NOTE 3 — LOANS

The components of loans are as follows:

	At September 30,					At December 31,
	2013					2012
	Amount			Percent		Amount			Percent
Real estate loans:
One-to-four family	$	113,493,621		30.1	%	$	112,350,393		27.5	%
Multi-family	41,407,945			11.0		42,203,212			10.3
Commercial	123,971,466			33.0		138,766,873			34.0
Construction and land	21,292,036			5.7		30,143,957			7.4
	300,165,068			79.8		323,464,435			79.2

Commercial business	62,785,913			16.7		71,251,082			17.5

Consumer:
Home equity	11,616,623			3.1		12,062,108			3.0
Automobile and other	1,504,779			0.4		1,462,909			0.3
	13,121,402			3.5		13,525,017			3.3

Total gross loans	376,072,383			100.0	%	408,240,534			100.0	%
Undisbursed portion of construction loans	(819,047		)			(7,376,713		)
Deferred loan origination costs (fees), net	(139,926		)			(50,610		)
Allowance for loan losses	(5,538,603		)			(5,944,585		)

Loans, net	$	369,574,807				$	394,868,626

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and presents these policies to the Board at least annually. A reporting system supplements the review process by providing management with reports related to loan production, loan quality, loan delinquencies and non-performing and potential problem loans.

Additional information regarding our accounting policies for the individual loan categories is contained in our 2012 Annual Report to Stockholders that is filed as an exhibit to the Company’s Annual Report on Form 10-K.

The loan portfolio includes a concentration of loans in commercial real estate amounting to approximately $123,971,000 and $138,767,000 as of September 30, 2013 and December 31, 2012, respectively. The loans are expected to be repaid from cash flows or from proceeds from the sale of selected assets of the borrowers. The concentration of credit within commercial real estate is taken into consideration by management in determining the allowance for loan losses. The Company’s opinion as to the ultimate collectibility of these loans is subject to estimates regarding future cash flows from operations and the value of the property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers.

On occasion, the Company originates loans secured by single-family dwellings with loan to value ratios exceeding 90%. The Company does not consider the level of such loans to be a significant concentration of credit as of September 30, 2013 or December 31, 2012.

The recorded investment in loans does not include accrued interest and loan origination fees due to immateriality. The recorded investment in construction and land includes undisbursed commitments of approximately $819,000 and $7,377,000 at September 30, 2013 and December 31, 2012, respectively.

The following tables present our past-due loans, segregated by class, as of September 30, 2013 and December 31, 2012:

September 30, 2013

	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	—	$	299,022	$	1,656,385	$	1,955,407	$	111,538,214	$	113,493,621	$	—
Multi-family	—		—		—		—		41,407,945		41,407,945		—
Commercial	589,639		544,547		39,986		1,174,172		122,797,294		123,971,466		—
Construction and land	33,964		—		—		33,964		21,258,072		21,292,036		—
	623,603		843,569		1,696,371		3,163,543		297,001,525		300,165,068		—

Commercial business	38,611		661,269		75,229		775,109		62,010,804		62,785,913		—

Consumer:
Home equity	101,285		17,234		30,047		148,566		11,468,057		11,616,623		—
Automobile and other	665		—		—		665		1,504,114		1,504,779		—
	101,950		17,234		30,047		149,231		12,972,171		13,121,402		—

Total	$	764,164	$	1,522,072	$	1,801,647	$	4,087,883	$	371,984,500	$	376,072,383	$	—

December 31, 2012

	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	318,052	$	577,608	$	1,811,054	$	2,706,714	$	109,643,679	$	112,350,393	$	182,770
Multi-family	—		—		—		—		42,203,212		42,203,212		—
Commercial	638,330		—		535,402		1,173,732		137,593,141		138,766,873		—
Construction and land	—		—		375,418		375,418		29,768,539		30,143,957		—
	956,382		577,608		2,721,874		4,255,864		319,208,571		323,464,435		182,770

Commercial business	217,800		—		286,692		504,492		70,746,590		71,251,082		26,234

Consumer:
Home equity	48,383		34,980		49,090		132,453		11,929,655		12,062,108		—
Automobile and other	—		4,244		5,492		9,736		1,453,173		1,462,909		—
	48,383		39,224		54,582		142,189		13,382,828		13,525,017		—

Total	$	1,222,565	$	616,832	$	3,063,148	$	4,902,545	$	403,337,989	$	408,240,534	$	209,004

All loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, there is reasonable probability of loss of principal or collection of additional interest is deemed insufficient to warrant further accrual. Generally, we place all loans 90 days or more past due on non-accrual status. However, exceptions may occur when a loan is in process of renewal, but it has not yet been completed. In addition, we may place any loan on non-accrual status if any part of it is classified as loss or if any part has been charged-off. When a loan is placed on non-accrual status, total interest accrued and unpaid to date is reversed. Subsequent payments are applied to the outstanding principal balance.

