11. TROUBLED DEBT RESTRUCTURINGS - From time to time, as part of our loss mitigation process, loans may be renegotiated in a troubled debt restructuring (“TDR”) when we determine that greater economic value will ultimately be recovered under the new restructured terms than through foreclosure, liquidation, or bankruptcy. We may consider the borrower’s payment status and history, the borrower’s ability to pay upon a rate reset on an adjustable rate mortgage, size of the payment increase upon a rate reset, period of time remaining prior to the rate reset, and other relevant factors in determining whether a borrower is experiencing financial difficulty. TDRs are accounted for as set forth in ASC 310-40 Troubled Debt Restructurings by Creditors (“ASC 310-40”). A TDR may be on nonaccrual or it may accrue interest. A TDR is typically on non-accrual until the borrower successfully performs under the new terms for at least six consecutive months. However, a TDR may be placed on accrual immediately following the restructuring in those instances where a borrower’s payments are current prior to the modification, the loan is restructured at a market rate and management determines that principal and interest under the new terms are fully collectible. All TDRs are considered to be impaired loans. A TDR will be removed from TDR classification if it is restructured at a market rate, is not impaired under restructured terms and has been performing for at least twelve consecutive months.

Existing performing loan customers who request a loan (non-TDR) modification and who meet the Bank’s underwriting standards may, usually for a fee, modify their original loan terms to terms currently offered. The modified terms of these loans are similar to the terms offered to new customers with similar credit risk. The fee assessed for modifying the loan is deferred and amortized over the life of the modified loan using the level-yield method and is reflected as an adjustment to interest income. Each modification is examined on a loan-by-loan basis and if the modification of terms represents more than a minor change to the loan, then the unamortized balance of the pre-modification deferred fees or costs associated with the mortgage loan are recognized in interest income at the time of the modification. If the modification of terms does not represent more than a minor change to the loan, then the unamortized balance of the pre-modification deferred fees or costs continue to be deferred.

The following tables summarize TDRs by loan type and accrual status.

	At September 30, 2013
					Total
					Unpaid						Number		Average
	Loan Status				Principal		Related		Recorded		of		Recorded
(In thousands)	Accrual		Nonaccrual		Balance		Allowance		Investment		Loans		Investment
One- to Four-Family residential real estate	$	2,048	$	1,624	$	3,672	$	7	$	3,666		25	$	4,137
Multi-family residential real estate		5,799		-		5,799		20		5,778		11		6,924
Nonresidential real estate		3,629		2,664		6,293		120		6,173		13		6,205
Total	$	11,476	$	4,288	$	15,764	$	147	$	15,617		49	$	17,266

	At June 30, 2013
					Total
					Unpaid						Number		Average
	Loan Status				Principal		Related		Recorded		of		Recorded
(In thousands)	Accrual		Nonaccrual		Balance		Allowance		Investment		Loans		Investment
One- to Four-Family residential real estate	$	2,061	$	2,554	$	4,615		7	$	4,608		27	$	4,779
Multi-family residential real estate		5,827		2,263		8,090		20		8,070		12		9,935
Nonresidential real estate		3,656		2,701		6,357		120		6,237		13		5,941
Total	$	11,544	$	7,518	$	19,062	$	147	$	18,915		52	$	20,655

Interest income recognized on TDRs is as follows:

	For the three months ended September 30,
	2013		2012

One- toFour-Family residential real estate	$	20	$	17
Multifamily residential real estate		82		86
Nonresidential real estate		39		20
Construction		-		-
Commercial		-		-
Consumer		-		-
Total	$	141	$	123

At September 30, 2013, the Bank had 49 loans totaling $15.8 million that qualified as TDRs, and has established an allowance for losses on these loans of $147,000. With respect to the $15.8 million in TDRs, the Bank charged off $5.1 million with respect to these loans at the time these loans were restructured into the Note A/B format. At June 30, 2013, the Bank had 52 loans totaling $19.1 million that qualified as TDRs, and has established an allowance for losses on these loans of $147,000. With respect to the $19.1 million in TDRs, the Bank charged off $5.1 million with respect to these loans at the time these loans were restructured into the Note A/B format. At September 30, 2013, the Bank had no other commitments to lend on its TDRs. Management continues to monitor the performance of loans classified as TDRs on a monthly basis.

Loans that were included in TDRs at September 30, 2013 and June 30, 2013 were generally given concessions of interest rate reductions of between 25 and 300 basis points, and/or structured as interest only payment loans for periods of one to three years. Many of these loans also have balloon payments due at the end of their lowered rate period, requiring the borrower to refinance at market rates at that time. At September 30, 2013, there were 45 loans with required principal and interest payments and four loans with required interest only payments. At June 30, 2013, there were 47 loans with required principal and interest payments and 5 loans with required interest only payments.

The following table is a roll forward of activity in our TDRs:

	Three Months Ended September 30, 2013
	Recorded Investment		Number of Loans
(Dollar amounts in thousands)
Beginning balance	$	18,915		52
Additions to TDR		-		-
Charge-offs		(24)		-
Removal of TDRs⁽¹⁾		(3,151)		(3)
Payments		(123)		-
Ending balance	$	15,617		49

⁽¹⁾ The removal of these loans from TDR was due to the payoff of the loans during the quarter ended September 30, 2013.