer		24		24		--		58		55		--		1
		20,762		20,762		--		20,177		21,991		78		316
Total impaired loans	$	25,371	$	24,130	$	1,241	$	25,214	$	28,638	$	78	$	365
Interest based on original terms											$	405	$	1,212
Interest income recognized on a cash basis on impaired loans											$	--	$	203

 

11

	December 31, 2011						For the Three and Nine Months Ended September 30, 2011
	Unpaid Principal Balance		Recorded Investment		Valuation Allowance		Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
Impaired loans with a valuation allowance:							(Three Months)		(Nine Months)		(Three Months)		(Nine Months)
One- to four-family residential	$	3,019	$	2,714	$	305	$	4,148	$	3,989	$	2	$	24
Home equity and second mortgage		108		27		81		123		191		2		7
Multifamily residential		2,958		2,255		703		4,789		4,968		--		--
Commercial real estate		4,301		2,422		1,879		1,972		2,257		--		18
One- to four-family construction		--		--		--		--		2		--		--
Other construction and land		925		645		280		3,597		3,829		2		23
Commercial		--		--		--		106		162		--		--
Consumer		70		25		45		3		13		--		1
		11,381		8,088		3,293		14,738		15,411		6		73
Impaired loans without a valuation allowance:
One- to four-family residential		10,066		10,066		--		16,769		18,623		67		270
Home equity and second mortgage		723		723		--		747		820		12		32
Multifamily residential		5,175		5,175		--		3,971		3,920		46		131
Commercial real estate		8,937		8,937		--		12,333		11,154		42		190
One- to four-family construction		--		--		--		--		--		--		--
Other construction and land		2,758		2,758		--		2,945		3,257		11		53
Commercial		72		72		--		409		402		1		8
Consumer		49		49		--		89		92		2		4
	$	27,780	$	27,780	$	--		37,263		38,268		181		688
Total impaired loans	$	39,161	$	35,868	$	3,293	$	52,001	$	53,679	$	187	$	761
Interest based on original terms											$	881	$	2,626
Interest income recognized on a cash basis on impaired loans											$	121	$	400

 

12

Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Bank's loan portfolio, the Bank categorizes loans into risk categories based on available and relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by assigning a credit risk rating to loans on at least an annual basis for non-homogeneous loans over $250,000. The Bank uses the following definitions for risk ratings:

Pass (Grades 1 to 5). Loans rated as pass generally meet or exceed normal credit standards and are rated on a scale from 1 to 5, with 1 being the highest quality loan and 5 being a pass/watch loan. Factors influencing the level of pass grade include repayment source and strength, collateral, borrower cash flows, existence of and strength of guarantors, industry/business sector, financial trends, performance history, etc.

Special Mention (Grade 6). Loans rated as special mention, while still adequately protected by the borrower's repayment capability, exhibit distinct weakening trends. If left unchecked or uncorrected, these potential weaknesses may result in deteriorated prospects of repayment. These exposures require management's close attention so as to avoid becoming adversely classified credits.

Substandard (Grade 7). Loans rated as substandard are inadequately protected by the current sound net worth and paying capacity of the borrower or the collateral pledged, if any. These assets must have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful (Grade 8). Loans rated as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

Loss (Grade 9). Loans rated as a loss are considered uncollectible and of such little value that continuance as an asset is not warranted. A loss classification does not mean that an asset has no recovery or salvage value, but that it is not practical or desirable to defer writing off or reserving all or a portion of the asset, even though partial recovery may be effected in the future.

Based on analyses performed at September 30, 2012 and December 31, 2011, the risk categories of loans are as follows:

	September 30, 2012
	Pass		Special Mention		Substandard		Not Rated		Total (1)
One- to four-family residential	$	19,824	$	8,465	$	12,769	$	110,037	$	151,095
Home equity and second mortgage		607		31		1,157		7,827		9,622
Multifamily residential		13,528		4,472		4,909		22		22,931
Commercial real estate		111,329		7,685		11,117		887		131,018
One- to four-family construction		1,056		327		250		--		1,633
Other construction and land		5,350		691		5,459		3,477		14,977
Commercial		19,025		345		505		305		20,180
Consumer		285		--		37		5,893		6,215
Total (1)	$	171,004	$	22,016	$	36,203	$	128,448	$	357,671

 

	December 31, 2011
	Pass		Special Mention		Substandard		Not Rated		Total (1)
One- to four-family residential	$	24,300	$	13,888	$	27,877	$	117,093	$	183,158
Home equity and second mortgage		558		487		1,569		9,888		12,502
Multifamily residential		4,736		6,655		6,203		2,882		20,476
Commercial real estate		55,997		9,174		29,020		1,729		95,920
One- to four-family construction		--		--		1,463		928		2,391
Other construction and land		9,508		2,908		8,696		2,331		23,443
Commercial		5,579		1,105		521		398		7,603
Consumer		626		13		191		7,185		8,015
Total (1)	$	101,304	$	34,230	$	75,540	$	142,434	$	353,508

(1) Gross of undisbursed loan funds, unearned discounts and net loan fees and the allowance for loan and lease losses.

As of September 30, 2012 and December 31, 2011, the Bank did not have any loans categorized as subprime or classified as doubtful.

13

Troubled Debt Restructurings. Troubled debt restructurings (“TDRs”) are loans where the contractual terms on the loan have been modified and both of the following conditions exist: (i) the borrower is experiencing financial difficulty and (ii) the restructuring constitutes a concession that the Bank would not otherwise make. The Bank assesses all loan modifications to determine if the modifications constitute a TDR. Restructurings resulting in an insignificant delay in payment are not considered to be TDRs. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

All TDRs are considered impaired loans. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

The following table summarizes TDRs as of September 30, 2012 and December 31, 2011: (dollars in thousands)

September 30, 2012	Number of Accruing TDR Loans		Balance		Number of Nonaccrual TDR Loans		Balance		Total Number of TDR Loans		Total Balance
One- to four-family residential		11	$	1,105		6	$	555		17	$	1,660
Home equity and second mortgage		1		19		3		75		4		94
Multifamily residential		1		3,466		--		--		1		3,466
Commercial real estate		1		1,260		2		580		3		1,840
Other construction and land		--		--		6		1,463		6		1,463
Consumer		3		7		--		--		3		7
Total		17	$	5,857		17	$	2,673		34	$	8,530

 

December 31, 2011	Number of Accruing TDR Loans		Balance		Number of Nonaccrual TDR Loans		Balance		Total Number of TDR Loans		Total Balance
One- to four-family residential		15	$	1,349		11	$	1,134		26	$	2,483
Home equity and second mortgage		3		68		4		133		7		201
Multifamily residential		1		3,488		1		1,399		2		4,887
Commercial real estate		--		--		6		4,759		6		4,759
Other construction and land		5		282		4		1,242		9		1,524
Consumer		7		20		--		--		7		20
Total		31	$	5,207		26	$	8,667		57	$	13,874

 

14

For the three and nine months ended September 30, 2012, there was one loan modified in a TDR with a balance after restructure of $172,000.

Loans receivable that were restructured as TDRs during the three and nine months ended September 30, 2011, were as follows: (dollars in thousands)

	Three Months Ended September 30, 2011
							Nature of Modification
	Number of Loans		Balance Prior to TDR		Balance at September 30, 2011		Payment Term (1)		Other
One- to four-family residential		1	$	34	$	33	$	33	$	--
Home equity and second mortgage		--		--		--		--		--
Other construction and land		--		--		--		--		--
Commercial real estate		1		1,271		1,305		--		1,305	(2)
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
Total		2	$	1,305	$	1,338	$	33	$	1,305

 

	Nine Months Ended September 30, 2011
							Nature of Modification
	Number of Loans		Balance Prior to TDR		Balance at September 30, 2011		Payment Term (1)		Other
One- to four-family residential		3	$	512	$	510	$	98	$	412	(3)
Home equity and second mortgage		2		74		74		74		--
Other construction and land		2		96		95		--		95	(3)
Commercial real estate		2		1,471		1,505		200		1,305	(2)
Commercial		1		54		25		--		25	(4)
Consumer		1		3		3		3		--
Total		11	$	2,210	$	2,212	$	375	$	1,837

(1) Concessions represent skipped payments/maturity date extensions or amortization term extensions.

(2) Concession represents payment of delinquent property taxes.

(3) Modification to interest only payments for a period of time.

(4) Debt consolidation.

15

The Bank had no loans receivable for which a payment default occurred during the three and nine months ended September 30, 2012 and that had been modified as a TDR within 12 months or less of the payment default. The following table represents loans receivable for which a payment default occurred during the three and nine months ended September 30, 2011, and that had been modified as a TDR within 12 months or less of the payment default. A payment default is defined as a payment received more than 90 days after its due date. (dollars in thousands)

	Three Months Ended September 30, 2011
	Number of Loans		Unpaid Principal Balance at September 30, 2011		Specific Valuation Allowance		Net Balance at September 30, 2011		Charge-offs		Transfers to Real Estate Owned
One- to four-family residential		6	$	226	$	27	$	199	$	34	$	387
Home equity and second mortgage		3		78		25		53		11		--
Multifamily residential		--		--		--		--		--		--
Other construction and land		2		318		--		318		--		45
Commercial real estate		1		408		--		408		--		--
Commercial		1		157		51		106		--		--
Consumer		1		--		--		--		26		--
Total		14	$	1,187	$	103	$	1,084	$	71	$	432

	Nine Months Ended September 30, 2011
	Number of Loans		Unpaid Principal Balance at September 30, 2011		Specific Valuation Allowance		Net Balance at September 30, 2011		Charge-offs		Transfers to Real Estate Owned
One- to four-family residential		6	$	669	$	117	$	552	$	34	$	387
Home equity and second mortgage		3		140		88		52		47		--
Multifamily residential		1		1,680		785		895		--		--
Other construction and land		2		318		--		318		--		45
Commercial real estate		1		408		--		408		--		--
Commercial		1		157		51		106		--		--
Consumer		2		--		--		--		66		--
Total		16	$	3,372	$	1,041	$	2,331	$	147	$	432

 

16

5. ALLOWANCES FOR LOAN AND LEASE LOSSES AND REAL ESTATE LOSSES

The tables below provide a rollforward of the allowance for loan and lease losses (“ALLL”) by portfolio segment (in thousands):

Three Months Ended September 30, 2012	One- to four-family residential			Home equity and second mortgage			Multifamily residential			Commercial real estate			One- to four-family construction			Other construction and land			Commercial			Consumer			Total
ALLL:
Balance, beginning of period	$	6,046		$	587		$	886		$	7,688		$	97		$	1,487		$	313		$	160		$	17,264
Provision charged to expense		455			(55	)		341			(734	)		(52	)		(242	)		148			139			--
Losses charged off		(295	)		(52	)		--			(293	)		--			(269	)		--			(79	)		(988	)
Recoveries		82			61			--			8			--			(22	)		8			19			156
Balance, end of period	$	6,288		$	541		$	1,227		$	6,669		$	45		$	954		$	469		$	239		$	16,432
Nine Months Ended September 30, 2012
ALLL:
Balance, beginning of year	$	6,306		$	693		$	2,654		$	7,316		$	84		$	2,567		$	972		$	226		$	20,818
Provision charged to expense		1,109			(95	)		(447	)		1,856			(39	)		(2,006	)		(540	)		184			22
Losses charged off		(1,230	)		(163	)		(997	)		(2,510	)		--			(327	)		--			(233	)		(5,460	)
Recoveries		103			106			17			7			--			720			37			62			1,052
Balance, end of period	$	6,288		$	541		$	1,227		$	6,669		$	45		$	954		$	469		$	239		$	16,432
Ending balance: individually evaluated for impairment	$	193		$	192		$	--		$	540		$	--		$	166		$	150		$	--		$	1,241
Ending balance: collectively evaluated for impairment	$	6,095		$	349		$	1,227		$	6,129		$	45		$	788		$	319		$	239		$	15,191
Loan balances (1):
Ending balance	$	151,095		$	9,622		$	22,931		$	131,018		$	1,633		$	14,977		$	20,180		$	6,215		$	357,671
Ending balance: individually evaluated for impairment	$	4,319		$	300		$	3,466		$	7,033		$	250		$	3,696		$	402		$	--		$	19,466
Ending balance: collectively evaluated for impairment	$	146,776		$	9,322		$	19,465		$	123,985		$	1,383		$	11,281		$	19,778		$	6,215		$	338,205

______________
 (1) Gross of undisbursed loan funds, unearned discounts, and net loan fees and the allowance for loan and lease losses.

17

Year Ended December 31, 2011	One- to four-family residential			Home equity and second mortgage			Multifamily residential			Commercial real estate			One- to four-family construction			Other construction and land			Commercial			Consumer			Total
ALLL:
Balance, beginning of year	$	5,440		$	1,275		$	6,581		$	9,491		$	81		$	4,035		$	3,543		$	638		$	31,084
Provision charged to expense		3,993			(160	)		(1,132	)		189			31			204			(2,139	)		(127	)		859
Losses charged off		(3,177	)		(486	)		(2,795	)		(2,375	)		(28	)		(2,190	)		(517	)		(409	)		(11,977	)
Recoveries		50			64			--			11			--			518			85			124			852
Balance, end of year	$	6,306		$	693		$	2,654		$	7,316		$	84		$	2,567		$	972		$	226		$	20,818
Ending balance: individually evaluated for impairment	$	305		$	81		$	703		$	1,879		$	--		$	280		$	--		$	45		$	3,293
Ending balance: collectively evaluated for impairment	$	6,001		$	612		$	1,951		$	5,437		$	84		$	2,287		$	972		$	181		$	17,525
Loan balances (1):
Ending balance	$	183,158		$	12,502		$	20,476		$	95,920		$	2,391		$	23,443		$	7,603		$	8,015		$	353,508
Ending balance: individually evaluated for impairment	$	13,085		$	831		$	8,133		$	13,238		$	--		$	3,683		$	72		$	119		$	39,161
Ending balance: collectively evaluated for impairment	$	170,073		$	11,671		$	12,343		$	82,682		$	2,391		$	19,760		$	7,531		$	7,896		$	314,347

______________
 (1) Gross of undisbursed loan funds, unearned discounts, and net loan fees and the allowance for loan and lease losses.

Impairment is measured on a loan by loan basis for loans where the aggregate relationship balance exceeds $250,000 by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Impaired loans under this threshold are aggregated and impairment measured on a collective basis.

The Bank does not have any loans acquired with deteriorated credit quality.

18

A summary of the activity in the allowances for loan and lease losses and real estate losses is as follows for the three and nine months ended September 30 (in thousands):

	Three Months Ended September 30, 2012						Three Months Ended September 30, 2011
	Loans and Leases			Real Estate			Loans and Leases			Real Estate
Balance—beginning of period	$	17,264		$	19,649		$	29,598		$	9,634
Provisions for estimated losses		--			277			21			1,838
Recoveries		156			--			154			--
Losses charged off		(988	)		(2,045	)		(1,801	)		(1,511	)
Balance—end of period	$	16,432		$	17,881		$	27,972		$	9,961

	Nine Months Ended September 30, 2012						Nine Months Ended September 30, 2011
	Loans and Leases			Real Estate			Loans and Leases			Real Estate
Balance—beginning of period	$	20,818		$	20,934		$	31,084		$	7,841
Provisions for estimated losses		22			585			812			4,837
Recoveries		1,052			--			781			--
Losses charged off		(5,460	)		(3,638	)		(4,705	)		(2,717	)
Balance—end of period	$	16,432		$	17,881		$	27,972		$	9,961

6.     STOCK BASED COMPENSATION

2011 Omnibus Incentive Plan—The 2011 Omnibus Incentive Plan (the “2011 Plan”) became effective May 3, 2011, after approval by the Company's stockholders on April 29, 2011. The objectives of the 2011 Plan are to optimize the profitability and growth of the Company through incentives that are consistent with the Company's goals and that link the personal interests of participants to those of the Company's stockholders. The 2011 Plan provides for a committee of the Company's Board of Directors to award nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other awards representing up to 1,930,269 shares of Company stock. Awards may be granted under the 2011 Plan up to ten years following the effective date of the plan. Each award under the 2011 Plan is governed by the terms of the individual award agreement, which shall specify pricing, term, vesting, and other pertinent provisions. Option awards are generally granted with an exercise price equal to the fair market value of the Company's stock at the date of grant, generally vest based on five years of continuous service and have seven year contractual terms. Compensation expense attributable to awards made under the 2011 Plan for the nine months ended September 30, 2012 totaled approximately $112,000.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. Expected volatilities are based on implied volatilities from historical volatility of the Company's stock and other factors. The Company uses historical data to estimate option exercise, employee termination, and expected term of the options within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The fair values of stock options granted during the nine months ended September 30, 2012 and 2011 were estimated based on the following average assumptions:

	2012			2011
Expected Term (years)		7			7
Annual Dividend Rate		0.00%			0.00%
Risk Free Interest Rate		1.32	%		2.164	%
Volatility		53.25	%		50.94	%
Expected forfeiture rate		4.00	%		4.00	%

 

19

A summary of the activity in the Company's 2011 Plan for the nine months ended September 30, 2012, is presented below:

	Shares Underlying Awards			Weighted Average Exercise Price
Outstanding—January 1, 2012		236,000		$	6.23
Granted		35,000		$	7.00
Forfeited		(54,000	)	$	6.57
Outstanding—September 30, 2012		217,000		$	6.28

 

The weighted average remaining contractual life of the outstanding options was 6.0 years and the aggregate intrinsic value of the options was approximately $758,000 at September 30, 2012. The weighted-average grant-date fair value of options granted during 2012 was $3.80. None of the outstanding options are vested.

As of September 30, 2012, there was $588,000 of total unrecognized compensation costs related to nonvested share-based compensation arrangements under the 2011 Plan. The cost is expected to be recognized over a weighted-average period of 4.0 years.

7.     EARNINGS PER SHARE

Basic earnings per share is computed by dividing reported earnings available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing reported earnings available to common stockholders by the weighted average number of common shares outstanding after consideration of the dilutive effect, if any, of the Company's outstanding common stock options and warrants using the treasury stock method.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Basic weighted average shares outstanding		19,302,603		19,302,603		19,302,603		10,502,544
Effect of dilutive securities		1,375,467		--		1,233,575		760,986
Diluted weighted average shares outstanding		20,678,070		19,302,603		20,536,178		11,263,530

8.     FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement, provides a framework for measuring fair value and defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1	Unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Financial instruments are broken down by recurring or nonrecurring measurement status. Recurring assets are initially measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date. Assets measured on a nonrecurring basis are assets that, due to an event or circumstance, were required to be remeasured at fair value after initial recognition in the financial statements at some time during the reporting period.

20

The following is a description of inputs and valuation methodologies used for assets recorded at fair value on a recurring basis and recognized in the accompanying statements of financial condition at September 30, 2012 and December 31, 2011, as well as the general classification of such assets pursuant to the valuation hierarchy.

Securities Available for Sale

Investment securities available for sale are recorded at fair value on a recurring basis. The fair values used by the Company are obtained from an independent pricing service, which represent either quoted market prices for the identical asset or fair values determined by pricing models, or other model-based valuation techniques, that consider observable market data, such as interest rate volatilities, London Interbank Offered Rate (“LIBOR”) yield curve, credit spreads and prices from market makers and live trading systems. Recurring Level 2 securities include U.S. government sponsored agency securities, corporate debt securities, and municipal bonds. Inputs used for valuing Level 2 securities include observable data that may include dealer quotes, benchmark yields, market spreads, live trading levels and market consensus prepayment speeds, among other things. Additional inputs include indicative values derived from the independent pricing service's proprietary computerized models. No securities were included in the Recurring Level 3 category at or for the periods ended September 30, 2012 or December 31, 2011.

The following table presents major categories of assets measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011 (in thousands):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2012
Available for sale investment securities:
Municipal securities	$	45,594	$	--	$	45,594	$	--
Corporate debt securities		7,913		--		7,913		--
U.S. Government sponsored agency securities		5,007		--		5,007		--
Total	$	58,514	$	--	$	58,514	$	--
December 31, 2011
Available for sale investment securities:
Municipal securities	$	36,613	$	--	$	36,613	$	--
Corporate debt securities		5,810		--		5,810		--
U.S. Government sponsored agency securities		19,654		--		19,654		--
Total	$	62,077	$	--	$	62,077	$	--

The following is a description of valuation methodologies used for significant assets measured at fair value on a nonrecurring basis.

Impaired Loans Receivable

Loans which meet certain criteria are evaluated individually for impairment. A loan is considered impaired when, based upon current information and events, it is probable the Bank will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the note.  Substantially all of the Bank's impaired loans at September 30, 2012 and December 31, 2011 are secured by real estate.  Impaired loan relationships over $250,000 are individually assessed to determine that the carrying value of the loan is not in excess of the fair value of the collateral, less estimated selling costs. Fair value is estimated primarily through current appraisals or internal valuations.  Appraisals are obtained from licensed third party appraisers and reviewed by a licensed review appraiser employed by the Bank. Internal valuations are prepared by Bank personnel and reviewed by the Bank's review appraiser. Fair values may be adjusted by management to reflect current economic and market conditions and, as such, are classified as Level 3.   Fair value adjustments are made by charge-offs to the allowance for loan and lease losses.

Real Estate Owned, net

REO represents real estate acquired as a result of foreclosure or by deed in lieu of foreclosure and is carried at the lower of cost or fair value less estimated selling costs.  Fair value is estimated through current appraisals, internal valuations, real estate brokers' opinions or listing prices. Appraisals are obtained from licensed third party appraisers, generally on an annual basis, and reviewed by a licensed review appraiser employed by the Bank. Internal valuations are prepared by Bank personnel and reviewed by the review appraiser. Fair values of REO are influenced by management's marketing strategy, including whether the Bank is willing to hold any given property for the marketing period assumed in the appraisal. The Bank is currently aggressively marketing certain properties, and as a result, may discount appraised values to account for shorter marketing times. As estimated fair values may be adjusted by management to reflect current economic and market conditions, such fair values are classified as Level 3.  Fair value adjustments are recorded in earnings during the period such adjustments are made. REO loss provisions recorded during the nine months ended September 30, 2012 and 2011 were $585,000 and $4.8 million, respectively.

21

The following table presents major categories of assets measured at fair value on a nonrecurring basis for the nine months ended September 30, 2012 and 2011 (in thousands). The assets disclosed in the following table represent REO properties or impaired loans that were remeasured at fair value during the period with a resulting valuation adjustment or fair value write-down.

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2012
Impaired loans	$	18,244	$	--	$	--	$	18,244
REO, net		7,989		--		--		7,989
September 30, 2011
Impaired loans	$	25,926	$	--	$	--	$	25,926
REO, net		21,938		--		--		21,938

 

9.     FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The estimated fair values of financial instruments that are reported at amortized cost in the Company's statement of financial condition, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value, are as follows (in thousands):

	September 30, 2012				December 31, 2011
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
FINANCIAL ASSETS:
Level 1 inputs:
Cash and cash equivalents	$	42,380	$	42,380	$	79,799	$	79,799
Level 2 inputs:
Interest-bearing time deposits in banks		29,840		30,752		27,113		27,572
Federal Home Loan Bank stock		578		578		576		576
Loans held for sale		5,790		5,790		3,339		3,339
Cash surrender value of life insurance		22,799		22,799		22,213		22,213
Accrued interest receivable		1,732		1,732		1,516		1,516
Level 3 inputs:
Loans receivable—net		339,978		354,714		331,453		333,006
FINANCIAL LIABILITIES:
Level 2 inputs:
Checking, money market and savings accounts		201,189		201,189		207,015		207,015
Other borrowings		3,174		3,321		6,679		6,889
Accrued interest payable		28		28		54		54
Advance payments by borrowers for taxes and insurance		535		535		816		816
Level 3 inputs:
Certificates of deposit		264,877		269,425		291,566		293,198

 

For cash and cash equivalents, the carrying amount approximates fair value (level 1). For Federal Home Loan Bank stock, loans held for sale, cash surrender value of life insurance and accrued interest receivable, the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments or, as to Federal Home Loan Bank stock, the ability to sell the stock back to the Federal Home Loan Bank at cost (level 2). Interest-bearing time deposits in banks were valued using discounted cash flows based on current rates for similar types of deposits (level 2). Fair values of impaired loans are estimated as described in Note 8. Non-impaired loans were valued using discounted cash flows. The discount rates used to determine the present value of these loans were based on interest rates currently being charged by the Bank on comparable loans (level 3).

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The fair value of checking accounts, savings accounts and money market deposits is the amount payable on demand at the reporting date (level 2). The fair value of fixed-maturity certificates of deposit is estimated using the discount rates currently offered by the Bank for deposits of similar terms (level 3). The fair value of Federal Home Loan Bank advances is estimated using the rates for advances of similar remaining maturities at the reporting date (level 2). For advance payments by borrowers for taxes and insurance and for accrued interest payable the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments (level 2).

The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2012 and December 31, 2011. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since the reporting date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

10.    REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the Office of the Comptroller of the Currency (“OCC”), as successor to the Office of Thrift Supervision (“OTS”) (see discussion below regarding “Regulatory Changes”). Failure to meet minimum capital requirements can result in certain mandatory—and possible additional discretionary—actions by regulators that, if undertaken, could have a direct and material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of tangible capital (as defined) to tangible assets (as defined) and core capital (as defined) to adjusted tangible assets (as defined), and of total risk-based capital (as defined) to risk-weighted assets (as defined). Tier 1 (core) capital includes common stockholders' equity less certain other deductions. Total capital includes Tier 1 capital plus the allowance for loan and lease losses, subject to limitations.

On April 12, 2010, the Company and the Bank each consented to the terms of Cease and Desist Orders issued by the OTS (the “Bank Order” and the “Company Order” and, together, the “Orders”). The Orders became effective April 14, 2010. The Orders impose certain restrictions on the Company and, to a greater extent, the Bank, including lending and dividend restrictions. The Orders also require the Company and the Bank to take certain actions, including the submission of capital and business plans to, among other things, preserve and enhance the capital of the Company and the Bank and strengthen and improve the consolidated Company's operations, earnings and profitability. The Bank Order specifically requires the Bank to achieve and maintain, by December 31, 2010, a Tier 1 (core) capital ratio of at least 8% and a total risk-based capital ratio of at least 12.0% and maintain these higher ratios for as long as the Bank Order is in effect.