Non-accrual loans, segregated by class, are as follows:

	September 30,		December 31,
	2013		2012
Real estate loans:
One-to-four family	$	2,312,386	$	2,087,073
Multi-family	2,415,095		3,005,771
Commercial	1,245,444		3,466,342
Construction and land	1,242,987		2,456,419
	7,215,912		11,015,605

Commercial business	217,340		260,458

Consumer:
Home equity	146,839		185,531
Automobile and other	—		9,735
	146,839		195,266
Total non-accrual loans	$	7,580,091	$	11,471,329

The following tables present the activity in the allowance for loan losses for the three and nine months ended September 30, 2013 and 2012. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Three months ended September 30, 2013

	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,011,386	$	(199,030	)	$	418	$	122,716		$	935,490
Multi-family	559,998		—			—		92,785			652,783
Commercial	1,073,664		(49,499		)	204,091		210,213			1,438,469
Construction and land	1,512,094		—			57,000		(259,470		)	1,309,624
	4,157,142		(248,529		)	261,509		166,244			4,336,366

Commercial business	1,195,622		(10,328		)	15,997		(116,554		)	1,084,737

Consumer
Home equity	120,776		—			233		(7,720		)	113,289
Automobile and other	5,158		—			6,023		(6,970		)	4,211
	125,934		—			6,256		(14,690		)	117,500

Total	$	5,478,698	$	(258,857	)	$	283,762	$	35,000		$	5,538,603

Three months ended September 30, 2012

	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	629,183	$	(54,664	)	$	504	$	84,682		$	659,705
Multi-family	690,986		—			—		(131,373		)	559,613
Commercial	1,117,029		(178,781		)	4,946		61,992			1,005,186
Construction and land	2,254,932		—			6,169		(180,527		)	2,080,574
	4,692,130		(233,445		)	11,619		(165,226		)	4,305,078

Commercial business	968,829		(383,575		)	9,801		595,069			1,190,124

Consumer
Home equity	189,091		—			—		(20,671		)	168,420
Automobile and other	14,972		—			—		(9,172		)	5,800
	204,063		—			—		(29,843		)	174,220

Total	$	5,865,022	$	(617,020	)	$	21,420	$	400,000		$	5,669,422

Nine months ended September 30, 2013

	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	847,285	$	(502,265	)	$	17,036	$	573,434		$	935,490
Multi-family	958,303		(482,478		)	—		176,958			652,783
Commercial	1,268,081		(216,750		)	204,681		182,457			1,438,469
Construction and land	1,413,002		—			214,268		(317,646		)	1,309,624
	4,486,671		(1,201,493		)	435,985		615,203			4,336,366

Commercial business	1,296,114		(135,114		)	23,967		(100,230		)	1,084,737

Consumer:
Home equity	151,625		(13,009		)	233		(25,560		)	113,289
Automobile and other	10,175		(7,574		)	6,023		(4,413		)	4,211
	161,800		(20,583		)	6,256		(29,973		)	117,500

Total	$	5,944,585	$	(1,357,190	)	$	466,208	$	485,000		$	5,538,603

Nine months ended September 30, 2012

	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	777,470	$	(263,026	)	$	1,172	$	144,089		$	659,705
Multi-family	779,680		—			34,312		(254,379		)	559,613
Commercial	1,157,114		(576,046		)	221,287		202,831			1,005,186
Construction and land	3,934,573		(2,123,047		)	15,316		253,732			2,080,574
	6,648,837		(2,962,119		)	272,087		346,273			4,305,078

Commercial business	969,669		(549,749		)	11,997		758,207			1,190,124

Consumer:
Home equity	133,234		(92,056		)	—		127,242			168,420
Automobile and other	37,522		—			—		(31,722		)	5,800
	170,756		(92,056		)	—		95,520			174,220

Total	$	7,789,262	$	(3,603,924	)	$	284,084	$	1,200,000		$	5,669,422

The following tables separate the allocation of the allowance for loan losses and the loan balances between loans evaluated both individually and collectively as of September 30, 2013 and December 31, 2012:

September 30, 2013

	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	84,846	$	850,644	$	935,490	$	2,361,385	$	111,132,236	$	113,493,621
Multi-family	—		652,783		652,783		2,415,095		38,992,850		41,407,945
Commercial	147,130		1,291,339		1,438,469		1,835,083		122,136,383		123,971,466
Construction and land	—		1,309,624		1,309,624		1,242,987		20,049,049		21,292,036
	231,976		4,104,390		4,336,366		7,854,550		292,310,518		300,165,068

Commercial business	203,612		881,125		1,084,737		351,270		62,434,643		62,785,913

Consumer:
Home equity	456		112,833		113,289		164,561		11,452,062		11,616,623
Automobile and other	—		4,211		4,211		—		1,504,779		1,504,779
	456		117,044		117,500		164,561		12,956,841		13,121,402

Total	$	436,044	$	5,102,559	$	5,538,603	$	8,370,381	$	367,702,002	$	376,072,383

December 31, 2012

	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	210,336	$	636,949	$	847,285	$	2,060,316	$	110,290,077	$	112,350,393
Multi-family	533,850		424,453		958,303		3,005,771		39,197,441		42,203,212
Commercial	34,812		1,233,269		1,268,081		3,237,893		135,528,980		138,766,873
Construction and land	—		1,413,002		1,413,002		2,456,419		27,687,538		30,143,957
	778,998		3,707,673		4,486,671		10,760,399		312,704,036		323,464,435

Commercial business	22,713		1,273,401		1,296,114		260,458		70,990,624		71,251,082

Consumer:
Home equity	28,117		123,508		151,625		185,531		11,876,577		12,062,108
Automobile and other	2,572		7,603		10,175		9,735		1,453,174		1,462,909
	30,689		131,111		161,800		195,266		13,329,751		13,525,017

Total	$	832,400	$	5,112,185	$	5,944,585	$	11,216,123	$	397,024,411	$	408,240,534

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt and comply with various terms of their loan agreements. The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends. Generally, all sizeable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile. Credits classified as watch generally receive a review more frequently than annually. The risk category of homogeneous loans such as consumer loans and smaller balance loans is evaluated when the loan becomes delinquent. For special mention, substandard, and doubtful credit classifications, the frequency of review is increased to no less than quarterly in order to determine potential impact on credit loss estimates.

The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt:

Pass - A pass asset is well protected by the current worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner. Pass assets also include certain assets considered watch, which are still protected by the worth and paying capacity of the borrower but deserve closer attention and a higher level of credit monitoring.

Special Mention - A special mention asset has potential weaknesses that deserve management’s close attention. The asset may also be subject to a weak or speculative market or to economic conditions, which may, in the future adversely affect the obligor. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard - A substandard asset is an asset with a well-defined weakness that jeopardizes repayment, in whole or in part, of the debt. These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These assets are characterized by the distinct possibility that the institution will sustain some loss of principal and/or interest if the deficiencies are not corrected. It is not necessary for a loan to have an identifiable loss potential in order to receive this rating.

Doubtful - An asset that has all the weaknesses inherent in the substandard classification, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely likely, but it is not identified at this point due to pending factors.

Loss - An asset, or portion thereof, classified as loss is considered uncollectible and of such little value that its continuance on the Company’s books as an asset is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery would occur. As such, it is not practical or desirable to defer the write-off. Therefore, there is no balance to report at September 30, 2013 or December 31, 2012.

The following tables present our credit quality indicators, segregated by class, as of September 30, 2013 and December 31, 2012:

September 30, 2013

	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	109,446,657	$	1,685,579	$	1,625,010	$	736,375	$	113,493,621
Multi-family	36,223,834		2,769,016		2,415,095		—		41,407,945
Commercial	110,413,475		9,329,184		4,188,821		39,986		123,971,466
Construction and land	19,923,148		—		1,368,888		—		21,292,036
	276,007,114		13,783,779		9,597,814		776,361		300,165,068

Commercial business	61,679,591		555,053		476,041		75,228		62,785,913

Consumer:
Home equity	11,418,364		33,698		164,561		—		11,616,623
Automobile and other	1,504,779		—		—		—		1,504,779
	12,923,143		33,698		164,561		—		13,121,402

