10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

000-55083

(Commission File Number)

AJS BANCORP, INC.

(Exact name of Registrant as Specified in its Charter)

Maryland	90-1022599
(State or Other Jurisdiction of	(I.R.S. Employer Identification Number)
Incorporation or Organization)

14757 S. Cicero Ave.

Midlothian, IL 60445

(708) 687-7400

(Address, including Zip Code and Telephone Number, including Area Code

of Registrant’s Principal Executive Officers)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

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.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (do not check if smaller reporting company)	Smaller reporting company x

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Registrant had 2,195,457 common shares outstanding at November 12, 2015

AJS BANCORP, INC.

FORM 10-Q

Table of Contents

		Page
		Number
PART I - Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition		1
Consolidated Unaudited Statements of Operations		2
Consolidated Unaudited Statements of Comprehensive Income (Loss)		3
Consolidated Unaudited Statements of Cash Flows		4
Consolidated Unaudited Statements of Stockholders’ Equity		6
Notes to Consolidated Unaudited Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	52
PART II - Other Information
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	53
Signatures		54

AJS BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2015 AND DECEMBER 31, 2014

(Dollars in thousands, except per share data)

	September 30,			December 31,
	2015			2014
	(Unaudited)
ASSETS
Cash and cash equivalents	$	29,807		$	32,898
Securities available-for-sale	48,085			54,214
Securities held-to-maturity (fair value: 2015 -$333; 2014 - $341)	327			331
Loans, net (allowance: 2015 — $1,085; 2014 - $1,103)	115,697			114,130
Federal Home Loan Bank stock	1,291			1,768
Premises and equipment	3,517			3,623
Bank-owned life insurance	5,849			5,706
Other real estate owned	1,249			1,751
Accrued interest receivable	425			438
Other assets	2,736			2,664
Total assets	$	208,983		$	217,523
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits	$	166,534		$	166,249
Federal Home Loan Bank advances	5,000			12,000
Advance payments by borrowers for taxes and insurance	1,190			2,068
Other liabilities and accrued interest payable	2,530			3,084
Total liabilities	175,254			183,401
Employee Stock Ownership Plan (ESOP) repurchase obligation	988			909
Stockholders’ equity
Preferred stock, $.01 par value, 50,000,000 shares authorized; none issued	—			—
Common stock, $.01 par value, 100,000,000 shares authorized; 2,195,457 shares outstanding at September 30, 2015 and 2,218,863 shares outstanding at December 31, 2014	22			22
Additional paid-in capital	13,364			13,731
Retained earnings	20,832			21,126
Accumulated other comprehensive income (loss)	48			(20		)
Unearned stock awards	(475		)	(596		)
Unearned ESOP shares	(1,050		)	(1,050		)
Total stockholders’ equity	32,741			33,213
Total liabilities and stockholders’ equity	$	208,983		$	217,523

See accompanying notes to consolidated unaudited financial statements.

1

AJS BANCORP, INC.

CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND SEPTEMBER 30, 2014

(Dollars in thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015			2014
Interest and dividend income:
Loans	$	1,127	$	1,151	$	3,367		$	3,561
Securities	169		199		513			660
Interest-earning deposits and other	18		19		53			48
Total interest income	1,314		1,369		3,933			4,269
Interest expense:
Deposits	144		176		438			503
Federal Home Loan Bank advances and other	33		84		114			260
Total interest expense	177		260		552			763
Net interest income	1,137		1,109		3,381			3,506
Provision for loan losses	—		207		130			687
Net interest income after provision for loan losses	1,137		902		3,251			2,819
Non-interest income:
Service fees	74		73		215			211
Rental income	18		18		56			56
Earnings on bank-owned life insurance	47		49		143			147
Security gains	—		56		74			123
Other real estate owned gains (losses)	—		740		(19		)	756
Other	31		21		94			52
Total non-interest income	170		957		563			1,345
Non-interest expense:
Compensation and employee benefits	551		655		1,749			1,766
Occupancy expense	211		173		576			537
Data processing expense	86		84		263			259
Advertising and promotion	20		9		42			38
Professional and regulatory	82		122		264			388
Postage and supplies	21		21		68			70
Bank security	29		28		89			89
Federal deposit insurance	47		48		143			184
Other real estate owned expense/impairment	87		42		324			67
Other	120		156		348			429
Total non-interest expense	1,254		1,338		3,866			3,827
Income (loss) before income taxes	53		521		(52		)	337
Income tax expense (benefit)	6		192		(66		)	(1,699		)
Net income	$	47	$	329	$	14		$	2,036
Earnings per share:
Basic	$	.02	$	0.15	$	.01		$	0.92
Diluted	$	.02	$	0.15	$	.01		$	0.92

See accompanying notes to consolidated unaudited financial statements.

2

AJS BANCORP, INC.

CONSOLIDATED UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND SEPTEMBER 30, 2014

(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net income	$	47		$	329		$	14		$	2,036
Other comprehensive income (loss):
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the period	339			(170		)	187			460
Reclassification adjustment for (gains) losses included in net income	—			(56		)	(74		)	(123		)
Related income tax (expense) benefit	(132		)	91			(45		)	(134		)
Total other comprehensive income (loss)	207			(135		)	68			203
Comprehensive income (loss)	$	254		$	194		$	82		$	2,239

See accompanying notes to consolidated unaudited financial statements.

3

AJS BANCORP, INC.

CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2015 AND SEPTEMBER 30, 2014

(Dollars in thousands)

	Nine Months Ended
	September 30,
	2015			2014
Cash flows from operating activities:
Net income	$	14		$	2,036
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation	142			176
Provision for loan losses	130			687
Net amortization of securities	184			196
Stock award and option expense	115			54
Earnings on bank-owned life insurance	(143		)	(147		)
(Gain) loss on sale of securities available-for-sale	(74		)	(123		)
(Gain) loss on the sale of other real estate owned	19			(756		)
Other real estate owned impairment	359			86
Reversal of valuation allowance on deferred taxes	—			(1,701		)
Changes in:
Accrued interest receivable and other assets	(59		)	(80		)
Accrued interest payable and other liabilities	(598		)	(34		)
Net cash provided by operating activities	89			394
Cash flows from investing activities:
Securities available-for-sale
Purchases	(20,959		)	(21,964		)
Sales	3,306			11,297
Calls, maturities and principal payments	23,788			17,163
Loan originations, purchases and repayments, net	(2,016		)	4,724
Proceeds from sale of other real estate	455			1,959
Improvements to other real estate owned	(12		)	—
Purchase of equipment, net	(36		)	(211		)
Net cash provided by investing activities	4,526			12,968
Cash flows from financing activities:
Net change in deposits	285			(1,510		)
Maturities of FHLB advances	(7,000		)	(3,000		)
Redemption of FHLB stock	477			—
Repurchase of common stock	(282		)	(681		)
Dividends paid on common stock	(308		)	(925		)
Net change in advance payments by borrowers for taxes and insurance	(878		)	(1,050		)
Net cash used in financing activities	(7,706		)	(7,166		)

See accompanying notes to consolidated unaudited financial statements.

4

AJS BANCORP, INC.

CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS (Continued)

	Nine Months Ended
	September 30,
	2015			2014
Net change in cash and cash equivalents	(3,091		)	6,196
Cash and cash equivalents at beginning of year	32,898			22,281
Cash and cash equivalents at end of period	$	29,807		$	28,477
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	569		$	771
Income taxes	—			1
Supplemental noncash disclosures:
Transfers from loans to real estate owned	$	319		$	86
Loans provided for sales of other real estate owned	—			$	25
Transfers of negative advance payment for borrower’s tax and insurance balances to loans	—			$	154

See accompanying notes to consolidated unaudited financial statements.

5

AJS BANCORP, INC.

CONSOLIDATED UNAUDITED STATEMENTS OF STOCKHOLDERS’ EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2015 AND YEAR ENDED DECEMBER 31, 2014

(Dollars in thousands, except per share data)

										Accumulated
				Additional						Other			Unearned			Unearned
	Common			Paid-In			Retained			Comprehensive			Stock			ESOP
	Stock			Capital			Earnings			Income (Loss)			Awards			Shares			Total
Balance at January 1, 2014	$	23		$	15,330		$	20,523		$	(405	)	$	—		$	(1,087	)	$	34,384
Allocation of stock awards of 56,267 shares	1			674			—			—			(675		)	—			—
Stock awards earned	—			—			—			—			79			—			79
Stock options compensation	—			16			—			—			—			—			16
Common stock repurchases of 150,867 shares	(2		)	(2,039		)	—			—			—			—			(2,041		)
Reclassification due to changes in fair value of common stock in ESOP subject to contingent repurchase obligation	—			(263		)	—			—			—			—			(263		)
Net income	—			—			2,102			—			—			—			2,102
Cash dividends of $0.70	—			—			(1,499		)	—			—			—			(1,499		)
Other comprehensive income	—			—			—			385			—			—			385
ESOP shares earned shares	—			13			—			—			—			37			50
Balance at December 31, 2014	22			13,731			21,126			(20		)	(596		)	(1,050		)	33,213
Allocation of stock awards of 6,000 shares	—			89			—			—			(89		)	—			—
Forfeited stock awards of 9,612 shares	—			(115		)	—			—			115			—			—
Issuance of 863 shares for exercise of 4,200 stock options, net of 3,337 shares surrendered	—			—			—			—			—			—			—
Stock awards earned	—			—			—			—			95			—			95
Stock options compensation	—			20			—			—			—			—			20
Common stock repurchases of 20,657 shares	—			(282		)	—			—			—			—			(282		)
Reclassification due to changes in fair value of common stock in ESOP subject to contingent repurchase obligation	—			(79		)	—			—			—			—			(79		)
Net income	—			—			14			—			—			—			14
Cash dividends of $0.15	—			—			(308		)	—			—			—			(308		)
Other comprehensive income	—			—			—			68			—			—			68
Balance at September 30, 2015	$	22		$	13,364		$	20,832		$	48		$	(475	)	$	(1,050	)	$	32,741

6

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 1 -BASIS OF PRESENTATION AND CONSOLIDATION

AJS Bancorp, Inc. (the “Company”), is a savings and loan holding company, the principal asset of which consists of its ownership of A.J. Smith Federal Savings Bank (the “Bank”). The Bank is a federally chartered savings bank with operations located in Midlothian and Orland Park, Illinois. The Bank provides single-family residential, home equity and commercial real estate loans to customers and accepts deposits from customers located in the southern suburbs of Chicago, Illinois. The consolidated financial statements included herein include the accounts of the Company and the Bank. All significant intercompany items have been eliminated.

On October 9, 2013, the Company completed a second step conversion and reorganization and sale of common stock. Prior to the completion of the second step conversion, the Company was a federal corporation and mid-tier holding company in the mutual holding company structure. Following the reorganization, the Company is the Maryland chartered holding company of the Bank.

The information contained in the accompanying consolidated financial statements is unaudited.  In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations for the interim periods. All such adjustments are of a normal recurring nature.  Any differences appearing between the numbers presented in the financial statements and management’s discussion and analysis are due to rounding.  The results of operations for the interim periods are not necessarily indicative of the results which may be expected for the entire year or for any other period.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods.  Actual results could differ from those estimates.

7

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 2 - SECURITIES

The fair value of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. government-sponsored entities	$	8,000	$	4	$	(1	)	$	8,003
Residential agency mortgage-backed	40,006		217		(141		)	40,082
Total	$	48,006	$	221	$	(142	)	$	48,085

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. government-sponsored entities	$	11,000	$	3	$	(10	)	$	10,993
Residential agency mortgage-backed	43,248		188		(215		)	43,221
Total	$	54,248	$	191	$	(225	)	$	54,214

8

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 2 - SECURITIES (Continued)

The amortized cost, unrecognized gains and losses, and fair values of securities held-to-maturity were as follows:

	September 30, 2015
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Residential agency mortgage-backed	$	7	$	—	$	—	$	7
State and municipal	320		6		—		326
Total	$	327	$	6	$	—	$	333

	December 31, 2014
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Residential agency mortgage-backed	$	11	$	—	$	—	$	11
State and municipal	320		10		—		330
Total	$	331	$	10	$	—	$	341

9

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 2 - SECURITIES (Continued)

Expected maturities of securities at September 30, 2015 were as follows.  Securities not due at a single maturity date (mortgage-backed securities) are shown separately.

	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due after one year through five years	$	8,000	$	8,003	$	260	$	265
Due after five years through ten years	—		—		60		61
Residential agency mortgage-backed	40,006		40,082		7		7
Total	$	48,006	$	48,085	$	327	$	333

Securities with a carrying value of approximately $8,836 and $10,161 at September 30, 2015 and December 31, 2014, respectively were pledged to secure public deposits and for other purposes as required or permitted by law.

The proceeds from sales of securities and the associated gains for the three and nine months ended September 30, 2015 and 2014 are listed below:

	Three Months		Nine Months		Three Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2015		2015		2014		2014
Proceeds from sale	$	—	$	3,306	$	3,889	$	11,297
Gross realized gains	—		74		56		123

10

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 2 - SECURITIES (Continued)

Securities with unrealized losses not recognized in income, by length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	September 30, 2015
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. government- sponsored entities	$	1,999	$	(1	)	$	—	$	—		$	1,999	$	(1	)
Residential agency mortgage-backed	1,941		(3		)	11,080		(138		)	13,021		(141		)
Total temporarily impaired	$	3,940	$	(4	)	$	11,080	$	(138	)	$	15,020	$	(142	)

	December 31, 2014
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. government- sponsored entities	$	4,992	$	(8	)	$	998	$	(2	)	$	5,990	$	(10	)
Residential agency mortgage-backed	3,112		(10		)	13,750		(205		)	16,862		(215		)
Total temporarily impaired	$	8,104	$	(18	)	$	14,748	$	(207	)	$	22,852	$	(225	)

Unrealized losses on securities have not been recognized because the issuer’s securities are of high credit quality (rated AA or higher), management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value was largely due to changes in interest rates.  The fair value is expected to recover as the securities approach maturity.

