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4. LOANS RECEIVABLE, NET
 12 Months Ended
Dec. 31, 2012
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4. LOANS RECEIVABLE, NET


Loans receivable, net at December 31, 2012 and 2011 are summarized as follows:


    2012     2011  
                 
Commercial loans (principally variable rate):                
Secured   $ 2,050,728     $ 1,522,639  
Unsecured     16,502,920       12,997,139  
Total commercial loans     18,553,648       14,519,778  
                 
Real estate loans:                
Commercial     56,698,844       59,376,008  
Residential     2,498,603       2,309,899  
Total real estate loans     59,197,447       61,685,907  
                 
Construction loans (net of undisbursed funds of $2,854,500 and $2,644,500, respectively)     3,112,477       4,610,000  
                 
Consumer loans     565,573       602,144  
Other loans     768,790       717,261  
      1,334,363       1,319,405  
                 
Total loans receivable     82,197,935       82,135,090  
                 
Less:                
Unearned loans fees, net     (226,364 )     (224,100 )
Allowance for loan losses     (1,753,521 )     (1,343,020 )
                 
Total   $ 80,218,050     $ 80,567,970  

Nonaccrual loans outstanding at December 31, 2012 and 2011 are summarized as follows:


    2012     2011  
Nonaccrual loans:                
Commercial real estate   $ 5,923,090     $ 8,265,397  
Residential real estate     —       2,200,000  
Construction     467,500       397,500  
                 
Total nonaccrual loans   $ 6,390,590     $ 10,862,897  

    2012     2011  
Interest income that would have been recorded during the period on nonaccrual loans outstanding in accordance with original terms   $ 478,556     $ 595,946  

At December 31, 2012 and 2011, there were no loans 90 days past due and still accruing interest.


The following table presents the aging of the past due loan balances as of December 31, 2012 and 2011 by class of loans:


December 31, 2012         30-59
Days 		    60-89
Days 		    Greater
than 90 Days 		    Total     Loans
Not 		 
    Total     Past Due     Past Due     Past Due     Past Due     Past Due  
                                                 
Commercial loans:                                                
Unsecured   $ 16,502,920     $ 4,599     $ —     $ —     $ 4,599     $ 16,498,321  
Secured     2,050,728       —       91,649       —       91,649       1,959,079  
Real Estate loans                                                
Commercial     56,698,844       1,946,281       150,000       5,923,090       8,019,371       48,679,473  
Residential     2,498,603       —       —       —       —       2,498,603  
Construction loans     3,112,477       —       —       467,500       467,500       2,644,977  
Consumer loans     565,573       —       2,903       —       2,903       562,670  
Other loans     768,790       —       —       —       —       768,790  
Total loans   $ 82,197,935     $ 1,950,880     $ 244,552     $ 6,390,590     $ 8,586,022     $ 73,611,913  

December 31, 2011         30-59
Days 		    60-89
Days 		    Greater
than 90 Days 		    Total     Not  
    Total     Past Due     Past Due     Past Due     Past Due     Past Due  
                                                 
Commercial loans:                                                
Unsecured   $ 12,997,139     $ 84,529     $ 16,260     $ —     $ 100,789     $ 12,896,350  
Secured     1,522,639       —       —       —       —       1,522,639  
Real Estate loans                                                
Commercial     59,376,008       997,740       359,620       8,265,397       9,622,757       49,753,251  
Residential     2,309,899       —       —       2,200,000       2,200,000       109,899  
Construction loans     4,610,000       —       —       397,500       397,500       4,212,500  
Consumer loans     602,144       678       —       —       678       601,466  
Other loans     717,261       —       —       —       —       717,261  
Total loans   $ 82,135,090     $ 1,082,947     $ 375,880     $ 10,862,897     $ 12,321,724     $ 69,813,366  

Nonaccrual loans include smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.