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The Bank's actual and required capital amounts (in thousands) and ratios are presented in the following table:

											To be Categorized
											as Adequately
											Capitalized Under
						For Capital					Prompt Corrective					Required Per
	Actual					Adequacy Purposes					Action Provisions					Bank Order
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount			Ratio
As of September 30, 2012:
Tangible Capital to Tangible Assets	$	67,764		12.48	%	$	8,144		1.50	%	N/A		N/A			N/A			N/A
Core Capital to Adjusted Tangible Assets		67,764		12.48	%		21,716		4.00	%	$	21,716		4.00	%	$	43,432	(1)		8.00%	(1)
Total Capital to Risk-Weighted Assets		72,568		19.47	%		29,815		8.00	%		29,815		8.00	%		44,723	(1)		12.00%	(1)
Tier I Capital to Risk-Weighted Assets		67,764		18.18	%	N/A		N/A				14,908		4.00	%	N/A			N/A
As of December 31, 2011:
Tangible Capital to Tangible Assets	$	64,839		11.22	%	$	8,666		1.50	%	N/A		N/A			N/A			N/A
Core Capital to Adjusted Tangible Assets		64,839		11.22	%		23,111		4.00	%	$	23,111		4.00	%	$	46,221	(1)		8.00%	(1)
Total Capital to Risk-Weighted Assets		69,466		19.62	%		28,319		8.00	%		28,319		8.00	%		42,479	(1)		12.00%	(1)
Tier I Capital to Risk-Weighted Assets		64,839		18.32	%	N/A		N/A				14,160		4.00	%	N/A			N/A

(1) The Bank Order states that no later than December 31, 2010, the Bank shall achieve and maintain a Tier 1 (core) capital ratio of at least 8% and a total risk-based capital ratio of at least 12%. The required amounts presented reflect these ratios.

Reverse Stock Split. The Company amended its Articles of Incorporation to effect a 1-for-5 reverse split (the “Reverse Split”) of the Company's issued and outstanding shares of common stock effective May 3, 2011. All periods presented in this Form 10-Q have been retroactively restated to reflect the Reverse Split.

Dividend Restrictions. The principal source of the Company's revenue is dividends from the Bank. The Company's ability to pay dividends to stockholders depends to a large extent upon the dividends received from the Bank. On November 19, 2009, the OTS issued written directives which require the Company and the Bank to obtain prior written non-objection of their primary regulator, now the FRB for the Company and the OCC for the Bank, in order to make or declare any dividends or payments on their outstanding securities. Neither the Company nor the Bank has the present intention to declare any dividends or payments on their outstanding securities.

Regulatory Changes. Effective July 21, 2011, pursuant to Section 312 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) (i) the regulatory functions and rulemaking authority of the OTS with regard to federally chartered savings and loan associations (including the Bank) were transferred to the OCC and (ii) the regulatory functions and rulemaking authority of the OTS with regard to savings and loan holding companies (including the Company) were transferred to the Board of Governors of the Federal Reserve System (“FRB”). Beginning on July 21, 2011, the OCC became the primary regulator of the Bank and is vested with authority to enforce the Bank Order. Also beginning on July 21, 2011, the Company became subject to the regulation of the FRB, which is vested with authority to enforce the Company Order.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

EXECUTIVE SUMMARY

Management's discussion and analysis of financial condition and results of operations is intended to assist a reader in understanding the consolidated financial condition and results of operations of the Company for the periods presented. The information contained in this section should be read in conjunction with the Condensed Consolidated Financial Statements and the accompanying Notes to the Condensed Consolidated Financial Statements and the other sections contained herein.

The Bank is a federally chartered stock savings and loan association that was formed in 1934. As of September 30, 2012, the Bank conducted business from its main office located in Harrison, Arkansas and fourteen full-service branch offices located in a six county area in Arkansas (comprised of Benton and Washington counties in Northwest Arkansas; Carroll, Boone, Marion and Baxter counties in North-central Arkansas) and a loan production office located in Little Rock, Arkansas. The Company also has executive offices in Little Rock, Arkansas. In February 2012, three full service branches in Northwest Arkansas were closed. Customers from closed branch locations are being serviced by other Bank branch locations in the area. As a result, these branch closings are not reported as discontinued operations. The Bank's primary focus will continue in this six county area as well as the Little Rock and Central Arkansas area. Other markets will also be considered that present opportunities for profitable growth.

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The Bank is a community-oriented financial institution offering a wide range of retail and commercial deposit accounts, including noninterest-bearing and interest-bearing checking, savings and money market accounts, certificates of deposit, and individual retirement accounts. Loan products offered by the Bank include residential real estate, consumer, construction, lines of credit, commercial real estate and commercial business loans. However, the Bank is currently subject to lending restrictions as a result of the provisions of the Bank Order. Other financial services include automated teller machines; 24-hour telephone banking; online banking, including account access, e-statements, and bill payment; mobile banking; Bounce Protection^TM overdraft service; debit cards; and safe deposit boxes.

The Company's net income was $1.3 million for the nine months ended September 30, 2012, compared to a net loss of $5.8 million for the same period in 2011. The primary reason for the increase in net income was an increase in net gains on sales of investment securities of $1.0 million and a decrease in net REO expenses of $6.4 million. The decrease in net REO expenses was primarily attributable to a $4.3 million decrease in loss provisions on REO and a $1.9 million increase in net gains on sales of REO properties. In December 2011, the Bank posted write-downs of REO of $11.3 million. This was a result of management's evaluation of the overall REO portfolio and based on the decision to more aggressively market certain properties. A consequence of this write-down was a reduction in the loss provision on REO for the three and nine months ended September 30, 2012, as minimal additional changes to REO values since year end were necessary.

The Company's net income was $353,000 for the three months ended September 30, 2012, compared to a net loss of $2.0 million for the three months ended September 30, 2011. The primary reason for the increase in net income was a $2.5 million decrease in net REO expenses attributable to a $1.6 million decrease in loss provisions on REO and a $933,000 increase in net gains on sales of REO properties.

The Bank has made substantial progress in reducing its level of nonperforming assets during 2012. Total nonperforming assets at September 30, 2012, including nonaccrual loans, real estate owned, and restructured loans, totaled $45.9 million, or 8.44% of total assets, a reduction of $21.8 million compared to December 31, 2011, and a reduction of $41.1 million compared to September 30, 2011. The Bank has also reduced its level of classified loans by 52% to $36.2 million at September 30, 2012 compared to $75.0 million at December 31, 2011.

While the Bank is continuing its focus on reducing nonperforming assets, it is equally focused on improving its operational performance through improving its net interest margin, increasing noninterest income, and controlling noninterest expense.

RECENT DEVELOPMENTS

New Proposed Capital Rules. On June 7, 2012, the Federal Reserve issued proposed rules that would substantially amend the regulatory risk-based capital rules applicable to the Company and the Bank. The FDIC and the OCC subsequently issued these proposed rules on June 12, 2012. The proposed rules implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. “Basel III” refers to two consultative documents released by the Basel Committee on Banking Supervision in December 2009, the rules text released in December 2010, and loss absorbency rules issued in January 2011. The proposed rules are subject to a comment period running through October 22, 2012.

The proposed rules include new risk-based capital and leverage ratios, which would be phased in from 2013 to 2019, and would refine the definition of what constitutes “capital” for purposes of calculating those ratios. The proposed new minimum capital level requirements applicable to the Company and the Bank under the proposals would be: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 4% for all institutions. The proposed rules would also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital. The new capital conservation buffer requirement would be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase by that amount each year until fully implemented in January 2019. An institution would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations would establish a maximum percentage of eligible retained income that could be utilized for such actions.

The federal bank regulatory agencies also proposed revisions to the prompt corrective action framework, which is designed to place restrictions on insured depository institutions, including the Bank, if their capital levels begin to show signs of weakness. These revisions would take effect January 1, 2015.

Based on our current capital composition and levels, we believe that we would be in compliance with the requirements as set forth in the proposed rules if they were presently in effect. Currently, the Bank is under a Bank Order which specifically requires the Bank to maintain a Tier 1 (core) capital ratio of at least 8% and a total risk-based capital ratio of at least 12.0% and maintain these higher ratios for as long as the Bank Order is in effect.

25

CRITICAL ACCOUNTING POLICIES

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, the following estimates, due to the judgments, estimates and assumptions inherent in those policies, are critical to preparation of our financial statements:

● Determination of our allowance for loan and lease losses (“ALLL”)

● Valuation of real estate owned

● Valuation of investment securities

● Valuation of our deferred tax assets

These policies and the judgments, estimates and assumptions are described in greater detail in subsequent sections of this Management's Discussion and Analysis and in the Notes to the Condensed Consolidated Financial Statements included herein. We believe that the judgments, estimates and assumptions used in the preparation of our condensed consolidated financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of our condensed consolidated financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in our results of operations or financial condition.

In estimating the amount of credit losses inherent in the loan portfolio, various judgments and assumptions are made. For example, when assessing the overall economic environment, assumptions are made regarding market conditions and their impact on the loan portfolio. In the event the economy were to sustain a prolonged downturn, the loss factors applied to the portfolios may need to be revised, which may significantly impact the measurement of the allowance for loan and lease losses. For impaired loans that are collateral dependent and for real estate owned, the estimated fair value of the collateral may deviate significantly from the proceeds received when the collateral is sold.

The Company has classified all of its investment securities as available for sale. Accordingly, its investment securities are stated at estimated fair value in the consolidated financial statements with unrealized gains and losses, net of related income taxes, and are reported as a separate component of stockholders' equity with any related changes included in accumulated other comprehensive income (loss). The Company utilizes independent third parties as its principal sources for determining fair value of its investment securities that are measured on a recurring basis. For investment securities traded in an active market, the fair values are based on quoted market prices if available. If quoted market prices are not

available, fair values are based on market prices for comparable securities, broker quotes or comprehensive interest rate tables, pricing matrices or a combination thereof. For investment securities traded in a market that is not active, fair value is determined using unobservable inputs. The fair values of the Company's investment securities traded in both active and inactive markets can be volatile and may be influenced by a number of factors including market interest rates, prepayment speeds, discount rates, credit quality of the issuer, general market conditions including market liquidity conditions and other factors. Factors and conditions are constantly changing and fair values could be subject to material variations that may significantly impact the Company's financial condition, results of operations and liquidity.

The Company recognizes deferred tax assets and liabilities for the future tax consequences related to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company evaluates its deferred tax assets for recoverability using a consistent approach that considers the relative impact of negative and positive evidence, including our historical profitability and projections of future taxable income. The Company is required to establish a valuation allowance for deferred tax assets if it is determined, based on available evidence at the time the determination is made, that it is more likely than not that some portion or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, the Company estimates future taxable income based on management-approved business plans and ongoing tax planning strategies. This process involves significant management judgment about assumptions that are subject to change from period to period based on changes in tax laws or variances between projected operating performance, our actual results and other factors.

26

ANALYSIS OF RESULTS OF OPERATIONS

The Company's results of operations depend primarily on its net interest income, which is the difference between interest income on interest-earning assets, such as loans and investments, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Net interest income is affected by the level of nonperforming assets as they provide no interest earnings to the Company. The Company's results of operations are also affected by the provision for loan and lease losses and the level of its noninterest income and expenses. Noninterest income is generated primarily through deposit account fee income, profit on sale of loans, loan fee income, and earnings on life insurance policies. Noninterest expense consists primarily of employee compensation and benefits, office occupancy expense, data processing expense, real estate owned expense, and other operating expense.

Interest Income and Interest Expense

Interest Income. The decreases in interest income in the three and nine month comparative periods ended September 30, 2012 and 2011 were primarily related to decreases in the average balances of and yields earned on loans receivable and investment securities. The average balance of loans receivable decreased due to repayments, maturities and charge-offs or transfers to real estate owned. The average balance of investment securities decreased due to sales and calls of investment securities.

Interest Expense.   The decreases in interest expense in the three and nine month comparative periods ended September 30, 2012 and 2011 was primarily due to decreases in the average balances of deposits and borrowings as well as a decrease in average rates paid on deposits. The decrease in the average rates paid on deposit accounts reflects decreases in market interest rates.

27

Average Balance Sheets

The following table sets forth certain information relating to the Company's average balance sheets and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing interest income or interest expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are based on daily balances during the periods. 

	Three Months Ended September 30,
	2012							2011
	Average Balance		Interest		Average Yield/ Cost			Average Balance		Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1)	$	358,990	$	4,318		4.79	%	$	371,968	$	5,005		5.34	%
Investment securities(2)		56,992		387		2.70			68,273		591		3.43
Other interest-earning assets		75,859		135		0.71			98,353		125		0.50
Total interest-earning assets		491,841		4,840		3.92			538,594		5,721		4.21
Noninterest-earning assets		58,243							69,809
Total assets	$	550,084						$	608,403
Interest-bearing liabilities:
Deposits	$	472,661		1,046		0.88		$	509,727		1,572		1.22
Other borrowings		3,933		23		2.35			10,434		74		2.82
Total interest-bearing liabilities		476,594		1,069		0.89			520,161		1,646		1.25
Noninterest-bearing liabilities		3,515							4,609
Total liabilities		480,109							524,770
Stockholders' equity		69,975							83,633
Total liabilities and stockholders' equity	$	550,084						$	608,403
Net interest income			$	3,771						$	4,075
Net earning assets (interest-bearing liabilities)	$	15,247						$	18,433
Interest rate spread						3.02	%						2.96	%
Net interest margin						3.04	%						3.00	%
Ratio of interest-earning assets to Interest-bearing liabilities						103.20	%						103.54	%

 

	Nine Months Ended September 30,
	2012							2011
	Average Balance		Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1)	$	356,057	$	13,381		5.02	%	$	384,035		$	15,511		5.40	%
Investment securities(2)		58,918		1,237		2.80			74,265			2,219		3.99
Other interest-earning assets		85,726		409		0.64			69,271			209		0.40
Total interest-earning assets		500,701		15,027		4.01			527,571			17,939		4.55
Noninterest-earning assets		59,689							72,924
Total assets	$	560,390						$	600,495
Interest-bearing liabilities:
Deposits	$	481,345		3,363		0.93		$	518,216			4,917		1.27
Other borrowings		5,576		86		2.06			16,973			281		2.22
Total interest-bearing liabilities		486,921		3,449		0.95			535,189			5,198		1.30
Noninterest-bearing liabilities		3,823							4,640
Total liabilities		490,744							539,829
Stockholders' equity		69,646							60,666
Total liabilities and stockholders' equity	$	560,390						$	600,495
Net interest income			$	11,578							$	12,741
Net earning assets (interest-bearing liabilities)	$	13,380						$	(7,618	)
Interest rate spread						3.06	%							3.25	%
Net interest margin						3.08	%							3.23	%
Ratio of interest-earning assets to interest-bearing liabilities						102.83	%							98.58	%

 (1) Includes nonaccrual loans.

(2) Includes FHLB of Dallas stock.

28

Rate/Volume Analysis

The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided regarding changes attributable to (i) changes in volume (changes in average volume multiplied by prior rate); (ii) changes in rate (change in rate multiplied by prior average volume); (iii) changes in rate-volume (changes in rate multiplied by the change in average volume); and (iv) the net change.

	Three Months Ended September 30,
	2012 vs. 2011
	Increase (Decrease) Due to
	Volume			Rate			Rate/ Volume			Total Increase (Decrease)
	(In Thousands)
Interest income:
Loans receivable	$	(175	)	$	(531	)	$	19		$	(687	)
Investment securities		(98	)		(127	)		21			(204	)
Other interest-earning assets		(29	)		50			(11	)		10
Total interest-earning assets		(302	)		(608	)		29			(881	)
Interest expense:
Deposits		(114	)		(444	)		32			(526	)
Other borrowings		(46	)		(13	)		8			(51	)
Total interest-bearing liabilities		(160	)		(457	)		40			(577	)
Net change in net interest income	$	(142	)	$	(151	)	$	(11	)	$	(304	)

 

	Nine Months Ended September 30,
	2012 vs. 2011
	Increase (Decrease) Due to
	Volume			Rate			Rate/ Volume		Total Increase (Decrease)
	(In Thousands)
Interest income:
Loans receivable	$	(1,130	)	$	(1,079	)	$	79	$	(2,130	)
Investment securities		(459	)		(659	)		136		(982	)
Other interest-earning assets		50			121			29		200
Total interest-earning assets		(1,539	)		(1,617	)		244		(2,912	)
Interest expense:
Deposits		(350	)		(1,296	)		92		(1,554	)
Other borrowings		(189	)		(19	)		13		(195	)
Total interest-bearing liabilities		(539	)		(1,315	)		105		(1,749	)
Net change in net interest income	$	(1,000	)	$	(302	)	$	139	$	(1,163	)

 

29

CHANGES IN RESULTS OF OPERATIONS

The table below presents a comparison of results of operations for the three months ended September 30, 2012 and 2011 (dollars in thousands except share data). Specific changes in certain line items are discussed following the table.

	Three Months Ended September 30,
	2012			2011			Dollar Change			Percentage Change
Interest income:
Loans receivable	$	4,318		$	5,005		$	(687	)		(13.7	)%
Investment securities		387			591			(204	)		(34.5	)
Other		135			125			10			8.0
Total interest income		4,840			5,721			(881	)		(15.4	)
Interest expense:
Deposits		1,046			1,572			(526	)		(33.5	)
Other borrowings		23			74			(51	)		(68.9	)
Total interest expense		1,069			1,646			(577	)		(35.1	)
Net interest income		3,771			4,075			(304	)		(7.5	)
Provision for loan losses		--			21			(21	)		(100.0	)
Net interest income after
provision for loan losses		3,771			4,054			(283	)		(7.0	)
Noninterest income:
Deposit fee income		904			1,297			(393	)		(30.3	)
Earnings on life insurance		198			191			7			3.7
Gain on sale of loans		250			156			94			60.3
Other		97			98			(1	)		(1.0	)
Total noninterest income		1,449			1,742			(293	)		(16.8	)
Noninterest expenses:
Salaries and employee benefits		2,681			2,749			(68	)		(2.5	)
Net occupancy expense		625			661			(36	)		(5.4	)
Real estate owned, net		118			2,612			(2,494	)		(95.5	)
FDIC insurance premium		286			317			(31	)		(9.8	)
Supervisory assessments		72			76			(4	)		(5.3	)
Data processing		395			370			25			6.8
Professional fees		158			193			(35	)		(18.1	)
Advertising and public relations		54			109			(55	)		(50.5	)
Postage and supplies		86			108			(22	)		(20.4	)
Other		392			634			(242	)		(38.2	)
Total noninterest expenses		4,867			7,829			(2,962	)		(37.8	)
Income (loss) before income taxes		353			(2,033	)		2,386			117.4
Income tax provision		--			--			--			--
Net income (loss)	$	353		$	(2,033	)	$	2,386			117.4
Basic earnings per share	$	0.02		$	(0.11	)	$	0.13			116.6	%
Diluted earnings per share	$	0.02		$	(0.11	)	$	0.13			116.6	%
Interest rate spread		3.02	%		2.96	%
Net interest margin		3.04	%		3.00	%
Average full-time equivalents		190			204
Full service offices		15			18

 

30

The table below presents a comparison of results of operations for the nine months ended September 30, 2012 and 2011 (dollars in thousands except share data). Specific changes in certain line items are discussed following the table.

	Nine Months Ended September 30,
	2012			2011			Dollar Change			Percentage Change
Interest income:
Loans receivable	$	13,381		$	15,511		$	(2,130	)		(13.7	)%
Investment securities		1,237			2,219			(982	)		(44.3	)
Other		409			209			200			95.7
Total interest income		15,027			17,939			(2,912	)		(16.2	)
Interest expense:
Deposits		3,363			4,917			(1,554	)		(31.6	)
Other borrowings		86			281			(195	)		(69.4	)
Total interest expense		3,449			5,198			(1,749	)		(33.6	)
Net interest income		11,578			12,741			(1,163	)		(9.1	)
Provision for loan losses		22			812			(790	)		(97.3	)
Net interest income after
provision for loan losses		11,556			11,929			(373	)		(3.1	)
Noninterest income:
Net gain (loss) on sale of investments		542			(439	)		981			223.5
Deposit fee income		2,975			3,642			(667	)		(18.3	)
Earnings on life insurance		586			575			11			1.9
Gain on sale of loans		668			440			228			51.8
Other		369			361			8			2.2
Total noninterest income		5,140			4,579			561			12.3
Noninterest expenses:
Salaries and employee benefits		8,265			8,335			(70	)		(0.8	)
Net occupancy expense		1,934			1,909			25			1.3
Real estate owned, net		(174	)		6,219			(6,393	)		(102.8	)
FDIC insurance premium		875			1,074			(199	)		(18.5	)
Supervisory assessments		222			265			(43	)		(16.2	)
Data processing		1,658			1,111			547			49.2
Professional fees		748			918			(170	)		(18.5	)
Advertising and public relations		192			231			(39	)		(16.9	)
Postage and supplies		377			374			3			0.8
Other		1,346			1,835			(489	)		(26.6	)
Total noninterest expenses		15,443			22,271			(6,828	)		(30.7	)
Income (loss) before income taxes		1,253			(5,763	)		7,016			121.7
Income tax provision		--			--			--			--
Net income (loss)	$	1,253			(5,763	)	$	7,016			121.7
Gain on redemption of preferred stock		--			(10,500	)		10,500			100.0
Net income available to common stockholders	$	1,253		$	4,737		$	(3,484	)		(73.5	)%
Basic earnings per share	$	0.06		$	0.45		$	(0.39	)		(86.7	)%
Diluted earnings per share	$	0.06		$	0.42		$	(0.36	)		(85.7	)%
Interest rate spread		3.06	%		3.25	%
Net interest margin		3.08	%		3.23	%
Average full-time equivalents		197			220
Full service offices		15			18

 

31

Provision for Loan Losses

The provision for loan losses includes charges to maintain an ALLL at a level adequate to cover probable credit losses related to specifically identified loans as well as probable credit losses inherent in the remainder of the loan portfolio that have been incurred as of the balance sheet date. The adequacy of the ALLL is evaluated quarterly by management of the Bank based on the Bank's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral and current economic conditions, including unemployment, bankruptcy trends, vacancy rates, and the level and trend of home sales and prices.

The decrease in the provision for loan losses in the three and nine month periods ended September 30, 2012 compared to the same periods in 2011 was primarily due to decreases in average loan balances and classified loans. The allowance as a percentage of loans receivable was 5.89% at December 31, 2011, compared to 4.59% at September 30, 2012, reflecting improvement in the credit quality of our loan portfolio. The allowance as a percentage of classified loans was 27.77% at December 31, 2011, compared to 45.39% at September 30, 2012. See “Allowance for Loan and Lease Losses” in the “Asset Quality” section.

Noninterest Income

The decrease in deposit fee income for the three month comparative period was primarily due to a decrease in insufficient funds fee income. The increase in noninterest income in the nine month comparative periods ended September 30, 2012 and 2011 was primarily due to increases in gains on sales of investment securities and gains on sales of loans, offset by a decrease in deposit fee income.

Noninterest Expense

Salaries and Employee Benefits. The changes in the composition of this line item are presented below (in thousands):

	Three Months Ended September 30,				Increase (Decrease)			Nine Months Ended September 30,				Increase (Decrease)
	2012		2011					2012		2011
Salaries	$	2,214	$	2,215	$	(1	)	$	6,596	$	6,753	$	(157	)
Payroll taxes		159		168		(9	)		613		572		41
Insurance		120		115		5			359		390		(31	)
Defined benefit plan contribution		108		174		(66	)		452		460		(8	)
Stock compensation		32		29		3			112		29		83
Other		48		48		--			133		131		2
Total	$	2,681	$	2,749	$	(68	)	$	8,265	$	8,335	$	(70	)

Salaries for the nine month period ended September 30, 2012, are down compared to the same period in 2011, primarily attributable to a general reduction in force recorded in the quarter ended June 30, 2011, partially offset by an increase in salaries and employee benefits related to hiring key members of management with experience in the lending area as well as adding additional experienced commercial loan officers.

The Bank is a participant in the Pentegra Defined Benefit Plan (the “Pentegra DB Plan”). The Pentegra DB Plan operates as a multiemployer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. Since the Pentegra DB Plan is a multiple-employer plan, contributions of participating employers are commingled and invested on a pooled basis without allocation to specific employers or employees.  On April 30, 2010, the Board of Directors of the Bank elected to freeze the Pentegra DB Plan effective July 1, 2010, eliminating all future benefit accruals for participants in the Pentegra DB Plan and closing the Pentegra DB Plan to new participants as of that date. The Pentegra DB Plan is noncontributory and prior to July 1, 2010 covered substantially all employees.  After July 1, 2010, the Bank continued to incur costs consisting of administration and Pension Benefit Guaranty Corporation insurance expenses as well as amortization charges based on the funding level of the Pentegra DB Plan.  The level of amortization charges is determined by the Pentegra DB Plan's funding shortfall, which is determined by comparing plan liabilities to plan assets on an annual basis.  Based on the level of interest rates and plan assets, the funding shortfall increased, resulting in increased amortization charges effective both July 1, 2010 and July 1, 2011.  Effective July 1, 2012, the Bank's minimum required contribution decreased based on pension funding relief, resulting in a decrease in defined benefit plan expense for the three and nine months ended September 30, 2012 compared to the three and nine months ended September 30, 2011. 

32

Real estate owned, net. The changes in the composition of this line item are presented below (in thousands):

	Three Months Ended September 30,						Increase (Decrease)			Nine Months Ended September 30,						Increase (Decrease)
	2012			2011						2012			2011
Loss provisions	$	277		$	1,838		$	(1,561	)	$	585		$	4,837		$	(4,252	)
Net (gain) loss on sales		(344	)		589			(933	)		(1,135	)		777			(1,912	)
Rental income		(16	)		(69	)		53			(425	)		(203	)		(222	)
Taxes and insurance		104			115			(11	)		399			376			23
Other		97			139			(42	)		402			432			(30	)
Total	$	118		$	2,612		$	(2,494	)	$	(174	)	$	6,219		$	(6,393	)

 

The decrease in REO loss provisions in 2012 compared to 2011 was primarily related to the Bank's comprehensive review of its REO portfolio as of December 31, 2011, and its decision to more aggressively market certain properties, which were written down at that time. Since the economic recession began in 2008, real estate values in the Bank's primary market areas have not fully recovered and the Bank continues to have higher levels of foreclosed assets. Sales of certain types of property, principally undeveloped land and developed residential subdivision lots, have been slow and as a result, management has made a strategic decision to more aggressively market certain REO properties, including reductions in the asking price on certain properties. However, there can be no guarantee that the properties can be sold given the current market environment. The previous carrying values were primarily based on third-party appraisals using marketing periods that exceed the Bank's more aggressive marketing strategy. Management reviewed the REO portfolio and individually analyzed the recorded value for many of its foreclosed properties by obtaining new broker pricing opinions or discounting current appraisals or valuations based on the Bank's recent experience selling or attempting to sell similar properties. The Bank also analyzed sales of REO during 2011 in order to estimate an average loss for each category of REO and applied these average loss percentages to the remainder of the REO portfolio to estimate net realizable values. Carrying values of the Bank's REO properties were adjusted as necessary based on the new estimated net realizable values as a result of management's intent to more aggressively market REO properties. This review resulted in an $11.3 million loss provision during the fourth quarter of 2011. The majority of these write-downs were made in the developed lots and raw land categories, where properties are more speculative in nature and market activity has been slow.

The increase in the net gain on sales of REO properties for the three and nine months ended September 30, 2012 compared to the same periods in 2011, was primarily related to the sale of 61 single-family residential properties with a total gain of $881,000 located in the Northwest Arkansas region. These properties were transferred to REO in December 2011 and valued based on updated appraisals. These properties were not additionally written down as part of the comprehensive review of REO in December as the Bank had received current appraisals and the properties were transferred to REO at the end of December.