11

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3 - LOANS

Loans were as follows:

	September 30,					December 31,
	2015					2014
	Amount			Percent		Amount			Percent
Mortgage:
One—to-four family	$	100,701		86.3	%	$	97,214		84.4	%
Multi-family and commercial	8,791			7.5		9,493			8.3
Home equity	6,943			6.0		8,069			7.0
Consumer and other	214			0.2		349			0.3
	116,649			100.0	%	115,125			100.0	%
Allowance for loan losses	(1,085		)			(1,103		)
Net deferred costs and other	133					108
Loans, net	$	115,697				$	114,130

The following tables present the activity in the allowance for loan losses by portfolio segment:

	For the Three Months Ended September 30, 2015
				Multi-family
	One—to-Four			and		Home		Consumer
	Family			Commercial		Equity		and Other		Total
Allowances for loan losses:
Beginning balance	$	846		$	214	$	20	$	—	$	1,080
Provision for loan losses	—			—		—		—		—
Charge-offs	(8		)	—		—		—		(8		)
Recoveries	13			—		—		—		13
Total ending allowance balance	$	851		$	214	$	20	$	—	$	1,085

12

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3- LOANS (Continued)

	For the Nine Months Ended September 30, 2015
				Multi-family
	One-to-Four			and			Home			Consumer
	Family			Commercial			Equity			and Other		Total
Allowances for loan losses:
Beginning balance	$	822		$	259		$	22		$	—	$	1,103
Provision for loan losses	172			(40		)	(2		)	—		130
Charge-offs	(160		)	(7		)	—			—		(167		)
Recoveries	17			2			—			—		19
Total ending allowance balance	$	851		$	214		$	20		$	—	$	1,085

	For the Three Months Ended September 30, 2014
				Multi-family
	One—to-Four			and			Home		Consumer
	Family			Commercial			Equity		and Other		Total
Allowances for loan losses:
Beginning balance	$	925		$	253		$	25	$	1	$	1,204
Provision for loan losses	—			207			—		—		207
Charge-offs	(47		)	(160		)	—		—		(207		)
Recoveries	1			1			—		—		2
Total ending allowance balance	$	879		$	301		$	25	$	1	$	1,206

	For the Nine Months Ended September 30, 2014
Allowances for loan losses:
Beginning balance	$	823		$	466		$	109		$	1	$	1,399
Provision for loan losses	161			610			(84		)	—		687
Charge-offs	(108		)	(778		)	—			—		(886		)
Recoveries	3			3			—			—		6
Total ending allowance balance	$	879		$	301		$	25		$	1	$	1,206

13

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3- LOANS (Continued)

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method:

	September 30, 2015
			Multi-Family				Consumer
	One—to-Four		and		Home		and
	Family		Commercial		Equity		Other		Total
Allowance for loan losses:
Loans individually evaluated for impairment	$	214	$	—	$	—	$	—	$	214
Loans collectively evaluated for impairment	637		214		20		—		871
Total ending allowance balance	$	851	$	214	$	20	$	—	$	1,085
Loans:
Loans individually evaluated for impairment	$	1,537	$	697	$	—	$	—	$	2,234
Loans collectively evaluated for impairment	99,164		8,094		6,943		214		114,415
Total ending loans balance	$	100,701	$	8,791	$	6,943	$	214	$	116,649

	December 31, 2014
			Multi-Family				Consumer
	One-to-Four		and		Home		and
	Family		Commercial		Equity		Other		Total
Allowance for loan losses:
Loans individually evaluated for impairment	$	234	$	—	$	—	$	—	$	234
Loans collectively evaluated for impairment	588		259		22		—		869
Total ending allowance balance	$	822	$	259	$	22	$	—	$	1,103
Loans:
Loans individually evaluated for impairment	$	1,564	$	899	$	—	$	—	$	2,463
Loans collectively evaluated for impairment	95,650		8,594		8,069		349		112,662
Total ending loans balance	$	97,214	$	9,493	$	8,069	$	349	$	115,125

14

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3- LOANS (Continued)

	As of September 30, 2015						As of December 31, 2014
					Allowance						Allowance
	Unpaid				for Loan		Unpaid				for Loan
	Principal		Recorded		Losses		Principal		Recorded		Losses
	Balance		Investment		Allocated		Balance		Investment		Allocated
With no related allowance recorded:
One—to-four family	$	401	$	288	$	—	$	410	$	297	$	—
Multi-family and commercial	987		697		—		1,185		899		—
Home equity	—		—		—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,388		985		—		1,595		1,196		—
With an allowance recorded:
One—to-four family	1,291		1,249		214		1,300		1,267		234
Multi-family and commercial	—		—		—		—
Home equity	—		—		—		—		—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,291		1,249		214		1,300		1,267		234
Total	$	2,679	$	2,234	$	214	$	2,895	$	2,463	$	234

	For the Three Months						For the Three Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
One—to-four family	$	290	$	3	$	—	$	299	$	3	$	—
Multi-family and commercial	703		—		9		1,787		1		6
Home equity	—		—		—				—		—
Consumer and other	—		—		—				—		—
Subtotal	993		3		9		2,086		4		6

15

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3 - LOANS (Continued)

	For the Three Months						For the Three Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
One—to-four family	1,253		12		—		1,175		17		—
Multi-family and commercial	—		—		—		—		—		—
Home equity	—		—		—				—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,253		12		—		1,175		17		—
Total	$	2,246	$	15	$	9	$	3,261	$	21	$	6

	For the Nine Months						For the Nine Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
One—to-four family	$	292	$	12	$	—	$	199	$	10	$	—
Multi-family and commercial	708		—		21		1,911		1		12
Home equity	—		—		—		—		—		—
Subtotal	1,000		12		21		2,110		11		12
With an allowance recorded:
One—to-four family	1,255		39		—		1,276		47		—
Multi-family and commercial	—		—		—		191		—		—
Home equity	—		—		—		—		—		—
Subtotal	1,255		39		—		1,467		47		—
Total	$	2,255	$	51	$	21	$	3,577	$	58	$	12

The recorded investment in loans excludes accrued interest receivable and loan origination costs, net, due to immateriality.

16

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3 - LOANS (Continued)

Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.  The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans:

					Loans Past Due Over
	Nonaccrual				90 Days Still Accruing
	September 30,		December 31,		September 30,		December 31,
	2015		2014		2015		2014
One—to-four family	$	1,128	$	1,886	$	—	$	—
Multi-family and commercial	697		900		—		—
Home equity	34		192		—		—
Consumer and other	—		—		—		—
Total	$	1,859	$	2,978	$	—	$	—

The following tables present the aging of the recorded investment in past due loans by class of loans:

	September 30, 2015
	30 - 59		60 - 89		Greater Than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
One—to-four family	$	572	$	207	$	220	$	999	$	99,702	$	100,701
Multi-family and commercial	—		196		—		196		8,595		8,791
Home equity	—		34		—		34		6,909		6,943
Consumer and other	—		—		—		—		214		214
Total	$	572	$	437	$	220	$	1,229	$	115,420	$	116,649

	December 31, 2014
	30 - 59		60 - 89		Greater Than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
One-to-four family	$	245	$	305	$	753	$	1,303	$	95,911	$	97,214
Multi-family and commercial	206		—		379		585		8,908		9,493
Home equity	88		44		35		167		7,902		8,069
Consumer and other	—		—		—		—		349		349
Total	$	539	$	349	$	1,167	$	2,055	$	113,070	$	115,125

17

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3 - LOANS (Continued)

Troubled Debt Restructurings

Troubled debt restructurings by accrual status and specific reserves allocated to troubled debt restructurings were as follows:

	September 30,			December 31,
	2015			2014
Accrual status	$	1,225		$	1,431
Non-accrual status	1,009			1,032
	2,234			2,463
Specific reserves allocated	(214		)	(234		)
Net	$	2,020		$	2,229

No additional loan commitments were outstanding to these borrowers at September 30, 2015 and December 31, 2014. Loans are returned to accrual status after a period of satisfactory payment performance under the terms of the restructuring, but no earlier than six months.

The following tables present loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2015:

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Loans	Investment		Investment
September 30, 2015
One-to—four family	1	$	217	$	219
Multi-family and commercial	—	—		—
Home equity	—	—		—
Consumer and other	—	—		—
Total	1	$	217	$	219

The recorded investment increased due to real estate taxes. The troubled debt restructuring described above was evaluated for impairment prior to modification, did not result in an increase in the allowance for loan losses upon modification, and resulted in no additional charge-offs for the three and nine months ended September 30, 2015. There were no new troubled debt restructurings made during the three months ended September 30, 2015 and the three and nine months ended September 30, 2014.

18

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3 - LOANS (Continued)

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.  The following table presents the loan by class modified as a troubled debt restructuring for which there was a payment default within twelve months following the modification during the nine months ended September 30, 2015.

	Number of	Recorded
	Loans	Investment
September 30, 2015
One-to—four family loans	1	$	217
Total	1	$	217

There were no 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, 2014. There were no troubled debt restructurings for which there was a payment default during the three months ended September 30, 2015.

The terms of certain other loans were modified during the three and nine months ended September 30, 2015 and 2014 that did not meet the definition of a troubled debt restructuring. These loan balances were not material in the three and nine months ended September 30, 2015 and 2014.

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. This evaluation is performed under the Company’s internal underwriting policy.

19

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3 - LOANS (Continued)

Credit Quality Indicators:

The Company categorizes loans into risk categories based on 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 Company analyzes loans individually by classifying the loans as to credit risk.  This analysis includes one —to four-family, multi-family and commercial real estate loans, home equity loans, and consumer and other. This analysis is performed on a quarterly basis.  The Company uses the following definitions for risk ratings:

Special Mention.  Loans classified 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 Company’s credit position at 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 Company 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 characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.  As of September 30, 2015 and December 31, 2014, the risk category of loans by class of loans was as follows:

	September 30, 2015
			Special
	Pass		Mention		Substandard		Doubtful		Total
One —to- four family	$	97,136	$	—	$	3,565	$	—	$	100,701
Multi-family and commercial	1,329		141		7,321		—		8,791
Home equity	6,875		—		68		—		6,943
Consumer and other	214		—		—		—		214
Total	$	105,554	$	141	$	10,954	$	—	$	116,649

20

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 3 - LOANS (Continued)

	December 31, 2014
			Special
	Pass		Mention		Substandard		Doubtful		Total
One—to-four family	$	94,007	$	—	$	3,207	$	—	$	97,214
Multi-family and commercial	2,649		102		6,742		—		9,493
Home equity	7,641		—		428		—		8,069
Consumer and other	349		—		—		—		349
Total	$	104,646	$	102	$	10,377	$	—	$	115,125

NOTE 4 - FAIR VALUES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (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.  There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other 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.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

21

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 4 - FAIR VALUES (Continued)

The Company used the following methods and significant assumptions used to estimate the fair value of the following items:

Securities:  The fair values of trading securities and securities available-for-sale are determined by quoted market prices, if available (Level 1).  For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

Impaired Loans:  At the time a loan is considered impaired, it is valued at the lower of cost or fair value of underlying collateral.  Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses.  For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.  Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned:  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

22

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 4 - FAIR VALUES (Continued)

Appraisals for both collateral dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

At September 30, 2015 and December 31, 2014, the Company had no liabilities measured at fair value.  Assets measured at fair value on a recurring basis are summarized below:

	September 30, 2015
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Securities available-for-sale
U.S. government-sponsored entities	$	8,003	$	—	$	8,003	$	—
Residential agency mortgage-backed	40,082		—		40,082		—

	December 31, 2014
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Securities available-for-sale
U.S. government-sponsored entities	$	10,993	$	—	$	10,993	$	—
Residential agency mortgage-backed	43,221		—		43,221		—

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2015 and the year ended December 31, 2014.

23

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 4 - FAIR VALUES (Continued)

The following tables set forth the Company’s assets that were measured at fair value on a non-recurring basis:

	September 30, 2015
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Other real estate owned:
One—to-four family	$	143	$	—	$	—	$	143
Multi-family and commercial	166		—		—		166

	December 31, 2014
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans:
One-to-four family	$	201	$	—	$	—	$	201
Multi-family and commercial	346		—		—		346
Other real estate owned:
One-to-four family	412		—		—		412
Multi-family and commercial	1,299		—		—		1,299

At September 30, 2015, other real estate owned, which is carried at fair value less estimated costs to sell, had a carrying amount of $1,778, net of a valuation allowance of $529, resulting in a write-down of $359 during the nine months ended September 30, 2015. At December 31, 2014, other real estate owned had a carrying amount of $2,021, net of a valuation allowance of $310, resulting in a write-down of $86 during 2014.

At December 31, 2014, loans which are measured for impairment using the fair value of the collateral for collateral dependent loans impaired loans, had a recorded investment of $547, with no valuation allowance, resulting in an additional provision for loan losses of $134 for 2014.