Loans individually evaluated for impairment were as follows:


    December 31,     December 31,  
    2012     2011  
                 
Loans with no allocated allowance for loan losses:                
Commercial real estate   $ 3,924,469     $ 6,662,331  
Construction     467,500       397,500  
Residential real estate     —       2,200,000  
Loans with allocated allowance for loan losses:                
Commercial real estate     1,772,565       1,350,374  
    $ 6,164,534     $ 10,610,205  
                 
Amount of the allowance for loan losses allocated:            
Commercial real estate   $ 838,531     $ 346,095  
                 
    $ 838,531     $ 346,095  

The following table sets forth certain information about impaired loans with a measured impairment:


    Year Ended     Year Ended  
    December 31,     December 31,  
    2012     2011  
                 
Average of individually impaired loans during period:                
Commercial real estate   $ 6,383,255     $ 3,630,540  
Construction     177,292       198,750  
Commercial unsecured     23       94,278  
Residential real estate     366,667       1,650,000  
    $ 6,927,237     $ 5,573,568  
                 
Interest income recognized during time period that loans were impaired, either using accrual or cash-basis method of accounting   $ 1,554     $ 165,515  

Troubled Debt Restructurings:


The Company has allocated $63,329 and $3,412 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDRs”) as of December 31, 2012 and 2011, respectively. The Company has not committed to lend any additional amounts to customers with outstanding loans that are classified as TDRs.


The outstanding principal balance of trouble debt restructurings at December 31, 2012 was $5,826,633 and at December 31, 2011 was $4,576,997. None of the loans currently classified as TDRs have defaulted during this period. These TDRs are all current and are paying under the modified arrangements.


The terms of certain other loans were modified during the year ended December 31, 2012 that did not meet the definition of a TDR. These loans have a total recorded investment as of December 31, 2012 of $105,972. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.


In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.


The following table presents loans by class modified as troubled debt restructurings that occurred during the year ending December 31, 2012:


          Pre-Modification     Post-Modification  
    Number     Outstanding Recorded     Outstanding Recorded  
    of Loans     Investment     Investment  
Troubled Debt Restructurings:                  
Commerical real estate     6     $ 3,193,700     $ 3,193,700  

The troubled debt restructurings described above required an additional allowance of $24,778 during the period ending December 31, 2012.


Credit Quality Indicators:


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


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


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


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


The following table sets forth at December 31, 2012 and 2011, the aggregate carrying value of our assets categorized as Special Mention, Substandard and Doubtful according to asset type:


    At December 31, 2012  
                               
      Special                       Not          
      Mention       Substandard       Doubtful       Classified       Total  
                                         
Commercial Loans:                                        
Secured   $ 91,649     $ —     $ —     $ 1,959,079     $ 2,050,728  
Unsecured     63,032       —       —       16,439,888       16,502,920  
Commercial Real Estate     5,820,246       6,570,971       —       44,307,627       56,698,844  
Residential Real Estate     —       2,174,455       —       324,148       2,498,603  
Construction     —       467,500       —       2,644,977       3,112,477  
Consumer     —       —       —       565,573       565,573  
Other     3,746       —       —       765,044       768,790  
Total loans   $ 5,978,673     $ 9,212,926     $ —     $ 67,006,336     $ 82,197,935  
                                         
Real estate owned     —       342,867       —       —       342,867  
Total assets   $ 5,978,673     $ 9,555,793     $ —     $ 67,006,336     $ 82,540,802  

    At December 31, 2011  
                               
      Special                       Not          
      Mention       Substandard       Doubtful       Classified       Total  
                                         
Commercial Loans:                                        
Secured   $ —     $ —     $ —     $ 1,522,639     $ 1,522,639  
Unsecured     127,132       50,379       —       12,819,628       12,997,139  
Commercial Real Estate     2,012,188       9,039,881       —       48,323,939       59,376,008  
Residential Real Estate     —       2,200,000       —       109,899       2,309,899  
Construction     —       397,500       —       4,212,500       4,610,000  
Consumer     12,682       —       —       589,462       602,144  
Other     5,306       —       —       711,955       717,261  
Total loans   $ 2,157,308     $ 11,687,760     $ —     $ 68,290,022     $ 82,135,090  
                                         
Real estate owned     —       267,246       —       —       267,246  
Total assets   $ 2,157,308     $ 11,955,006     $ —     $ 68,290,022     $ 82,402,336  