Real estate owned expenses such as taxes, insurance and maintenance are expected to remain elevated for the foreseeable future. Future levels of loss provisions and net gains or losses on sales of real estate owned will be dependent on market conditions.

Data Processing. The increase in data processing expense for the three and nine month comparative periods was primarily related to one-time costs of approximately $550,000 for the nine months ended September 30, 2012 as a result of the Bank's conversion of its operational software during the second quarter of 2012.

FDIC Insurance Premium. The decrease in the Bank's FDIC insurance premiums for the three and nine month comparative periods was primarily due to a decrease in the assessment base. Additionally, the decrease in FDIC insurance premiums for the nine month comparative period was partially due to the FDIC's change in the deposit insurance assessment base and its change in the rate schedule effective April 1, 2011.  The base is defined as average consolidated total assets for the assessment period less average tangible equity capital with potential adjustments for unsecured debt, brokered deposits and depository institution debts.  The FDIC also adopted a new rate schedule and suspended dividends indefinitely.  In lieu of dividends, the FDIC adopted progressively lower assessment rate schedules that will take effect when the reserve ratio exceeds 1.15 percent, 2 percent and 2.5 percent. 

Other Expenses. The decrease in other expenses for the three and nine month comparative periods was primarily due to a decrease in loan-related collection expenses due to a decrease in nonperforming assets.

Income Taxes. The Company had no taxable income in 2012 or 2011 and recorded a valuation allowance for the full amount of its net deferred tax asset as of September 30, 2012 and December 31, 2011, respectively.

33

ANALYSIS OF CHANGES IN FINANCIAL CONDITION

Changes in financial condition between September 30, 2012 and December 31, 2011, are presented in the following table (dollars in thousands except share data). Material changes between periods are discussed in the sections that follow the table.

	September 30,			December 31,			Increase			Percentage
	2012			2011			(Decrease)			Change
ASSETS
Cash and cash equivalents	$	42,380		$	79,799		$	(37,419	)		(46.9	)%
Interest-bearing time deposits in banks		29,840			27,113			2,727			10.1
Investment securities available for sale		58,514			62,077			(3,563	)		(5.7	)
Federal Home Loan Bank stock		578			576			2			0.4
Loans receivable, net		339,978			331,453			8,525			2.6
Loans held for sale		5,790			3,339			2,451			73.4
Accrued interest receivable		1,732			1,516			216			14.3
Real estate owned, net		20,535			28,113			(7,578	)		(27.0	)
Office properties and equipment, net		20,917			21,441			(524	)		(2.4	)
Cash surrender value of life insurance		22,799			22,213			586			2.6
Prepaid expenses and other assets		702			1,406			(704	)		(50.0	)
TOTAL	$	543,765		$	579,046		$	(35,281	)		(6.1	)
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits	$	466,066		$	498,581		$	(32,515	)		(6.5	)
Other borrowings		3,174			6,679			(3,505	)		(52.5	)
Advance payments by borrowers for taxes and insurance		535			816			(281	)		(34.5	)
Other liabilities		3,780			4,077			(297	)		(7.3	)
Total liabilities		473,555			510,153			(36,598	)		(7.2	)
STOCKHOLDERS' EQUITY		70,210			68,893			1,317			1.9
TOTAL	$	543,765		$	579,046		$	(35,281	)		(6.1	)%
BOOK VALUE PER COMMON SHARE	$	3.64		$	3.57
COMMON EQUITY TO ASSETS		12.9	%		11.9	%
COMMON SHARES OUTSTANDING		19,302,603			19,302,603

 

34

Loans Receivable. Changes in loan composition between September 30, 2012 and December 31, 2011, are presented in the following table (dollars in thousands).

	September 30,			December 31,			Increase
	2012			2011			(Decrease)			% Change
One- to four-family residential	$	151,095		$	183,158		$	(32,063	)		(17.5	)%
Home equity and second mortgage		9,622			12,502			(2,880	)		(23.0	)
Multifamily residential		22,931			20,476			2,455			12.0
Commercial real estate		131,018			95,920			35,098			36.6
One- to four-family residential construction		1,633			2,391			(758	)		(31.7	)
Other construction and land		14,977			23,443			(8,466	)		(36.1	)
Total mortgage loans		331,276			337,890			(6,614	)		(2.0	)
Commercial		20,180			7,603			12,577			165.4
Automobile		2,076			2,536			(460	)		(18.1	)
Other		4,139			5,479			(1,340	)		(24.5	)
Total consumer		6,215			8,015			(1,800	)		(22.5	)
Total loans receivable		357,671			353,508			4,163			1.2
Undisbursed loan funds		(1,055	)		(822	)		(233	)		28.3
Unearned discounts and net deferred loan costs (fees)		(206	)		(415	)		209			(50.4	)
Allowance for loan and lease losses		(16,432	)		(20,818	)		4,386			(21.1	)
Loans receivable, net	$	339,978		$	331,453		$	8,525			2.6	%

 

The increase in the Bank's overall loan portfolio was primarily due to increases in loan originations of commercial real estate loans and commercial loans offset by repayments and transfers of nonperforming loans to REO. The increases in commercial real estate loans and commercial loans were primarily attributable to increases in loan originations in the first nine months of 2012 with principal balances totaling $49.8 million and $12.1 million at September 30, 2012, respectively.  The growth in commercial loans for the period is attributable to the addition of new experienced lenders at the Bank who have worked to attract new high quality loans in the commercial and commercial real estate categories.

35

Asset Quality. The following table sets forth the amounts and categories of the Bank's nonperforming assets at the dates indicated (dollars in thousands).

	September 30, 2012					December 31, 2011
	Net (2)		% Total Assets			Net (2)		% Total Assets			Increase (Decrease)
Nonaccrual Loans:
One- to four-family residential	$	7,271		1.34	%	$	11,736		2.03	%	$	(4,465	)
Home equity and second mortgage		635		0.12	%		764		0.13	%		(129	)
Multifamily residential		--		--			4,645		0.80	%		(4,645	)
Commercial real estate		6,424		1.18	%		13,238		2.29	%		(6,814	)
One- to four-family construction		250		0.05	%		--		--			250
Other construction and land		4,517		0.83	%		3,401		0.59	%		1,116
Commercial		402		0.07	%		72		0.01	%		330
Consumer		16		--			98		0.01	%		(82	)
Total nonaccrual loans		19,515		3.59	%		33,954		5.86	%		(14,439	)
Accruing loans 90 days or more past due		--		--			388		0.07	%		(388	)
Real estate owned		20,535		3.78	%		28,113		4.86	%		(7,578	)
Total nonperforming assets		40,050		7.37	%		62,455		10.79	%		(22,405	)
Performing restructured loans		5,857		1.07	%		5,207		0.90	%		650
Total nonperforming assets and performing restructured loans (1)	$	45,907		8.44	%	$	67,662		11.69	%	$	(21,755	)

(1) The table does not include substandard loans which were judged not to be impaired totaling $12.9 million and $36.1 million at September 30, 2012 and December 31, 2011, respectively.

(2) Loan balances are presented net of undisbursed loan funds, partial charge-offs and interest payments recorded as reductions in principal balances for financial reporting purposes.

The decrease in nonaccrual loans from $34.0 million at December 31, 2011, to $19.5 million at September 30, 2012 was primarily related to decreases in nonaccrual single family residential loans, multifamily residential loans and commercial real estate loans. The decrease in nonaccrual multifamily residential loans was primarily due to two loans that were settled during the first quarter of 2012 totaling $4.4 million. The decrease in nonaccrual commercial real estate loans was primarily related to one loan of $3.5 million that was transferred to REO in the first quarter of 2012 and two loans on one property settled during the third quarter of 2012 totaling $2.3 million. At September 30, 2012, there were 130 loans on nonaccrual status, compared to 158 loans at December 31, 2011.

Nonaccrual Loans. The composition of nonaccrual loans by status was as follows as of the dates indicated (dollars in thousands):

	September 30, 2012					December 31, 2011					Increase (Decrease)
	Balance		Percentage of Total			Balance		Percentage of Total			Balance			Percentage of Total
Bankruptcy or foreclosure	$	4,071		20.9	%	$	7,118		21.0	%	$	(3,047	)		(0.1	)%
Over 90 days past due		9,311		47.7			5,106		15.0			4,205			32.7
30-89 days past due		627		3.2			1,560		4.6			(933	)		(1.4	)
Not past due		5,506		28.2			20,170		59.4			(14,664	)		(31.2	)
	$	19,515		100.0	%	$	33,954		100.0	%	$	(14,439	)		--

 

The table below reflects the payment terms for nonaccrual loans that were not past due as of the periods indicated (dollars in thousands):

	September 30, 2012					December 31, 2011					Increase (Decrease)
	Balance		Percentage of Total			Balance		Percentage of Total			Balance			Percentage of Total
Principal and interest	$	5,506		100.0	%	$	14,635		72.6	%	$	(9,129	)		27.4	%
Interest only		--		--			4,473		22.2			(4,473	)		(22.2	)
Term due		--		--			1,062		5.2			(1,062	)		(5.2	)
	$	5,506		100.0	%	$	20,170		100.0	%	$	(14,664	)		--

 

36

Nonaccrual loans by category and region at September 30, 2012 and December 31, 2011, are listed in the table below (dollars in thousands). The Northwest Arkansas region is comprised of Benton and Washington counties and the North Arkansas Region is comprised of Carroll, Boone, Marion and Baxter counties. There are no nonaccrual loans in the Bank's Central Arkansas region.

	Northwest Arkansas Region					North Arkansas Region					Total
September 30, 2012	Balance		Percentage of Total			Balance		Percentage of Total			Balance		Percentage of Total
One- to four-family residential	$	5,825		29.8	%	$	1,446		7.4	%	$	7,271		37.2	%
Home equity and second mortgage		519		2.7			116		0.6			635		3.3
Multifamily residential		--		--			--		--			--		--
Commercial real estate		4,480		23.0			1,944		10.0			6,424		33.0
One- to four-family construction		250		1.3			--		--			250		1.3
Other construction and land		2,698		13.8			1,819		9.3			4,517		23.1
Commercial		402		2.0			--		--			402		2.0
Consumer		1		--			15		0.1			16		0.1
	$	14,175		72.6	%	$	5,340		27.4	%	$	19,515		100.0	%

 

	Northwest Arkansas Region					North Arkansas Region					Total
December 31, 2011	Balance		Percentage of Total			Balance		Percentage of Total			Balance		Percentage of Total
One- to four-family residential	$	8,685		25.6	%	$	3,051		9.0	%	$	11,736		34.6	%
Home equity and second mortgage		550		1.6			214		0.6			764		2.2
Multifamily residential		4,645		13.7			--		--			4,645		13.7
Commercial real estate		13,021		38.3			217		0.6			13,238		38.9
One- to four-family construction		--		--			--		--			--		--
Other construction and land		3,382		9.9			19		0.1			3,401		10.0
Commercial		--		--			72		0.2			72		0.2
Consumer		88		0.3			10		0.1			98		0.4
	$	30,371		89.4	%	$	3,583		10.6	%	$	33,954		100.0	%

 

The following table presents nonaccrual loan activity for the nine months ended September 30, 2012 (in thousands):

		Nine Months Ended September 30, 2012
Balance of nonaccrual loans—January 1, 2012	$	33,954
Loans added to nonaccrual status		10,425
Net cash payments		(9,560	)
Loans returned to accrual status		(5,075	)
Charge-offs to the ALLL		(3,785	)
Transfers to REO		(6,444	)
Balance of nonaccrual loans—September 30, 2012	$	19,515

 

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Real Estate Owned. The following table sets forth the amounts and categories of the Bank's real estate owned by region at September 30, 2012 and December 31, 2011 (dollars in thousands).

	Northwest Arkansas Region					North Arkansas Region					Total
September 30, 2012	Balance		Percentage of Total			Balance		Percentage of Total			Balance		Percentage of Total
One- to four-family residential	$	2,639		12.8	%	$	2,024		9.9	%	$	4,663		22.7	%
Developed lots		3,566		17.4			22		0.1			3,588		17.5
Raw land		4,520		22.0			33		0.2			4,553		22.2
Commercial real estate		5,565		27.1			2,166		10.5			7,731		37.6
	$	16,290		79.3	%	$	4,245		20.7	%	$	20,535		100.0	%

 

	Northwest Arkansas Region					North Arkansas Region					Total
December 31, 2011	Balance		Percentage of Total			Balance		Percentage of Total			Balance		Percentage of Total
One- to four-family residential	$	7,337		26.1	%	$	2,234		7.9	%	$	9,571		34.0	%
Speculative construction		160		0.6			--		--			160		0.6
Multifamily residential		718		2.6			--		--			718		2.6
Developed lots		4,835		17.2			23		0.1			4,858		17.3
Raw land		5,240		18.6			261		0.9			5,501		19.5
Commercial real estate		4,703		16.7			2,602		9.3			7,305		26.0
	$	22,993		81.8	%	$	5,120		18.2	%	$	28,113		100.0	%

 

Changes in the composition of real estate owned between September 30, 2012 and December 31, 2011, are presented in the following table (dollars in thousands).

	December 31, 2011		Additions		Fair Value Adjustments			Net Sales Proceeds(1)			Net Gain (Loss)		September 30, 2012
One- to four-family residential	$	9,571	$	3,634	$	(266	)	$	(9,256	)	$	980	$	4,663
Speculative one- to four-family		160		--		--			(160	)		--		--
Multifamily		718		--		(14	)		(709	)		5		--
Land		10,214		25		(104	)		(2,044	)		50		8,141
Commercial real estate		7,450		2,229		(201	)		(1,851	)		104		7,731
Total	$	28,113	$	5,888	$	(585	)	$	(14,020	)	$	1,139	$	20,535

___________________
	(1)	Net sales proceeds include $1.4 million of loans made by the Bank to finance certain sales of real estate owned.

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Classified Assets. Federal regulations require that each insured savings association risk rate its assets on a regular basis into three classification categories - substandard, doubtful and loss. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified loss is generally considered uncollectible and of such little value that continuance as an asset is not warranted. The table below summarizes the Bank's classified assets as of the dates indicated (dollars in thousands):

	September 30, 2012			December 31, 2011			September 30, 2011
Nonaccrual loans	$	19,515		$	33,954		$	46,311
Accruing classified loans		16,688			41,016			43,977
Classified loans		36,203			74,970			90,288
Real estate owned		20,535			28,113			36,294
Total classified assets	$	56,738		$	103,083		$	126,582
Texas Ratio (1)		47.6	%		72.5	%		81.4	%
Classified Assets Ratio (2)		67.4	%		120.4	%		124.8	%

__________________

(1) Defined as the ratio of nonaccrual loans and real estate owned to Tier 1 capital plus the allowance for loan and lease losses.

(2) Defined as the ratio of classified assets to Tier 1 capital plus the allowance for loan and lease losses.

Allowance for Loan and Lease Losses. The Bank maintains an allowance for loan and lease losses for known and inherent losses in the loan portfolio based on ongoing quarterly assessments of the loan portfolio. The estimated appropriate level of the allowance for loan and lease losses is maintained through a provision for loan losses charged to earnings. Charge-offs are recorded against the allowance when management believes the estimated loss has been confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance consists of general and allocated (also referred to as specific) loan loss components. For loans that are determined to be impaired and the relationship totals $250,000 or more, a specific loan loss allowance is established when the discounted cash flows or collateral value of the impaired loan is lower than its carrying value. The general loan loss allowance covers loans that are not impaired and those impaired relationships under $250,000 and is based on historical loss experience adjusted for qualitative factors.

The allowance for loan and lease losses represents management's estimate of incurred credit losses inherent in the Bank's loan portfolio as of the balance sheet date. The estimation of the allowance is based on a variety of factors, including past loan loss experience, the current credit profile of the Bank's borrowers, adverse situations that have occurred that may affect the borrowers' ability to repay, the estimated value of underlying collateral, and general economic conditions, including unemployment, bankruptcy trends, vacancy rates and the level and trend of home sales and prices. Losses are recognized when available information indicates that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or conditions change.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the note. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the short fall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for loans where the aggregate relationship balance exceeds $250,000 by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Impaired loans under this threshold are aggregated and included in loan pools with their ALLL calculated as described in the following paragraph. Classified loans where the borrower's total loan relationship exceeds $250,000 are evaluated for impairment on a loan-by-loan basis at least quarterly. Nonaccrual loans and troubled debt restructurings (“TDRs”) are also considered to be impaired loans. TDRs are restructurings in which the Bank, for economic or legal reasons related to the debtor's financial difficulties, grants a concession to the debtor that the Bank would not otherwise consider.

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Groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans which are not on nonaccrual status or TDRs for impairment disclosures. Homogeneous loans are those that are considered to have common characteristics that provide for evaluation on an aggregate or pool basis. The Bank considers the characteristics of (1) one- to four-family residential mortgage loans; (2) unsecured consumer loans; and (3) collateralized consumer loans to permit consideration of the appropriateness of the allowance for losses of each group of loans on a pool basis. The primary methodology used to determine the appropriateness of the allowance for losses includes segregating impaired loans from the pools of loans, valuing these loans, and then applying a loss factor to the remaining pool balance based on several factors including past loss experience, inherent risks, and economic conditions in the primary market areas.

In estimating the amount of credit losses inherent in the loan portfolio, various judgments and assumptions are made. For example, when assessing the condition of the overall economic environment, assumptions are made regarding market conditions and their impact on the loan portfolio. For impaired loans that are collateral dependent, the estimated fair value of the collateral may deviate significantly from the proceeds received when the collateral is sold in the event that the Bank has to foreclose or repossess the collateral.

The Company considers its allowance for loan and lease losses of approximately $16.4 million to be adequate to cover losses inherent in its loan portfolio as of September 30, 2012. Actual losses may substantially differ from currently estimated losses. Adequacy of the allowance for loan and lease losses is periodically evaluated, and the allowance could be significantly decreased or increased, which could materially affect the Company's financial condition and results of operations.

The composition of the allowance for loan and lease losses by component and category as of September 30, 2012 and December 31, 2011, is presented below (dollars in thousands):

	September 30, 2012						December 31, 2011
	Specific Loss Allowance		General Loss Allowance		Total		Specific Loss Allowance		General Loss Allowance		Total
One- to four-family residential	$	193	$	6,095	$	6,288	$	305	$	6,001	$	6,306
Home equity and second mortgage		192		349		541		81		612		693
Multifamily residential		--		1,227		1,227		703		1,951		2,654
Commercial real estate		540		6,129		6,669		1,879		5,437		7,316
One- to four-family construction		--		45		45		--		84		84
Other construction and land		166		788		954		280		2,287		2,567
Commercial loans		150		319		469		--		972		972
Consumer loans		--		239		239		45		181		226
Total	$	1,241	$	15,191	$	16,432	$	3,293	$	17,525	$	20,818

 

Investment Securities Available for Sale. The following table sets forth the carrying values of the Company's investment securities available for sale (dollars in thousands).

	September 30, 2012		December 31, 2011		Increase (Decrease)
Municipal securities	$	45,594	$	36,613	$	8,981
Corporate debt securities		7,913		5,810		2,103
U.S. Government sponsored agency securities		5,007		19,654		(14,647	)
Total	$	58,514	$	62,077	$	(3,563	)

 

Municipal securities and corporate debt securities increased due to purchases. U.S. Government sponsored agency securities decreased due to calls. The overall yield of the investment portfolio was 2.65% as of September 30, 2012 compared to 3.12% at December 31, 2011.

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Deposits. Changes in the composition of deposits between September 30, 2012 and December 31, 2011, are presented in the following table (dollars in thousands).

	September 30, 2012		December 31, 2011		Increase (Decrease)			% Change
Checking accounts	$	129,885	$	137,078	$	(7,193	)		(5.3	)%
Money market accounts		41,065		42,033		(968	)		(2.3	)
Savings accounts		30,239		27,904		2,335			8.4
Certificates of deposit		264,877		291,566		(26,689	)		(9.2	)
Total deposits	$	466,066	$	498,581	$	(32,515	)		(6.5	)%

 

Deposits decreased in the comparison period primarily due to a decrease in certificates of deposit. The Bank reduced the cost of its certificate of deposit accounts with the weighted average cost of funds decreasing from 1.71% at December 31, 2011 to 1.39% at September 30, 2012. The Bank continues its efforts to efficiently and effectively manage its overall balance sheet, its liquidity position and lower its overall cost of deposit funds.  The overall cost of deposit funds decreased from 1.09% at December 31, 2011 to 0.87% at September 30, 2012. Cash and cash equivalents were used to pay deposit withdrawals.

Stockholders' Equity. Stockholders' equity increased approximately $1.3 million from December 31, 2011 to September 30, 2012, primarily due to the net income of $1.3 million for the nine months ended September 30, 2012. See the unaudited condensed consolidated statements of stockholders' equity for the period ended September 30, 2012 contained herein for more detail.

OFF-BALANCE SHEET ARRANGEMENTS AND COMMITMENTS

In the normal course of business, the Bank is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated statements of financial condition.

The Bank does not use financial instruments with off-balance sheet risk as part of its asset/liability management program or for trading purposes. The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the counterparty. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

In the normal course of business, the Company makes commitments to buy or sell assets or to incur or fund liabilities. Commitments include, but are not limited to:

● the origination, purchase or sale of loans;

● the fulfillment of commitments under letters of credit, extensions of credit on home equity lines of credit, construction loans, and under predetermined overdraft protection limits; and

● the commitment to fund withdrawals of certificates of deposit at maturity.

The funding period for construction loans is generally six to eighteen months and commitments to originate mortgage loans are generally outstanding for 60 days or less.

At September 30, 2012, the Bank's off-balance sheet arrangements principally included lending commitments, which are described below. At September 30, 2012, the Company had no interests in non-consolidated special purpose entities.

41

At September 30, 2012, commitments included:

● total approved loan origination commitments outstanding amounting to $16.9 million, including approximately $849,000 of loans committed to sell;

● rate lock agreements with customers of $7.5 million, all of which have been locked with an investor;

● funded mortgage loans committed to sell of $5.8 million;

● unadvanced portion of construction loans of $1.1 million;

● unused lines of credit of $16.6 million;

● outstanding standby letters of credit of $1.9 million;

● total predetermined overdraft protection limits of $9.8 million; and

● certificates of deposit scheduled to mature in one year or less totaling $153.0 million.

Total unfunded commitments to originate loans for sale and the related commitments to sell of $7.5 million meet the definition of a derivative financial instrument. The related asset and liability are considered immaterial at September 30, 2012.

Historically, a very small percentage of predetermined overdraft limits have been used. At September 30, 2012, overdrafts of accounts with Bounce Protection^TM represented usage of 2.40% of the limit.

In light of the Company's efforts to proactively and effectively manage its level of assets and liabilities and as a result of the current interest rate environment, management cannot estimate the portion of maturing deposits that will remain with the Bank. Management anticipates that the Bank will continue to have sufficient funds, through its current liquidity position, as well as through loan repayments, deposits and borrowings, to meet our current and future commitments.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity management is both a daily and long-term function. The Bank's liquidity, represented by cash and cash equivalents and eligible investment securities, is a product of its operating, investing and financing activities. The Bank's primary sources of funds are deposits; borrowings; payments on outstanding loans; maturities, sales and calls of investment securities and other short-term investments; and funds provided from operations. While scheduled loan amortization and maturing investment securities and short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. Calls of investment securities are determined by the issuer and are generally influenced by the level of market interest rates at the bond's call date compared to the coupon rate of the bond. The Bank manages the pricing of its deposits to maintain deposit balances at levels commensurate with the operating, investing and financing activities of the Bank. In addition, the Bank invests excess funds in overnight deposits and other short-term interest-earning assets that provide liquidity to meet lending requirements and pay deposit withdrawals.When funds from the retail deposit market are inadequate for the liquidity needs of the Bank or the pricing of deposits are not as favorable as other sources, the Bank has borrowed from the FHLB of Dallas as well as utilized the services of bulletin board deposit listing services to acquire funds.

On October 11, 2012, the Bank was notified by the FHLB of the Bank's removal from restricted status. This allows the Bank to borrow longer-term FHLB advances with maturities in excess of thirty days. The FHLB continues to retain custody and endorsement of the loans that collateralize the Bank's outstanding borrowings with the FHLB.  The FHLB currently allows an aggregate collateral or lendable value on qualifying loans (as defined) of approximately 75% of the outstanding balance of the loans pledged to the FHLB. During the nine months ended September 30, 2012, FHLB borrowings decreased by $3.5 million or 52.5%. At September 30, 2012, the Bank's additional borrowing capacity with FHLB was $50.0 million, comprised of qualifying loans collateralized by first-lien one- to four-family mortgages with a collateral value of $53.2 million less outstanding advances at September 30, 2012 of $3.2 million. Outstanding borrowings with the FHLB are reported as “Other Borrowings” in the Company's Condensed Consolidated Statements of Financial Condition.

The Bank uses qualifying investment securities and qualifying commercial real estate loans as collateral for the discount window. The FRB will permit only certain commercial real estate loans to be pledged as collateral for the discount window. The lendable value of commercial real estate of approximately $6.4 million at September 30, 2012 was 67% of the fair market value of the loans as determined by the FRB taking into consideration the rate and duration of the loans pledged. In addition, at September 30, 2012, the Bank pledged qualifying investment securities with a collateral value of approximately $11.2 million and a carrying value of approximately $12.9 million to secure transaction settlements. On October 9, 2012, the Bank was notified by the FRB that the Bank is no longer required to pledge collateral to secure account transaction settlements and that the Bank is eligible for primary credit from the Federal Reserve Discount Window as a result of improvement in the Bank's financial condition.

At September 30, 2012, the Bank had short-term funds availability of approximately $175.0 million or 32.2% of Bank assets consisting of borrowing capacity at the FHLB and the FRB, unpledged investment securities, and overnight funds including the balances maintained at the FRB. The Bank anticipates it will continue to rely primarily on deposits, calls and maturities of investment securities, loan repayments, and funds provided from operations to provide liquidity. As necessary, the sources of borrowed funds described above will be used to augment the Bank's funding sources.

42

The Bank uses its sources of funds primarily to meet its ongoing commitments, to pay maturing savings certificates and savings withdrawals, to repay maturing borrowings, to fund loan commitments, and to purchase investment securities.

The Bank emphasizes deposit growth and retention throughout its retail branch network to enhance its liquidity position. The Bank is currently subject to the national rate caps as outlined weekly by the FDIC. These rate restrictions have not had a significant impact on the level of new and existing time deposits. The Bank has historically paid rates near the middle of the market for regular term certificates of deposits and paid above average rates locally for certificates of deposit with special terms.

The Bank's liquidity risk management program assesses our current and projected funding needs to ensure that sufficient funds or access to funds exist to meet those needs. The program also includes effective methods to achieve and maintain sufficient liquidity and to measure and monitor liquidity risk, including the preparation and submission of liquidity reports on a regular basis to the board of directors. The program also contains a Contingency Funding Plan that forecasts funding needs and funding sources under different stress scenarios. The Contingency Funding Plan approved by the board of directors is designed to respond to an overall decline in the economic environment, the banking industry or a problem specific to the Bank. A number of different contingency funding conditions may arise which may result in strains or expectation of strains in the Bank's normal funding activities including customer reaction to negative news of the banking industry, in general, or us, specifically. As a result of negative news, some depositors may reduce the amount of deposits held at the Bank if concerns persist, which could affect the level and composition of the Bank's deposit portfolio and thereby directly impact the Bank's liquidity, funding costs and net interest margin. The Bank's funding costs may also be adversely affected in the event that activities of the FRB and the Treasury to provide liquidity for the banking system and improvement in capital markets are curtailed or are unsuccessful. Such events could reduce liquidity in the markets, thereby increasing funding costs to the Bank or reducing the availability of funds to the Bank to finance its existing operations and thereby adversely affect the Company's results of operations, financial condition, future prospects, and stock price.