24

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 4 - FAIR VALUES (Continued)

The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis:

	September 30, 2015
			Valuation		Range
	Fair Value		Technique(s)	Unobservable Input(s)	(Weighted Average)
Other real estate owned:
One-to-four family	$	143	Sales comparison approach	Adjustment for differences between the comparable sales	(24.5)-3.7%(-7.82%)
Multi-family and commercial	166		Sales comparison approach	Adjustment for differences between the comparable sales	5.7-55.4% (34.2%)

At September 30, 2015, the Bank also had a commercial real estate owned property with a carrying value of $940,000, which is supported by an approved cash purchase offer.  As of December 31, 2014, the value was supported by an appraisal, and was included in the level 3 assets in the below table as of 12/31/2014.

	December 31, 2014
			Valuation		Range
	Fair Value		Technique(s)	Unobservable Input(s)	(Weighted Average)
Impaired loans:
One-to-four family	$	201	Sales comparison approach	Adjustment for differences between the comparable Sales	0.0-7.0% (-4.8%)
Multi-family and commercial	346		Sales comparison approach	Adjustment for differences between the comparable sales	0.0-56.7% (18.2%)
Other real estate owned:
One-to-four family	412		Sales comparison approach	Adjustment for differences between the comparable sales	0.0-5.3% (-6.5%)
Multi-family and commercial	90		Sales comparison approach	Adjustment for differences between the comparable sales	5.7-55.4% (34.2%)
	1,209		Income approach	Adjustment for differences in net operating income expectations	13.1% (13.1%)
				Capitalization rate	8.3% (8.3%)

25

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 4 - FAIR VALUES (Continued)

The carrying amount and estimated fair value of financial instruments not previously presented were as follows.

	September 30, 2015
	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	29,807	$	29,807	$	—	$	—	$	29,807
Securities held-to-maturity	327		—		333		—		333
Loans, net	115,697		—		—		114,734		114,734
FHLB stock	1,291		N/A		N/A		N/A		N/A
Accrued interest receivable	425		—		16		409		425
Financial liabilities
Non-interest-bearing deposits	$	21,754	$	21,754	$	—	$	—	$	21,754
Interest-bearing deposits	144,780		—		144,954		—		144,954
FHLB advances	5,000		—		5,055		—		5,055
Advances from borrowers for taxes	1,190		—		1,190		—		1,190
Accrued interest payable	11		—		11		—		11

	December 31, 2014
	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	32,898	$	32,898	$	—	$	—	$	32,898
Securities held-to-maturity	331		—		341		—		341
Loans, net (less impaired loans)	113,583		—		—		113,316		113,316
FHLB stock	1,768		N/A		N/A		N/A		N/A
Accrued interest receivable	438		—		20		418		438
Financial liabilities
Non-interest-bearing deposits	$	20,905	$	20,905	$	—	$	—	$	20,905
Interest-bearing deposits	145,344		—		145,444		—		145,444
FHLB advances	12,000		—		12,163		—		12,163
Advances from borrowers for taxes	2,068		—		2,068		—		2,068
Accrued interest payable	28		—		28		—		28

26

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 4 - FAIR VALUES (Continued)

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

(a)Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1

(b)Securities Held-to-Maturity

The carrying amounts of held to maturity securities are determined using a pricing matrix resulting in a Level 2 classification.

(c)FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(d)Loans

The fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

(e)Accrued Interest Receivable

The carrying amount of accrued interest receivable approximates its fair value and is classified as Level 2 for securities and Level 3 for loans.

27

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 4 - FAIR VALUES (Continued)

(f)Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) and are classified as Level 1.  The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date are classified as a Level 2. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(g)Federal Home Loan Bank Advances

The fair value of Federal Home Loan Bank  advances, which are at a fixed rate, are estimated using discounted cash flow analyses based on current rates for similar advances resulting in a Level 2 classification.

(h)Securities Sold Under Agreements to Repurchase

The carrying amounts of securities sold under agreements to repurchase approximate fair value resulting in a Level 2 classification.

(i)Advances From Borrowers For Taxes

The carrying values of short-term borrowings approximated fair value and are classified as Level 2.

(j)Accrued Interest Payable

The carrying amount of accrued interest payable approximates its fair value and is classified as Level 2.

28

AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 5 - EARNINGS PER SHARE

According to the provisions of FASB ASC 260, Earnings Per Share, non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. ESOP shares are considered outstanding for basic and diluted earnings per share when the shares are committed to be released. The Company’s non-vested restricted stock awards qualify as participating securities.

Net income is allocated between the common stock and participating securities pursuant to the two-class method, based on their rights to receive dividends, participate in earnings or absorb losses. Basic earnings per common share is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating non-vested restricted shares.

The table below calculates the earnings per share for the three months and nine months ended September 30, 2015 and 2014:

	Three Months						Nine Months
	September 30,						September 30,
	2015			2014			2015			2014
Basic
Net income	$	47		$	329		$	14		$	2,036
Distributed earnings allocated to participated securities	2			3			7			3
Undistributed earnings allocated to participated securities	(1		)	5			(7		)	13
Net earnings allocated to common shareholders	$	46		$	321		$	14		$	2,020
Weighted average common shares outstanding including participating securities	2,087,361			2,252,924			2,094,192			2,228,180
Less: Participating securities	(38,780		)	(56,267		)	(48,947		)	(21,641		)
Weighted-average common shares outstanding for basic	2,048,581			2,196,657			2,045,245			2,206,539
Basic earnings per common share	$	0.02		$	0.15		$	0.01		$	0.92
Diluted
Net earnings allocated to common stock	$	46		$	321		$	14		$	2,020
Weighted average common shares outstanding for basic	2,048,581			2,196,657			2,045,245			2,206,539
Add: dilutive effects of assumed exercise of stock options and stock awards	15,167			—			11,831			—
Weighted-average common shares outstanding for diluted	2,063,748			2,196,657			2,057,076			2,206,539
Diluted earnings per common share	$	0.02		$	0.15		$	0.01		$	0.92

At September 30, 2015 and 2014, there were 1,375 anti-dilutive stock options, respectively.

Employee stock ownership plan shares are considered outstanding for this calculation unless unearned. At September 30, 2015 and 2014, there were 105,032 and 108,783 shares unearned from the employee stock ownership plan, respectively.

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AJS BANCORP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share data)

NOTE 6 — EQUITY INCENTIVE PLAN

The Company’s 2014 Equity Incentive Plan provides for grants of stock options, stock awards, stock units, awards, performance stock awards, stock appreciations rights, and other equity-based awards to key employees and nonemployee directors. As of September 30, 2015, the Company has only granted stock options and stock awards. The Company recognizes stock compensation costs for services received in a share-based payment transaction over the required service period, generally defined as the vesting period.

For stock options, certain key employees and nonemployee directors were granted options to purchase shares of the Company’s common stock at fair value at the date of the grant (exercise price). The options become exercisable in equal installments over a five-year period from the date of grant, and they expire ten years from the date of grant. Compensation cost is determined by estimating the fair value of the option on the date of the grant using a closed form option valuation (Black-Scholes) model. Expected volatilities are based on historical volatilities of the Company’s common stock. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferrable. The risk-free interest rate for the expected term of the option is based on the U.S. treasury yield curve in effect at the time of grant. There were 118,132 options granted in May 2014 with a strike price of $11.99, 4,000 options granted in June 2015 with a strike price of $15.00 and 10,000 options granted with a strike price of $14.85. During the nine months ended September 30, 2015, there were 23,624 options vested, 16,800 options forfeited, 4,200 options were exercised, and no options expired. Total unrecognized compensation expense for stock options was $100 as of September 30, 2015. Compensation expense totaled $20 and $9 for the nine months ended September 30, 2015 and 2014, respectively. Management expects outstanding options to vest over the weighted average remaining vesting period of 3.8 years.

For stock awards, the compensation cost is based on the grant date fair value of the award (as determined by quoted market prices) and is recognized over the vesting period. The Company’s stock awards vest based on a service period of five years. The unamortized cost of shares not yet earned (vested) is reported as a reduction of stockholders’ equity. The Company awarded 56,267 shares of stock in May 2014 and 6,000 shares in August 2015. During the nine months ended September 30, 2015, there were 11,251 awards vested and 9,612 awards forfeited. Total unrecognized compensation expense for awards was $475 as of September 30, 2015. Compensation expense totaled $95 and $45 for the nine months ended September 30, 2015 and 2014, respectively. Management expects outstanding awards to vest over the weighted average remaining vesting period of 3.8 years.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements and information relating to the Company and the Bank that are based on the beliefs of management as well as assumptions made by and information currently available to management. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “should,” “could,” or “may” and similar expressions or the negative thereof. Certain factors that could cause actual results to differ materially from expected results include, changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the business of the Company and the Bank, and changes in the securities markets. 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. We caution readers not to place undue reliance on forward-looking statements. The Company disclaims any obligation to revise or update any forward-looking statements contained in this Form 10-Q to reflect future events or developments.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. By their nature, changes in these assumptions and estimates could significantly affect our financial position or results of operations.  Actual results could differ from those estimates.

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

Discussed below are selected critical accounting policies that are of particular significance to us.

Allowance for Loan Losses.  The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-offs less recoveries.  We estimate the allowance balance required using past loan loss experience; known and inherent losses in the nature and volume of the portfolio that are both probable and estimable;

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information about specific borrower situations; and estimated collateral values, economic conditions, and other factors.  Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged off.  Loan losses are charged against the allowance when we believe that the uncollectibility of a loan balance is confirmed.

The allowance consists of specific and general components.  The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful.

Non-performing loans and impaired loans are defined differently.  A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  A loan is non-performing when it is on non-accrual or greater than 90 days past due.  Some loans may be included in both categories, whereas other loans may only be included in one category. Our policy requires that all non-homogeneous loans past due greater than 90 days be classified as impaired and non-performing.  However, performing loans may also be classified as impaired when we do not expect to collect all amounts due according to the contractual terms of the loan agreement even though the borrower may be current or less than 90 days past due on repaying a loan.  Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Factors considered by us 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.  We determine the significance of payment delays and payment shortfalls on 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 shortfall in relation to the principal and interest owed.

Multifamily and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception.  If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral.  For troubled debt restructurings that subsequently default, we determine the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

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The general component covers non-impaired loans and is based on actual historical loss experience determined by portfolio loan segment adjusted for current factors.  This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio loan segment, such as real estate trends and national and local economic conditions.  As greater risk is associated with loans classified as special mention and substandard that are not impaired, the Company considers the actual historical loss experience by loan segment, the levels of loans classified as special mention and substandard, and the trends in the collateral associated with these classifications.

The following portfolio segments have been identified: One-to four-family, multifamily and commercial, home equity, consumer and other.  Substantially all of the loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate.  Commercial real estate loans are expected to be repaid from cash flows from operations of businesses and consumer loans are expected to be repaid from personal cash flows.  There are no significant concentrations of loans to any one industry or customer.  Risk factors impacting loans in each of the portfolio segments include local and national real estate values, local and national economic factors affecting borrowers’ employment prospects and income levels, levels and movement of interest rates and general availability of credit, and overall economic sentiment.

Other Real Estate Owned.  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense.  Operating costs after acquisition are expensed.

Realization of Deferred Tax Asset.  The future realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income of the appropriate character, (for example, ordinary income or capital gain) within the carry back and carry forward period available under the tax law.  We evaluate the future realization of the deferred tax asset on a quarterly basis and establish a valuation allowance predicated on consideration of future performance as well as tax planning strategies available to us.  Tax-planning strategies are actions that we would take in order to prevent an operating loss or tax credit carry forward from expiring unused.  In order for a tax-planning strategy to be considered, it must be prudent and feasible and result in realization of the deferred tax assets.

Fair Value of Financial Instruments.  Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 4.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.  Some of these estimates are not necessarily indicative of an exit price. Changes in assumptions or in market conditions could significantly affect the estimates.

Overview

We had net income of $47,000, or $0.02 per share, for the three months ended September 30, 2015 compared to net income of $329,000, or $0.15 per share, for the same period in 2014. Our net income for the nine months ended September 30, 2015 was $14,000, or $0.01 per share, compared to

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net income of $2.0 million, or $0.92 per share, for the same period in 2014. The decrease in net income for the three months ended September 30, 2015 compared to the prior year period was mainly attributable to a $740,000 decrease in other real estate owned gains, partially offset by a decline in the provision for loan losses of $207,000 and a $186,000 decrease in income tax expense. The decline in net income for the nine month period ended September 30, 2015 compared to the prior year period was mainly attributable to the $1.7 million reversal of the remaining deferred tax asset valuation allowance in the second quarter of 2014, a $775,000 decrease in other real estate owned gains, higher other real estate owned expense/impairment of $257,000, and a decline in net interest income of $125,000. These decreases were partially offset by a decline in the provision for loan losses of $557,000 for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Comparison of Financial Condition at September 30, 2015 and December 31, 2014

Assets. Total consolidated assets as of September 30, 2015 were $209.0 million, a decrease of $8.5 million, or 3.9%, from $217.5 million at December 31, 2014.  The decrease was due to declines in cash and cash equivalents, securities available-for-sale, and other real estate owned, partially offset by an increase in net loans.

Cash and cash equivalents decreased $3.1 million, or 9.4%, to $29.8 million at September 30, 2015 from $32.9 million at December 31, 2014. The primary reason for the decline in cash and cash equivalents was due to the repayment of maturing Federal Home Loan Bank (FHLB) advances of $7.0 million and a $1.6 million increase in net loans during the nine months ended September 30, 2015, partially offset by a $6.1 million decrease in the securities available-for-sale portfolio.

