Loans and the Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2012

Loans And Allowance For Loan Losses Tables

Schedule of Loans Receivable, by category

Categories of loans at December 31 include:

	2012		2011
	(In thousands)
One-to-four family residential	$	160,910	$	153,064
Multi-family residential		9,790		8,589
Construction		2,170		753
Nonresidential real estate and land		65,761		62,864
Commercial		14,245		10,526
Consumer and other		1,517		2,257
		254,393		238,053
Less:
Undisbursed portion of loans in process		2,647		1,691
Deferred loan origination fees		569		409
Allowance for loan losses		3,328		3,854
Total loans	$	247,849	$	232,099

Schedule of Allowance for Loan Losses

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31, 2012 and 2011:

December 31, 2012		One-to-four family residential			All other mortgage loans			Commercial business loans			Consumer loans			Unallocated		Total
	(In thousands)
Allowance for loan losses:
Balance, December 31, 2011		$	1,128		$	2,547		$	169		$	10		$	—	$	3,854
Provision charged to expense			98			577			92			6			—		773
Losses charged off			(146	)		(1,199	)		(1	)		(11	)		—		(1,357	)
Recoveries			42			—			15			1			—		58
Balance, December 31, 2012		$	1,122		$	1,925		$	275		$	6		$	—	$	3,328
Ending balance:  individually evaluated for impairment		$	248		$	1,074		$	100		$	—		$	—	$	1,422
Ending balance:  collectively evaluated for impairment		$	874		$	851		$	175		$	6		$	—	$	1,906
Loans:
Ending balance		$	160,910		$	77,721		$	14,245		$	1,517				$	254,393
Ending balance:  individually evaluated for impairment		$	6,878		$	5,837		$	185		$	—				$	12,900
Ending balance:  collectively evaluated for impairment		$	154,032		$	71,884		$	14,060		$	1,517				$	241,493

December 31, 2011		One-to-four family residential			All other mortgage loans		Commercial business loans		Consumer loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Balance, beginning of year		$	1,073		$	1,967	$	158	$	5	$	—	$	3,203
Provision charged to expense			212			580		11		3		—		806
Losses charged off			(157	)		—		—		—				(157	)
Recoveries			—			—		—		2		—		2
Balance, end of year		$	1,128		$	2,547	$	169	$	10	$	—	$	3,854
Ending balance:  individually evaluated for impairment		$	320		$	1,941	$	53	$	—	$	—	$	2,314
Ending balance:  collectively evaluated for impairment		$	808		$	606	$	116	$	10	$	—	$	1,540
Loans:
Ending balance		$	153,064		$	72,206	$	10,526	$	2,257			$	238,053
Ending balance:  individually evaluated for impairment		$	3,744		$	6,955	$	92	$	—			$	10,791
Ending balance:  collectively evaluated for impairment		$	149,320		$	65,251	$	10,434	$	2,257			$	227,262

Schedule of Loans Receivable Quality Indicators

The following tables present the credit risk profile of the Bank’s loan portfolio based on rating category and payment activity as of December 31, 2012 and 2011:

December 31, 2012	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	151,749	$	68,949	$	14,034	$	1,513
Special Mention (Risk 5)		708		2,934		26		—
Substandard (Risk 6)		8,453		5,838		185		4
Total	$	160,910	$	77,721	$	14,245	$	1,517

December  31, 2011	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	145,061	$	61,970	$	10,268	$	2,257
Special Mention (Risk 5)		2,979		3,281		166		—
Substandard (Risk 6)		5,024		6,955		92		—
Total	$	153,064	$	72,206	$	10,526	$	2,257

* Ratings are generally assigned to consumer and residential mortgage loans on a “pass” or “fail” basis, where “fail” results in a substandard classification. Commercial loans, both secured by real estate or other assets or unsecured, are analyzed in accordance with an analytical matrix codified in the Bank’s loan policy that produces a risk rating as described below.

Risk 1 is unquestioned credit quality for any credit product. Loans are secured by cash and near cash collateral with immediate access to proceeds.

Risk 2 is very low risk with strong credit and repayment sources. Borrower is well capitalized in a stable industry, financial ratios exceed peers and financial trends are positive.

Risk 3 is very favorable risk with highly adequate credit strength and repayment sources. Borrower has good overall financial condition and adequate capitalization.

Risk 4 is acceptable, average risk with adequate credit strength and repayment sources. Collateral positions must be within Bank policies.