Since the Company is a holding company and does not conduct independent operations, its primary source of liquidity is dividends from the Bank. The Company has no borrowings from outside sources. The Company and the Bank are currently not permitted to declare or pay dividends or make any other capital distributions without the prior written approval of the FRB and the OCC, respectively, as successors to the OTS. The Company funds its expenses from cash deposits maintained in the Bank, which amounted to $1.6 million at September 30, 2012.

At September 30, 2012, the Bank's core and risk-based capital ratios amounted to 12.48% and 19.47%, respectively, compared to required core and total risk-based capital ratios of 8% and 12% per the Bank Order.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements and information relating to the Company that are based on the beliefs of management as well as assumptions made by and information currently available to management. In addition, in those and other portions of this document, the words "anticipate," "believe," "estimate," "expect," "intend," "should" and similar expressions, or the negative thereof, as they relate to the Company or the Company's management, are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future looking events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause actual results for 2012 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us and could negatively affect the Company's operating and stock performance.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

For a discussion of the Company's asset and liability management position as well as the potential impact of interest rate changes upon the market value of the Bank's net portfolio value of equity, see “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2012.  There has been no material change in the Company's asset and liability position or the Bank's net portfolio value of equity since December 31, 2011.

Item 4. Controls and Procedures.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are operating effectively.

43

No change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. However, during the second quarter of 2012, the Company migrated its operational software system. This migration affected the deposit and loan processing functions of the Bank as well as the general ledger system. Extensive data verification processes were performed throughout the Bank leading up to the conversion and post-conversion. In addition, our internal audit department reviewed the financial reporting control activities and narratives for each of the Company's business cycles that had previously been identified for the Company's testing of internal control over financial reporting. Each major area of the Company that has a direct impact on the creation of data that is used in the financial reporting process asserted that the conversion did not create material changes in the Company's system of internal controls over financial reporting.

Part II. Other Information

Item 1.        Legal Proceedings

Neither the Company nor the Bank is a party to or involved in any pending legal proceedings other than non-material legal proceedings occurring in the ordinary course of business.

Item 1A.      Risk Factors

There have been no material changes to the risk factors set forth in Part I, Item 1A. of the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2012.

Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not repurchase any securities during the third quarter of 2012. The Company Order prohibits the Company from repurchasing shares of its common stock without the prior written non-objection of the OCC, as successor to the OTS.

Item 6.        Exhibits

The exhibits required to be filed as part of this Quarterly Report on Form 10-Q are listed in the Exhibit Index attached hereto and are incorporated herein by reference.

44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

Date:	October 31, 2012	By:	/s/ W. Dabbs Cavin
			W. Dabbs Cavin
			Chief Executive Officer

Date:	October 31, 2012	By:	/s/ Sherri R. Billings
			Sherri R. Billings
			Chief Financial Officer

45

First Federal Bancshares of Arkansas, Inc.

Exhibit Index

Exhibit No.	Description
2.1	Plan of Conversion (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the SEC on July 21, 2011).
3.1	Articles of Incorporation of First Federal Bancshares of Arkansas, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on July 21, 2011).
3.2	Bylaws of First Federal Bancshares of Arkansas, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the SEC on July 21, 2011).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Section 906 Certification of the CEO
32.2	Section 906 Certification of the CFO
101.INS	XBRL Instance Document (1)
101.SCH	XBRL Taxonomy Extension Schema (1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase (1)
101.LAB	XBRL Taxonomy Extension Label Linkbase (1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase (1)
101.DEF	XBRL Taxonomy Extension Definition Linkbase (1)

(1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or section 34(b) of the Investment Company Act of 1940, as amended, and otherwise is not subject to liability under these sections.

46

EX-31.1

EXHIBIT 31.1

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, W. Dabbs Cavin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Federal Bancshares of Arkansas, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date:	October 31, 2012	/s/ W. Dabbs Cavin
		W. Dabbs Cavin Chief Executive Officer

EX-31.2

EXHIBIT 31.2

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Sherri R. Billings, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Federal Bancshares of Arkansas, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information;
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date:	October 31, 2012	/s/ Sherri R. Billings
		Sherri R. Billings Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the Quarterly Report of First Federal Bancshares of Arkansas, Inc. (the “Registrant”) on Form 10-Q for the three and nine months ended September 30, 2012 as filed with the Securities and Exchange Commission (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:

a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of and for the period covered by the Report.

Date:	October 31, 2012	/s/ W. Dabbs Cavin
		W. Dabbs Cavin Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the Quarterly Report of First Federal Bancshares of Arkansas, Inc. (the “Registrant”) on Form 10-Q for the three and nine months ended September 30, 2012 as filed with the Securities and Exchange Commission (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:

a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of and for the period covered by the Report.

Date:	October 31, 2012	/s/ Sherri R. Billings
		Sherri R. Billings Chief Financial Officer

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Note 5 - Allowances For Loan And Real Estate Losses (Detail) (USD $)	Sep. 30, 2012
Minimum Loan Amount for Loans Analyzed by Credit Risk	$ 250,000

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Note 8 - Fair Value Measurements (Detail) - Assets Measured at Fair Value on a Nonrecurring Basis (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Estimate of Fair Value, Fair Value Disclosure [Member]
Impaired loans	$ 18,244	$ 25,926
REO, net	7,989	21,938
Fair Value, Inputs, Level 3 [Member]
Impaired loans	18,244	25,926
REO, net	$ 7,989	$ 21,938

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Note 8 - Fair Value Measurements (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Minimum Loan Amount for Loans Analyzed by Credit Risk	$ 250,000
Real Estate Owned, Valuation Allowance, Provision	$ 585,000	$ 4,800,000

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Note 4 - Loans Receivable (Detail) - Impaired Loans (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Unpaid Principal Balance [Member] | One-to-Four-Family Residential [Member]
Impaired loans with a valuation allowance unpaid principal balance	$ 1,462	$ 3,019	$ 1,462	$ 3,019
Impaired loans without a valuation allowance unpaid principal balance	6,914	10,066	6,914	10,066
Unpaid Principal Balance [Member] | Home Equity and Second Mortgage [Member]
Impaired loans with a valuation allowance unpaid principal balance	212	108	212	108
Impaired loans without a valuation allowance unpaid principal balance	442	723	442	723
Unpaid Principal Balance [Member] | Multifamily Residential [Member]
Impaired loans with a valuation allowance unpaid principal balance		2,958		2,958
Impaired loans without a valuation allowance unpaid principal balance	3,466	5,175	3,466	5,175
Unpaid Principal Balance [Member] | Commercial Real Estate Loans [Member]
Impaired loans with a valuation allowance unpaid principal balance	1,921	4,301	1,921	4,301
Impaired loans without a valuation allowance unpaid principal balance	5,761	8,937	5,761	8,937
Unpaid Principal Balance [Member] | One-to-Four-Family Construction [Member]
Impaired loans without a valuation allowance unpaid principal balance	250		250
Unpaid Principal Balance [Member] | Other Construction and Land [Member]
Impaired loans with a valuation allowance unpaid principal balance	634	925	634	925
Impaired loans without a valuation allowance unpaid principal balance	3,883	2,758	3,883	2,758
Unpaid Principal Balance [Member] | Commercial Loans [Member]
Impaired loans with a valuation allowance unpaid principal balance	380		380
Impaired loans without a valuation allowance unpaid principal balance	22	72	22	72
Unpaid Principal Balance [Member] | Consumer Loans [Member]
Impaired loans with a valuation allowance unpaid principal balance		70		70
Impaired loans without a valuation allowance unpaid principal balance	24	49	24	49
Unpaid Principal Balance [Member]
Impaired loans with a valuation allowance unpaid principal balance	4,609	11,381	4,609	11,381
Impaired loans without a valuation allowance unpaid principal balance	20,762	27,780	20,762	27,780
Total impaired loans	25,371	39,161	25,371	39,161
Recorded Investment [Member] | One-to-Four-Family Residential [Member]
Impaired loans with a valuation allowance recorded investment	1,269	2,714	1,269	2,714
Impaired loans without a valuation allowance recorded investment	6,914	10,066	6,914	10,066
Recorded Investment [Member] | Home Equity and Second Mortgage [Member]
Impaired loans with a valuation allowance recorded investment	20	27	20	27
Impaired loans without a valuation allowance recorded investment	442	723	442	723
Recorded Investment [Member] | Multifamily Residential [Member]
Impaired loans with a valuation allowance recorded investment		2,255		2,255
Impaired loans without a valuation allowance recorded investment	3,466	5,175	3,466	5,175
Recorded Investment [Member] | Commercial Real Estate Loans [Member]
Impaired loans with a valuation allowance recorded investment	1,381	2,422	1,381	2,422
Impaired loans without a valuation allowance recorded investment	5,761	8,937	5,761	8,937
Recorded Investment [Member] | One-to-Four-Family Construction [Member]
Impaired loans without a valuation allowance recorded investment	250		250
Recorded Investment [Member] | Other Construction and Land [Member]
Impaired loans with a valuation allowance recorded investment	468	645	468	645
Impaired loans without a valuation allowance recorded investment	3,883	2,758	3,883	2,758
Recorded Investment [Member] | Commercial Loans [Member]
Impaired loans with a valuation allowance recorded investment	230		230
Impaired loans without a valuation allowance recorded investment	22	72	22	72
Recorded Investment [Member] | Consumer Loans [Member]
Impaired loans with a valuation allowance recorded investment		25		25
Impaired loans without a valuation allowance recorded investment	24	49	24	49
Recorded Investment [Member]
Impaired loans with a valuation allowance recorded investment	3,368	8,088	3,368	8,088
Impaired loans without a valuation allowance recorded investment	20,762	27,780	20,762	27,780
Total impaired loans	24,130	35,868	24,130	35,868
Valuation Allowance [Member] | One-to-Four-Family Residential [Member]
Impaired loans with a valuation allowance valuation allowance	193	305	193	305
Total impaired loans	193	305	193	305
Valuation Allowance [Member] | Home Equity and Second Mortgage [Member]
Impaired loans with a valuation allowance valuation allowance	192	81	192	81
Total impaired loans	192	81	192	81
Valuation Allowance [Member] | Multifamily Residential [Member]
Impaired loans with a valuation allowance valuation allowance		703		703
Total impaired loans		703		703
Valuation Allowance [Member] | Commercial Real Estate Loans [Member]
Impaired loans with a valuation allowance valuation allowance	540	1,879	540	1,879
Total impaired loans	540	1,879	540	1,879
Valuation Allowance [Member] | Other Construction and Land [Member]
Impaired loans with a valuation allowance valuation allowance	166	280	166	280
Total impaired loans	166	280	166	280
Valuation Allowance [Member] | Commercial Loans [Member]
Impaired loans with a valuation allowance valuation allowance	150		150
Total impaired loans	150		150
Valuation Allowance [Member] | Consumer Loans [Member]
Impaired loans with a valuation allowance valuation allowance		45		45
Total impaired loans		45		45
Valuation Allowance [Member]
Impaired loans with a valuation allowance valuation allowance	1,241	3,293	1,241	3,293
Total impaired loans	1,241	3,293	1,241	3,293
Average Recorded Investment [Member] | One-to-Four-Family Residential [Member]
Impaired loans with a valuation allowance average recorded investment	1,376	4,148	2,394	3,989
Impaired loans without a valuation allowance average recorded investment	6,691	16,769	7,369	18,623
Average Recorded Investment [Member] | Home Equity and Second Mortgage [Member]
Impaired loans with a valuation allowance average recorded investment	20	123	22	191
Impaired loans without a valuation allowance average recorded investment	446	747	531	820
Average Recorded Investment [Member] | Multifamily Residential [Member]
Impaired loans with a valuation allowance average recorded investment		4,789	564	4,968
Impaired loans without a valuation allowance average recorded investment	1,873	3,971	3,173	3,920
Average Recorded Investment [Member] | Commercial Real Estate Loans [Member]
Impaired loans with a valuation allowance average recorded investment	2,405	1,972	2,346	2,257
Impaired loans without a valuation allowance average recorded investment	5,570	12,333	6,834	11,154
Average Recorded Investment [Member] | One-to-Four-Family Construction [Member]
Impaired loans with a valuation allowance average recorded investment				2
Impaired loans without a valuation allowance average recorded investment	125		63
Average Recorded Investment [Member] | Other Construction and Land [Member]
Impaired loans with a valuation allowance average recorded investment	1,121	3,597	1,257	3,829
Impaired loans without a valuation allowance average recorded investment	5,202	2,945	3,721	3,257
Average Recorded Investment [Member] | Commercial Loans [Member]
Impaired loans with a valuation allowance average recorded investment	115	106	58	162
Impaired loans without a valuation allowance average recorded investment	212	409	245	402
Average Recorded Investment [Member] | Consumer Loans [Member]
Impaired loans with a valuation allowance average recorded investment		3	6	13
Impaired loans without a valuation allowance average recorded investment	58	89	55	92
Average Recorded Investment [Member]
Impaired loans with a valuation allowance average recorded investment	5,037	14,738	6,647	15,411
Impaired loans without a valuation allowance average recorded investment	20,177	37,263	21,991	38,268
Total impaired loans	25,214	52,001	28,638	53,679
Interest Income Recognized [Member] | One-to-Four-Family Residential [Member]
Impaired loans with a valuation allowance interest income recognized		2		24
Impaired loans without a valuation allowance interest income recognized	18	67	70	270
Interest Income Recognized [Member] | Home Equity and Second Mortgage [Member]
Impaired loans with a valuation allowance interest income recognized		2		7
Impaired loans without a valuation allowance interest income recognized		12	5	32
Interest Income Recognized [Member] | Multifamily Residential [Member]
Impaired loans without a valuation allowance interest income recognized	42	46	49	131
Interest Income Recognized [Member] | Commercial Real Estate Loans [Member]
Impaired loans with a valuation allowance interest income recognized			40	18
Impaired loans without a valuation allowance interest income recognized	18	42	102	190
Interest Income Recognized [Member] | Other Construction and Land [Member]
Impaired loans with a valuation allowance interest income recognized		2	9	23
Impaired loans without a valuation allowance interest income recognized		11	89	53
Interest Income Recognized [Member] | Commercial Loans [Member]
Impaired loans without a valuation allowance interest income recognized		1		8
Interest Income Recognized [Member] | Consumer Loans [Member]
Impaired loans with a valuation allowance interest income recognized				1
Impaired loans without a valuation allowance interest income recognized		2	1	4
Interest Income Recognized [Member] | Interest Income Based on Original Terms [Member]
Interest based on original terms	405	881	1,212	2,626
Total impaired loans	405	881	1,212	2,626
Interest Income Recognized [Member]
Impaired loans with a valuation allowance interest income recognized		6	49	73
Interest based on original terms	78	187	365	761
Interest income recognized on a cash basis on impaired loans		121	203	400
Impaired loans without a valuation allowance interest income recognized	78	181	316	688
Total impaired loans	$ 78	$ 187	$ 365	$ 761

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Note 10 - Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

											To be Categorized
											as Adequately
											Capitalized Under
						For Capital					Prompt Corrective					Required Per
	Actual					Adequacy Purposes					Action Provisions					Bank Order
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount			Ratio
As of September 30, 2012:
Tangible Capital to Tangible Assets	$	67,764		12.48	%	$	8,144		1.50	%	N/A		N/A			N/A			N/A
Core Capital to Adjusted Tangible Assets		67,764		12.48	%		21,716		4.00	%	$	21,716		4.00	%	$	43,432	(1)		8.00%	(1)
Total Capital to Risk-Weighted Assets		72,568		19.47	%		29,815		8.00	%		29,815		8.00	%		44,723	(1)		12.00%	(1)
Tier I Capital to Risk-Weighted Assets		67,764		18.18	%	N/A		N/A				14,908		4.00	%	N/A			N/A
As of December 31, 2011:
Tangible Capital to Tangible Assets	$	64,839		11.22	%	$	8,666		1.50	%	N/A		N/A			N/A			N/A
Core Capital to Adjusted Tangible Assets		64,839		11.22	%		23,111		4.00	%	$	23,111		4.00	%	$	46,221	(1)		8.00%	(1)
Total Capital to Risk-Weighted Assets		69,466		19.62	%		28,319		8.00	%		28,319		8.00	%		42,479	(1)		12.00%	(1)
Tier I Capital to Risk-Weighted Assets		64,839		18.32	%	N/A		N/A				14,160		4.00	%	N/A			N/A

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Note 10 - Regulatory Matters (Detail)

9 Months Ended

Sep. 30, 2012

Dec. 31, 2011

Sep. 30, 2012

Required Per Bank Order [Member]

Dec. 31, 2011

Required Per Bank Order [Member]

Dec. 31, 2010

Required Per Bank Order [Member]

Tier One Leverage Capital Required for Capital Adequacy to Average Assets

4.00%

4.00%

8.00%

^[1]

8.00%

^[1]

8.00%

Capital Required for Capital Adequacy to Risk Weighted Assets

8.00%

8.00%

12.00%

^[1]

12.00%

^[1]

12.00%

Stockholders' Equity, Reverse Stock Split

Reverse Stock Split. The Company amended its Articles of Incorporation to effect a 1-for-5 reverse split (the "Reverse Split") of the Company's issued and outstanding shares of common stock effective May 3, 2011. All periods presented in this Form 10-Q have been retroactively restated to reflect the Reverse Split.

Restrictions on Dividends, Loans and Advances [Text Block]

Dividend Restrictions. The principal source of the Company's revenue is dividends from the Bank. The Company's ability to pay dividends to stockholders depends to a large extent upon the dividends received from the Bank. On November 19, 2009, the OTS issued written directives which require the Company and the Bank to obtain prior written non-objection of their primary regulator, now the FRB for the Company and the OCC for the Bank, in order to make or declare any dividends or payments on their outstanding securities. Neither the Company nor the Bank has the present intention to declare any dividends or payments on their outstanding securities.

Regulatory Changes

Regulatory Changes. Effective July 21, 2011, pursuant to Section 312 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) (i) the regulatory functions and rulemaking authority of the OTS with regard to federally chartered savings and loan associations (including the Bank) were transferred to the OCC and (ii) the regulatory functions and rulemaking authority of the OTS with regard to savings and loan holding companies (including the Company) were transferred to the Board of Governors of the Federal Reserve System (“FRB”). Beginning on July 21, 2011, the OCC became the primary regulator of the Bank and is vested with authority to enforce the Bank Order. Also beginning on July 21, 2011, the Company became subject to the regulation of the FRB, which is vested with authority to enforce the Company Order.

[1] The Bank Order states that no later than December 31, 2010, the Bank shall achieve and maintain a Tier 1 (Core) Capital Ratio of at least 8% and a Total Risk-Based Capital Ratio of at least 12%. The required amounts presented reflect these ratios.

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Note 6 - Stock Based Compensation (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation (in Dollars)	$ 112,000	$ 29,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	6 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value (in Dollars)	758,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)	$ 3.80
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized (in Dollars)	588,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	4 years
2011 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)	1,930,269
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	5 years
Share-based Compensation Award Term	7
Share-based Compensation (in Dollars)	$ 112,000

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Note 4 - Loans Receivable (Detail) - Loans Restructured as TDRs (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011 Modification of Payment Terms [Member] One-to-Four-Family Residential [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] One-to-Four-Family Residential [Member] Modified Year to Date [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Home Equity and Second Mortgage [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Home Equity and Second Mortgage [Member] Modified Year to Date [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Land Loans [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Land Loans [Member] Modified Year to Date [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Commercial Real Estate Loans [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Commercial Real Estate Loans [Member] Modified Year to Date [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Commercial Loans [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Commercial Loans [Member] Modified Year to Date [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Consumer Loans [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Consumer Loans [Member] Modified Year to Date [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Modification of Payment Terms [Member] Modified Year to Date [Member]		Sep. 30, 2011 Other Modifications [Member] One-to-Four-Family Residential [Member] Modified Year to Date [Member]	Sep. 30, 2011 Other Modifications [Member] Land Loans [Member] Modified Year to Date [Member]		Sep. 30, 2011 Other Modifications [Member] Commercial Real Estate Loans [Member] Modified in Current Quarter [Member]		Sep. 30, 2011 Other Modifications [Member] Commercial Real Estate Loans [Member] Modified Year to Date [Member]		Sep. 30, 2011 Other Modifications [Member] Commercial Loans [Member] Modified Year to Date [Member]		Sep. 30, 2011 Other Modifications [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 Other Modifications [Member] Modified Year to Date [Member]	Sep. 30, 2011 One-to-Four-Family Residential [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 One-to-Four-Family Residential [Member] Modified Year to Date [Member]	Sep. 30, 2011 Home Equity and Second Mortgage [Member] Modified Year to Date [Member]	Sep. 30, 2011 Land Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Commercial Real Estate Loans [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 Commercial Real Estate Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Commercial Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Consumer Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Modified in Current Quarter [Member]	Sep. 30, 2011 Modified Year to Date [Member]
Number of Loans	34	57																																								1	3	2	2	1	2	1	1	2	11
Balance Prior to TDR																																										$ 34	$ 512	$ 74	$ 96	$ 1,271	$ 1,471	$ 54	$ 3	$ 1,305	$ 2,210
Balance at September 30	$ 8,530	$ 13,874	$ 33	[1]	$ 98	[1]		[1]	$ 74	[1]		[1]		[1]		[1]	$ 200	[1]		[1]		[1]		[1]	$ 3	[1]	$ 33	[1]	$ 375	[1]	$ 412	$ 95	[2]	$ 1,305	[3]	$ 1,305	[3]	$ 25	[4]	$ 1,305	$ 1,837	$ 33	$ 510	$ 74	$ 95	$ 1,305	$ 1,505	$ 25	$ 3	$ 1,338	$ 2,212

[1] Concessions represent skipped payments/maturity date extensions or amortization term extensions.

[2] Modification to interest only payments for a period of time.

[3] Concession represents payment of delinquent property taxes.

[4] Debt consolidation.

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Note 8 - Fair Value Measurements (Detail) - Assets Measured at Fair Value on a Recurring Basis (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available for sale investment securities:
Available for sale investment securities	$ 58,514	$ 62,077
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale investment securities:
Available for sale investment securities	45,594	36,613
US States and Political Subdivisions Debt Securities [Member]
Available for sale investment securities:
Available for sale investment securities	45,594	36,613
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale investment securities:
Available for sale investment securities	7,913	5,810
Corporate Debt Securities [Member]
Available for sale investment securities:
Available for sale investment securities	7,913	5,810
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale investment securities:
Available for sale investment securities	5,007	19,654
US Government Agencies Debt Securities [Member]
Available for sale investment securities:
Available for sale investment securities	5,007	19,654
Fair Value, Inputs, Level 2 [Member]
Available for sale investment securities:
Available for sale investment securities	$ 58,514	$ 62,077

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Note 3 - Investment Securities Available for Sale

9 Months Ended

Sep. 30, 2012

Marketable Securities [Table Text Block]

3.      INVESTMENT SECURITIES AVAILABLE FOR SALE

Investment securities available for sale consisted of the following as of the dates indicated (in thousands):

	September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	44,657	$	953	$	(16	)	$	45,594
Corporate debt securities		8,000		--		(87	)		7,913
U.S. Government sponsored agency securities		5,007		--		--			5,007
Total	$	57,664	$	953	$	(103	)	$	58,514

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	35,590	$	1,033	$	(10	)	$	36,613
Corporate debt securities		6,000		--		(190	)		5,810
U.S. Government sponsored agency securities		19,589		65		--			19,654
Total	$	61,179	$	1,098	$	(200	)	$	62,077

The following tables summarize the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired (“OTTI”) (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	September 30, 2012
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	1,975	$	16	$	--	$	--	$	1,975	$	16
Corporate debt securities		3,992		8		3,921		79		7,913		87
Total	$	5,967	$	24	$	3,921	$	79	$	9,888	$	103

	December 31, 2011
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	1,812	$	10	$	--	$	--	$	1,812	$	10
Corporate debt securities		3,810		190		--		--		3,810		190
Total	$	5,622	$	200	$	--	$	--	$	5,622	$	200

On a quarterly basis, management conducts a formal review of securities for the presence of OTTI.  Management assesses whether an OTTI is present when the fair value of a security is less than its amortized cost basis at the balance sheet date.  For such securities, OTTI is considered to have occurred if the Company intends to sell the security, if it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis or if the present values of expected cash flows is not sufficient to recover the entire amortized cost.

The unrealized losses are primarily a result of increases in market yields since the time of purchase.  In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired.  Additionally, the unrealized losses are also considered temporary because scheduled coupon payments have been made, it is anticipated that the entire principal balance will be collected as scheduled, and management neither intends to sell the securities nor is it more likely than not that the Company will be required to sell the securities before the recovery of the remaining amortized cost amount.

The Company has pledged investment securities available for sale with carrying values of approximately $1.6 million for the period ended September 30, 2012 and $1.2 million for the period ended December 31, 2011, as collateral for certain deposits in excess of $250,000. In addition the Company has pledged investment securities available for sale with carrying values of approximately $12.9 million and $8.9 million at September 30, 2012 and December 31, 2011, respectively, as collateral at the Federal Reserve Bank to secure transaction settlements. Effective October 9, 2012, the Company is no longer required to pledge collateral to secure transaction settlements.

The scheduled contractual maturities of debt securities at September 30, 2012 are shown below (in thousands). Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2012
	Amortized Cost		Fair Value		Weighted Average Rate
Within one year	$	5,282	$	5,283		0.37	%
Due from one year to five years		16,305		16,313		2.40	%
Due from five years to ten years		21,525		21,941		2.59	%
Due after ten years		14,552		14,977		3.84	%
Total	$	57,664	$	58,514		2.65	%

As of September 30, 2012 and December 31, 2011, investments with amortized cost of approximately $37.4 million and $48.5 million, respectively, have call options held by the issuer, of which approximately $8.0 million and $26.6 million, respectively, are or were callable within one year.