Securities available-for-sale decreased $6.1 million, or 11.3%, to $48.1 million at September 30, 2015 from $54.2 million at December 31, 2014.  The decrease was primarily due to securities available-for-sale principal repayments, calls and sales of $27.1 million exceeding new securities purchases of $21.0 million and a decrease in the unrealized loss on available-for-sale securities of $112,000 as a result of the decrease in interest rates during the nine months ended September 30, 2015.

Net loans increased $1.6 million, or 1.4%, to $115.7 million at September 30, 2015 from $114.1 million at December 31, 2014.  The increase was primarily attributable to an increase in our one-to four-family residential portfolio, partially offset by declines in our multifamily and commercial real estate and home equity portfolios during the nine months ended September 30, 2015. One-to four-family residential loans increased $3.5 million, or 3.6%, to $100.7 million at September 30, 2015 from $97.2 million at December 31, 2014. The increase was primarily due to increased borrower demand to lock in current low interest rates prior to anticipated increases in interest rates in future periods as well as the seasonal increase in home sales in the spring and summer. Multifamily and commercial real estate loans declined $702,000, or 7.4%, to $8.8 million at September 30, 2015 from $9.5 million at December 31, 2014. Home equity loans decreased $1.1 million, or 14.0%, to $6.9 million at September 30, 2015 from $8.1 million at December 31, 2014. The decrease in the multifamily and commercial real estate loan portfolio was due to aggressive price competition for these loans in the Bank’s marketplace.

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Federal Home Loan Bank stock decreased $477,000, or 27.0%, to $1.3 million at September 30, 2015 from $1.8 million at December 31, 2014 as we sold shares of FHLB stock back to the FHLB.  The decrease was primarily due to changes in the membership stock requirement as specified in the FHLB of Chicago’s capital plan which allowed excess stock to be available for repurchase so that those funds could be deployed elsewhere in the organization.

Other real estate owned decreased $502,000, or 28.7%, to $1.2 million at September 30, 2015 from $1.7 million at December 31, 2014. The decrease was primarily due to $474,000 in sales of three one-to four- family residential properties which resulted in a loss of $19,000 and write-downs of $359,000 on two commercial real estate properties, partially offset by additions to other real estate owned of two one-to four-family residential properties and a commercial real estate property for a total of $319,000 during the nine months ended September 30, 2015.

Liabilities. Total liabilities decreased $8.1 million, or 4.4%, to $175.3 million at September 30, 2015 from $183.4 million at December 31, 2014. The decrease in total liabilities was primarily due to declines in FHLB advances and advance payments by borrowers for taxes and insurance.

Deposits. Total deposits increased $285,000, or 0.2%, to $166.5 million at September 30, 2015 from $166.2 million at December 31, 2014. Passbook account balances grew $2.7 million, or 4.1%, to $68.0 million at September 30, 2015 from $65.4 million at December 31, 2014. NOW and checking account balances increased $1.9 million, or 6.0%, to $33.8 million at September 30, 2015 from $31.9 million at December 31, 2014. The increase in our lower cost core deposits, which we consider to be our checking, passbook and NOW accounts were partially offset by a decrease in our money market accounts and certificates of deposit. Money market accounts decreased $963,000, or 15.0%, to $5.5 million at September 30, 2015 from $6.4 million at December 31, 2014. Higher cost certificates of deposit decreased $3.3 million, or 5.3%, to $59.3 million at September 30, 2015 from $62.6 million at December 31, 2014. The decline in the balance of certificates of deposit was attributable to legacy certificates of deposit customers seeking higher yields as accounts re-priced to current lower market interest rates upon maturity and/or moving maturing certificates into more liquid core deposit accounts in anticipation of higher interest rates.

FHLB Advances. FHLB of Chicago advances decreased $7.0 million, or 58.3%, to $5.0 million at September 30, 2015 from $12.0 million at December 31, 2014.  Due to our excess liquidity, we repaid our maturing FHLB advances of $7.0 million with a weighted average interest rate of 2.24% during the nine months ended September 30, 2015. Outstanding FHLB of Chicago advances at September 30, 2015 were fixed-rate with maturities of less than one year with a weighted average interest rate of 2.55%.

ESOP Repurchase Obligation. The ESOP repurchase obligation increased $79,000, or 8.7% to $988,000 at September 30, 2015 from $909,000 at December 31, 2014. The increase was primarily due to an increase in the market value of the vested portion of the common stock held in the ESOP.

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Stockholders’ Equity. Total stockholders’ equity decreased $472,000, or 1.4%, to $32.7 million at September 30, 2015 from $33.2 million at December 31, 2014. The Company repurchased shares of 20,657 at an average price of $13.66 per share from the second and third stock repurchase programs for a total cost of $282,000 and paid dividends on common stock of $308,000, which were partially offset by net income of $14,000, and a decrease in the unrealized loss on securities classified as available-for-sale of $68,000 for the nine months ended September 30, 2015. Book value per share was $14.91 at September 30, 2015 as compared to $14.97 at December 31, 2014.

Asset Quality

The following table sets forth information with respect to our non-performing assets at the dates indicated (dollars in thousands):

	September 30,			December 31,
	2015			2014
Loans 90 days or more past due and still accruing	$	—		$	—
Non-accrual troubled debt restructurings	1,009			1,032
Non-accrual loans (excludes troubled debt restructurings)	850			1,946
Total non-performing loans	$	1,859		$	2,978
Other real estate owned	1,249			1,751
Total non-performing assets	$	3,108		$	4,729
Non-performing assets to total assets	1.49		%	2.17		%
Non-performing loans to total loans	1.59			2.59
Allowance for loan losses to non-performing loans	58.36			37.04
Allowance for loan losses to total loans	0.93			0.96

Non-performing Assets and Allowance for Loan Losses. We had non-performing assets of $3.1 million, or 1.49% of total assets, as of September 30, 2015 and $4.7 million, or 2.17% of total assets, as of December 31, 2014. The decrease in nonperforming assets was primarily attributable to sales of $474,000 of three one-to four-family residential other real estate owned properties and write-downs of $359,000 on two commercial real estate properties, partially offset by additions of two one-to four-family residential properties and a commercial real estate property for a total of $319,000 during the nine months ended September 30, 2015. Net charge-offs for the nine months ended September 30, 2015 and September 30, 2014 were $148,000 and $880,000, respectively. The allowance for loan losses totaled $1.1 million at both September 30, 2015 and December 31, 2014.  This represents a ratio of the allowance for loan losses to total loans of 0.93% at September 30, 2015 and 0.96% at December 31, 2014. The slight decrease in the allowance for loan losses to total loans was due to a decline in the historical loss factors on multi-family and commercial real estate loans collectively evaluated for

36

impairment, the continued reduced risk profile of the loan portfolio, and improvements in economic conditions.

At September 30, 2015, we had 22 one- to four-family residential loans, one home equity loan, and four multifamily and commercial real estate loans with an aggregate principal balance of $1.9 million, none of which had an individual principal balance in excess of $500,000 on nonaccrual status. At December 31, 2014, we had 27 one- to four-family residential loans, five home equity loans, and five multifamily and commercial real estate loans with an aggregate principal balance of $3.0 million, none of which had an individual principal balance in excess of $500,000, on nonaccrual status.

At September 30, 2015, we had three one- to four-family residential loans and four multifamily and commercial real estate loans classified as troubled debt restructurings with an aggregate principal balance of $2.2 million of which $1.0 million was on non-accrual status. At December 31, 2014, we had 10 one-to four-family residential loans and five multifamily and commercial real estate loans classified as troubled debt restructurings with an aggregate principal balance of $2.5 million of which $1.0 million was on non-accrual status.

At September 30, 2015, we had a $3.5 million commercial real estate loan secured by a golf course located in Flossmoor, Illinois. Borrowers’ risk ratings are reassessed annually when the borrowers’ financial statements are received. Based on the most recent financial statements of the borrower, we determined the borrower displayed well-defined credit weaknesses that may jeopardize full collection of principal and interest if not corrected. As a result, the loan is classified as substandard as of September 30, 2015. However, the loan was performing in accordance with its terms and is on accrual status.

At September 30, 2015, we had another real estate owned property of $940,000 representing a 3.35% participation in an indoor water park/ hotel complex. During the quarter ended September 30, 2015 the property manager received two offers from third parties to purchase the property, subject to customary due diligence. In October 2015, the participants voted to accept the lower cash offer and authorized the property manager to proceed with the due diligence and drafting of the sale agreement. As a result, we recorded an additional $104,000 write-down during the third quarter of 2015 to reflect the expected net realizable value upon the sale.

Although we record our non-performing assets at the estimated fair value of the property or underlying collateral less costs to sell, there may be additional losses on these properties in the future.

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Comparison of Operating Results for the Three Months Ended September 30, 2015 and September 30, 2014

General.  Net income for the three months ended September 30, 2015 was $47,000, a decrease of $282,000, or 85.7%, compared to net income of $329,000 for the three months ended September 30, 2014. The decline was mainly attributable to a $740,000 decrease in other real estate owned gains, partially offset by a decline in the provision for loan losses of $207,000, an $84,000 decrease in non-interest expense and a $186,000 decrease in income tax expense.

Net Interest Income.  Net interest income increased by $28,000 to $1.1 million for the three months ended September 30, 2015, as compared to the same period in 2014. The net interest margin increased by 19 basis points to 2.37% for the three months ended September 30, 2015 compared to 2.18% for the three months ended September 30, 2014, and the net interest rate spread increased 22 basis points to 2.26% for the three months ended September 30, 2015 compared to 2.04% for the three months ended September 30, 2014.

Interest Income.  Total interest income decreased $55,000, or 4.0%, to $1.3 million for the three months ended September 30, 2015 from $1.4 million for the same period in 2014.  The decrease was primarily due to a $12.0 million, or 5.9% decrease in average interest-earning assets, partially offset by a five basis point increase in the average yield on interest-earning assets. The average yield on interest- earning assets was 2.74% for the three months ended September 30, 2015 as compared to 2.69% for the same period in 2014. The decline in the average balance of interest-earning assets was primarily due to using the proceeds from calls and repayments of lower yielding securities available-for-sale portfolio and funding the repayment of FHLB advances and modest deposit outflows.

Interest income from loans decreased by $24,000, or 2.0%, to $1.1 million for the three months ended September 30, 2015, from $1.2 million for the three months ended September 30, 2014. The decline in interest income from loans was due to a nine basis point decrease in the average loan yield. The average yield on loans decreased to 3.87% for the three months ended September 30, 2015 from 3.94% for the same period in 2014. The decrease in the average yield on loans was primarily caused by lower yields earned on new loan originations and repayments of higher yielding seasoned loans as a result of the prolonged low interest rate environment.

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Interest income from securities decreased $30,000, or 15.1%, to $169,000 for the three months ended September 30, 2015, from $199,000 for the three months ended September 30, 2014.  The decrease primarily resulted from a $10.0 million, or 17.1% decrease in the average securities balance, partially offset by a three basis point increase in the average securities yield for the three months ended September 30, 2015 as compared to the same period in 2014.  The average yield on securities increased to 1.39% for the three months ended September 30, 2015 from 1.36% for the same period in 2014.

Interest Expense.  Interest expense decreased by $83,000, or 31.9%, to $177,000 for the three months ended September 30, 2015, from $260,000 for the same period in 2014.  The primary reasons for the decrease were due to the $11.7 million, or 17.1% decrease in the average balance of interest- bearing liabilities and a 17 basis points decline in the average interest rate paid for interest-bearing liabilities. Average interest bearing liabilities were $148.9 million and $160.6 million for the three months ended September 30, 2015 and September 30, 2014, respectively. The decrease was primarily due to the repayment of maturing FHLB advances and modest deposit outflows.

Interest expense on deposits decreased by $32,000, or 18.2%, to $144,000 for the three months ended September 30, 2015, from $176,000 for the same period in 2014. Our average cost of deposits decreased eight basis points to 0.40% for the three months ended September 30, 2015 from 0.48% for the three months ended September 30, 2014. The decrease in our average cost of deposits resulted from the continued change in the mix of our average deposits from higher-cost certificates of deposit to lower-cost core deposits. Average interest-bearing deposit balances decreased $2.2 million to $143.9 million for the three months ended September 30, 2015, from $146.1 million for the same period in 2014 due primarily to a $5.1 million decrease in the average balance of certificates of deposit and a $1.9 million decrease in the average balance of money market accounts, partially offset by a $4.3 million increase in the average balance of passbook accounts.  The decrease in the average balance of certificates of deposit was attributable to legacy certificates of deposit customers seeking higher yields as accounts re-priced to current lower market interest rates upon maturity and/or moving maturing certificates into more liquid core deposit accounts in anticipation of higher interest rates.

Interest expense on FHLB advances decreased $51,000, or 60.7%, to $33,000 for the three months ended September 30, 2015, from $84,000 for the same period in 2014. The primary reason for the decrease was a $9.5 million, or 65.5% decrease in the average balance of FHLB of Chicago advances, partially offset by a 32 basis point increase in the average cost of FHLB advances to 2.56% due to the payoff of lower cost advances. The decrease in average balance was due to the repayment of maturing FHLB advances.