Total	$	350,609,848	$	14,372,530	$	10,238,416	$	851,589	$	376,072,383

December 31, 2012

	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	108,197,672	$	1,882,095	$	1,763,954	$	506,672	$	112,350,393
Multi-family	36,428,424		2,769,017		3,005,771		—		42,203,212
Commercial	121,242,335		11,221,414		6,303,124		—		138,766,873
Construction and land	26,808,635		120,699		2,839,205		375,418		30,143,957
	292,677,066		15,993,225		13,912,054		882,090		323,464,435

Commercial business	70,155,966		834,657		257,897		2,562		71,251,082

Consumer:
Home equity	11,840,875		35,703		185,530		—		12,062,108
Automobile and other	1,453,175		—		4,243		5,491		1,462,909
	13,294,050		35,703		189,773		5,491		13,525,017

Total	$	376,127,082	$	16,863,585	$	14,359,724	$	890,143	$	408,240,534

The following tables provide details of impaired loans, segregated by class, as of and for periods indicated. The unpaid contractual balance represents the recorded balance prior to any partial charge-offs. The recorded investment represents customer balances net of any partial charge-offs recognized on the loans.

	As of September 30, 2013						As of December 31, 2012
	Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Real estate loans:
One-to-four family	$	1,521,393	$	1,250,344	$	—	$	494,195	$	494,195	$	—
Multi-family	3,049,493		2,415,095		—		367,883		215,963		—
Commercial	809,404		809,404		—		3,015,172		2,702,491		—
Construction and land	3,016,221		1,242,987		—		4,480,653		2,456,419		—
	8,396,511		5,717,830		—		8,357,903		5,869,068		—

Commercial business	68,150		57,822		—		2,562		2,562		—

Consumer:
Home equity	134,514		134,514		—		157,413		157,413		—
Automobile and other	—		—				—		—		—
	134,514		134,514		—		157,413		157,413		—
Subtotal	$	8,599,175	$	5,910,166	$	—	$	8,517,878	$	6,029,043	$	—

With an allowance recorded:
Real estate loans:
One-to-four family	$	1,311,217	$	1,111,041	$	84,846	$	1,566,121	$	1,566,121	$	210,336
Multi-family	—		—		—		2,789,808		2,789,808		533,849
Commercial	1,209,063		1,025,679		147,130		535,402		535,402		34,812
Construction and land	—		—		—		—		—		—
	2,520,280		2,136,720		231,976		4,891,331		4,891,331		778,997

Commercial business	293,448		293,448		203,612		257,896		257,896		22,713

Consumer:
Home equity	30,047		30,047		456		28,118		28,118		28,118
Automobile and other	—		—		—		9,735		9,735		2,572
	30,047		30,047		456		37,853		37,853		30,690
Subtotal	2,843,775		2,460,215		436,044		5,187,080		5,187,080		832,400
Total	$	11,442,950	$	8,370,381	$	436,044	$	13,704,958	$	11,216,123	$	832,400

	For the three months ended September 30, 2013						For the three months ended September 30, 2012
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded:
Real estate loans:
One-to-four family	$	1,146,644	$	517	$	—	$	883,460	$	—	$	—
Multi-family	1,322,609		—		—		110,267		—		—
Commercial	1,730,282		10,134		—		2,774,179		—		—
Construction and land	1,450,938		—		—		2,007,976		5,900		—
	5,650,473		10,651		—		5,775,882		5,900		—

Commercial business	28,911		—		—		137,408		569		—

Consumer:
Home equity	126,655		315		—		141,763		—		—
Automobile and other	—		—		—		1,721		—		—
	126,655		315		—		143,484		—		—
Subtotal	$	5,806,039	$	10,966	$	—	$	6,056,774	$	6,469	$	—

With an allowance recorded:
Real estate loans:
One-to-four family	$	1,197,003	$	—	$	—	$	601,068	$	—	$	—
Multi-family	1,106,998		—		—		3,206,090		—		—
Commercial	552,825		—		—		541,666		—		—
Construction and land	—		—		—		1,077,650		—		—
	2,856,826		—		—		5,426,474		—		—

Commercial business	342,867		2,318		—		556,251		—		—

Consumer:
Home equity	37,060		—		—		51,578		—		—
Automobile and other	—		—		—		2,713		—		—
	37,060		—		—		54,291		—		—
Subtotal	3,236,753		2,318		—		6,037,016		—		—
Total	$	9,042,792	$	13,284	$	—	$	12,093,790	$	6,469	$	—