Sales of the Company's investment securities available for sale are summarized as follows (in thousands):

	Nine Months Ended September 30,
	2012		2011
Sales proceeds	$	5,387	$	18,931
Gross realized gains	$	542	$	128
Gross realized losses		--		(567	)
Net gains (losses) on sales of investment securities	$	542	$	(439	)

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Note 6 - Stock Based Compensation (Detail) - Stock Options, Valuation Assumptions	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Expected Term (years)	7 years	7 years
Annual Dividend Rate	0.00%	0.00%
Risk Free Interest Rate	1.32%	2.164%
Volatility	53.25%	50.94%
Expected forfeiture rate	4.00%	4.00%

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Note 3 - Investment Securities Available for Sale (Detail) - Maturities of Debt Securities (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Total	$ 57,664	$ 61,179
Total	58,514	62,077
Amortized Cost [Member]
Within one year	5,282
Due from one year to five years	16,305
Due from five years to ten years	21,525
Due after ten years	14,552
Total	57,664
Fair Value [Member]
Within one year	5,283
Due from one year to five years	16,313
Due from five years to ten years	21,941
Due after ten years	14,977
Total	$ 58,514
Weighted Average Rate [Member]
Within one year	0.37%
Due from one year to five years	2.40%
Due from five years to ten years	2.59%
Due after ten years	3.84%
Total	2.65%

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Note 3 - Investment Securities Available for Sale (Detail) - Gross Unrealized Losses and Fair Value of the Investments (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Securities in Unrealized Loss Position Less Than 12 Months Fair Value	$ 5,967	$ 5,622
Securities in Unrealized Loss Position Less Than 12 Months Unrealized Losses	24	200
Securities in Unrealized Loss Position 12 Months or More Fair Value	3,921
Securities in Unrealized Loss Position 12 Months or More Unrealized Losses	79
Securities in Unrealized Loss Position Fair Value	9,888	5,622
Securities in Unrealized Loss Position Unrealized Losses	103	200
US States and Political Subdivisions Debt Securities [Member]
Securities in Unrealized Loss Position Less Than 12 Months Fair Value	1,975	1,812
Securities in Unrealized Loss Position Less Than 12 Months Unrealized Losses	16	10
Securities in Unrealized Loss Position Fair Value	1,975	1,812
Securities in Unrealized Loss Position Unrealized Losses	16	10
Corporate Debt Securities [Member]
Securities in Unrealized Loss Position Less Than 12 Months Fair Value	3,992	3,810
Securities in Unrealized Loss Position Less Than 12 Months Unrealized Losses	8	190
Securities in Unrealized Loss Position 12 Months or More Fair Value	3,921
Securities in Unrealized Loss Position 12 Months or More Unrealized Losses	79
Securities in Unrealized Loss Position Fair Value	7,913	3,810
Securities in Unrealized Loss Position Unrealized Losses	$ 87	$ 190

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Note 6 - Stock Based Compensation (Detail) - Stock Option Activity (USD $)	9 Months Ended
	Sep. 30, 2012
Outstanding—January 1, 2012	236,000
Outstanding—January 1, 2012 (in Dollars per share)	$ 6.23
Granted	35,000
Granted (in Dollars per share)	$ 7.00
Forfeited	(54,000)
Forfeited (in Dollars per share)	$ 6.57
Outstanding—September 30, 2012	217,000
Outstanding—September 30, 2012 (in Dollars per share)	$ 6.28

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Note 3 - Investment Securities Available for Sale (Detail) - Realized Gain on Available-for-Sale Securities (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Sales proceeds	$ 5,387	$ 18,931
Gross realized gains	542	128
Gross realized losses	0	(567)
Net gains (losses) on sales of investment securities	$ 542	$ (439)

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Note 4 - Loans Receivable (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		$ 388,000
Financing Receivable, Modifications, Recorded Investment	8,530,000	13,874,000
Minimum Loan Amount for Loans Analyzed by Credit Risk	250,000
Financing Receivable, Modifications, Post-Modification Recorded Investment	172,000
Nonaccrual Troubled Debt Restructurings [Member]
Financing Receivable, Modifications, Recorded Investment	$ 2,673,000	$ 8,667,000

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Note 2 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

2.      RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. The ASU expands ASC 820's disclosure requirements, particularly for Level 3 inputs, including (1) a quantitative disclosure of the unobservable inputs and assumptions used, (2) a description of the valuation process in place and (3) a narrative description of the sensitivity of the fair value to changes in unobservable inputs. The ASU is effective for the Company's reporting periods beginning after December 15, 2011. As this ASU amends only the disclosure requirements for fair value measurements, the adoption of this ASU did not have a material impact on the Company's financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. In December 2011, FASB issued ASU 2011-12, which defers certain provisions of ASU 2011-05. One of ASU 2011-05's provisions requires the Company to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. ASU 2011-12 defers this requirement indefinitely. All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. The ASU does not amend the components that must be reported in other comprehensive income. Both ASUs are effective for the Company's reporting periods beginning after December 15, 2011. The Company adopted this ASU beginning in the quarter ended March 31, 2012.

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Note 4 - Loans Receivable (Detail) - Past Due and Nonaccrual Loans (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Total	$ 357,671	[1],[2]	$ 353,508	[1],[2]
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | One-to-Four-Family Residential [Member]
30-89 Days Past Due	1,738		8,319
90 Days or More Past Due	4,738		5,604
Current	144,619		169,235
Total	151,095	[1]	183,158	[1]
Nonaccrual loans 30-89 Days Past Due	1,738		8,319
Nonaccrual loans 90 Days or More Past Due	4,738		5,604
Nonaccrual loans current	144,619		169,235
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | Home Equity and Second Mortgage [Member]
30-89 Days Past Due	36		126
90 Days or More Past Due	437		437
Current	9,149		11,939
Total	9,622	[1]	12,502	[1]
Nonaccrual loans 30-89 Days Past Due	36		126
Nonaccrual loans 90 Days or More Past Due	437		437
Nonaccrual loans current	9,149		11,939
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | Multifamily Residential [Member]
30-89 Days Past Due			31
Current	22,931		20,445
Total	22,931	[1]	20,476	[1]
Nonaccrual loans 30-89 Days Past Due			31
Nonaccrual loans current	22,931		20,445
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | Commercial Real Estate Loans [Member]
30-89 Days Past Due	411		1,371
90 Days or More Past Due	3,746		4,752
Current	126,861		89,797
Total	131,018	[1]	95,920	[1]
Nonaccrual loans 30-89 Days Past Due	411		1,371
Nonaccrual loans 90 Days or More Past Due	3,746		4,752
Nonaccrual loans current	126,861		89,797
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | One-to-Four-Family Construction [Member]
90 Days or More Past Due	250
Current	1,383		2,391
Total	1,633	[1]	2,391	[1]
Nonaccrual loans 90 Days or More Past Due	250
Nonaccrual loans current	1,383		2,391
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | Other Construction and Land [Member]
30-89 Days Past Due			191
90 Days or More Past Due	3,498		1,344
Current	11,479		21,908
Total	14,977	[1]	23,443	[1]
Nonaccrual loans 30-89 Days Past Due			191
Nonaccrual loans 90 Days or More Past Due	3,498		1,344
Nonaccrual loans current	11,479		21,908
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | Commercial Loans [Member]
30-89 Days Past Due	17
90 Days or More Past Due	385		388
Current	19,778		7,215
Total	20,180	[1]	7,603	[1]
Nonaccrual loans 30-89 Days Past Due	17
Nonaccrual loans 90 Days or More Past Due	385		388
Nonaccrual loans current	19,778		7,215
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member] | Consumer [Member]
30-89 Days Past Due	19		23
90 Days or More Past Due	15		5
Current	6,181		7,987
Total	6,215	[1]	8,015	[1]
Nonaccrual loans 30-89 Days Past Due	19		23
Nonaccrual loans 90 Days or More Past Due	15		5
Nonaccrual loans current	6,181		7,987
Gross of Undisbursed Funds, Unearned Discounts and Net Loan Fees, and Allowance for Loan and Lease Losses [Member]
30-89 Days Past Due	2,221	[1]	10,061	[1]
90 Days or More Past Due	13,069	[1]	12,530	[1]
Current	342,381	[1]	330,917	[1]
Total	357,671	[1]	353,508	[1]
Nonaccrual loans 30-89 Days Past Due	2,221	[1]	10,061	[1]
Nonaccrual loans 90 Days or More Past Due	13,069	[1]	12,530	[1]
Nonaccrual loans current	342,381	[1]	330,917	[1]
Nonaccrual [Member] | One-to-Four-Family Residential [Member]
30-89 Days Past Due	707		1,870
90 Days or More Past Due	4,738		5,604
Current	1,826		4,262
Nonaccrual loans 30-89 Days Past Due	707		1,870
Nonaccrual loans 90 Days or More Past Due	4,738		5,604
Nonaccrual loans current	1,826		4,262
Nonaccrual loans total	7,271		11,736
Nonaccrual [Member] | Home Equity and Second Mortgage [Member]
30-89 Days Past Due	25		57
90 Days or More Past Due	437		437
Current	173		270
Nonaccrual loans 30-89 Days Past Due	25		57
Nonaccrual loans 90 Days or More Past Due	437		437
Nonaccrual loans current	173		270
Nonaccrual loans total	635		764
Nonaccrual [Member] | Multifamily Residential [Member]
Current			4,645
Nonaccrual loans current			4,645
Nonaccrual loans total			4,645
Nonaccrual [Member] | Commercial Real Estate Loans [Member]
30-89 Days Past Due			203
90 Days or More Past Due	3,746		4,752
Current	2,678		8,283
Nonaccrual loans 30-89 Days Past Due			203
Nonaccrual loans 90 Days or More Past Due	3,746		4,752
Nonaccrual loans current	2,678		8,283
Nonaccrual loans total	6,424		13,238
Nonaccrual [Member] | One-to-Four-Family Construction [Member]
90 Days or More Past Due	250
Nonaccrual loans 90 Days or More Past Due	250
Nonaccrual loans total	250
Nonaccrual [Member] | Other Construction and Land [Member]
30-89 Days Past Due			164
90 Days or More Past Due	3,498		1,344
Current	1,019		1,893
Nonaccrual loans 30-89 Days Past Due			164
Nonaccrual loans 90 Days or More Past Due	3,498		1,344
Nonaccrual loans current	1,019		1,893
Nonaccrual loans total	4,517		3,401
Nonaccrual [Member] | Commercial Loans [Member]
30-89 Days Past Due	17
90 Days or More Past Due	385
Current			72
Nonaccrual loans 30-89 Days Past Due	17
Nonaccrual loans 90 Days or More Past Due	385
Nonaccrual loans current			72
Nonaccrual loans total	402		72
Nonaccrual [Member] | Consumer [Member]
90 Days or More Past Due	15		5
Current	1		93
Nonaccrual loans 90 Days or More Past Due	15		5
Nonaccrual loans current	1		93
Nonaccrual loans total	16		98
Nonaccrual [Member]
30-89 Days Past Due	749		2,294
90 Days or More Past Due	13,069		12,142
Current	5,697		19,518
Nonaccrual loans 30-89 Days Past Due	749		2,294
Nonaccrual loans 90 Days or More Past Due	13,069		12,142
Nonaccrual loans current	5,697		19,518
Nonaccrual loans total	19,515		33,954
One-to-Four-Family Residential [Member]
Total	151,095	[1],[2]	183,158	[1],[2]
Home Equity and Second Mortgage [Member]
Total	9,622	[1],[2]	12,502	[1],[2]
Multifamily Residential [Member]
Total	22,931	[1],[2]	20,476	[1],[2]
Commercial Real Estate Loans [Member]
Total	131,018	[1],[2]	95,920	[1],[2]
One-to-Four-Family Construction [Member]
Total	1,633	[1],[2]	2,391	[1],[2]
Other Construction and Land [Member]
Total	14,977	[1],[2]	23,443	[1],[2]
Commercial Loans [Member]
Total	$ 20,180	[1],[2]	$ 7,603	[1],[2]

[1] Gross of undisbursed loan funds, unearned discounts and net loan fees and the allowance for loan and lease losses.

[2] Gross of undisbursed loan funds, unearned discounts, and net loan fees and the allowance for loan and lease losses.

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Note 5 - Allowances For Loan And Real Estate Losses (Detail) - Allowance for Loan Losses by Portfolio Segment (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Sep. 30, 2012		Sep. 30, 2011	Dec. 31, 2011
ALLL:
Balance, beginning of period	$ 17,264			$ 20,818		$ 31,084	$ 31,084
Provision charged to expense			21	22		812	859
Losses charged off	(988)			(5,460)			(11,977)
Recoveries	156			1,052			852
Balance, end of period	16,432			16,432			20,818
Ending allowance balance: individually evaluated for impairment	1,241			1,241			3,293
Ending allowance balance: collectively evaluated for impairment	15,191			15,191			17,525
Loan balances (1):
Ending balance	357,671	[1],[2]		357,671	[1],[2]		353,508	[1],[2]
Ending loan balance: individually evaluated for impairment	19,466	[2]		19,466	[2]		39,161	[2]
Ending loan balance: collectively evaluated for impairment	338,205	[2]		338,205	[2]		314,347	[2]
One-to-Four-Family Residential [Member]
ALLL:
Balance, beginning of period	6,046			6,306		5,440	5,440
Provision charged to expense	455			1,109			3,993
Losses charged off	(295)			(1,230)			(3,177)
Recoveries	82			103			50
Balance, end of period	6,288			6,288			6,306
Ending allowance balance: individually evaluated for impairment	193			193			305
Ending allowance balance: collectively evaluated for impairment	6,095			6,095			6,001
Loan balances (1):
Ending balance	151,095	[1],[2]		151,095	[1],[2]		183,158	[1],[2]
Ending loan balance: individually evaluated for impairment	4,319	[2]		4,319	[2]		13,085	[2]
Ending loan balance: collectively evaluated for impairment	146,776	[2]		146,776	[2]		170,073	[2]
Home Equity and Second Mortgage [Member]
ALLL:
Balance, beginning of period	587			693		1,275	1,275
Provision charged to expense	(55)			(95)			(160)
Losses charged off	(52)			(163)			(486)
Recoveries	61			106			64
Balance, end of period	541			541			693
Ending allowance balance: individually evaluated for impairment	192			192			81
Ending allowance balance: collectively evaluated for impairment	349			349			612
Loan balances (1):
Ending balance	9,622	[1],[2]		9,622	[1],[2]		12,502	[1],[2]
Ending loan balance: individually evaluated for impairment	300	[2]		300	[2]		831	[2]
Ending loan balance: collectively evaluated for impairment	9,322	[2]		9,322	[2]		11,671	[2]
Multifamily Residential [Member]
ALLL:
Balance, beginning of period	886			2,654		6,581	6,581
Provision charged to expense	341			(447)			(1,132)
Losses charged off				(997)			(2,795)
Recoveries				17
Balance, end of period	1,227			1,227			2,654
Ending allowance balance: individually evaluated for impairment							703
Ending allowance balance: collectively evaluated for impairment	1,227			1,227			1,951
Loan balances (1):
Ending balance	22,931	[1],[2]		22,931	[1],[2]		20,476	[1],[2]
Ending loan balance: individually evaluated for impairment	3,466	[2]		3,466	[2]		8,133	[2]
Ending loan balance: collectively evaluated for impairment	19,465	[2]		19,465	[2]		12,343	[2]
Commercial Real Estate Loans [Member]
ALLL:
Balance, beginning of period	7,688			7,316		9,491	9,491
Provision charged to expense	(734)			1,856			189
Losses charged off	(293)			(2,510)			(2,375)
Recoveries	8			7			11
Balance, end of period	6,669			6,669			7,316
Ending allowance balance: individually evaluated for impairment	540			540			1,879
Ending allowance balance: collectively evaluated for impairment	6,129			6,129			5,437
Loan balances (1):
Ending balance	131,018	[1],[2]		131,018	[1],[2]		95,920	[1],[2]
Ending loan balance: individually evaluated for impairment	7,033	[2]		7,033	[2]		13,238	[2]
Ending loan balance: collectively evaluated for impairment	123,985	[2]		123,985	[2]		82,682	[2]
One-to-Four-Family Construction [Member]
ALLL:
Balance, beginning of period	97			84		81	81
Provision charged to expense	(52)			(39)			31
Losses charged off							(28)
Balance, end of period	45			45			84
Ending allowance balance: collectively evaluated for impairment	45			45			84
Loan balances (1):
Ending balance	1,633	[1],[2]		1,633	[1],[2]		2,391	[1],[2]
Ending loan balance: individually evaluated for impairment	250	[2]		250	[2]			[2]
Ending loan balance: collectively evaluated for impairment	1,383	[2]		1,383	[2]		2,391	[2]
Other Construction and Land [Member]
ALLL:
Balance, beginning of period	1,487			2,567		4,035	4,035
Provision charged to expense	(242)			(2,006)			204
Losses charged off	(269)			(327)			(2,190)
Recoveries	(22)			720			518
Balance, end of period	954			954			2,567
Ending allowance balance: individually evaluated for impairment	166			166			280
Ending allowance balance: collectively evaluated for impairment	788			788			2,287
Loan balances (1):
Ending balance	14,977	[1],[2]		14,977	[1],[2]		23,443	[1],[2]
Ending loan balance: individually evaluated for impairment	3,696	[2]		3,696	[2]		3,683	[2]
Ending loan balance: collectively evaluated for impairment	11,281	[2]		11,281	[2]		19,760	[2]
Commercial Loans [Member]
ALLL:
Balance, beginning of period	313			972		3,543	3,543
Provision charged to expense	148			(540)			(2,139)
Losses charged off							(517)
Recoveries	8			37			85
Balance, end of period	469			469			972
Ending allowance balance: individually evaluated for impairment	150			150
Ending allowance balance: collectively evaluated for impairment	319			319			972
Loan balances (1):
Ending balance	20,180	[1],[2]		20,180	[1],[2]		7,603	[1],[2]
Ending loan balance: individually evaluated for impairment	402	[2]		402	[2]		72	[2]
Ending loan balance: collectively evaluated for impairment	19,778	[2]		19,778	[2]		7,531	[2]
Consumer Loans [Member]
ALLL:
Balance, beginning of period	160			226		638	638
Provision charged to expense	139			184			(127)
Losses charged off	(79)			(233)			(409)
Recoveries	19			62			124
Balance, end of period	239			239			226
Ending allowance balance: individually evaluated for impairment							45
Ending allowance balance: collectively evaluated for impairment	239			239			181
Loan balances (1):
Ending balance	6,215	[1],[2]		6,215	[1],[2]		8,015	[1],[2]
Ending loan balance: individually evaluated for impairment		[2]			[2]		119	[2]
Ending loan balance: collectively evaluated for impairment	$ 6,215	[2]		$ 6,215	[2]		$ 7,896	[2]

[1] Gross of undisbursed loan funds, unearned discounts and net loan fees and the allowance for loan and lease losses.

[2] Gross of undisbursed loan funds, unearned discounts, and net loan fees and the allowance for loan and lease losses.

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Condensed Consolidated Statements of Financial Condition (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 42,380	$ 79,799
Interest-bearing time deposits in banks	29,840	27,113
Investment securities available for sale	58,514	62,077
Federal Home Loan Bank stock—at cost	578	576
Loans receivable, net of allowance of $16,432 and $20,818, respectively	339,978	331,453
Loans held for sale	5,790	3,339
Accrued interest receivable	1,732	1,516
Real estate owned - net	20,535	28,113
Office properties and equipment - net	20,917	21,441
Cash surrender value of life insurance	22,799	22,213
Prepaid expenses and other assets	702	1,406
TOTAL	543,765	579,046
LIABILITIES:
Deposits	466,066	498,581
Other borrowings	3,174	6,679
Advance payments by borrowers for taxes and insurance	535	816
Other liabilities	3,780	4,077
Total liabilities	473,555	510,153
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value—30,000,000 shares authorized; 19,302,603 shares issued and outstanding at September 30, 2012 and December 31, 2011	193	193
Additional paid-in capital	90,684	90,572
Accumulated other comprehensive income	850	898
Accumulated deficit	(21,517)	(22,770)
Total stockholders' equity	70,210	68,893
TOTAL	$ 543,765	$ 579,046

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Note 7 - Earnings Per Share (Detail) - Weighted Average Shares Outstanding	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic weighted average shares outstanding	19,302,603	19,302,603	19,302,603	10,502,544
Effect of dilutive securities	1,375,467		1,233,575	760,986
Diluted weighted average shares outstanding	20,678,070	19,302,603	20,536,178	11,263,530

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Condensed Consolidated Statements of Cash Flows (unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES:
Net income (loss)	$ 1,253	$ (5,763)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Provision for loan losses	22	812
Provision for real estate losses	585	4,837
Deferred tax provision	1,318	408
Deferred tax valuation allowance	(1,318)	(408)
Net amortization (accretion) of investment securities	19	(25)
Federal Home Loan Bank stock dividends	(2)	(4)
Gain on sale of fixed assets, net	(149)	(15)
(Gain) loss on sale of real estate owned, net	(1,135)	777
(Gain) loss on sales of investment securities, net	(542)	439
Originations of loans held for sale	(35,388)	(21,153)
Proceeds from sales of loans held for sale	33,605	23,030
Gain on sale of loans originated to sell	(668)	(440)
Depreciation	1,089	1,017
Amortization of deferred loan costs, net	56	166
Stock compensation	112	29
Earnings on life insurance policies	(586)	(575)
Changes in operating assets and liabilities:
Accrued interest receivable	(216)	590
Prepaid expenses and other assets	704	1,402
Other liabilities	(98)	(121)
Net cash (used in) provided by operating activities	(1,339)	5,003
INVESTING ACTIVITIES:
Purchases of interest-bearing time deposits in banks	(4,470)	(22,885)
Redemptions of interest-bearing time deposits in banks	1,743
Purchases of investment securities available for sale	(22,499)	(21,065)
Proceeds from sales, maturities, and calls of investment securities available for sale	26,338	42,296
Purchases of Federal Home Loan Bank stock		(633)
Loan (originations) repayments, net	(11,270)	24,770
Loan participations purchased	(1,662)	(704)
Loan participations sold		7,000
Proceeds from sales of real estate owned	12,648	6,647
Improvements to real estate owned	(191)	(67)
Proceeds from sales of office properties and equipment	272	20
Purchases of office properties and equipment	(688)	(273)
Net cash provided by investing activities	221	35,106
FINANCING ACTIVITIES:
Net decrease in deposits	(32,515)	(36,142)
Repayment of advances from Federal Home Loan Bank	(3,505)	(9,339)
Net (decrease) increase in advance payments by borrowers for taxes and insurance	(281)	40
Proceeds from issuance of common stock		47,592
Net cash (used in) provided by financing activities	(36,301)	2,151
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(37,419)	42,260
CASH AND CASH EQUIVALENTS:
Beginning of period	79,799	36,407
End of period	42,380	78,667
Cash paid for:
Interest	3,475	5,261
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Real estate and other assets acquired in settlement of loans	5,707	7,815
Sales of real estate owned financed by the Bank	1,378	4,042
Investment securities purchased—not settled	1,435	1,759
Preferred dividends cancelled		$ 930

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Note 4 - Loans Receivable (Detail) - Financing Receivable by Credit Quality Indicators (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Financing Receivables	$ 357,671	[1],[2]	$ 353,508	[1],[2]
Pass [Member] | One-to-Four-Family Residential [Member]
Financing Receivables	19,824		24,300
Pass [Member] | Home Equity and Second Mortgage [Member]
Financing Receivables	607		558
Pass [Member] | Multifamily Residential [Member]
Financing Receivables	13,528		4,736
Pass [Member] | Commercial Real Estate Loans [Member]
Financing Receivables	111,329		55,997
Pass [Member] | One-to-Four-Family Construction [Member]
Financing Receivables	1,056
Pass [Member] | Other Construction and Land [Member]
Financing Receivables	5,350		9,508
Pass [Member] | Commercial Loans [Member]
Financing Receivables	19,025		5,579
Pass [Member] | Consumer Loans [Member]
Financing Receivables	285		626
Pass [Member]
Financing Receivables	171,004		101,304
Special Mention [Member] | One-to-Four-Family Residential [Member]
Financing Receivables	8,465		13,888
Special Mention [Member] | Home Equity and Second Mortgage [Member]
Financing Receivables	31		487
Special Mention [Member] | Multifamily Residential [Member]
Financing Receivables	4,472		6,655
Special Mention [Member] | Commercial Real Estate Loans [Member]
Financing Receivables	7,685		9,174
Special Mention [Member] | One-to-Four-Family Construction [Member]
Financing Receivables	327
Special Mention [Member] | Other Construction and Land [Member]
Financing Receivables	691		2,908
Special Mention [Member] | Commercial Loans [Member]
Financing Receivables	345		1,105
Special Mention [Member] | Consumer Loans [Member]
Financing Receivables			13
Special Mention [Member]
Financing Receivables	22,016		34,230
Substandard [Member] | One-to-Four-Family Residential [Member]
Financing Receivables	12,769		27,877
Substandard [Member] | Home Equity and Second Mortgage [Member]
Financing Receivables	1,157		1,569
Substandard [Member] | Multifamily Residential [Member]
Financing Receivables	4,909		6,203
Substandard [Member] | Commercial Real Estate Loans [Member]
Financing Receivables	11,117		29,020
Substandard [Member] | One-to-Four-Family Construction [Member]
Financing Receivables	250		1,463
Substandard [Member] | Other Construction and Land [Member]
Financing Receivables	5,459		8,696
Substandard [Member] | Commercial Loans [Member]
Financing Receivables	505		521
Substandard [Member] | Consumer Loans [Member]
Financing Receivables	37		191
Substandard [Member]
Financing Receivables	36,203		75,540
Not Rated [Member] | One-to-Four-Family Residential [Member]
Financing Receivables	110,037		117,093
Not Rated [Member] | Home Equity and Second Mortgage [Member]
Financing Receivables	7,827		9,888
Not Rated [Member] | Multifamily Residential [Member]
Financing Receivables	22		2,882
Not Rated [Member] | Commercial Real Estate Loans [Member]
Financing Receivables	887		1,729
Not Rated [Member] | One-to-Four-Family Construction [Member]
Financing Receivables			928
Not Rated [Member] | Other Construction and Land [Member]
Financing Receivables	3,477		2,331
Not Rated [Member] | Commercial Loans [Member]
Financing Receivables	305		398
Not Rated [Member] | Consumer Loans [Member]
Financing Receivables	5,893		7,185
Not Rated [Member]
Financing Receivables	128,448		142,434
One-to-Four-Family Residential [Member]
Financing Receivables	151,095	[1],[2]	183,158	[1],[2]
Home Equity and Second Mortgage [Member]
Financing Receivables	9,622	[1],[2]	12,502	[1],[2]
Multifamily Residential [Member]
Financing Receivables	22,931	[1],[2]	20,476	[1],[2]
Commercial Real Estate Loans [Member]
Financing Receivables	131,018	[1],[2]	95,920	[1],[2]
One-to-Four-Family Construction [Member]
Financing Receivables	1,633	[1],[2]	2,391	[1],[2]
Other Construction and Land [Member]
Financing Receivables	14,977	[1],[2]	23,443	[1],[2]
Commercial Loans [Member]
Financing Receivables	20,180	[1],[2]	7,603	[1],[2]
Consumer Loans [Member]
Financing Receivables	$ 6,215	[1],[2]	$ 8,015	[1],[2]

[1] Gross of undisbursed loan funds, unearned discounts and net loan fees and the allowance for loan and lease losses.

[2] Gross of undisbursed loan funds, unearned discounts, and net loan fees and the allowance for loan and lease losses.