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	For the Three Months Ended September 30,
	2015							2014
	Average Outstanding Balance			Interest Earned/ Paid		Yield/ Cost (4)		Average Outstanding Balance			Interest Earned/ Paid		Yield/ Cost (4)
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other financial institutions	$	25,716		$	16	0.25	%	$	26,688		$	17	0.25	%
Securities	48,497			169		1.39		58,526			199		1.36
Loans receivable	116,475			1,127		3.87		116,965			1,151		3.94
Federal Home Loan Bank common stock	1,291			2		0.62		1,768			2		0.45
Total interest-earning assets	191,979			1,314		2.74		203,947			1,369		2.69
Total non-interest-earning assets	16,391							16,672
Total assets	$	208,370						$	220,619
Interest-bearing liabilities:
Passbook accounts	$	68,010		27		0.16	%	$	63,723		24		0.15	%
NOW accounts	11,556			—		—		11,089			—		—
Money market accounts	4,755			—		—		6,666			—		—
Certificates of deposit	59,595			117		0.79		64,659			152		0.94
Total deposits	143,916			144		0.40		146,137			176		0.48
Federal Home Loan Bank of Chicago advances	5,000			33		2.64		14,500			84		2.32
Total interest-bearing liabilities	148,916			177		0.48		160,637			260		0.65
Non-interest-bearing demand deposits-checking accounts	$	21,963						$	19,939
Other liabilities	4,858							4,490
Total liabilities	175,737							185,066
Stockholders’ Equity	32,633							35,553
Total liabilities and stockholders’ equity	$	208,370						$	220,619
Net interest income				$	1,137						$	1,109
Net interest rate spread (1)						2.26	%						2.04	%
Net interest-earning assets (2)	$	43,063						$	43,310
Net interest margin (3)						2.37	%						2.18	%
Average interest-earning assets to average interest-bearing liabilities	128.92		%					126.96		%

(1)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)Net interest margin represents net interest income divided by average total interest-earning assets.

(4)Annualized.

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Provision for Loan Losses.  We establish a provision for loan losses, which is charged to operations, at a level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio.  In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.  Based on our evaluation of these factors, we recorded no provision for loan losses for the three months ended September 30, 2015 and $207,000 for the three months ended September 30, 2014. The lack of a provision was due to a decline in historical loss factors and having net recoveries for the quarter of $5,000. The allowance for loan losses was $1.1 million, or 0.93% of total loans, at September 30, 2015 compared to $1.1 million, or 0.96% of total loans, at December 31, 2014. The decrease in the allowance for loan losses as a percent of total loans was due to a decline in the historical loss factors on multifamily and commercial real estate loans collectively evaluated for impairment, the continued reduced risk profile of the loan portfolio, and improvements in economic conditions in the Bank’s market area.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance.  While management uses available information to recognize and provide for losses on loans, future loan loss provisions may be necessary based on changes in economic conditions.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination.  The allowance for loan losses as of September 30, 2015 was maintained at a level that represents management’s best estimate of inherent losses in the loan portfolio, and such losses that were both probable and reasonably estimable.

Non-Interest Income.  Non-interest income decreased $787,000 to $170,000 for the three months ended September 30, 2015, from $957,000 for the three months ended September 30, 2014. The decrease was primarily due to a $740,000 and $56,000 decrease in gains in other real estate owned, and securities sales, respectively.

Non-Interest Expense.  Non-interest expense decreased $84,000, or 6.3%, to $1.3 million for the three months ended September 30, 2015, as compared to the same period in 2014.  The decrease was primarily due to a $104,000 decrease in compensation and employee benefits expense, and a $40,000 decline in professional and regulatory expense, partially offset by a $45,000 increase in other real estate owned expense/impairment

Compensation and employee benefits expense decreased $104,000, or 15.9% to $551,000 for the three months ended September 30, 2015, from $655,000 for the same period in 2014. The primary reasons for the decrease were lower compensation expense related to reduced headcount, lower bonus accruals and decreases in medical insurance, payroll tax and stock related compensation expenses.

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Professional and regulatory expense decreased $40,000 to $82,000 for the three months ended September 30, 2015 from $122,000 for the same period in 2014. The decrease was primarily due to reporting efficiencies from the Company’s second year reporting as a public company and the Bank’s improved overall regulatory condition.

Other real estate owned expense/impairment increased $45,000 to $87,000 for the three months ended September 30, 2015, from $42,000 for the three months ended September 30, 2014. The increase was primarily due to write-downs of $154,000 on two commercial properties, partially offset by $51,000 of operating income received from one of its commercial properties.

Income Tax Expense.  We recorded an income tax expense of $6,000 for the three months ended September 30, 2015 and an income tax expense of $192,000 for the three months ended September 30, 2014. The decrease in the income tax expense was primarily due to the $468,000 decrease in income before income taxes for the third quarter of 2015 compared to the same period in 2014.

Comparison of Operating Results for the Nine Months Ended September 30, 2015 and September 30, 2014

General.  Net income for the nine months ended September 30, 2015 was $14,000, a decrease of $2.0 million, or 99.3%, from net income of $2.0 million for the nine months ended September 30, 2014. The decline was mainly attributable to the $1.7 million reversal of the remaining deferred tax asset valuation allowance in the second quarter of 2014, a $775,000 decrease in other real estate owned gains, higher other real estate owned expense/impairment of $257,000, and a decline in net interest income of $125,000. These decreases were partially offset by a decline in the provision for loan losses of $557,000 for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Net Interest Income.  Net interest income decreased by $125,000 to $3.4 million for the nine months ended September 30, 2015, from $3.5 million for the same period in 2014. The decrease was primarily due to an $8.7 million, or 4.2% decrease in the level of interest-earning assets, slightly offset by a one basis point improvement in the net interest margin to 2.31% from 2.30% for the nine months ended September 30, 2015 as compared to the same period in 2014.

Interest Income.  Total interest income decreased $336,000, or 7.9%, to $3.9 million for the nine months ended September 30, 2015 from $4.3 million for the same period in 2014.  The decrease was primarily due to the &8.7 million, or 4.2% decrease in average interest-earning assets and an 11 basis points decline in the average yield on interest- earning assets. The average yield on interest- earning assets was 2.69% for the nine months ended September 30, 2015 as compared to 2.80% for the same period in 2014. The decline was primarily a result of the 12 and 16 basis point decreases in the average yield on loans and securities, respectively.

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Interest income from loans decreased by $194,000, or 5.4%, to $3.4 million for the nine months ended September 30, 2015, from $3.6 million for the nine months ended September 30, 2014. The decline in interest income from loans was due to decreases in the average loan yield and average loan balance for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014. The average yield on loans decreased to 3.87% for the nine months ended September 30, 2015 from 3.99% for the same period in 2014. The decrease in the average yield on loans was primarily caused by lower yields earned on new loan originations and repayments of higher yielding seasoned loans as a result of the prolonged low interest rate environment. The average loan balance decreased by $3.7 million to $115.9 million for the nine months ended September 30, 2015 from $119.0 million for the same period in 2014. The decrease in the average loan balance was primarily due to the aggressive price competition for multifamily and commercial real estate loans in the Bank’s marketplace.

Interest income from securities decreased $147,000, or 22.3%, to $513,000 for the nine months ended September 30, 2015, from $660,000 for the nine months ended September 30, 2014.  The decrease primarily resulted from a decrease in the average securities yield and average securities balance for the nine months ended September 30, 2015 as compared to the same period in 2014.  The average yield on securities decreased to 1.32% for the nine months ended September 30, 2015 from 1.48% for the same period in 2014 due to the prolonged low interest rate environment. The average balance of securities decreased $7.7 million to $51.9 million for the nine months ended September 30, 2015 from $59.6 million for the same period in 2014. The decrease in the average securities balance was due to securities principal repayments, calls, and sales exceeding new securities purchases.

Interest Expense.  Interest expense decreased by $211,000, or 27.7%, to $552,000 for the nine months ended September 30, 2015, from $763,000 for the same period in 2014.  The primary reasons for the decrease were due to the $9.0 million decrease in the average balance of interest-bearing liabilities and a 14 basis points decline in the average interest rate paid for interest-bearing liabilities. Average interest-bearing liabilities were $151.1 million and $160.2 million for the nine months ended September 30, 2015 and September 30, 2014, respectively, while the average cost of interest bearing liabilities was 0.49% for the nine months ended September 30, 2015 as compared to 0.63% for the same period in 2014.

Interest expense on deposits decreased by $65,000, or 12.9%, to $438,000 for the nine months ended September 30, 2015, from $503,000 for the same period in 2014. Our average cost of deposits decreased six basis points to 0.40% for the nine months ended September 30, 2015 from 0.46% for the nine months ended September 30, 2014. The decrease in our average cost of deposits resulted from the continued change in the mix of our average deposits from higher-cost certificates of deposit to lower-cost core deposits. Average interest-bearing deposit balances were relatively unchanged at $144.9 million for the nine months ended September 30, 2015, compared to $145.0 million for the same period in 2014 due primarily to the increase in the average balance of passbook accounts of $3.0 million. The increase was primarily due to customer preferences in moving maturing certificate of deposit balances to more liquid core deposit products.

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Interest expense on FHLB advances decreased $146,000, or 56.2%, to $114,000 for the nine months ended September 30, 2015, from $260,000 for the same period in 2014. The primary reason for the decrease in interest expense on FHLB advances was a decrease in the average balance of FHLB of Chicago advances, partially offset by a 17 basis point increase in the average cost of FHLB advances to 2.45%. Average balances of FHLB of Chicago advances decreased $9.0 million to $6.2 million for the nine months ended September 30, 2015 from $15.2 million for the same period in 2014. The decrease was due to the repayment of maturing FHLB advances.

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	For the Nine Months Ended September 30,
	2015							2014
	Average Outstanding Balance			Interest Earned/ Paid		Yield/ Cost (4)		Average Outstanding Balance			Interest Earned/ Paid		Yield/ Cost (4)
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other financial institutions	$	25,434		$	47	0.24	%	$	23,081		$	42	0.24	%
Securities	51,930			513		1.32		59,593			660		1.48
Loans receivable	115,888			3,367		3.87		118,965			3,561		3.99
Federal Home Loan Bank of Chicago common stock	1,482			6		0.54		1,768			6		0.45
Total interest-earning assets	194,734			3,933		2.69		203,407			4,269		2.80
Total non-interest-earning assets	16,482							16,034
Total assets	$	211,216						$	219,441
Interest-bearing liabilities:
Passbook accounts	$	66,770		79		0.16	%	$	63,723		70		0.15	%
NOW accounts	10,988			—		—		10,624			—		—
Money market accounts	6,375			1		—		6,557			—		—
Certificates of deposit	60,777			358		0.79		64,109			433		0.90
Total deposits	144,910			438		0.40		145,013			503		0.46
Federal Home Loan Bank of Chicago advances	6,200			114		2.45		15,200			260		2.28
Total interest-bearing liabilities	151,110			552		0.49		160,213			763		0.63
Non-interest-bearing demand deposits-checking accounts	$	22,057						$	19,654
Other liabilities	5,234							4,748
Total liabilities	178,401							184,615
Stockholders’ Equity	32,815							34,826
Total liabilities and stockholders’ equity	$	211,216						$	219,441
Net interest income				$	3,381						$	3,506
Net interest rate spread (1)						2.20	%						2.17	%
Net interest-earning assets (2)	$	43,624						$	43,194
Net interest margin (3)						2.31	%						2.30	%
Average interest-earning assets to average interest-bearing liabilities	128.87		%					126.96		%

(1)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)Net interest margin represents net interest income divided by average total interest-earning assets.

(4)Annualized.

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Provision for Loan Losses.  We establish a provision for loan losses, which is charged to operations, at a level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio.  In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.  Based on our evaluation of these factors, we recorded a provision for loan losses of $130,000 for the nine months ended September 30, 2015 and $687,000 for the nine months ended September 30, 2014. The allowance for loan losses was $1.1 million, or 0.93% of total loans, at September 30, 2015 compared to $1.1 million, or 0.96% of total loans, at December 31, 2014. The decrease in the allowance for loan losses as a percent of total loans was due to a decline in the historical loss factors on multifamily and commercial real estate loans collectively evaluated for impairment, the continued reduced risk profile of the loan portfolio, and improvements in economic conditions in the Bank’s market area.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance.  While management uses available information to recognize and provide for losses on loans, future loan loss provisions may be necessary based on changes in economic conditions.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination.  The allowance for loan losses as of September 30, 2015 was maintained at a level that represents management’s best estimate of inherent losses in the loan portfolio, and such losses that were both probable and reasonably estimable.

Non-Interest Income.  Non-interest income decreased $782,000 to $563,000 for the nine months ended September 30, 2015, from $1.3 million for the nine months ended September 30, 2014. The decrease was primarily due to a $775,000 decrease in other real estate owned gains due to a large commercial real estate parcel that was sold in 2014.

Non-Interest Expense.  Non-interest expense increased $39,000, or 1.0%, to $3.9 million for the nine months ended September 30, 2015, from $3.8 million for the nine months ended September 30, 2014.  The increase was primarily due to $257,000 of higher other real estate owned expense/impairment, partially offset by a $124,000 decrease in professional and regulatory expense, a $41,000 decrease in federal deposit insurance expense, and an $81,000 decrease in other non-interest expense items. The decrease in other non-interest expense was due to less legal expenses related to problem loans and lack of costs associated with flood damage at a branch location in 2014.

Other real estate owned expense/impairment increased $257,000 to $324,000 for the nine months ended September 30, 2015, from $67,000 for the nine months ended September 30, 2014. The increase was primarily due to write-downs of $359,000 on two commercial properties, partially offset by

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$51,000 of operating income received from one of the commercial properties and having lower expenses due to a $1.0 million commercial property that was sold in the third quarter of 2014.

Professional and regulatory expense decreased $124,000 to $264,000 for the nine months ended September 30, 2015 from $388,000 for the same period in 2014. The decrease was primarily due to reporting efficiencies from the Company’s second year reporting as a public company and the Bank’s improved overall regulatory condition.