Risk 5 or “Special Mention,” also known as “watch,” has potential weakness that deserves Management’s close attention. This risk includes loans where the borrower has developed financial uncertainties or are resolving them. Bank credits have been secured or negotiations will be ongoing to secure further collateral. In accordance with regulatory guidance, this category is generally regarded as temporary, as successful remedial actions will either successfully move the credit back up to Risk 4 or unsuccessful remedial actions will result in the credit being downgraded to Risk 6.

Risk 6 or “Substandard” loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that exhibit a weakening of the borrower’s credit strength with limited credit access and all non-performing loans.

Risk 7 or “Doubtful” loans are significantly under protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that are likely to experience a loss of some magnitude, but where the amount of the expected loss is not known with enough certainty to allow for an accurate calculation of a loss amount for charge off. This category is considered to be temporary until a charge off amount can be reasonably determined.

Aging Analysis of Loans Receivable

The following tables present the Bank’s loan portfolio aging analysis as of December 31, 2012 and 2011:

December 31, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days & Accruing
	(In thousands)
One-to-four family residential loans	$	1,049	$	339	$	1,190	$	2,578	$	158,332	$	160,910	$	—
All other mortgage loans		1,544		—		1,309		2,853		74,868		77,721		—
Commercial business loans		—		—		—		—		14,245		14,245		—
Consumer loans		1		2		2		5		1,512		1,517		—
Total	$	2,594	$	341	$	2,501	$	5,436	$	248,957	$	254,393	$	—

December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days & Accruing
	(In thousands)
One-to-four family residential loans	$	1,513	$	280	$	844	$	2,637	$	150,427	$	153,064	$	—
All other mortgage loans		903		—		1,905		2,808		69,398		72,206		—
Commercial business loans		17		—		35		52		10,474		10,526		—
Consumer loans		17		9		—		26		2,231		2,257		—
Total	$	2,450	$	289	$	2,784	$	5,523	$	232,530	$	238,053	$	—

Schedule of Non-accrual Loans

Non-accrual loans were comprised of the following at December 31, 2012 and 2011:

	2012		2011
Nonaccrual
	(In thousands)
One-to-four family residential loans	$	2,097	$	2,433
Nonresidential real estate loans		3,123		3,271
All other mortgage loans		—		—
Commercial business loans		32		92
Consumer loans		4		12
Total	$	5,256	$	5,808

Schedule of Impaired Loans

The following tables present impaired loans as of and for the years ended December 31, 2012 and 2011:

December 31, 2012	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,587	$	5,587	$	—	$	3,733	$	147
All other mortgage loans		2,781		2,781		—		2,376		102
Commercial business loans		85		85		—		21		1
Loans with a specific valuation allowance
One-to-four family residential loans		1,291		1,291		248		1,252		45
All other mortgage loans		3,056		3,652		1,074		4,453		1
Commercial business loans		100		100		100		59		4
Total:
One-to-four family residential loans	$	6,878	$	6,878	$	248	$	4,985	$	192
All other mortgage loans		5,837		6,433		1,074		6,829		103
Commercial business loans		185		185		100		80		5
	$	12,900	$	13,496	$	1,422	$	11,894	$	300

December 31, 2011	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
Loans without a specific valuation allowance							(nine months)
One-to-four family residential loans	$	1,613	$	1,613	$	—	$	1,966	$	35
All other mortgage loans		1,771		1,771		—		1,345		52
Loans with a specific valuation allowance
One-to-four family residential loans		250		250		224		557		15
All other mortgage loans		5,184		5,184		1,941		5,142		75
Commercial business loans		92		92		53		76		—
Total:
One-to-four family residential loans	$	1,863	$	1,863	$	224	$	2,523	$	50
All other mortgage loans		6,955		6,955		1,941		6,487		127
Commercial business loans		92		92		53		76		—
	$	8,910	$	8,910	$	2,218	$	9,086	$	177

Schedule of Troubled Debt Restructurings

The following tables present information regarding newly classified troubled debt restructurings by class for the years ended December 31, 2012 and 2011.

December 31, 2012	Number of loans	Pre-modification Unpaid Principal Balance		Post-modification Unpaid Principal Balance
Troubled Debt Restructurings
One-to-four family residential loans	2	$	527	$	527
All other mortgage loans	2		1,296		1,296
December 31, 2011 (nine months)
Troubled Debt Restructurings
One-to-four family residential loans	2	$	205	$	205
All other mortgage loans	2		1,366		1,366
Commercial business loans	2		162		162