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Note 7 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Basic weighted average shares outstanding		19,302,603		19,302,603		19,302,603		10,502,544
Effect of dilutive securities		1,375,467		--		1,233,575		760,986
Diluted weighted average shares outstanding		20,678,070		19,302,603		20,536,178		11,263,530

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Note 4 - Loans Receivable (Detail) - Troubled Debt Restructurings ("TDRs") (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Number of TDR loans	34	57
Balance (in Dollars)	$ 8,530	$ 13,874
Accruing Troubled Debt Restructurings [Member] | One-to-Four-Family Residential [Member]
Number of TDR loans	11	15
Balance (in Dollars)	1,105	1,349
Accruing Troubled Debt Restructurings [Member] | Home Equity and Second Mortgage [Member]
Number of TDR loans	1	3
Balance (in Dollars)	19	68
Accruing Troubled Debt Restructurings [Member] | Multifamily Residential [Member]
Number of TDR loans	1	1
Balance (in Dollars)	3,466	3,488
Accruing Troubled Debt Restructurings [Member] | Commercial Real Estate [Member]
Number of TDR loans	1
Balance (in Dollars)	1,260
Accruing Troubled Debt Restructurings [Member] | Other Construction and Land [Member]
Number of TDR loans		5
Balance (in Dollars)		282
Accruing Troubled Debt Restructurings [Member] | Consumer Loans [Member]
Number of TDR loans	3
Balance (in Dollars)	7
Accruing Troubled Debt Restructurings [Member] | Consumer [Member]
Number of TDR loans		7
Balance (in Dollars)		20
Accruing Troubled Debt Restructurings [Member]
Number of TDR loans	17	31
Balance (in Dollars)	5,857	5,207
Nonaccrual Troubled Debt Restructurings [Member] | One-to-Four-Family Residential [Member]
Number of TDR loans	6	11
Balance (in Dollars)	555	1,134
Nonaccrual Troubled Debt Restructurings [Member] | Home Equity and Second Mortgage [Member]
Number of TDR loans	3	4
Balance (in Dollars)	75	133
Nonaccrual Troubled Debt Restructurings [Member] | Multifamily Residential [Member]
Number of TDR loans		1
Balance (in Dollars)		1,399
Nonaccrual Troubled Debt Restructurings [Member] | Commercial Real Estate [Member]
Number of TDR loans	2	6
Balance (in Dollars)	580	4,759
Nonaccrual Troubled Debt Restructurings [Member] | Other Construction and Land [Member]
Number of TDR loans	6	4
Balance (in Dollars)	1,463	1,242
Nonaccrual Troubled Debt Restructurings [Member]
Number of TDR loans	17	26
Balance (in Dollars)	2,673	8,667
One-to-Four-Family Residential [Member]
Number of TDR loans	17	26
Balance (in Dollars)	1,660	2,483
Home Equity and Second Mortgage [Member]
Number of TDR loans	4	7
Balance (in Dollars)	94	201
Multifamily Residential [Member]
Number of TDR loans	1	2
Balance (in Dollars)	3,466	4,887
Commercial Real Estate [Member]
Number of TDR loans	3	6
Balance (in Dollars)	1,840	4,759
Other Construction and Land [Member]
Number of TDR loans	6	9
Balance (in Dollars)	1,463	1,524
Consumer Loans [Member]
Number of TDR loans	3
Balance (in Dollars)	7
Consumer [Member]
Number of TDR loans		7
Balance (in Dollars)		$ 20

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Note 9 - Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value, by Balance Sheet Grouping [Table Text Block]

	September 30, 2012				December 31, 2011
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
FINANCIAL ASSETS:
Level 1 inputs:
Cash and cash equivalents	$	42,380	$	42,380	$	79,799	$	79,799
Level 2 inputs:
Interest-bearing time deposits in banks		29,840		30,752		27,113		27,572
Federal Home Loan Bank stock		578		578		576		576
Loans held for sale		5,790		5,790		3,339		3,339
Cash surrender value of life insurance		22,799		22,799		22,213		22,213
Accrued interest receivable		1,732		1,732		1,516		1,516
Level 3 inputs:
Loans receivable—net		339,978		354,714		331,453		333,006
FINANCIAL LIABILITIES:
Level 2 inputs:
Checking, money market and savings accounts		201,189		201,189		207,015		207,015
Other borrowings		3,174		3,321		6,679		6,889
Accrued interest payable		28		28		54		54
Advance payments by borrowers for taxes and insurance		535		535		816		816
Level 3 inputs:
Certificates of deposit		264,877		269,425		291,566		293,198

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Note 1 - Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Significant Accounting Policies [Text Block]

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation—First Federal Bancshares of Arkansas, Inc. (the “Company”) is a unitary holding company that owns all of the stock of First Federal Bank (the “Bank”). The Company is principally in the business of community banking and therefore is considered a banking operation with no separately reportable segments. The Bank provides a broad line of financial products to individuals and small- to medium-sized businesses. The consolidated financial statements also include the accounts of the Bank's wholly owned subsidiary, First Harrison Service Corporation (“FHSC”), which is inactive.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and the Bank. Intercompany transactions have been eliminated in consolidation. Certain reclassifications of prior period amounts have been made to conform with the current period presentation. These reclassifications had no impact on previously reported net income.

The results of operations for the nine months ended September 30, 2012, are not necessarily indicative of the results to be expected for the year ending December 31, 2012. The unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2011, contained in the Company's 2011 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).

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Condensed Consolidated Statements of Financial Condition (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Allowance for loans receivable (in Dollars)	$ 16,432	$ 20,818
Preferred stock, par value (in Dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	19,302,603	19,302,603
Common stock, shares outstanding	19,302,603	19,302,603

XML

Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2012

Consolidation, Policy [Policy Text Block]

Nature of Operations and Principles of Consolidation—First Federal Bancshares of Arkansas, Inc. (the “Company”) is a unitary holding company that owns all of the stock of First Federal Bank (the “Bank”). The Company is principally in the business of community banking and therefore is considered a banking operation with no separately reportable segments. The Bank provides a broad line of financial products to individuals and small- to medium-sized businesses. The consolidated financial statements also include the accounts of the Bank's wholly owned subsidiary, First Harrison Service Corporation (“FHSC”), which is inactive.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and the Bank. Intercompany transactions have been eliminated in consolidation. Certain reclassifications of prior period amounts have been made to conform with the current period presentation. These reclassifications had no impact on previously reported net income.

The results of operations for the nine months ended September 30, 2012, are not necessarily indicative of the results to be expected for the year ending December 31, 2012. The unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2011, contained in the Company's 2011 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).

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Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	FIRST FEDERAL BANCSHARES OF ARKANSAS INC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		19,302,603
Amendment Flag	false
Entity Central Index Key	0001006424
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

XML

Note 3 - Investment Securities Available for Sale (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Investment Holdings, Schedule of Investments [Table Text Block]

	September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	44,657	$	953	$	(16	)	$	45,594
Corporate debt securities		8,000		--		(87	)		7,913
U.S. Government sponsored agency securities		5,007		--		--			5,007
Total	$	57,664	$	953	$	(103	)	$	58,514

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	35,590	$	1,033	$	(10	)	$	36,613
Corporate debt securities		6,000		--		(190	)		5,810
U.S. Government sponsored agency securities		19,589		65		--			19,654
Total	$	61,179	$	1,098	$	(200	)	$	62,077

Schedule of Unrealized Loss on Investments [Table Text Block]

	September 30, 2012
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	1,975	$	16	$	--	$	--	$	1,975	$	16
Corporate debt securities		3,992		8		3,921		79		7,913		87
Total	$	5,967	$	24	$	3,921	$	79	$	9,888	$	103

	December 31, 2011
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	1,812	$	10	$	--	$	--	$	1,812	$	10
Corporate debt securities		3,810		190		--		--		3,810		190
Total	$	5,622	$	200	$	--	$	--	$	5,622	$	200

Investments Classified by Contractual Maturity Date [Table Text Block]

	September 30, 2012
	Amortized Cost		Fair Value		Weighted Average Rate
Within one year	$	5,282	$	5,283		0.37	%
Due from one year to five years		16,305		16,313		2.40	%
Due from five years to ten years		21,525		21,941		2.59	%
Due after ten years		14,552		14,977		3.84	%
Total	$	57,664	$	58,514		2.65	%

Realized Gain (Loss) on Investments [Table Text Block]

	Nine Months Ended September 30,
	2012		2011
Sales proceeds	$	5,387	$	18,931
Gross realized gains	$	542	$	128
Gross realized losses		--		(567	)
Net gains (losses) on sales of investment securities	$	542	$	(439	)

XML

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
INTEREST INCOME:
Loans receivable	$ 4,318	$ 5,005	$ 13,381	$ 15,511
Investment securities:
Taxable	64	397	336	1,615
Nontaxable	323	194	901	604
Other	135	125	409	209
Total interest income	4,840	5,721	15,027	17,939
INTEREST EXPENSE:
Deposits	1,046	1,572	3,363	4,917
Other borrowings	23	74	86	281
Total interest expense	1,069	1,646	3,449	5,198
NET INTEREST INCOME	3,771	4,075	11,578	12,741
PROVISION FOR LOAN LOSSES		21	22	812
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	3,771	4,054	11,556	11,929
NONINTEREST INCOME:
Net gain (loss) on sale of investment securities			542	(439)
Deposit fee income	904	1,297	2,975	3,642
Earnings on life insurance policies	198	191	586	575
Gain on sale of loans	250	156	668	440
Other	97	98	369	361
Total noninterest income	1,449	1,742	5,140	4,579
NONINTEREST EXPENSES:
Salaries and employee benefits	2,681	2,749	8,265	8,335
Net occupancy expense	625	661	1,934	1,909
Real estate owned, net	118	2,612	(174)	6,219
FDIC insurance	286	317	875	1,074
Supervisory assessments	72	76	222	265
Data processing	395	370	1,658	1,111
Professional fees	158	193	748	918
Advertising and public relations	54	109	192	231
Postage and supplies	86	108	377	374
Other	392	634	1,346	1,835
Total noninterest expenses	4,867	7,829	15,443	22,271
INCOME (LOSS) BEFORE INCOME TAXES	353	(2,033)	1,253	(5,763)
INCOME TAX	0	0	0	0
NET INCOME (LOSS)	353	(2,033)	1,253	(5,763)
GAIN ON REDEMPTION OF PREFERRED STOCK				(10,500)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	353	(2,033)	1,253	4,737
Basic earnings (loss) per common share (in Dollars per share)	$ 0.02	$ (0.11)	$ 0.06	$ 0.45
Diluted earnings (loss) per common share (in Dollars per share)	$ 0.02	$ (0.11)	$ 0.06	$ 0.42
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized holding gains arising during the period	236	1,140	494	2,783
Reclassification adjustments for (gain) loss included in net income			(542)	439
COMPREHENSIVE INCOME (LOSS)	$ 589	$ (893)	$ 1,205	$ (2,541)

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Note 6 - Stock Based Compensation

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

6.     STOCK BASED COMPENSATION

2011 Omnibus Incentive Plan—The 2011 Omnibus Incentive Plan (the “2011 Plan”) became effective May 3, 2011, after approval by the Company's stockholders on April 29, 2011. The objectives of the 2011 Plan are to optimize the profitability and growth of the Company through incentives that are consistent with the Company's goals and that link the personal interests of participants to those of the Company's stockholders. The 2011 Plan provides for a committee of the Company's Board of Directors to award nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other awards representing up to 1,930,269 shares of Company stock. Awards may be granted under the 2011 Plan up to ten years following the effective date of the plan. Each award under the 2011 Plan is governed by the terms of the individual award agreement, which shall specify pricing, term, vesting, and other pertinent provisions. Option awards are generally granted with an exercise price equal to the fair market value of the Company's stock at the date of grant, generally vest based on five years of continuous service and have seven year contractual terms. Compensation expense attributable to awards made under the 2011 Plan for the nine months ended September 30, 2012 totaled approximately $112,000.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. Expected volatilities are based on implied volatilities from historical volatility of the Company's stock and other factors. The Company uses historical data to estimate option exercise, employee termination, and expected term of the options within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The fair values of stock options granted during the nine months ended September 30, 2012 and 2011 were estimated based on the following average assumptions:

	2012			2011
Expected Term (years)		7			7
Annual Dividend Rate		0.00%			0.00%
Risk Free Interest Rate		1.32	%		2.164	%
Volatility		53.25	%		50.94	%
Expected forfeiture rate		4.00	%		4.00	%

A summary of the activity in the Company's 2011 Plan for the nine months ended September 30, 2012, is presented below:

	Shares Underlying Awards			Weighted Average Exercise Price
Outstanding—January 1, 2012		236,000		$	6.23
Granted		35,000		$	7.00
Forfeited		(54,000	)	$	6.57
Outstanding—September 30, 2012		217,000		$	6.28

The weighted average remaining contractual life of the outstanding options was 6.0 years and the aggregate intrinsic value of the options was approximately $758,000 at September 30, 2012. The weighted-average grant-date fair value of options granted during 2012 was $3.80. None of the outstanding options are vested.

As of September 30, 2012, there was $588,000 of total unrecognized compensation costs related to nonvested share-based compensation arrangements under the 2011 Plan. The cost is expected to be recognized over a weighted-average period of 4.0 years.

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Note 5 - Allowances For Loan And Real Estate Losses

9 Months Ended

Sep. 30, 2012

Allowance for Credit Losses [Text Block]

5. ALLOWANCES FOR LOAN AND LEASE LOSSES AND REAL ESTATE LOSSES

The tables below provide a rollforward of the allowance for loan and lease losses (“ALLL”) by portfolio segment (in thousands):

Three Months Ended September 30, 2012	One- to four-family residential			Home equity and second mortgage			Multifamily residential			Commercial real estate			One- to four-family construction			Other construction and land			Commercial			Consumer			Total
ALLL:
Balance, beginning of period	$	6,046		$	587		$	886		$	7,688		$	97		$	1,487		$	313		$	160		$	17,264
Provision charged to expense		455			(55	)		341			(734	)		(52	)		(242	)		148			139			--
Losses charged off		(295	)		(52	)		--			(293	)		--			(269	)		--			(79	)		(988	)
Recoveries		82			61			--			8			--			(22	)		8			19			156
Balance, end of period	$	6,288		$	541		$	1,227		$	6,669		$	45		$	954		$	469		$	239		$	16,432
Nine Months Ended September 30, 2012
ALLL:
Balance, beginning of year	$	6,306		$	693		$	2,654		$	7,316		$	84		$	2,567		$	972		$	226		$	20,818
Provision charged to expense		1,109			(95	)		(447	)		1,856			(39	)		(2,006	)		(540	)		184			22
Losses charged off		(1,230	)		(163	)		(997	)		(2,510	)		--			(327	)		--			(233	)		(5,460	)
Recoveries		103			106			17			7			--			720			37			62			1,052
Balance, end of period	$	6,288		$	541		$	1,227		$	6,669		$	45		$	954		$	469		$	239		$	16,432
Ending balance: individually evaluated for impairment	$	193		$	192		$	--		$	540		$	--		$	166		$	150		$	--		$	1,241
Ending balance: collectively evaluated for impairment	$	6,095		$	349		$	1,227		$	6,129		$	45		$	788		$	319		$	239		$	15,191
Loan balances (1):
Ending balance	$	151,095		$	9,622		$	22,931		$	131,018		$	1,633		$	14,977		$	20,180		$	6,215		$	357,671
Ending balance: individually evaluated for impairment	$	4,319		$	300		$	3,466		$	7,033		$	250		$	3,696		$	402		$	--		$	19,466
Ending balance: collectively evaluated for impairment	$	146,776		$	9,322		$	19,465		$	123,985		$	1,383		$	11,281		$	19,778		$	6,215		$	338,205

______________
 (1) Gross of undisbursed loan funds, unearned discounts, and net loan fees and the allowance for loan and lease losses.

Year Ended December 31, 2011	One- to four-family residential			Home equity and second mortgage			Multifamily residential			Commercial real estate			One- to four-family construction			Other construction and land			Commercial			Consumer			Total
ALLL:
Balance, beginning of year	$	5,440		$	1,275		$	6,581		$	9,491		$	81		$	4,035		$	3,543		$	638		$	31,084
Provision charged to expense		3,993			(160	)		(1,132	)		189			31			204			(2,139	)		(127	)		859
Losses charged off		(3,177	)		(486	)		(2,795	)		(2,375	)		(28	)		(2,190	)		(517	)		(409	)		(11,977	)
Recoveries		50			64			--			11			--			518			85			124			852
Balance, end of year	$	6,306		$	693		$	2,654		$	7,316		$	84		$	2,567		$	972		$	226		$	20,818
Ending balance: individually evaluated for impairment	$	305		$	81		$	703		$	1,879		$	--		$	280		$	--		$	45		$	3,293
Ending balance: collectively evaluated for impairment	$	6,001		$	612		$	1,951		$	5,437		$	84		$	2,287		$	972		$	181		$	17,525
Loan balances (1):
Ending balance	$	183,158		$	12,502		$	20,476		$	95,920		$	2,391		$	23,443		$	7,603		$	8,015		$	353,508
Ending balance: individually evaluated for impairment	$	13,085		$	831		$	8,133		$	13,238		$	--		$	3,683		$	72		$	119		$	39,161
Ending balance: collectively evaluated for impairment	$	170,073		$	11,671		$	12,343		$	82,682		$	2,391		$	19,760		$	7,531		$	7,896		$	314,347

 ______________
 (1) Gross of undisbursed loan funds, unearned discounts, and net loan fees and the allowance for loan and lease losses.

Impairment is measured on a loan by loan basis for loans where the aggregate relationship balance exceeds $250,000 by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Impaired loans under this threshold are aggregated and impairment measured on a collective basis.

The Bank does not have any loans acquired with deteriorated credit quality.

A summary of the activity in the allowances for loan and lease losses and real estate losses is as follows for the three and nine months ended September 30 (in thousands):

	Three Months Ended September 30, 2012						Three Months Ended September 30, 2011
	Loans and Leases			Real Estate			Loans and Leases			Real Estate
Balance—beginning of period	$	17,264		$	19,649		$	29,598		$	9,634
Provisions for estimated losses		--			277			21			1,838
Recoveries		156			--			154			--
Losses charged off		(988	)		(2,045	)		(1,801	)		(1,511	)
Balance—end of period	$	16,432		$	17,881		$	27,972		$	9,961

	Nine Months Ended September 30, 2012						Nine Months Ended September 30, 2011
	Loans and Leases			Real Estate			Loans and Leases			Real Estate
Balance—beginning of period	$	20,818		$	20,934		$	31,084		$	7,841
Provisions for estimated losses		22			585			812			4,837
Recoveries		1,052			--			781			--
Losses charged off		(5,460	)		(3,638	)		(4,705	)		(2,717	)
Balance—end of period	$	16,432		$	17,881		$	27,972		$	9,961

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Note 8 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2012
Available for sale investment securities:
Municipal securities	$	45,594	$	--	$	45,594	$	--
Corporate debt securities		7,913		--		7,913		--
U.S. Government sponsored agency securities		5,007		--		5,007		--
Total	$	58,514	$	--	$	58,514	$	--
December 31, 2011
Available for sale investment securities:
Municipal securities	$	36,613	$	--	$	36,613	$	--
Corporate debt securities		5,810		--		5,810		--
U.S. Government sponsored agency securities		19,654		--		19,654		--
Total	$	62,077	$	--	$	62,077	$	--

Fair Value Measurements, Nonrecurring [Table Text Block]

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2012
Impaired loans	$	18,244	$	--	$	--	$	18,244
REO, net		7,989		--		--		7,989
September 30, 2011
Impaired loans	$	25,926	$	--	$	--	$	25,926
REO, net		21,938		--		--		21,938

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Note 4 - Loans Receivable (Tables)

9 Months Ended

Sep. 30, 2012

Sep. 30, 2011

Prior Year [Member]

Past Due Financing Receivables [Table Text Block]

September 30, 2012	30-89 Days Past Due		90 Days or More Past Due		Current		Total (1)
One- to four-family residential	$	1,738	$	4,738	$	144,619	$	151,095
Home equity and second mortgage		36		437		9,149		9,622
Multifamily residential		--		--		22,931		22,931
Commercial real estate		411		3,746		126,861		131,018
One- to four-family construction		--		250		1,383		1,633
Other construction and land		--		3,498		11,479		14,977
Commercial		17		385		19,778		20,180
Consumer		19		15		6,181		6,215
Total (1)	$	2,221	$	13,069	$	342,381	$	357,671

December 31, 2011	30-89 Days Past Due		90 Days or More Past Due		Current		Total (1)
One- to four-family residential	$	8,319	$	5,604	$	169,235	$	183,158
Home equity and second mortgage		126		437		11,939		12,502
Multifamily residential		31		--		20,445		20,476
Commercial real estate		1,371		4,752		89,797		95,920
One- to four-family construction		--		--		2,391		2,391
Other construction and land		191		1,344		21,908		23,443
Commercial		--		388		7,215		7,603
Consumer		23		5		7,987		8,015
Total (1)	$	10,061	$	12,530	$	330,917	$	353,508

September 30, 2012	30-89 Days Past Due		90 Days or More Past Due		Current		Total
One- to four-family residential	$	707	$	4,738	$	1,826	$	7,271
Home equity and second mortgage		25		437		173		635
Multifamily residential		--		--		--		--
Commercial real estate		--		3,746		2,678		6,424
One- to four-family construction		--		250		--		250
Other construction and land		--		3,498		1,019		4,517
Commercial		17		385		--		402
Consumer		--		15		1		16
Total	$	749	$	13,069	$	5,697	$	19,515

December 31, 2011	30-89 Days Past Due		90 Days or More Past Due		Current		Total
One- to four-family residential	$	1,870	$	5,604	$	4,262	$	11,736
Home equity and second mortgage		57		437		270		764
Multifamily residential		--		--		4,645		4,645
Commercial real estate		203		4,752		8,283		13,238
One- to four-family construction		--		--		--		--
Other construction and land		164		1,344		1,893		3,401
Commercial		--		--		72		72
Consumer		--		5		93		98
Total	$	2,294	$	12,142	$	19,518	$	33,954

Impaired Financing Receivables [Table Text Block]

	December 31, 2011						For the Three and Nine Months Ended September 30, 2011
	Unpaid Principal Balance		Recorded Investment		Valuation Allowance		Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
Impaired loans with a valuation allowance:							(Three Months)		(Nine Months)		(Three Months)		(Nine Months)
One- to four-family residential	$	3,019	$	2,714	$	305	$	4,148	$	3,989	$	2	$	24
Home equity and second mortgage		108		27		81		123		191		2		7
Multifamily residential		2,958		2,255		703		4,789		4,968		--		--
Commercial real estate		4,301		2,422		1,879		1,972		2,257		--		18
One- to four-family construction		--		--		--		--		2		--		--
Other construction and land		925		645		280		3,597		3,829		2		23
Commercial		--		--		--		106		162		--		--
Consumer		70		25		45		3		13		--		1
		11,381		8,088		3,293		14,738		15,411		6		73
Impaired loans without a valuation allowance:
One- to four-family residential		10,066		10,066		--		16,769		18,623		67		270
Home equity and second mortgage		723		723		--		747		820		12		32
Multifamily residential		5,175		5,175		--		3,971		3,920		46		131
Commercial real estate		8,937		8,937		--		12,333		11,154		42		190
One- to four-family construction		--		--		--		--		--		--		--
Other construction and land		2,758		2,758		--		2,945		3,257		11		53
Commercial		72		72		--		409		402		1		8
Consumer		49		49		--		89		92		2		4
	$	27,780	$	27,780	$	--		37,263		38,268		181		688
Total impaired loans	$	39,161	$	35,868	$	3,293	$	52,001	$	53,679	$	187	$	761
Interest based on original terms											$	881	$	2,626
Interest income recognized on a cash basis on impaired loans											$	121	$	400

	September 30, 2012						For the Three and Nine Months Ended September 30, 2012
	Unpaid Principal Balance		Recorded Investment		Valuation Allowance		Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
Impaired loans with a valuation allowance:							(Three Months)		(Nine Months)		(Three Months)		(Nine Months)
One- to four-family residential	$	1,462	$	1,269	$	193	$	1,376	$	2,394	$	--	$	--
Home equity and second mortgage		212		20		192		20		22		--		--
Multifamily residential		--		--		--		--		564		--		--
Commercial real estate		1,921		1,381		540		2,405		2,346		--		40
One- to four-family construction		--		--		--		--		--		--		--
Other construction and land		634		468		166		1,121		1,257		--		9
Commercial		380		230		150		115		58		--		--
Consumer		--		--		--		--		6		--		--
		4,609		3,368		1,241		5,037		6,647		--		49
Impaired loans without a valuation allowance:
One- to four-family residential		6,914		6,914		--		6,691		7,369		18		70
Home equity and second mortgage		442		442		--		446		531		--		5
Multifamily residential		3,466		3,466		--		1,873		3,173		42		49
Commercial real estate		5,761		5,761		--		5,570		6,834		18		102
One- to four-family construction		250		250		--		125		63		--		--
Other construction and land		3,883		3,883		--		5,202		3,721		--		89
Commercial		22		22		--		212		245		--		--
Consumer		24		24		--		58		55		--		1
		20,762		20,762		--		20,177		21,991		78		316
Total impaired loans	$	25,371	$	24,130	$	1,241	$	25,214	$	28,638	$	78	$	365
Interest based on original terms											$	405	$	1,212
Interest income recognized on a cash basis on impaired loans											$	--	$	203

Financing Receivable Credit Quality Indicators [Table Text Block]

	September 30, 2012
	Pass		Special Mention		Substandard		Not Rated		Total (1)
One- to four-family residential	$	19,824	$	8,465	$	12,769	$	110,037	$	151,095
Home equity and second mortgage		607		31		1,157		7,827		9,622
Multifamily residential		13,528		4,472		4,909		22		22,931
Commercial real estate		111,329		7,685		11,117		887		131,018
One- to four-family construction		1,056		327		250		--		1,633
Other construction and land		5,350		691		5,459		3,477		14,977
Commercial		19,025		345		505		305		20,180
Consumer		285		--		37		5,893		6,215
Total (1)	$	171,004	$	22,016	$	36,203	$	128,448	$	357,671

	December 31, 2011
	Pass		Special Mention		Substandard		Not Rated		Total (1)
One- to four-family residential	$	24,300	$	13,888	$	27,877	$	117,093	$	183,158
Home equity and second mortgage		558		487		1,569		9,888		12,502
Multifamily residential		4,736		6,655		6,203		2,882		20,476
Commercial real estate		55,997		9,174		29,020		1,729		95,920
One- to four-family construction		--		--		1,463		928		2,391
Other construction and land		9,508		2,908		8,696		2,331		23,443
Commercial		5,579		1,105		521		398		7,603
Consumer		626		13		191		7,185		8,015
Total (1)	$	101,304	$	34,230	$	75,540	$	142,434	$	353,508

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

September 30, 2012	Number of Accruing TDR Loans		Balance		Number of Nonaccrual TDR Loans		Balance		Total Number of TDR Loans		Total Balance
One- to four-family residential		11	$	1,105		6	$	555		17	$	1,660
Home equity and second mortgage		1		19		3		75		4		94
Multifamily residential		1		3,466		--		--		1		3,466
Commercial real estate		1		1,260		2		580		3		1,840
Other construction and land		--		--		6		1,463		6		1,463
Consumer		3		7		--		--		3		7
Total		17	$	5,857		17	$	2,673		34	$	8,530