Federal deposit insurance expense decreased $41,000 to $143,000 for the nine months ended September 30, 2015 from $184,000 for the same period in 2014. The decrease was due to the Bank’s improved overall regulatory condition.

Income Tax Benefit.  We recorded an income tax benefit of $66,000 for the nine months ended September 30, 2015 and an income tax benefit of $1.7 million for the nine months ended September 30, 2014. The decrease in the income tax benefit was primarily due to the reversal of the remaining deferred tax asset valuation allowance of $1.7 million during the second quarter of 2014.

Liquidity and Capital Resources

We maintain liquid assets at levels we consider adequate to meet our liquidity needs.  Our liquidity ratio averaged 42.3% and 41.8% for the nine months ended September 30, 2015 and for the year ended December 31, 2014, respectively.  We adjust our liquidity levels to fund deposit outflows, pay real estate taxes on mortgage loans, repay borrowings and to fund loan commitments.  We also adjust liquidity as appropriate to meet our asset and liability management objectives.

Our primary sources of liquidity are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations.  While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition.  We set the interest rates on our deposits to maintain a desired level of total deposits.  In addition, we invest excess funds in short-term interest-earning investments and other assets, which provide liquidity to meet lending requirements.  Short-term interest-earning deposits with the Federal Reserve Bank of Chicago amounted to $26.1 million at September 30, 2015 and $29.5 million at December 31, 2014.

A significant portion of our liquidity consists of securities classified as available-for-sale and cash and cash equivalents, which are a product of our operating, investing and financing activities.  Our primary sources of cash are principal repayments on loans and mortgage-backed securities and increases in deposit accounts, along with advances from the FHLB of Chicago.

Liquidity management is both a daily and long-term function of business management.  If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Chicago and JP Morgan Chase which provides an additional source of funds.  At September 30, 2015, we had $5.0 million in advances outstanding and were eligible to borrow an additional $69.7 million from the FHLB of Chicago. At September 30, 2015, we had no balance outstanding on the $5.0

47

million line of credit at JP Morgan Chase.  The $5.0 million in FHLB advances outstanding at September 30, 2015, are due within one year.

Our cash flows are comprised of three classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $89,000 for the nine months ended September 30, 2015 compared to $394,000 for the nine months ended September 30, 2014.

Net cash used by investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from the sales, calls, repayments and maturities of securities, was $4.5 million for the nine months ended September 30, 2015. Net cash provided by investing activities was $13.0 million for the nine months ended September 30, 2014. During the nine months ended September 30, 2015, we purchased $21.0 million and sold $3.3 million in securities classified as available-for sale, and during the nine months ended September 30, 2014, we purchased $22.0 million and sold $11.3 million in securities classified as available-for-sale.

Net cash used in financing activities, consisting primarily of deposit account activity, FHLB advance and stock activity, repurchases of the Company’s common stock, and dividends paid to our stockholders, was $7.9 million and $7.2 million for the nine months ended September 30, 2015 and September 30, 2014, respectively.

At September 30, 2015, we had outstanding commitments of $2.9 million to originate loans.  This amount does not include the unfunded portion of loans in process.  At September 30, 2015, certificates of deposit scheduled to mature in less than one year totaled $32.0 million.  Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case.  In addition, the cost of such deposits may be significantly higher upon renewal in a rising interest rate environment.

We are required to maintain liquid assets in an amount that would ensure our safe and sound operation.  Our liquidity ratio at September 30, 2015 was 41.8%.

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Regulatory Capital

Basel III Capital Rules. In July 2013, the OCC and the other federal bank regulatory agencies published final rules (the “Basel III Capital Rules”) that implement, in part, agreements reached by the Basel Committee on Banking Supervision (“Basel Committee”) in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” (“Basel III”) and imposed new capital requirements on the Bank, effective January 1, 2015. The Federal Reserve has amended its “Small Bank Holding Company” policy statement to exempt savings and loan holding companies with less than $1.0 billion in assets from capital requirements.

The Basel III Capital Rules provide for the following minimum capital to risk-weighted assets ratios beginning as of January 1, 2015: a) 4.5% based upon common equity tier 1 capital (“CET1”); b) 6.0% based upon tier 1 capital; and c) 8.0% based upon total regulatory capital.  A minimum leverage ratio (tier 1 capital as a percentage of total average assets) of 4.0% is also required under the Basel III Capital Rules.  When fully phased in, the Basel III Capital Rules will additionally require institutions to retain a capital conservation buffer, composed of CET1, of 2.5% above these required minimum capital ratio levels.  Banking organizations that fail to maintain the minimum 2.5% capital conservation buffer could face restrictions on capital distributions or discretionary bonus payments to executive officers.  Restrictions would begin phasing in where the banking organization’s capital conservation buffer was below 2.5% at the beginning of a quarter, and distributions and discretionary bonus payments would be completely prohibited if no capital conservation buffer exists.  When the capital conservation buffer is fully phased in on January 1, 2019, the Bank will effectively have the following minimum capital to risk-weighted assets ratios: a) 7.0% based upon CET1; b) 8.5% based upon tier 1 capital; and c) 10.5% based upon total regulatory capital.

The Basel III Capital Rules provide for a number of deductions from, and adjustments to, CET1.  These include, for example, the requirement that mortgage servicing rights, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1.

Implementation of the deductions from, and other adjustments to, CET1 began on January 1, 2015 and will be phased-in over a 4-year period (beginning at 40% on January 1, 2015 and an additional 20% per year thereafter). The implementation of the capital conservation buffer will begin on January 1, 2016 at 0.625% and increase by 0.625% each subsequent January 1, until it reaches 2.5% on January 1, 2019.

The Basel III Capital Rules prescribe a new standardized approach for risk weightings that expand the risk-weighting categories from the former four Basel I-derived categories (0%, 20%, 50% and 100%) to a larger and more risk-sensitive number of categories, depending on the nature of the assets, generally

49

ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higher risk weights for a variety of asset classes.  In particular, the Basel III Capital Rules provide stricter rules related to the risk weighting of past due and certain commercial real estate loans, as well as on some equity investment exposures, and replace the existing credit rating approach for determining the risk weighting of securitization exposures with an alternative approach in which senior securitization tranches are assigned a risk weight associated with the underlying exposure and requiring a banking organization to hold capital for the senior tranche based on the risk weight of the underlying exposures.  Under the revised approach, for subordinate securitization tranches, a banking organization must hold capital for the subordinate tranche, as well as all more senior tranches for which the subordinate tranche provides credit support.

With respect to the Bank, the Basel III Capital Rules revise the “prompt corrective action” (“PCA”) regulations adopted pursuant to Section 38 of the Federal Deposit Insurance Act by: (i) introducing a CET1 ratio requirement at each PCA category (other than critically undercapitalized), with the required CET1 ratio being 6.5% for well-capitalized status; (ii) increasing the minimum Tier 1 capital ratio requirement for each category, with the minimum tier 1 capital ratio for well-capitalized status being 8.0% (as compared to the former 6.0%); and (iii) eliminating the current provision that a bank with a composite supervisory rating of 1 may have a 3.0% leverage ratio and still be adequately capitalized. The Basel III Capital Rules do not change the total risk-based capital requirement for any PCA category.

The Basel III Capital Rules will increase the required capital levels of the Bank. The Bank made the one-time, permanent election to continue to exclude the effects of accumulated other comprehensive income or loss items included in stockholders’ equity for the purposes of determining the regulatory capital ratios.  The following table summarizes the Bank’s capital amounts and ratios, together with capital adequacy requirements, under Basel III regulatory requirements as of September 30, 2015, and under pre-Basel III regulatory requirements as of December 31, 2014.

									To Be Well
					Required				Capitalized
					For Capital				Under Basel III
					Adequacy Purposes				Regulatory
	Actual				Under Basel III				Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of September 30, 2015
Total risk-based capital to risk-weighted assets	$	28,891	32.62	%	$	7,096	8.0	%	$	8,870	10.0	%
Tier I (core) capital to risk- weighted assets	27,851		31.40		5,322		6.0		7,096		8.0
Common equity tier I capital to risk-weighted assets	27,851		31.40		3,991		4.5		5,765		6.5
Tier I (core) capital to adjusted total assets	27,851		13.51		8,246		4.0		10,308		5.0

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									To Be Well
					Required				Capitalized
					For Capital				Under Pre-Basel III
					Adequacy Purposes				Regulatory
	Actual				Pre-Basel III				Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2014
Total risk-based capital to risk-weighted assets	$	30,603	32.21	%	$	7,601	8.0	%	$	9,502	10.0	%
Tier I (core) capital to risk-weighted assets	29,500		31.05		3,801		4.0		5,701		6.0
Tier I (core) capital to adjusted total assets	29,500		13.67		8,630		4.0		10,787		5.0

Implementation of the Basel III Capital Rules effective January 1, 2015 did not have a material impact on the capital levels required for the Bank.

Off-Balance Sheet Arrangements.  In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in our consolidated financial statements.  These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, unused lines of credit and standby letters of credit.

The contractual amount of financial instruments with off-balance sheet risk was as follows (dollars in thousands):

	September 30,				December 31,
	2015				2014
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate
Commitments to make loans	$	2,867	$	—	$	1,827	$	221
Unused lines of credit and letters of credit	189		7,470		181		8,633

Commitments to make loans are generally made for periods of 120 days or less.  At September 30, 2015, the fixed rate loan commitments had interest rates ranging from 2.75% to 4.50% and the commitments are to extend credit ranging from 10 to 20 years.

For the nine months ended September 30, 2015 and the year ended December 31, 2014, we did not engage in any off-balance-sheet transactions other than loan origination commitments, unused lines of credit and standby letters of credit in the normal course of our lending activities.

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Item 3.Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

Item 4.Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective. In addition, there have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — Other Information

Item 1. Legal Proceedings

At September 30, 2015, there were no material legal proceedings to which the Company is a party or of which any of its property is subject. From time to time, the Company is a party to various legal proceedings incident to its business.

Item 1A. Risk Factors

Not required for smaller reporting companies.

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

On March 17, 2015, the Board of Directors of the Company adopted a third stock repurchase program. Under the repurchase program, the Company may purchase up to 110,000 shares of its common stock, or approximately 5.0% of its then outstanding shares.

The Company’s stock repurchases for the three months ended September 30, 2015 were as follows:

				Total # of shares	Maximum # of
	Total #	Average		purchased as part	shares that
	of share	price paid		of publicly announced	may yet
Period	purchased	per share		plans or programs	be purchased
July 1 - 31, 2015	—	$	—	—	109,972
August 1 – 31, 2015	229	$	14.50	229	109,743
September 1 – 30, 2015	—	$	—	—	109,743
Total	229	$	14.50	229	109,743

52

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from AJS Bancorp, Inc.’s Form 10-Q report for the quarter ended September 30, 2015, formatted in XBRL pursuant to Rule 405 of Regulation S-T: (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss),(iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and, (vi) the Notes to Consolidated Financial Statements.

53

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.

AJS Bancorp, Inc.
By:	/s/ Thomas R. Butkus
	Thomas R. Butkus,
	Chairman of the Board,
	President and Chief Executive Officer
Date:	November 13, 2015
By:	/s/ Jerry A. Weberling
	Jerry A. Weberling,
	Executive Vice President and
	Chief Financial Officer
Date:	November 13, 2015

54

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas R. Butkus, certify that:

1)I have reviewed this report on Form 10-Q of AJS Bancorp, Inc.;

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 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 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 13-a-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 subsidiary, 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; and

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

2)The registrant’s other certifying officer 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 the 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: November 13, 2015

/s/ Thomas R. Butkus

Thomas R. Butkus

Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act

I, Jerry A. Weberling, certify that:

1)I have reviewed this report on Form 10-Q of AJS Bancorp, Inc.;

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 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 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 13-a-15(f) and 15d-15(f)) for the registrant 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 subsidiary, 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; and

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 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 the 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: November 13, 2015

/s/ Jerry A. Weberling

Jerry A. Weberling

Executive Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

Certification of Principal Executive Officer and Principal Financial Officer pursuant to

18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of AJS Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), the undersigned, Thomas R. Butkus, Chairman, President and Chief Executive Officer of the Company,  and Jerry A. Weberling, Executive Vice President and Chief Financial Officer, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,  that to best of his/her knowledge:

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

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas R. Butkus	Date: November 13, 2015
Thomas R. Butkus
Chairman, President and Chief Executive Officer
/s/ Jerry A. Weberling	Date: November 13, 2015
Jerry A. Weberling
Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to AJS Bancorp, Inc. and will be retained by AJS Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

FAIR VALUES (Details 2) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Assets that were measured at fair value on a non-recurring basis:
Impaired Loans	$ 2,234	$ 2,463
Valuation allowance	214	234
Other real estate owned	1,249	1,751
One-to-four-family
Assets that were measured at fair value on a non-recurring basis:
Valuation allowance	214	234
Non-recurring | Significant Unobservable Inputs (Level 3) | One-to-four-family
Assets that were measured at fair value on a non-recurring basis:
Impaired Loans		201
Other real estate owned	143	412
Non-recurring | Significant Unobservable Inputs (Level 3) | Multi-family and commercial
Assets that were measured at fair value on a non-recurring basis:
Impaired Loans		346
Other real estate owned	166	1,299
Non-recurring | Carrying Value
Assets that were measured at fair value on a non-recurring basis:
Impaired Loans		547
Valuation allowance		0
Additional provision for loan losses		134
Other real estate owned	1,778	2,021
Valuation allowance	529	310
Write-downs	359	86
Non-recurring | Total | One-to-four-family
Assets that were measured at fair value on a non-recurring basis:
Impaired Loans		201
Other real estate owned	143	412
Non-recurring | Total | Multi-family and commercial
Assets that were measured at fair value on a non-recurring basis:
Impaired Loans		346
Other real estate owned	$ 166	$ 1,299