	For the nine months ended September 30, 2013						For the nine months ended September 30, 2012
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded:
Real estate loans:
One-to-four family	$	1,040,242	$	517	$	—	$	908,408	$	8,634	$	—
Multi-family	773,675		—		—		171,665		—		—
Commercial	2,329,088		10,134		—		1,880,889		—		—
Construction and land	1,768,331		—		—		2,100,065		10,322		—
	5,911,336		10,651		—		5,061,027		18,956		—

Commercial business	15,096		—		—		179,918		925		—

Consumer:
Home equity	140,974		315		—		262,230		—		—
Automobile and other	1,137		—		—		860		—		—
	142,111		315		—		263,090		—		—
Subtotal	$	6,068,543	$	10,966	$	—	$	5,504,035	$	19,881	$	—

With an allowance recorded:
Real estate loans:
One-to-four family	$	1,104,666	$	—	$	—	$	842,127	$	604	$	—
Multi-family	1,930,451		—		—		3,304,568		27,971		—
Commercial	569,846		—		—		1,622,268		8,000		—
Construction and land	—		—		—		2,932,441		3,746		—
	3,604,963		—		—		8,701,404		40,321		—

Commercial business	311,683		2,548		—		677,244		1,132		—

Consumer:
Home equity	32,347		—		—		65,126		—		—
Automobile and other	3,380		—		—		1,357		—		—
	35,727		—		—		66,483		—		—
Subtotal	3,952,373		2,548		—		$	9,445,131	$	41,453	$	—
Total	$	10,020,916	$	13,514	$	—	$	14,949,166	$	61,334	$	—

Troubled Debt Restructurings:

The Company has allocated $340,380 of specific reserves on $6,559,796 of loans to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2013. The Company had $584,810 of allocations of specific reserves on $8,934,496 of loans to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2012. The Company has no commitments to lend additional amounts as of September 30, 2013 or December 31, 2012 to customers with outstanding loans that are classified as troubled debt restructurings.

During the three months ended September 30, 2013, six loans totaling $1,019,972 were modified as troubled debt restructurings. The modifications included one or a combination of the following: payment and maturity changes not available in the market; and a reduction of the stated interest rate of the loan.

During the nine months ended September 30, 2013, 11 loans totaling $1,243,886 were modified as troubled debt restructurings. The modifications included one or a combination of the following: payment and maturity changes not available in the market; and a reduction of the stated interest rate of the loan.

During the three months ended September 30, 2012, there were no loans modified as troubled debt restructurings. During the nine months ended September 30, 2012, six loans totaling $4,233,408 were modified as troubled debt restructurings. The modifications included one or a combination of the following: payment and maturity changes not available in the market; a reduction of the stated interest rate of the loan; and forbearance agreements.

The following tables present loans, by class, modified as troubled debt restructurings that occurred during the three and nine months ended September 30, 2013 and the nine months ended September 2012:

Three months ended September 30, 2013

	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
One-to-four family	1	$	49,678	$	49,000
Commercial	3	809,404		809,404
	4	859,082		858,404

Commercial business	1	142,112		142,112

Consumer:
Home equity	1	18,778		17,722

Total	6	$	1,019,972	$	1,018,238

Nine months ended September 30, 2013

	Number of Contracts	Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
Real estate loans:
One-to-four family	5	$	135,590	$	134,277
Commercial	3	809,404		809,404
	8	944,994		943,681

Commercial business	2	280,114		276,041

Consumer:
Home equity	1	18,778		17,722

Total	11	$	1,243,886	$	1,237,444

Nine months ended September 30, 2012

	Number of Contracts	Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
Real estate loans:
One-to-four family	1	$	306,794	$	303,503
Multi-family	1	449,055		220,535
Commercial	3	2,978,384		2,750,673
Construction and land	1	499,175		—

Total	6	$	4,233,408	$	3,274,711

The troubled debt restructurings described above resulted in a net increase in the allowance for loan losses of $252,574 and charge offs of $500,723 during the nine months ended September 30, 2013.

The following tables present the troubled debt restructurings for which there was a payment default within twelve months following the modification during the three and nine months ended September 30, 2013 and 2012.

Three and nine months ended September 30, 2013

Three and nine months ended September 30, 2012

The troubled debt restructurings that subsequently defaulted, described above, resulted in a net increase in the allowance for loan losses of $2,289 and resulted in no charge offs during the nine months ended September 30, 2013.

A loan is considered to be in payment default once it is 60 days contractually past due under the modified terms.

Number of
Contracts

Recorded Investment
(as of period end)

Real estate loans:

One-to-four family