December 31, 2011	Number of Accruing TDR Loans		Balance		Number of Nonaccrual TDR Loans		Balance		Total Number of TDR Loans		Total Balance
One- to four-family residential		15	$	1,349		11	$	1,134		26	$	2,483
Home equity and second mortgage		3		68		4		133		7		201
Multifamily residential		1		3,488		1		1,399		2		4,887
Commercial real estate		--		--		6		4,759		6		4,759
Other construction and land		5		282		4		1,242		9		1,524
Consumer		7		20		--		--		7		20
Total		31	$	5,207		26	$	8,667		57	$	13,874

Schedule of Loans Restructured As TDRs in Current Period [Table Text Block]

	Three Months Ended September 30, 2011
							Nature of Modification
	Number of Loans		Balance Prior to TDR		Balance at September 30, 2011		Payment Term (1)		Other
One- to four-family residential		1	$	34	$	33	$	33	$	--
Home equity and second mortgage		--		--		--		--		--
Other construction and land		--		--		--		--		--
Commercial real estate		1		1,271		1,305		--		1,305	(2)
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
Total		2	$	1,305	$	1,338	$	33	$	1,305

	Nine Months Ended September 30, 2011
							Nature of Modification
	Number of Loans		Balance Prior to TDR		Balance at September 30, 2011		Payment Term (1)		Other
One- to four-family residential		3	$	512	$	510	$	98	$	412	(3)
Home equity and second mortgage		2		74		74		74		--
Other construction and land		2		96		95		--		95	(3)
Commercial real estate		2		1,471		1,505		200		1,305	(2)
Commercial		1		54		25		--		25	(4)
Consumer		1		3		3		3		--
Total		11	$	2,210	$	2,212	$	375	$	1,837

Additional Information Regarding Troubled Debt Restructurings [Table Text Block]

	Three Months Ended September 30, 2011
	Number of Loans		Unpaid Principal Balance at September 30, 2011		Specific Valuation Allowance		Net Balance at September 30, 2011		Charge-offs		Transfers to Real Estate Owned
One- to four-family residential		6	$	226	$	27	$	199	$	34	$	387
Home equity and second mortgage		3		78		25		53		11		--
Multifamily residential		--		--		--		--		--		--
Other construction and land		2		318		--		318		--		45
Commercial real estate		1		408		--		408		--		--
Commercial		1		157		51		106		--		--
Consumer		1		--		--		--		26		--
Total		14	$	1,187	$	103	$	1,084	$	71	$	432

	Nine Months Ended September 30, 2011
	Number of Loans		Unpaid Principal Balance at September 30, 2011		Specific Valuation Allowance		Net Balance at September 30, 2011		Charge-offs		Transfers to Real Estate Owned
One- to four-family residential		6	$	669	$	117	$	552	$	34	$	387
Home equity and second mortgage		3		140		88		52		47		--
Multifamily residential		1		1,680		785		895		--		--
Other construction and land		2		318		--		318		--		45
Commercial real estate		1		408		--		408		--		--
Commercial		1		157		51		106		--		--
Consumer		2		--		--		--		66		--
Total		16	$	3,372	$	1,041	$	2,331	$	147	$	432

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Note 9 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Financial Instruments Disclosure [Text Block]

9.     FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The estimated fair values of financial instruments that are reported at amortized cost in the Company's statement of financial condition, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value, are as follows (in thousands):

	September 30, 2012				December 31, 2011
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
FINANCIAL ASSETS:
Level 1 inputs:
Cash and cash equivalents	$	42,380	$	42,380	$	79,799	$	79,799
Level 2 inputs:
Interest-bearing time deposits in banks		29,840		30,752		27,113		27,572
Federal Home Loan Bank stock		578		578		576		576
Loans held for sale		5,790		5,790		3,339		3,339
Cash surrender value of life insurance		22,799		22,799		22,213		22,213
Accrued interest receivable		1,732		1,732		1,516		1,516
Level 3 inputs:
Loans receivable—net		339,978		354,714		331,453		333,006
FINANCIAL LIABILITIES:
Level 2 inputs:
Checking, money market and savings accounts		201,189		201,189		207,015		207,015
Other borrowings		3,174		3,321		6,679		6,889
Accrued interest payable		28		28		54		54
Advance payments by borrowers for taxes and insurance		535		535		816		816
Level 3 inputs:
Certificates of deposit		264,877		269,425		291,566		293,198

For cash and cash equivalents, the carrying amount approximates fair value (level 1). For Federal Home Loan Bank stock, loans held for sale, cash surrender value of life insurance and accrued interest receivable, the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments or, as to Federal Home Loan Bank stock, the ability to sell the stock back to the Federal Home Loan Bank at cost (level 2). Interest-bearing time deposits in banks were valued using discounted cash flows based on current rates for similar types of deposits (level 2). Fair values of impaired loans are estimated as described in Note 8. Non-impaired loans were valued using discounted cash flows. The discount rates used to determine the present value of these loans were based on interest rates currently being charged by the Bank on comparable loans (level 3).

The fair value of checking accounts, savings accounts and money market deposits is the amount payable on demand at the reporting date (level 2). The fair value of fixed-maturity certificates of deposit is estimated using the discount rates currently offered by the Bank for deposits of similar terms (level 3). The fair value of Federal Home Loan Bank advances is estimated using the rates for advances of similar remaining maturities at the reporting date (level 2). For advance payments by borrowers for taxes and insurance and for accrued interest payable the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments (level 2).

The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2012 and December 31, 2011. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since the reporting date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

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Note 7 - Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Text Block]

7.     EARNINGS PER SHARE

Basic earnings per share is computed by dividing reported earnings available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing reported earnings available to common stockholders by the weighted average number of common shares outstanding after consideration of the dilutive effect, if any, of the Company's outstanding common stock options and warrants using the treasury stock method.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Basic weighted average shares outstanding		19,302,603		19,302,603		19,302,603		10,502,544
Effect of dilutive securities		1,375,467		--		1,233,575		760,986
Diluted weighted average shares outstanding		20,678,070		19,302,603		20,536,178		11,263,530

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Note 8 - Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Text Block]

8.     FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement, provides a framework for measuring fair value and defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1	Unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Financial instruments are broken down by recurring or nonrecurring measurement status. Recurring assets are initially measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date. Assets measured on a nonrecurring basis are assets that, due to an event or circumstance, were required to be remeasured at fair value after initial recognition in the financial statements at some time during the reporting period.

The following is a description of inputs and valuation methodologies used for assets recorded at fair value on a recurring basis and recognized in the accompanying statements of financial condition at September 30, 2012 and December 31, 2011, as well as the general classification of such assets pursuant to the valuation hierarchy.

Securities Available for Sale

Investment securities available for sale are recorded at fair value on a recurring basis. The fair values used by the Company are obtained from an independent pricing service, which represent either quoted market prices for the identical asset or fair values determined by pricing models, or other model-based valuation techniques, that consider observable market data, such as interest rate volatilities, London Interbank Offered Rate (“LIBOR”) yield curve, credit spreads and prices from market makers and live trading systems. Recurring Level 2 securities include U.S. government sponsored agency securities, corporate debt securities, and municipal bonds. Inputs used for valuing Level 2 securities include observable data that may include dealer quotes, benchmark yields, market spreads, live trading levels and market consensus prepayment speeds, among other things. Additional inputs include indicative values derived from the independent pricing service's proprietary computerized models. No securities were included in the Recurring Level 3 category at or for the periods ended September 30, 2012 or December 31, 2011.

The following table presents major categories of assets measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011 (in thousands):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2012
Available for sale investment securities:
Municipal securities	$	45,594	$	--	$	45,594	$	--
Corporate debt securities		7,913		--		7,913		--
U.S. Government sponsored agency securities		5,007		--		5,007		--
Total	$	58,514	$	--	$	58,514	$	--
December 31, 2011
Available for sale investment securities:
Municipal securities	$	36,613	$	--	$	36,613	$	--
Corporate debt securities		5,810		--		5,810		--
U.S. Government sponsored agency securities		19,654		--		19,654		--
Total	$	62,077	$	--	$	62,077	$	--

The following is a description of valuation methodologies used for significant assets measured at fair value on a nonrecurring basis.

Impaired Loans Receivable

Loans which meet certain criteria are evaluated individually for impairment. A loan is considered impaired when, based upon current information and events, it is probable the Bank will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the note.  Substantially all of the Bank's impaired loans at September 30, 2012 and December 31, 2011 are secured by real estate.  Impaired loan relationships over $250,000 are individually assessed to determine that the carrying value of the loan is not in excess of the fair value of the collateral, less estimated selling costs. Fair value is estimated primarily through current appraisals or internal valuations.  Appraisals are obtained from licensed third party appraisers and reviewed by a licensed review appraiser employed by the Bank. Internal valuations are prepared by Bank personnel and reviewed by the Bank's review appraiser. Fair values may be adjusted by management to reflect current economic and market conditions and, as such, are classified as Level 3.   Fair value adjustments are made by charge-offs to the allowance for loan and lease losses.

Real Estate Owned, net

REO represents real estate acquired as a result of foreclosure or by deed in lieu of foreclosure and is carried at the lower of cost or fair value less estimated selling costs.  Fair value is estimated through current appraisals, internal valuations, real estate brokers' opinions or listing prices. Appraisals are obtained from licensed third party appraisers, generally on an annual basis, and reviewed by a licensed review appraiser employed by the Bank. Internal valuations are prepared by Bank personnel and reviewed by the review appraiser. Fair values of REO are influenced by management's marketing strategy, including whether the Bank is willing to hold any given property for the marketing period assumed in the appraisal. The Bank is currently aggressively marketing certain properties, and as a result, may discount appraised values to account for shorter marketing times. As estimated fair values may be adjusted by management to reflect current economic and market conditions, such fair values are classified as Level 3.  Fair value adjustments are recorded in earnings during the period such adjustments are made. REO loss provisions recorded during the nine months ended September 30, 2012 and 2011 were $585,000 and $4.8 million, respectively.

The following table presents major categories of assets measured at fair value on a nonrecurring basis for the nine months ended September 30, 2012 and 2011 (in thousands). The assets disclosed in the following table represent REO properties or impaired loans that were remeasured at fair value during the period with a resulting valuation adjustment or fair value write-down.

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2012
Impaired loans	$	18,244	$	--	$	--	$	18,244
REO, net		7,989		--		--		7,989
September 30, 2011
Impaired loans	$	25,926	$	--	$	--	$	25,926
REO, net		21,938		--		--		21,938

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Note 10 - Regulatory Matters

9 Months Ended

Sep. 30, 2012

Regulatory Capital Requirements under Banking Regulations [Text Block]

10.    REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the Office of the Comptroller of the Currency (“OCC”), as successor to the Office of Thrift Supervision (“OTS”) (see discussion below regarding “Regulatory Changes”). Failure to meet minimum capital requirements can result in certain mandatory—and possible additional discretionary—actions by regulators that, if undertaken, could have a direct and material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of tangible capital (as defined) to tangible assets (as defined) and core capital (as defined) to adjusted tangible assets (as defined), and of total risk-based capital (as defined) to risk-weighted assets (as defined). Tier 1 (core) capital includes common stockholders' equity less certain other deductions. Total capital includes Tier 1 capital plus the allowance for loan and lease losses, subject to limitations.

On April 12, 2010, the Company and the Bank each consented to the terms of Cease and Desist Orders issued by the OTS (the “Bank Order” and the “Company Order” and, together, the “Orders”). The Orders became effective April 14, 2010. The Orders impose certain restrictions on the Company and, to a greater extent, the Bank, including lending and dividend restrictions. The Orders also require the Company and the Bank to take certain actions, including the submission of capital and business plans to, among other things, preserve and enhance the capital of the Company and the Bank and strengthen and improve the consolidated Company's operations, earnings and profitability. The Bank Order specifically requires the Bank to achieve and maintain, by December 31, 2010, a Tier 1 (core) capital ratio of at least 8% and a total risk-based capital ratio of at least 12.0% and maintain these higher ratios for as long as the Bank Order is in effect.

The Bank's actual and required capital amounts (in thousands) and ratios are presented in the following table:

											To be Categorized
											as Adequately
											Capitalized Under
						For Capital					Prompt Corrective					Required Per
	Actual					Adequacy Purposes					Action Provisions					Bank Order
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount			Ratio
As of September 30, 2012:
Tangible Capital to Tangible Assets	$	67,764		12.48	%	$	8,144		1.50	%	N/A		N/A			N/A			N/A
Core Capital to Adjusted Tangible Assets		67,764		12.48	%		21,716		4.00	%	$	21,716		4.00	%	$	43,432	(1)		8.00%	(1)
Total Capital to Risk-Weighted Assets		72,568		19.47	%		29,815		8.00	%		29,815		8.00	%		44,723	(1)		12.00%	(1)
Tier I Capital to Risk-Weighted Assets		67,764		18.18	%	N/A		N/A				14,908		4.00	%	N/A			N/A
As of December 31, 2011:
Tangible Capital to Tangible Assets	$	64,839		11.22	%	$	8,666		1.50	%	N/A		N/A			N/A			N/A
Core Capital to Adjusted Tangible Assets		64,839		11.22	%		23,111		4.00	%	$	23,111		4.00	%	$	46,221	(1)		8.00%	(1)
Total Capital to Risk-Weighted Assets		69,466		19.62	%		28,319		8.00	%		28,319		8.00	%		42,479	(1)		12.00%	(1)
Tier I Capital to Risk-Weighted Assets		64,839		18.32	%	N/A		N/A				14,160		4.00	%	N/A			N/A

(1) The Bank Order states that no later than December 31, 2010, the Bank shall achieve and maintain a Tier 1 (core) capital ratio of at least 8% and a total risk-based capital ratio of at least 12%. The required amounts presented reflect these ratios.

Reverse Stock Split. The Company amended its Articles of Incorporation to effect a 1-for-5 reverse split (the “Reverse Split”) of the Company's issued and outstanding shares of common stock effective May 3, 2011. All periods presented in this Form 10-Q have been retroactively restated to reflect the Reverse Split.

Dividend Restrictions. The principal source of the Company's revenue is dividends from the Bank. The Company's ability to pay dividends to stockholders depends to a large extent upon the dividends received from the Bank. On November 19, 2009, the OTS issued written directives which require the Company and the Bank to obtain prior written non-objection of their primary regulator, now the FRB for the Company and the OCC for the Bank, in order to make or declare any dividends or payments on their outstanding securities. Neither the Company nor the Bank has the present intention to declare any dividends or payments on their outstanding securities.

Regulatory Changes. Effective July 21, 2011, pursuant to Section 312 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) (i) the regulatory functions and rulemaking authority of the OTS with regard to federally chartered savings and loan associations (including the Bank) were transferred to the OCC and (ii) the regulatory functions and rulemaking authority of the OTS with regard to savings and loan holding companies (including the Company) were transferred to the Board of Governors of the Federal Reserve System (“FRB”). Beginning on July 21, 2011, the OCC became the primary regulator of the Bank and is vested with authority to enforce the Bank Order. Also beginning on July 21, 2011, the Company became subject to the regulation of the FRB, which is vested with authority to enforce the Company Order.

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Note 4 - Loans Receivable (Detail) - Impaired Loans (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Unpaid Principal Balance [Member] | One-to-Four-Family Residential [Member]
Impaired loans without a valuation allowance unpaid principal balance	$ 6,914	$ 10,066	$ 6,914	$ 10,066
Impaired loans with a valuation allowance unpaid principal balance	1,462	3,019	1,462	3,019
Unpaid Principal Balance [Member] | Home Equity and Second Mortgage [Member]
Impaired loans without a valuation allowance unpaid principal balance	442	723	442	723
Impaired loans with a valuation allowance unpaid principal balance	212	108	212	108
Unpaid Principal Balance [Member] | Multifamily Residential [Member]
Impaired loans without a valuation allowance unpaid principal balance	3,466	5,175	3,466	5,175
Impaired loans with a valuation allowance unpaid principal balance		2,958		2,958
Unpaid Principal Balance [Member] | Commercial Real Estate Loans [Member]
Impaired loans without a valuation allowance unpaid principal balance	5,761	8,937	5,761	8,937
Impaired loans with a valuation allowance unpaid principal balance	1,921	4,301	1,921	4,301
Unpaid Principal Balance [Member] | One-to-Four-Family Construction [Member]
Impaired loans without a valuation allowance unpaid principal balance	250		250
Unpaid Principal Balance [Member] | Other Construction and Land [Member]
Impaired loans without a valuation allowance unpaid principal balance	3,883	2,758	3,883	2,758
Impaired loans with a valuation allowance unpaid principal balance	634	925	634	925
Unpaid Principal Balance [Member] | Commercial Loans [Member]
Impaired loans without a valuation allowance unpaid principal balance	22	72	22	72
Impaired loans with a valuation allowance unpaid principal balance	380		380
Unpaid Principal Balance [Member] | Consumer Loans [Member]
Impaired loans without a valuation allowance unpaid principal balance	24	49	24	49
Impaired loans with a valuation allowance unpaid principal balance		70		70
Unpaid Principal Balance [Member]
Impaired loans without a valuation allowance unpaid principal balance	20,762	27,780	20,762	27,780
Total impaired loans	25,371	39,161	25,371	39,161
Impaired loans with a valuation allowance unpaid principal balance	4,609	11,381	4,609	11,381
Recorded Investment [Member] | One-to-Four-Family Residential [Member]
Impaired loans without a valuation allowance recorded investment	6,914	10,066	6,914	10,066
Impaired loans with a valuation allowance recorded investment	1,269	2,714	1,269	2,714
Recorded Investment [Member] | Home Equity and Second Mortgage [Member]
Impaired loans without a valuation allowance recorded investment	442	723	442	723
Impaired loans with a valuation allowance recorded investment	20	27	20	27
Recorded Investment [Member] | Multifamily Residential [Member]
Impaired loans without a valuation allowance recorded investment	3,466	5,175	3,466	5,175
Impaired loans with a valuation allowance recorded investment		2,255		2,255
Recorded Investment [Member] | Commercial Real Estate Loans [Member]
Impaired loans without a valuation allowance recorded investment	5,761	8,937	5,761	8,937
Impaired loans with a valuation allowance recorded investment	1,381	2,422	1,381	2,422
Recorded Investment [Member] | One-to-Four-Family Construction [Member]
Impaired loans without a valuation allowance recorded investment	250		250
Recorded Investment [Member] | Other Construction and Land [Member]
Impaired loans without a valuation allowance recorded investment	3,883	2,758	3,883	2,758
Impaired loans with a valuation allowance recorded investment	468	645	468	645
Recorded Investment [Member] | Commercial Loans [Member]
Impaired loans without a valuation allowance recorded investment	22	72	22	72
Impaired loans with a valuation allowance recorded investment	230		230
Recorded Investment [Member] | Consumer Loans [Member]
Impaired loans without a valuation allowance recorded investment	24	49	24	49
Impaired loans with a valuation allowance recorded investment		25		25
Recorded Investment [Member]
Impaired loans without a valuation allowance recorded investment	20,762	27,780	20,762	27,780
Total impaired loans	24,130	35,868	24,130	35,868
Impaired loans with a valuation allowance recorded investment	3,368	8,088	3,368	8,088
Valuation Allowance [Member] | One-to-Four-Family Residential [Member]
Total impaired loans	193	305	193	305
Impaired loans with a valuation allowance valuation allowance	193	305	193	305
Valuation Allowance [Member] | Home Equity and Second Mortgage [Member]
Total impaired loans	192	81	192	81
Impaired loans with a valuation allowance valuation allowance	192	81	192	81
Valuation Allowance [Member] | Multifamily Residential [Member]
Total impaired loans		703		703
Impaired loans with a valuation allowance valuation allowance		703		703
Valuation Allowance [Member] | Commercial Real Estate Loans [Member]
Total impaired loans	540	1,879	540	1,879
Impaired loans with a valuation allowance valuation allowance	540	1,879	540	1,879
Valuation Allowance [Member] | Other Construction and Land [Member]
Total impaired loans	166	280	166	280
Impaired loans with a valuation allowance valuation allowance	166	280	166	280
Valuation Allowance [Member] | Commercial Loans [Member]
Total impaired loans	150		150
Impaired loans with a valuation allowance valuation allowance	150		150
Valuation Allowance [Member] | Consumer Loans [Member]
Total impaired loans		45		45
Impaired loans with a valuation allowance valuation allowance		45		45
Valuation Allowance [Member]
Total impaired loans	1,241	3,293	1,241	3,293
Impaired loans with a valuation allowance valuation allowance	1,241	3,293	1,241	3,293
Average Recorded Investment [Member] | One-to-Four-Family Residential [Member]
Impaired loans without a valuation allowance average recorded investment	6,691	16,769	7,369	18,623
Impaired loans with a valuation allowance average recorded investment	1,376	4,148	2,394	3,989
Average Recorded Investment [Member] | Home Equity and Second Mortgage [Member]
Impaired loans without a valuation allowance average recorded investment	446	747	531	820
Impaired loans with a valuation allowance average recorded investment	20	123	22	191
Average Recorded Investment [Member] | Multifamily Residential [Member]
Impaired loans without a valuation allowance average recorded investment	1,873	3,971	3,173	3,920
Impaired loans with a valuation allowance average recorded investment		4,789	564	4,968
Average Recorded Investment [Member] | Commercial Real Estate Loans [Member]
Impaired loans without a valuation allowance average recorded investment	5,570	12,333	6,834	11,154
Impaired loans with a valuation allowance average recorded investment	2,405	1,972	2,346	2,257
Average Recorded Investment [Member] | One-to-Four-Family Construction [Member]
Impaired loans without a valuation allowance average recorded investment	125		63
Impaired loans with a valuation allowance average recorded investment				2
Average Recorded Investment [Member] | Other Construction and Land [Member]
Impaired loans without a valuation allowance average recorded investment	5,202	2,945	3,721	3,257
Impaired loans with a valuation allowance average recorded investment	1,121	3,597	1,257	3,829
Average Recorded Investment [Member] | Commercial Loans [Member]
Impaired loans without a valuation allowance average recorded investment	212	409	245	402
Impaired loans with a valuation allowance average recorded investment	115	106	58	162
Average Recorded Investment [Member] | Consumer Loans [Member]
Impaired loans without a valuation allowance average recorded investment	58	89	55	92
Impaired loans with a valuation allowance average recorded investment		3	6	13
Average Recorded Investment [Member]
Impaired loans without a valuation allowance average recorded investment	20,177	37,263	21,991	38,268
Total impaired loans	25,214	52,001	28,638	53,679
Impaired loans with a valuation allowance average recorded investment	5,037	14,738	6,647	15,411
Interest Income Recognized [Member] | One-to-Four-Family Residential [Member]
Impaired loans without a valuation allowance interest income recognized	18	67	70	270
Impaired loans with a valuation allowance interest income recognized		2		24
Interest Income Recognized [Member] | Home Equity and Second Mortgage [Member]
Impaired loans without a valuation allowance interest income recognized		12	5	32
Impaired loans with a valuation allowance interest income recognized		2		7
Interest Income Recognized [Member] | Multifamily Residential [Member]
Impaired loans without a valuation allowance interest income recognized	42	46	49	131
Interest Income Recognized [Member] | Commercial Real Estate Loans [Member]
Impaired loans without a valuation allowance interest income recognized	18	42	102	190
Impaired loans with a valuation allowance interest income recognized			40	18
Interest Income Recognized [Member] | Other Construction and Land [Member]
Impaired loans without a valuation allowance interest income recognized		11	89	53
Impaired loans with a valuation allowance interest income recognized		2	9	23
Interest Income Recognized [Member] | Commercial Loans [Member]
Impaired loans without a valuation allowance interest income recognized		1		8
Interest Income Recognized [Member] | Consumer Loans [Member]
Impaired loans without a valuation allowance interest income recognized		2	1	4
Impaired loans with a valuation allowance interest income recognized				1
Interest Income Recognized [Member] | Interest Income Based on Original Terms [Member]
Total impaired loans	405	881	1,212	2,626
Interest based on original terms	405	881	1,212	2,626
Interest Income Recognized [Member]
Impaired loans without a valuation allowance interest income recognized	78	181	316	688
Total impaired loans	78	187	365	761
Impaired loans with a valuation allowance interest income recognized		6	49	73
Interest based on original terms	78	187	365	761
Interest income recognized on a cash basis on impaired loans		$ 121	$ 203	$ 400

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Note 10 - Regulatory Matters (Detail) - The Bank’s Actual and Required Capital Amounts (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011		Dec. 31, 2010
Tangible Capital to Tangible Assets - Amount (in Dollars)	$ 67,764		$ 64,839
Tangible Capital to Tangible Assets - Ratio	12.48%		11.22%
Tangible Capital to Tangible Assets - For Capital Adequacy Purposes Amount (in Dollars)	8,144		8,666
Tangible Capital to Tangible Assets - For Capital Adequacy Purposes Ratio	1.50%		1.50%
Core Capital to Adjusted Tangible Assets - Actual Amount (in Dollars)	67,764		64,839
Core Capital to Adjusted Tangible Assets - Actual Ratio	12.48%		11.22%
Core Capital to Adjusted Tangible Assets - For Capital Adequacy Purposes Amount (in Dollars)	21,716		23,111
Core Capital to Adjusted Tangible Assets - For Capital Adequacy Purposes Ratio	4.00%		4.00%
Total Capital to Risk-Weighted Assets - Actual Amount (in Dollars)	72,568		69,466
Total Capital to Risk-Weighted Assets - Actual Ratio	19.47%		19.62%
Total Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Amount (in Dollars)	29,815		28,319
Total Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Ratio	8.00%		8.00%
Tier I Capital to Risk-Weighted Assets - Actual Amount (in Dollars)	67,764		64,839
Tier I Capital to Risk-Weighted Assets - Actual Ratio	18.18%		18.32%
To be Categorized as Adequatey Capitalized Under Prompt Corrective Action Provisions [Member]
Core Capital to Adjusted Tangible Assets - For Capital Adequacy Purposes Amount (in Dollars)	21,716		23,111
Core Capital to Adjusted Tangible Assets - For Capital Adequacy Purposes Ratio	4.00%		4.00%
Total Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Amount (in Dollars)	29,815		28,319
Total Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Ratio	8.00%		8.00%
Tier I Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Amount (in Dollars)	14,908		14,160
Tier I Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Ratio	4.00%		4.00%
Required Per Bank Order [Member]
Core Capital to Adjusted Tangible Assets - For Capital Adequacy Purposes Amount (in Dollars)	43,432	[1]	46,221	[1]
Core Capital to Adjusted Tangible Assets - For Capital Adequacy Purposes Ratio	8.00%	[1]	8.00%	[1]	8.00%
Total Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Amount (in Dollars)	$ 44,723	[1]	$ 42,479	[1]
Total Capital to Risk-Weighted Assets - For Capital Adequacy Purposes Ratio	12.00%	[1]	12.00%	[1]	12.00%

[1] The Bank Order states that no later than December 31, 2010, the Bank shall achieve and maintain a Tier 1 (Core) Capital Ratio of at least 8% and a Total Risk-Based Capital Ratio of at least 12%. The required amounts presented reflect these ratios.