XML

LOANS (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Activity in the allowance for loan losses
Beginning balance	$ 1,080	$ 1,204	$ 1,103	$ 1,399
Provision for loan losses		207	130	687
Charge-offs	(8)	(207)	(167)	(886)
Recoveries	13	2	19	6
Total ending allowance balance	1,085	1,206	1,085	1,206
One-to-four-family
Activity in the allowance for loan losses
Beginning balance	846	925	822	823
Provision for loan losses			172	161
Charge-offs	(8)	(47)	(160)	(108)
Recoveries	13	1	17	3
Total ending allowance balance	851	879	851	879
Multi-family and commercial
Activity in the allowance for loan losses
Beginning balance	214	253	259	466
Provision for loan losses		207	(40)	610
Charge-offs		(160)	(7)	(778)
Recoveries		1	2	3
Total ending allowance balance	214	301	214	301
Home equity
Activity in the allowance for loan losses
Beginning balance	20	25	22	109
Provision for loan losses			(2)	(84)
Total ending allowance balance	$ 20	25	$ 20	25
Consumer and other
Activity in the allowance for loan losses
Beginning balance		1		1
Total ending allowance balance		$ 1		$ 1

XML

EARNINGS PER SHARE (Details 2) - shares	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
EARNINGS PER SHARE
Shares unearned from the employee stock ownership plan	105,032	108,783
Stock options
EARNINGS PER SHARE
Anti-dilutive securities (in shares)	1,375	1,375

XML

BASIS OF PRESENTATION AND CONSOLIDATION

9 Months Ended

Sep. 30, 2015

BASIS OF PRESENTATION AND CONSOLIDATION

BASIS OF PRESENTATION AND CONSOLIDATION

NOTE 1 -BASIS OF PRESENTATION AND CONSOLIDATION

AJS Bancorp, Inc. (the “Company”), is a savings and loan holding company, the principal asset of which consists of its ownership of A.J. Smith Federal Savings Bank (the “Bank”). The Bank is a federally chartered savings bank with operations located in Midlothian and Orland Park, Illinois. The Bank provides single-family residential, home equity and commercial real estate loans to customers and accepts deposits from customers located in the southern suburbs of Chicago, Illinois. The consolidated financial statements included herein include the accounts of the Company and the Bank. All significant intercompany items have been eliminated.

On October 9, 2013, the Company completed a second step conversion and reorganization and sale of common stock. Prior to the completion of the second step conversion, the Company was a federal corporation and mid-tier holding company in the mutual holding company structure. Following the reorganization, the Company is the Maryland chartered holding company of the Bank.

The information contained in the accompanying consolidated financial statements is unaudited.  In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations for the interim periods. All such adjustments are of a normal recurring nature.  Any differences appearing between the numbers presented in the financial statements and management’s discussion and analysis are due to rounding.  The results of operations for the interim periods are not necessarily indicative of the results which may be expected for the entire year or for any other period.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods.  Actual results could differ from those estimates.

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LOANS (Details 6) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Troubled Debt Restructurings
Troubled debt restructurings	$ 2,234	$ 2,463
Specific reserves allocated	214	234
Troubled debt restructurings, net	2,020	2,229
Additional loan commitments outstanding	$ 0	0
Period after which loans are returned to accrual status after a period of satisfactory payment performance	6 months
Accrual status
Troubled Debt Restructurings
Troubled debt restructurings	$ 1,225	1,431
Non-accrual status
Troubled Debt Restructurings
Troubled debt restructurings	$ 1,009	$ 1,032

XML

LOANS (Details 5) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Recorded investment in past due loans by class of loans
Nonaccrual	$ 1,859	$ 2,978
Aging of recorded investment in past due loans by class of loans
30-59 Days Past Due	572	539
60-89 Days Past Due	437	349
Greater than 90 Days Past Due	220	1,167
Total Past Due	1,229	2,055
Loans Not Past Due	115,420	113,070
Total	116,649	115,125
One-to-four-family
Recorded investment in past due loans by class of loans
Nonaccrual	1,128	1,886
Aging of recorded investment in past due loans by class of loans
30-59 Days Past Due	572	245
60-89 Days Past Due	207	305
Greater than 90 Days Past Due	220	753
Total Past Due	999	1,303
Loans Not Past Due	99,702	95,911
Total	100,701	97,214
Multi-family and commercial
Recorded investment in past due loans by class of loans
Nonaccrual	697	900
Aging of recorded investment in past due loans by class of loans
30-59 Days Past Due		206
60-89 Days Past Due	196
Greater than 90 Days Past Due		379
Total Past Due	196	585
Loans Not Past Due	8,595	8,908
Total	8,791	9,493
Home equity
Recorded investment in past due loans by class of loans
Nonaccrual	34	192
Aging of recorded investment in past due loans by class of loans
30-59 Days Past Due		88
60-89 Days Past Due	34	44
Greater than 90 Days Past Due		35
Total Past Due	34	167
Loans Not Past Due	6,909	7,902
Total	6,943	8,069
Consumer and other
Aging of recorded investment in past due loans by class of loans
Loans Not Past Due	214	349
Total	$ 214	$ 349

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LOANS (Details 7) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($) item	Sep. 30, 2015 USD ($) item loan	Sep. 30, 2014 USD ($) item
Troubled Debt Restructurings
Number of Loans | loan			1
Pre-Modification Outstanding Recorded Investment			$ 217
Post-Modification Outstanding Recorded Investment			219
Additional charge-off	$ 0		$ 0
Period contractually past due under modified terms for which loan is considered to be in payment default			30 days
Number of Loans, With Subsequent Default | item	0	0	1	0
Recorded Investment			$ 217
Troubled debt restructurings	$ 0	$ 0		$ 0
One-to-four-family
Troubled Debt Restructurings
Number of Loans | loan			1
Pre-Modification Outstanding Recorded Investment			$ 217
Post-Modification Outstanding Recorded Investment			$ 219
Number of Loans, With Subsequent Default | item			1
Recorded Investment			$ 217

XML

LOANS (Details 8) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Risk category of loans by class of loans
Loans	$ 116,649	$ 115,125
Pass
Risk category of loans by class of loans
Loans	105,554	104,646
Special Mention
Risk category of loans by class of loans
Loans	141	102
Substandard
Risk category of loans by class of loans
Loans	10,954	10,377
One-to-four-family
Risk category of loans by class of loans
Loans	100,701	97,214
One-to-four-family | Pass
Risk category of loans by class of loans
Loans	97,136	94,007
One-to-four-family | Substandard
Risk category of loans by class of loans
Loans	3,565	3,207
Multi-family and commercial
Risk category of loans by class of loans
Loans	8,791	9,493
Multi-family and commercial | Pass
Risk category of loans by class of loans
Loans	1,329	2,649
Multi-family and commercial | Special Mention
Risk category of loans by class of loans
Loans	141	102
Multi-family and commercial | Substandard
Risk category of loans by class of loans
Loans	7,321	6,742
Home equity
Risk category of loans by class of loans
Loans	6,943	8,069
Home equity | Pass
Risk category of loans by class of loans
Loans	6,875	7,641
Home equity | Substandard
Risk category of loans by class of loans
Loans	68	428
Consumer and other
Risk category of loans by class of loans
Loans	214	349
Consumer and other | Pass
Risk category of loans by class of loans
Loans	$ 214	$ 349

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Allocation of stock awards (in shares)	6,000	56,267
Forfeited stock awards (in shares)	9,612
Issuance of shares for exercise of stock options, net of shares surrendered (in shares)	863
Exercised stock options (in shares)	4,200
Surrendered (in shares)	3,337
Common stock repurchases (in shares)	20,657	150,867
Cash dividends (in dollars per share)	$ 0.15	$ 0.70

XML

FAIR VALUES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets measured at fair value on a recurring basis
Liabilities measured at fair value	$ 0	$ 0
Securities available-for-sale	48,085	54,214
Transfer of assets between level 1 and level 2
Transfer of assets from level 1 to level 2	0	0
Transfer of assets from level 2 to level 1	0	0
U.S. government-sponsored entities
Assets measured at fair value on a recurring basis
Securities available-for-sale	8,003	10,993
Residential agency mortgage-backed
Assets measured at fair value on a recurring basis
Securities available-for-sale	40,082	43,221
Significant Other Observable Inputs (Level 2) | U.S. government-sponsored entities
Assets measured at fair value on a recurring basis
Securities available-for-sale	8,003	10,993
Significant Other Observable Inputs (Level 2) | Residential agency mortgage-backed
Assets measured at fair value on a recurring basis
Securities available-for-sale	40,082	43,221
Recurring | U.S. government-sponsored entities
Assets measured at fair value on a recurring basis
Securities available-for-sale	8,003	10,993
Recurring | Residential agency mortgage-backed
Assets measured at fair value on a recurring basis
Securities available-for-sale	$ 40,082	$ 43,221

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 29,807	$ 32,898
Securities available-for-sale	48,085	54,214
Securities held-to-maturity (fair value: 2015 - $333; 2014 - $341)	327	331
Loans, net (allowance: 2015 - $1,085; 2014 - $1,103)	115,697	114,130
Federal Home Loan Bank stock	1,291	1,768
Premises and equipment	3,517	3,623
Bank-owned life insurance	5,849	5,706
Other real estate owned	1,249	1,751
Accrued interest receivable	425	438
Other assets	2,736	2,664
Total assets	208,983	217,523
Liabilities
Deposits	166,534	166,249
Federal Home Loan Bank advances	5,000	12,000
Advance payments by borrowers for taxes and insurance	1,190	2,068
Other liabilities and accrued interest payable	2,530	3,084
Total liabilities	175,254	183,401
Employee Stock Ownership Plan (ESOP) repurchase obligation	$ 988	$ 909
Stockholders' equity
Preferred stock, $.01 par value, 50,000,000 shares authorized; none issued
Common stock, $.01 par value, 100,000,000 shares authorized; 2,195,457 shares outstanding at September 30, 2015 and 2,218,863 shares outstanding at December 31, 2014	$ 22	$ 22
Additional paid-in capital	13,364	13,731
Retained earnings	20,832	21,126
Accumulated other comprehensive income (loss)	48	(20)
Unearned stock awards	(475)	(596)
Unearned ESOP shares	(1,050)	(1,050)
Total stockholders' equity	32,741	33,213
Total liabilities and stockholders' equity	$ 208,983	$ 217,523

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income	$ 14	$ 2,036
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation	142	176
Provision for loan losses	130	687
Net amortization of securities	184	196
Stock award and option expense	115	54
Earnings on bank-owned life insurance	(143)	(147)
(Gain) loss on sale of securities available-for-sale	(74)	(123)
(Gain) loss on the sale of other real estate owned	19	(756)
Other real estate owned impairment	359	86
Reversal of valuation allowance on deferred taxes		(1,701)
Changes in:
Accrued interest receivable and other assets	(59)	(80)
Accrued interest payable and other liabilities	(598)	(34)
Net cash provided by operating activities	89	394
Securities available-for-sale
Purchases	(20,959)	(21,964)
Sales	3,306	11,297
Calls, maturities and principal payments	23,788	17,163
Loan originations, purchases and repayments, net	(2,016)	4,724
Proceeds from sale of other real estate	455	1,959
Improvements to other real estate owned	(12)
Purchase of equipment, net	(36)	(211)
Net cash provided by investing activities	4,526	12,968
Cash flows from financing activities:
Net change in deposits	285	(1,510)
Maturities of FHLB advances	(7,000)	(3,000)
Redemption of FHLB stock	477
Repurchase of common stock	(282)	(681)
Dividends paid on common stock	(308)	(925)
Net change in advance payments by borrowers for taxes and insurance	(878)	(1,050)
Net cash used in financing activities	(7,706)	(7,166)
Net change in cash and cash equivalents	(3,091)	6,196
Cash and cash equivalents at beginning of year	32,898	22,281
Cash and cash equivalents at end of period	29,807	28,477
Cash paid during the period for:
Interest	569	771
Income taxes		1
Supplemental noncash disclosures:
Transfers from loans to real estate owned	$ 319	86
Loans provided for sales of other real estate owned		25
Transfers of negative advance payment for borrower's tax and insurance balances to loans		$ 154

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FAIR VALUES (Details 4) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financial assets
Securities held-to-maturity	$ 333	$ 341
Accrued interest receivable	425	438
Financial liabilities
Advances from borrowers for taxes	1,190	2,068
Quoted Prices in Active Markets For Identical Assets (Level 1)
Financial assets
Cash and cash equivalents	29,807	32,898
Financial liabilities
Non-interest-bearing deposits	21,754	20,905
Significant Other Observable Inputs (Level 2)
Financial assets
Securities held-to-maturity	333	341
Accrued interest receivable	16	20
Financial liabilities
Interest-bearing deposits	144,954	145,444
FHLB advances	5,055	12,163
Advances from borrowers for taxes	1,190	2,068
Accrued interest payable	11	28
Significant Unobservable Inputs (Level 3)
Financial assets
Loans, net (less impaired loans)	114,734	113,316
Accrued interest receivable	409	418
Total
Financial assets
Cash and cash equivalents	29,807	32,898
Securities held-to-maturity	333	341
Loans, net (less impaired loans)	114,734	113,316
Accrued interest receivable	425	438
Financial liabilities
Non-interest-bearing deposits	21,754	20,905
Interest-bearing deposits	144,954	145,444
FHLB advances	5,055	12,163
Advances from borrowers for taxes	1,190	2,068
Accrued interest payable	11	28
Carrying Value
Financial assets
Cash and cash equivalents	29,807	32,898
Securities held-to-maturity	327	331
Loans, net (less impaired loans)	115,697	113,583
Federal Home Loan Bank stock	1,291	1,768
Accrued interest receivable	425	438
Financial liabilities
Non-interest-bearing deposits	21,754	20,905
Interest-bearing deposits	144,780	145,344
FHLB advances	5,000	12
Advances from borrowers for taxes	1,190	2,068
Accrued interest payable	$ 11	$ 28