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


December 31, 2012                                          
                                           
    Commercial     Commercial           Commerical     Residential     Other        
    Unsecured     Secured     Construction     Real Estate     Real Estate     Loans     Total  
                                                         
Allowance for loan losses:                                                        
Ending allowance balance attributable to loans                                                        
Individually evaluated for impairment   $ —     $ —     $ —     $ 853,108     $ —     $ —     $ 853,108  
Collectively evaluated for impairment     425,495       18,790       16,282       394,091       4,528       41,227       900,413  
Total ending allowance balance   $ 425,495     $ 18,790     $ 16,282     $ 1,247,199     $ 4,528     $ 41,227     $ 1,753,521  
                                                         
Loans:                                                        
Individually evaluated for impairment   $ —     $ —     $ 467,500     $ 6,570,971     $ 2,174,455     $ —     $ 9,212,926  
Collectively evaluated for impairment     16,502,920       2,050,728       2,644,977       50,127,873       324,148       1,334,363       72,985,009  
Total ending loans balance   $ 16,502,920     $ 2,050,728     $ 3,112,477     $ 56,698,844     $ 2,498,603     $ 1,334,363     $ 82,197,935  

December 31, 2011                                          
                                           
    Commercial     Commercial           Commerical     Residential     Other        
    Unsecured     Secured     Construction     Real Estate     Real Estate     Loans     Total  
                                                         
Allowance for loan losses:                                                        
Ending allowance balance attributable to loans                                                        
Individually evaluated for impairment   $ 6,664     $ —     $ —     $ 363,520     $ —     $ —     $ 370,184  
Collectively evaluated for impairment     468,022       12,356       34,184       417,300       672       40,302       972,836  
Total ending allowance balance   $ 474,686     $ 12,356     $ 34,184     $ 780,820     $ 672     $ 40,302     $ 1,343,020  
                                                         
Loans:                                                        
Individually evaluated for impairment   $ 50,379     $ —     $ 397,500     $ 9,039,881     $ 2,200,000     $ —     $ 11,687,760  
Collectively evaluated for impairment     12,946,760       1,522,639       4,212,500       50,336,127       109,899       1,319,405       70,447,330  
Total ending loans balance   $ 12,997,139     $ 1,522,639     $ 4,610,000     $ 59,376,008     $ 2,309,899     $ 1,319,405     $ 82,135,090  

The following table presents the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2012 and 2011.


Year ended December 31, 2012                                          
                                           
    Commercial     Commercial           Commerical     Residential     Other        
    Unsecured     Secured     Construction     Real Estate     Real Estate     Loans     Total  
                                                         
Allowance for loan losses:                                                        
Beginning balance   $ 474,686     $ 12,356     $ 34,184     $ 780,820     $ 672     $ 40,302     $ 1,343,020  
Provision for loan losses     (59,686 )     6,434       (17,902 )     440,304       (23,785 )     9,635       355,000  
Loans charged-off     (100,757 )     —       —       (16,675 )     —       (10,917 )     (128,349 )
Recoveries     111,252       —       —       42,750       27,641       2,207       183,850  
Total ending allowance balance   $ 425,495     $ 18,790     $ 16,282     $ 1,247,199     $ 4,528     $ 41,227     $ 1,753,521  

Year ended December 31, 2011                                          
                                           
    Commercial     Commercial           Commerical     Residential     Other        
    Unsecured     Secured     Construction     Real Estate     Real Estate     Loans     Total  
                                                         
Allowance for loan losses:                                                        
Beginning balance   $ 520,953     $ 13,486     $ 52,138     $ 653,362     $ 7,174     $ 30,107     $ 1,277,220  
Provision for loan losses     368,559       (1,130 )     (17,954 )     196,470       38,713       10,342       595,000  
Loans charged-off     (532,957 )     —       —       (74,512 )     (57,715 )     (3,811 )     (668,995 )
Recoveries     118,131       —       —       5,500       12,500       3,664       139,795  
Total ending allowance balance   $ 474,686     $ 12,356     $ 34,184     $ 780,820     $ 672     $ 40,302     $ 1,343,020  

Many of our loans are made in the Borough of Staten Island and we are still assessing the impact of Hurricane Sandy on the allowance for loan loss and the loan portfolio.