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Note 6 - Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2012			2011
Expected Term (years)		7			7
Annual Dividend Rate		0.00%			0.00%
Risk Free Interest Rate		1.32	%		2.164	%
Volatility		53.25	%		50.94	%
Expected forfeiture rate		4.00	%		4.00	%

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Shares Underlying Awards			Weighted Average Exercise Price
Outstanding—January 1, 2012		236,000		$	6.23
Granted		35,000		$	7.00
Forfeited		(54,000	)	$	6.57
Outstanding—September 30, 2012		217,000		$	6.28

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Note 3 - Investment Securities Available for Sale (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Available-for-sale Securities Pledged as Collateral	$ 1,600,000	$ 1,200,000
Available-for-sale Securities, Amortized Cost Basis	57,664,000	61,179,000
Collateral Required for Deposits Minimum Balance [Member]
Cash, FDIC Insured Amount	250,000
Federal Reserve Bank Transaction Settlements [Member]
Available-for-sale Securities Pledged as Collateral	12,900,000	8,900,000
Call Options [Member]
Available-for-sale Securities, Amortized Cost Basis	37,400,000	48,500,000
Callable Within One Year [Member]
Available-for-sale Securities, Amortized Cost Basis	$ 8,000,000	$ 26,600,000

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Note 9 - Fair Value of Financial Instruments (Detail) - The Estimated Fair Values of Financial Instruments (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
FINANCIAL ASSETS:
Cash and cash equivalents	$ 42,380	$ 79,799	$ 78,667	$ 36,407
Interest-bearing time deposits in banks	29,840	27,113
Federal Home Loan Bank stock	578	576
Loans held for sale	5,790	3,339
Cash surrender value of life insurance	22,799	22,213
Accrued interest receivable	1,732	1,516
Loans receivable—net	339,978	331,453
FINANCIAL LIABILITIES:
Other borrowings	3,174	6,679
Advance payments by borrowers for taxes and insurance	535	816
Carrying Value [Member] | Fair Value, Inputs, Level 1 [Member]
FINANCIAL ASSETS:
Cash and cash equivalents	42,380	79,799
Carrying Value [Member] | Fair Value, Inputs, Level 2 [Member]
FINANCIAL ASSETS:
Interest-bearing time deposits in banks	29,840	27,113
Federal Home Loan Bank stock	578	576
Loans held for sale	5,790	3,339
Cash surrender value of life insurance	22,799	22,213
Accrued interest receivable	1,732	1,516
FINANCIAL LIABILITIES:
Checking, money market and savings accounts	201,189	207,015
Other borrowings	3,174	6,679
Accrued interest payable	28	54
Accrued interest payable	28	54
Advance payments by borrowers for taxes and insurance	535	816
Carrying Value [Member] | Fair Value, Inputs, Level 3 [Member]
FINANCIAL ASSETS:
Loans receivable—net	339,978	331,453
FINANCIAL LIABILITIES:
Certificates of deposit	264,877	291,566
Estimated Fair Value [Member] | Fair Value, Inputs, Level 1 [Member]
FINANCIAL ASSETS:
Cash and cash equivalents	42,380	79,799
Estimated Fair Value [Member] | Fair Value, Inputs, Level 2 [Member]
FINANCIAL ASSETS:
Interest-bearing time deposits in banks	30,752	27,572
Federal Home Loan Bank stock	578	576
Loans held for sale	5,790	3,339
Cash surrender value of life insurance	22,799	22,213
Accrued interest receivable	1,732	1,516
FINANCIAL LIABILITIES:
Checking, money market and savings accounts	201,189	207,015
Other borrowings	3,321	6,889
Accrued interest payable	28	54
Accrued interest payable	28	54
Advance payments by borrowers for taxes and insurance	535	816
Estimated Fair Value [Member] | Fair Value, Inputs, Level 3 [Member]
FINANCIAL ASSETS:
Loans receivable—net	354,714	333,006
FINANCIAL LIABILITIES:
Certificates of deposit	$ 269,425	$ 293,198

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Note 5 - Allowances For Loan And Real Estate Losses (Detail) - Allowances for Loan Losses (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Provisions for estimated losses			$ 585,000	$ 4,800,000
Loan and Leases [Member]
Balance—beginning of period	17,264,000	29,598,000	20,818,000	31,084,000
Balance—end of period	16,432,000	27,972,000	16,432,000	27,972,000
Provisions for estimated losses		21,000	22,000	812,000
Recoveries	156,000	154,000	1,052,000	781,000
Losses charged off	(988,000)	(1,801,000)	(5,460,000)	(4,705,000)
Real Estate [Member]
Balance—beginning of period	19,649,000	9,634,000	20,934,000	7,841,000
Balance—end of period	17,881,000	9,961,000	17,881,000	9,961,000
Provisions for estimated losses	277,000	1,838,000	585,000	4,837,000
Losses charged off	$ (2,045,000)	$ (1,511,000)	$ (3,638,000)	$ (2,717,000)

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (USD $) In Thousands, except Share data	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2011	$ 193	$ 90,572	$ 898	$ (22,770)	$ 68,893
Balance (in Shares) at Dec. 31, 2011	19,302,603
Net income				1,253	1,253
Other comprehensive loss			(48)		(48)
Stock compensation expense		112			112
Balance at Sep. 30, 2012	$ 193	$ 90,684	$ 850	$ (21,517)	$ 70,210
Balance (in Shares) at Sep. 30, 2012	19,302,603

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Note 4 - Loans Receivable

9 Months Ended

Sep. 30, 2012

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4.       LOANS RECEIVABLE 

The following tables present age analyses of loans, including both accruing and nonaccrual loans, as of the dates indicated (in thousands):

September 30, 2012	30-89 Days Past Due		90 Days or More Past Due		Current		Total (1)
One- to four-family residential	$	1,738	$	4,738	$	144,619	$	151,095
Home equity and second mortgage		36		437		9,149		9,622
Multifamily residential		--		--		22,931		22,931
Commercial real estate		411		3,746		126,861		131,018
One- to four-family construction		--		250		1,383		1,633
Other construction and land		--		3,498		11,479		14,977
Commercial		17		385		19,778		20,180
Consumer		19		15		6,181		6,215
Total (1)	$	2,221	$	13,069	$	342,381	$	357,671

December 31, 2011	30-89 Days Past Due		90 Days or More Past Due		Current		Total (1)
One- to four-family residential	$	8,319	$	5,604	$	169,235	$	183,158
Home equity and second mortgage		126		437		11,939		12,502
Multifamily residential		31		--		20,445		20,476
Commercial real estate		1,371		4,752		89,797		95,920
One- to four-family construction		--		--		2,391		2,391
Other construction and land		191		1,344		21,908		23,443
Commercial		--		388		7,215		7,603
Consumer		23		5		7,987		8,015
Total (1)	$	10,061	$	12,530	$	330,917	$	353,508

(1) Gross of undisbursed loan funds, unearned discounts and net loan fees and the allowance for loan and lease losses.

There was one loan over 90 days past due and still accruing at December 31, 2011, totaling $388,000 and no such loans at September 30, 2012. Restructured loans totaled $8.5 million and $13.9 million as of September 30, 2012 and December 31, 2011, respectively, with $2.7 million and $8.7 million of such restructured loans on nonaccrual status at September 30, 2012 and December 31, 2011, respectively.

The following table presents age analyses of nonaccrual loans as of the dates indicated (in thousands):

September 30, 2012	30-89 Days Past Due		90 Days or More Past Due		Current		Total
One- to four-family residential	$	707	$	4,738	$	1,826	$	7,271
Home equity and second mortgage		25		437		173		635
Multifamily residential		--		--		--		--
Commercial real estate		--		3,746		2,678		6,424
One- to four-family construction		--		250		--		250
Other construction and land		--		3,498		1,019		4,517
Commercial		17		385		--		402
Consumer		--		15		1		16
Total	$	749	$	13,069	$	5,697	$	19,515

December 31, 2011	30-89 Days Past Due		90 Days or More Past Due		Current		Total
One- to four-family residential	$	1,870	$	5,604	$	4,262	$	11,736
Home equity and second mortgage		57		437		270		764
Multifamily residential		--		--		4,645		4,645
Commercial real estate		203		4,752		8,283		13,238
One- to four-family construction		--		--		--		--
Other construction and land		164		1,344		1,893		3,401
Commercial		--		--		72		72
Consumer		--		5		93		98
Total	$	2,294	$	12,142	$	19,518	$	33,954

The following tables summarize information pertaining to impaired loans as of September 30, 2012 and December 31, 2011, and for three and nine month periods ended September 30, 2012 and 2011 (in thousands):

	September 30, 2012						For the Three and Nine Months Ended September 30, 2012
	Unpaid Principal Balance		Recorded Investment		Valuation Allowance		Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
Impaired loans with a valuation allowance:							(Three Months)		(Nine Months)		(Three Months)		(Nine Months)
One- to four-family residential	$	1,462	$	1,269	$	193	$	1,376	$	2,394	$	--	$	--
Home equity and second mortgage		212		20		192		20		22		--		--
Multifamily residential		--		--		--		--		564		--		--
Commercial real estate		1,921		1,381		540		2,405		2,346		--		40
One- to four-family construction		--		--		--		--		--		--		--
Other construction and land		634		468		166		1,121		1,257		--		9
Commercial		380		230		150		115		58		--		--
Consumer		--		--		--		--		6		--		--
		4,609		3,368		1,241		5,037		6,647		--		49
Impaired loans without a valuation allowance:
One- to four-family residential		6,914		6,914		--		6,691		7,369		18		70
Home equity and second mortgage		442		442		--		446		531		--		5
Multifamily residential		3,466		3,466		--		1,873		3,173		42		49
Commercial real estate		5,761		5,761		--		5,570		6,834		18		102
One- to four-family construction		250		250		--		125		63		--		--
Other construction and land		3,883		3,883		--		5,202		3,721		--		89
Commercial		22		22		--		212		245		--		--
Consumer		24		24		--		58		55		--		1
		20,762		20,762		--		20,177		21,991		78		316
Total impaired loans	$	25,371	$	24,130	$	1,241	$	25,214	$	28,638	$	78	$	365
Interest based on original terms											$	405	$	1,212
Interest income recognized on a cash basis on impaired loans											$	--	$	203

	December 31, 2011						For the Three and Nine Months Ended September 30, 2011
	Unpaid Principal Balance		Recorded Investment		Valuation Allowance		Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
Impaired loans with a valuation allowance:							(Three Months)		(Nine Months)		(Three Months)		(Nine Months)
One- to four-family residential	$	3,019	$	2,714	$	305	$	4,148	$	3,989	$	2	$	24
Home equity and second mortgage		108		27		81		123		191		2		7
Multifamily residential		2,958		2,255		703		4,789		4,968		--		--
Commercial real estate		4,301		2,422		1,879		1,972		2,257		--		18
One- to four-family construction		--		--		--		--		2		--		--
Other construction and land		925		645		280		3,597		3,829		2		23
Commercial		--		--		--		106		162		--		--
Consumer		70		25		45		3		13		--		1
		11,381		8,088		3,293		14,738		15,411		6		73
Impaired loans without a valuation allowance:
One- to four-family residential		10,066		10,066		--		16,769		18,623		67		270
Home equity and second mortgage		723		723		--		747		820		12		32
Multifamily residential		5,175		5,175		--		3,971		3,920		46		131
Commercial real estate		8,937		8,937		--		12,333		11,154		42		190
One- to four-family construction		--		--		--		--		--		--		--
Other construction and land		2,758		2,758		--		2,945		3,257		11		53
Commercial		72		72		--		409		402		1		8
Consumer		49		49		--		89		92		2		4
	$	27,780	$	27,780	$	--		37,263		38,268		181		688
Total impaired loans	$	39,161	$	35,868	$	3,293	$	52,001	$	53,679	$	187	$	761
Interest based on original terms											$	881	$	2,626
Interest income recognized on a cash basis on impaired loans											$	121	$	400

Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Bank's loan portfolio, the Bank categorizes loans into risk categories based on available and relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by assigning a credit risk rating to loans on at least an annual basis for non-homogeneous loans over $250,000. The Bank uses the following definitions for risk ratings:

Pass (Grades 1 to 5). Loans rated as pass generally meet or exceed normal credit standards and are rated on a scale from 1 to 5, with 1 being the highest quality loan and 5 being a pass/watch loan. Factors influencing the level of pass grade include repayment source and strength, collateral, borrower cash flows, existence of and strength of guarantors, industry/business sector, financial trends, performance history, etc.

Special Mention (Grade 6). Loans rated as special mention, while still adequately protected by the borrower's repayment capability, exhibit distinct weakening trends. If left unchecked or uncorrected, these potential weaknesses may result in deteriorated prospects of repayment. These exposures require management's close attention so as to avoid becoming adversely classified credits.

Substandard (Grade 7). Loans rated as substandard are inadequately protected by the current sound net worth and paying capacity of the borrower or the collateral pledged, if any. These assets must have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful (Grade 8). Loans rated as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

Loss (Grade 9). Loans rated as a loss are considered uncollectible and of such little value that continuance as an asset is not warranted. A loss classification does not mean that an asset has no recovery or salvage value, but that it is not practical or desirable to defer writing off or reserving all or a portion of the asset, even though partial recovery may be effected in the future.

Based on analyses performed at September 30, 2012 and December 31, 2011, the risk categories of loans are as follows:

	September 30, 2012
	Pass		Special Mention		Substandard		Not Rated		Total (1)
One- to four-family residential	$	19,824	$	8,465	$	12,769	$	110,037	$	151,095
Home equity and second mortgage		607		31		1,157		7,827		9,622
Multifamily residential		13,528		4,472		4,909		22		22,931
Commercial real estate		111,329		7,685		11,117		887		131,018
One- to four-family construction		1,056		327		250		--		1,633
Other construction and land		5,350		691		5,459		3,477		14,977
Commercial		19,025		345		505		305		20,180
Consumer		285		--		37		5,893		6,215
Total (1)	$	171,004	$	22,016	$	36,203	$	128,448	$	357,671

	December 31, 2011
	Pass		Special Mention		Substandard		Not Rated		Total (1)
One- to four-family residential	$	24,300	$	13,888	$	27,877	$	117,093	$	183,158
Home equity and second mortgage		558		487		1,569		9,888		12,502
Multifamily residential		4,736		6,655		6,203		2,882		20,476
Commercial real estate		55,997		9,174		29,020		1,729		95,920
One- to four-family construction		--		--		1,463		928		2,391
Other construction and land		9,508		2,908		8,696		2,331		23,443
Commercial		5,579		1,105		521		398		7,603
Consumer		626		13		191		7,185		8,015
Total (1)	$	101,304	$	34,230	$	75,540	$	142,434	$	353,508

(1) Gross of undisbursed loan funds, unearned discounts and net loan fees and the allowance for loan and lease losses.

As of September 30, 2012 and December 31, 2011, the Bank did not have any loans categorized as subprime or classified as doubtful.

Troubled Debt Restructurings. Troubled debt restructurings (“TDRs”) are loans where the contractual terms on the loan have been modified and both of the following conditions exist: (i) the borrower is experiencing financial difficulty and (ii) the restructuring constitutes a concession that the Bank would not otherwise make. The Bank assesses all loan modifications to determine if the modifications constitute a TDR. Restructurings resulting in an insignificant delay in payment are not considered to be TDRs. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

All TDRs are considered impaired loans. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

The following table summarizes TDRs as of September 30, 2012 and December 31, 2011: (dollars in thousands)

September 30, 2012	Number of Accruing TDR Loans		Balance		Number of Nonaccrual TDR Loans		Balance		Total Number of TDR Loans		Total Balance
One- to four-family residential		11	$	1,105		6	$	555		17	$	1,660
Home equity and second mortgage		1		19		3		75		4		94
Multifamily residential		1		3,466		--		--		1		3,466
Commercial real estate		1		1,260		2		580		3		1,840
Other construction and land		--		--		6		1,463		6		1,463
Consumer		3		7		--		--		3		7
Total		17	$	5,857		17	$	2,673		34	$	8,530

December 31, 2011	Number of Accruing TDR Loans		Balance		Number of Nonaccrual TDR Loans		Balance		Total Number of TDR Loans		Total Balance
One- to four-family residential		15	$	1,349		11	$	1,134		26	$	2,483
Home equity and second mortgage		3		68		4		133		7		201
Multifamily residential		1		3,488		1		1,399		2		4,887
Commercial real estate		--		--		6		4,759		6		4,759
Other construction and land		5		282		4		1,242		9		1,524
Consumer		7		20		--		--		7		20
Total		31	$	5,207		26	$	8,667		57	$	13,874

For the three and nine months ended September 30, 2012, there was one loan modified in a TDR with a balance after restructure of $172,000.

Loans receivable that were restructured as TDRs during the three and nine months ended September 30, 2011, were as follows: (dollars in thousands)

	Three Months Ended September 30, 2011
							Nature of Modification
	Number of Loans		Balance Prior to TDR		Balance at September 30, 2011		Payment Term (1)		Other
One- to four-family residential		1	$	34	$	33	$	33	$	--
Home equity and second mortgage		--		--		--		--		--
Other construction and land		--		--		--		--		--
Commercial real estate		1		1,271		1,305		--		1,305	(2)
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
Total		2	$	1,305	$	1,338	$	33	$	1,305

	Nine Months Ended September 30, 2011
							Nature of Modification
	Number of Loans		Balance Prior to TDR		Balance at September 30, 2011		Payment Term (1)		Other
One- to four-family residential		3	$	512	$	510	$	98	$	412	(3)
Home equity and second mortgage		2		74		74		74		--
Other construction and land		2		96		95		--		95	(3)
Commercial real estate		2		1,471		1,505		200		1,305	(2)
Commercial		1		54		25		--		25	(4)
Consumer		1		3		3		3		--
Total		11	$	2,210	$	2,212	$	375	$	1,837

(1) Concessions represent skipped payments/maturity date extensions or amortization term extensions.

(2) Concession represents payment of delinquent property taxes.

(3) Modification to interest only payments for a period of time.

(4) Debt consolidation.

The Bank had no loans receivable for which a payment default occurred during the three and nine months ended September 30, 2012 and that had been modified as a TDR within 12 months or less of the payment default. The following table represents loans receivable for which a payment default occurred during the three and nine months ended September 30, 2011, and that had been modified as a TDR within 12 months or less of the payment default. A payment default is defined as a payment received more than 90 days after its due date. (dollars in thousands)

	Three Months Ended September 30, 2011
	Number of Loans		Unpaid Principal Balance at September 30, 2011		Specific Valuation Allowance		Net Balance at September 30, 2011		Charge-offs		Transfers to Real Estate Owned
One- to four-family residential		6	$	226	$	27	$	199	$	34	$	387
Home equity and second mortgage		3		78		25		53		11		--
Multifamily residential		--		--		--		--		--		--
Other construction and land		2		318		--		318		--		45
Commercial real estate		1		408		--		408		--		--
Commercial		1		157		51		106		--		--
Consumer		1		--		--		--		26		--
Total		14	$	1,187	$	103	$	1,084	$	71	$	432

	Nine Months Ended September 30, 2011
	Number of Loans		Unpaid Principal Balance at September 30, 2011		Specific Valuation Allowance		Net Balance at September 30, 2011		Charge-offs		Transfers to Real Estate Owned
One- to four-family residential		6	$	669	$	117	$	552	$	34	$	387
Home equity and second mortgage		3		140		88		52		47		--
Multifamily residential		1		1,680		785		895		--		--
Other construction and land		2		318		--		318		--		45
Commercial real estate		1		408		--		408		--		--
Commercial		1		157		51		106		--		--
Consumer		2		--		--		--		66		--
Total		16	$	3,372	$	1,041	$	2,331	$	147	$	432

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Note 3 - Investment Securities Available for Sale (Detail) - Investment Securities (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available for Sale Securities Amortized Cost	$ 57,664	$ 61,179
Available for Sale Securities Gross Unrealized Gains	953	1,098
Available for Sale Securities Gross Unrealized Losses	(103)	(200)
Available for Sale Securities Fair Value	58,514	62,077
US States and Political Subdivisions Debt Securities [Member]
Available for Sale Securities Amortized Cost	44,657	35,590
Available for Sale Securities Gross Unrealized Gains	953	1,033
Available for Sale Securities Gross Unrealized Losses	(16)	(10)
Available for Sale Securities Fair Value	45,594	36,613
Corporate Debt Securities [Member]
Available for Sale Securities Amortized Cost	8,000	6,000
Available for Sale Securities Gross Unrealized Losses	(87)	(190)
Available for Sale Securities Fair Value	7,913	5,810
US Government Agencies Debt Securities [Member]
Available for Sale Securities Amortized Cost	5,007	19,589
Available for Sale Securities Gross Unrealized Gains		65
Available for Sale Securities Fair Value	$ 5,007	$ 19,654

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Note 4 - Loans Receivable (Detail) - Additional Information Regarding Troubled Debt Restructurings (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended					3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2011 One-to-Four-Family Residential [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 One-to-Four-Family Residential [Member]	Sep. 30, 2011 Home Equity and Second Mortgage [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 Home Equity and Second Mortgage [Member] Modified Year to Date [Member]	Sep. 30, 2011 Multifamily Residential [Member] Modified Year to Date [Member]	Sep. 30, 2011 Land Loans [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 Land Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Commercial Real Estate Loans [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 Commercial Real Estate Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Commercial Loans [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 Commercial Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Consumer Loans [Member] Modified in Current Quarter [Member]	Sep. 30, 2011 Consumer Loans [Member] Modified Year to Date [Member]	Sep. 30, 2011 Modified in Current Quarter [Member]	Sep. 30, 2011 Modified Year to Date [Member]
Number of Loans	6	6	3	3	1	2	2	1	1	1	1	1	2	14	16
Unpaid Principal Balance at September 30, 2011	$ 226	$ 669	$ 78	$ 140	$ 1,680	$ 318	$ 318	$ 408	$ 408	$ 157	$ 157			$ 1,187	$ 3,372
Specific Valuation Allowance	27	117	25	88	785					51	51			103	1,041
Net Balance at September 30, 2011	199	552	53	52	895	318	318	408	408	106	106			1,084	2,331
Charge-offs	34	34	11	47								26	66	71	147
Transfers to REO	$ 387	$ 387				$ 45	$ 45							$ 432	$ 432

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Note 5 - Allowances For Loan And Real Estate Losses (Tables)

9 Months Ended

Sep. 30, 2012

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Three Months Ended September 30, 2012	One- to four-family residential			Home equity and second mortgage			Multifamily residential			Commercial real estate			One- to four-family construction			Other construction and land			Commercial			Consumer			Total
ALLL:
Balance, beginning of period	$	6,046		$	587		$	886		$	7,688		$	97		$	1,487		$	313		$	160		$	17,264
Provision charged to expense		455			(55	)		341			(734	)		(52	)		(242	)		148			139			--
Losses charged off		(295	)		(52	)		--			(293	)		--			(269	)		--			(79	)		(988	)
Recoveries		82			61			--			8			--			(22	)		8			19			156
Balance, end of period	$	6,288		$	541		$	1,227		$	6,669		$	45		$	954		$	469		$	239		$	16,432
Nine Months Ended September 30, 2012
ALLL:
Balance, beginning of year	$	6,306		$	693		$	2,654		$	7,316		$	84		$	2,567		$	972		$	226		$	20,818
Provision charged to expense		1,109			(95	)		(447	)		1,856			(39	)		(2,006	)		(540	)		184			22
Losses charged off		(1,230	)		(163	)		(997	)		(2,510	)		--			(327	)		--			(233	)		(5,460	)
Recoveries		103			106			17			7			--			720			37			62			1,052
Balance, end of period	$	6,288		$	541		$	1,227		$	6,669		$	45		$	954		$	469		$	239		$	16,432
Ending balance: individually evaluated for impairment	$	193		$	192		$	--		$	540		$	--		$	166		$	150		$	--		$	1,241
Ending balance: collectively evaluated for impairment	$	6,095		$	349		$	1,227		$	6,129		$	45		$	788		$	319		$	239		$	15,191
Loan balances (1):
Ending balance	$	151,095		$	9,622		$	22,931		$	131,018		$	1,633		$	14,977		$	20,180		$	6,215		$	357,671
Ending balance: individually evaluated for impairment	$	4,319		$	300		$	3,466		$	7,033		$	250		$	3,696		$	402		$	--		$	19,466
Ending balance: collectively evaluated for impairment	$	146,776		$	9,322		$	19,465		$	123,985		$	1,383		$	11,281		$	19,778		$	6,215		$	338,205

Year Ended December 31, 2011	One- to four-family residential			Home equity and second mortgage			Multifamily residential			Commercial real estate			One- to four-family construction			Other construction and land			Commercial			Consumer			Total
ALLL:
Balance, beginning of year	$	5,440		$	1,275		$	6,581		$	9,491		$	81		$	4,035		$	3,543		$	638		$	31,084
Provision charged to expense		3,993			(160	)		(1,132	)		189			31			204			(2,139	)		(127	)		859
Losses charged off		(3,177	)		(486	)		(2,795	)		(2,375	)		(28	)		(2,190	)		(517	)		(409	)		(11,977	)
Recoveries		50			64			--			11			--			518			85			124			852
Balance, end of year	$	6,306		$	693		$	2,654		$	7,316		$	84		$	2,567		$	972		$	226		$	20,818
Ending balance: individually evaluated for impairment	$	305		$	81		$	703		$	1,879		$	--		$	280		$	--		$	45		$	3,293
Ending balance: collectively evaluated for impairment	$	6,001		$	612		$	1,951		$	5,437		$	84		$	2,287		$	972		$	181		$	17,525
Loan balances (1):
Ending balance	$	183,158		$	12,502		$	20,476		$	95,920		$	2,391		$	23,443		$	7,603		$	8,015		$	353,508
Ending balance: individually evaluated for impairment	$	13,085		$	831		$	8,133		$	13,238		$	--		$	3,683		$	72		$	119		$	39,161
Ending balance: collectively evaluated for impairment	$	170,073		$	11,671		$	12,343		$	82,682		$	2,391		$	19,760		$	7,531		$	7,896		$	314,347

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

	Three Months Ended September 30, 2012						Three Months Ended September 30, 2011
	Loans and Leases			Real Estate			Loans and Leases			Real Estate
Balance—beginning of period	$	17,264		$	19,649		$	29,598		$	9,634
Provisions for estimated losses		--			277			21			1,838
Recoveries		156			--			154			--
Losses charged off		(988	)		(2,045	)		(1,801	)		(1,511	)
Balance—end of period	$	16,432		$	17,881		$	27,972		$	9,961

	Nine Months Ended September 30, 2012						Nine Months Ended September 30, 2011
	Loans and Leases			Real Estate			Loans and Leases			Real Estate
Balance—beginning of period	$	20,818		$	20,934		$	31,084		$	7,841
Provisions for estimated losses		22			585			812			4,837
Recoveries		1,052			--			781			--
Losses charged off		(5,460	)		(3,638	)		(4,705	)		(2,717	)
Balance—end of period	$	16,432		$	17,881		$	27,972		$	9,961