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SECURITIES (Details 4) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
SECURITIES
Carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law		$ 8,836		$ 10,161
Proceeds from sale	$ 3,889	3,306	$ 11,297
Gross realized gains	$ 56	$ 74	$ 123

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic
Net income	$ 47	$ 329	$ 14	$ 2,036
Distributed earnings allocated to participated securities	2	3	7	3
Undistributed earnings allocated to participated securities	(1)	5	(7)	13
Net earnings allocated to common shareholders	$ 46	$ 321	$ 14	$ 2,020
Weighted average common shares outstanding including participating securities	2,087,361	2,252,924	2,094,192	2,228,180
Less: Participating securities	(38,780)	(56,267)	(48,947)	(21,641)
Weighted-average common shares outstanding for basic	2,048,581	2,196,657	2,045,245	2,206,539
Basic earnings per common share (in dollars per share)	$ 0.02	$ 0.15	$ 0.01	$ 0.92
Diluted
Net earnings allocated to common stock	$ 46	$ 321	$ 14	$ 2,020
Weighted average common shares outstanding for basic	2,048,581	2,196,657	2,045,245	2,206,539
Diluted effects:
Add: dilutive effects of assumed exercise of stock options and stock awards (in shares)	15,167		11,831
Weighted-average common shares outstanding for diluted	2,063,748	2,196,657	2,057,076	2,206,539
Diluted earnings per common share (in dollars per share)	$ 0.02	$ 0.15	$ 0.01	$ 0.92

XML

LOANS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Loans
Loans, gross	$ 116,649		$ 115,125
Loans, gross (as a percent)	100.00%		100.00%
Allowance for loan losses	$ (1,085)	$ (1,080)	$ (1,103)	$ (1,206)	$ (1,204)	$ (1,399)
Net deferred costs and other	133		108
Loans, net	115,697		114,130
One-to-four-family
Loans
Loans, gross	$ 100,701		$ 97,214
Loans, gross (as a percent)	86.30%		84.40%
Allowance for loan losses	$ (851)	(846)	$ (822)	(879)	(925)	(823)
Multi-family and commercial
Loans
Loans, gross	$ 8,791		$ 9,493
Loans, gross (as a percent)	7.50%		8.30%
Allowance for loan losses	$ (214)	(214)	$ (259)	(301)	(253)	(466)
Home equity
Loans
Loans, gross	$ 6,943		$ 8,069
Loans, gross (as a percent)	6.00%		7.00%
Allowance for loan losses	$ (20)	$ (20)	$ (22)	(25)	(25)	(109)
Consumer and other
Loans
Loans, gross	$ 214		$ 349
Loans, gross (as a percent)	0.20%		0.30%
Allowance for loan losses				$ (1)	$ (1)	$ (1)

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Unearned Stock Awards	Unearned ESOP Shares	Total
Balance at Dec. 31, 2013	$ 23	$ 15,330	$ 20,523	$ (405)		$ (1,087)	$ 34,384
Increase (Decrease) in Stockholders' Equity
Allocation of stock awards of 56,267 shares during the year ended December 31, 2014 and 6,000 shares during the nine months ended September 30, 2015	1	674			$ (675)
Stock awards earned					79		79
Stock options compensation		16					16
Common stock repurchases of 150,867 shares during the year ended December 31, 2014 and 20,657 shares during the nine months ended September 30, 2015	(2)	(2,039)					(2,041)
Reclassification due to changes in fair value of common stock in ESOP subject to contingent repurchase obligation		(263)					(263)
Net income			2,102				2,102
Cash dividends of $0.70 during the year ended December 31, 2014 and $0.15 during the nine months ended September 30, 2015			(1,499)				(1,499)
Other comprehensive income				385			385
ESOP shares earned shares		13				37	50
Balance at Dec. 31, 2014	22	13,731	21,126	(20)	(596)	(1,050)	33,213
Increase (Decrease) in Stockholders' Equity
Allocation of stock awards of 56,267 shares during the year ended December 31, 2014 and 6,000 shares during the nine months ended September 30, 2015		89			(89)
Forfeited stock awards of 9,612 shares		(115)			115
Stock awards earned					95		95
Stock options compensation		20					20
Common stock repurchases of 150,867 shares during the year ended December 31, 2014 and 20,657 shares during the nine months ended September 30, 2015		(282)					(282)
Reclassification due to changes in fair value of common stock in ESOP subject to contingent repurchase obligation		(79)					(79)
Net income			14				14
Cash dividends of $0.70 during the year ended December 31, 2014 and $0.15 during the nine months ended September 30, 2015			(308)				(308)
Other comprehensive income				68			68
Balance at Sep. 30, 2015	$ 22	$ 13,364	$ 20,832	$ 48	$ (475)	$ (1,050)	$ 32,741

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Securities held-to-maturity, fair value (in dollars)	$ 333	$ 341
Loans, allowance (in dollars)	$ 1,085	$ 1,103
Preferred stock, Par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, Shares authorized	50,000,000	50,000,000
Preferred stock, Shares issued	0	0
Common stock, Par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, Shares authorized	100,000,000	100,000,000
Common Stock, Shares, Outstanding	2,195,457	2,218,863

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FAIR VALUES (Tables)

9 Months Ended

Sep. 30, 2015

FAIR VALUES

Summary of assets measured at fair value on a recurring basis

	September 30, 2015
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Securities available-for-sale
U.S. government-sponsored entities	$	8,003	$	—	$	8,003	$	—
Residential agency mortgage-backed	40,082		—		40,082		—

	December 31, 2014
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Securities available-for-sale
U.S. government-sponsored entities	$	10,993	$	—	$	10,993	$	—
Residential agency mortgage-backed	43,221		—		43,221		—

Schedule of the Company's assets that were measured at fair value on a non-recurring basis

	September 30, 2015
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Other real estate owned:
One—to-four family	$	143	$	—	$	—	$	143
Multi-family and commercial	166		—		—		166

	December 31, 2014
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans:
One-to-four family	$	201	$	—	$	—	$	201
Multi-family and commercial	346		—		—		346
Other real estate owned:
One-to-four family	412		—		—		412
Multi-family and commercial	1,299		—		—		1,299

Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis

	September 30, 2015
			Valuation		Range
	Fair Value		Technique(s)	Unobservable Input(s)	(Weighted Average)
Other real estate owned:
One-to-four family	$	143	Sales comparison approach	Adjustment for differences between the comparable sales	(24.5)-3.7%(-7.82%)
Multi-family and commercial	166		Sales comparison approach	Adjustment for differences between the comparable sales	5.7-55.4% (34.2%)

	December 31, 2014
			Valuation		Range
	Fair Value		Technique(s)	Unobservable Input(s)	(Weighted Average)
Impaired loans:
One-to-four family	$	201	Sales comparison approach	Adjustment for differences between the comparable Sales	0.0-7.0% (-4.8%)
Multi-family and commercial	346		Sales comparison approach	Adjustment for differences between the comparable sales	0.0-56.7% (18.2%)
Other real estate owned:
One-to-four family	412		Sales comparison approach	Adjustment for differences between the comparable sales	0.0-5.3% (-6.5%)
Multi-family and commercial	90		Sales comparison approach	Adjustment for differences between the comparable sales	5.7-55.4% (34.2%)
	1,209		Income approach	Adjustment for differences in net operating income expectations	13.1% (13.1%)
				Capitalization rate	8.3% (8.3%)

Schedule of carrying amount and estimated fair value of financial instruments not previously presented

	September 30, 2015
	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	29,807	$	29,807	$	—	$	—	$	29,807
Securities held-to-maturity	327		—		333		—		333
Loans, net	115,697		—		—		114,734		114,734
FHLB stock	1,291		N/A		N/A		N/A		N/A
Accrued interest receivable	425		—		16		409		425
Financial liabilities
Non-interest-bearing deposits	$	21,754	$	21,754	$	—	$	—	$	21,754
Interest-bearing deposits	144,780		—		144,954		—		144,954
FHLB advances	5,000		—		5,055		—		5,055
Advances from borrowers for taxes	1,190		—		1,190		—		1,190
Accrued interest payable	11		—		11		—		11

	December 31, 2014
	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	32,898	$	32,898	$	—	$	—	$	32,898
Securities held-to-maturity	331		—		341		—		341
Loans, net (less impaired loans)	113,583		—		—		113,316		113,316
FHLB stock	1,768		N/A		N/A		N/A		N/A
Accrued interest receivable	438		—		20		418		438
Financial liabilities
Non-interest-bearing deposits	$	20,905	$	20,905	$	—	$	—	$	20,905
Interest-bearing deposits	145,344		—		145,444		—		145,444
FHLB advances	12,000		—		12,163		—		12,163
Advances from borrowers for taxes	2,068		—		2,068		—		2,068
Accrued interest payable	28		—		28		—		28

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 12, 2015
Document and Entity Information
Entity Registrant Name	AJS Bancorp, Inc.
Entity Central Index Key	0001576336
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,195,457
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

XML

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2015

EARNINGS PER SHARE

Schedule of earnings per share

	Three Months						Nine Months
	September 30,						September 30,
	2015			2014			2015			2014
Basic
Net income	$	47		$	329		$	14		$	2,036
Distributed earnings allocated to participated securities	2			3			7			3
Undistributed earnings allocated to participated securities	(1		)	5			(7		)	13
Net earnings allocated to common shareholders	$	46		$	321		$	14		$	2,020
Weighted average common shares outstanding including participating securities	2,087,361			2,252,924			2,094,192			2,228,180
Less: Participating securities	(38,780		)	(56,267		)	(48,947		)	(21,641		)
Weighted-average common shares outstanding for basic	2,048,581			2,196,657			2,045,245			2,206,539
Basic earnings per common share	$	0.02		$	0.15		$	0.01		$	0.92
Diluted
Net earnings allocated to common stock	$	46		$	321		$	14		$	2,020
Weighted average common shares outstanding for basic	2,048,581			2,196,657			2,045,245			2,206,539
Add: dilutive effects of assumed exercise of stock options and stock awards	15,167			—			11,831			—
Weighted-average common shares outstanding for diluted	2,063,748			2,196,657			2,057,076			2,206,539
Diluted earnings per common share	$	0.02		$	0.15		$	0.01		$	0.92

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest and dividend income:
Loans	$ 1,127	$ 1,151	$ 3,367	$ 3,561
Securities	169	199	513	660
Interest-earning deposits and other	18	19	53	48
Total interest income	1,314	1,369	3,933	4,269
Interest expense:
Deposits	144	176	438	503
Federal Home Loan Bank advances and other	33	84	114	260
Total interest expense	177	260	552	763
Net interest income	1,137	1,109	3,381	3,506
Provision for loan losses		207	130	687
Net interest income after provision for loan losses	1,137	902	3,251	2,819
Non-interest income:
Service fees	74	73	215	211
Rental income	18	18	56	56
Earnings on bank-owned life insurance	47	49	143	147
Security gains		56	74	123
Other real estate owned gains (losses)		740	(19)	756
Other	31	21	94	52
Total non-interest income	170	957	563	1,345
Non-interest expense:
Compensation and employee benefits	551	655	1,749	1,766
Occupancy expense	211	173	576	537
Data processing expense	86	84	263	259
Advertising and promotion	20	9	42	38
Professional and regulatory	82	122	264	388
Postage and supplies	21	21	68	70
Bank security	29	28	89	89
Federal deposit insurance	47	48	143	184
Other real estate owned expense/impairment	87	42	324	67
Other	120	156	348	429
Total non-interest expense	1,254	1,338	3,866	3,827
Income (loss) before income taxes	53	521	(52)	337
Income tax expense (benefit)	6	192	(66)	(1,699)
Net income	$ 47	$ 329	$ 14	$ 2,036
Earnings per share:
Basic (in dollars per share)	$ 0.02	$ 0.15	$ 0.01	$ 0.92
Diluted (in dollars per share)	$ 0.02	$ 0.15	$ 0.01	$ 0.92

XML

FAIR VALUES

9 Months Ended

Sep. 30, 2015

FAIR VALUES

FAIR VALUES

NOTE 4 - FAIR VALUES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (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.  There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other 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.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions used to estimate the fair value of the following items:

Securities:  The fair values of trading securities and securities available-for-sale are determined by quoted market prices, if available (Level 1).  For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

Impaired Loans:  At the time a loan is considered impaired, it is valued at the lower of cost or fair value of underlying collateral.  Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses.  For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.  Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned:  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

At September 30, 2015 and December 31, 2014, the Company had no liabilities measured at fair value.  Assets measured at fair value on a recurring basis are summarized below:

	September 30, 2015
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Securities available-for-sale
U.S. government-sponsored entities	$	8,003	$	—	$	8,003	$	—
Residential agency mortgage-backed	40,082		—		40,082		—

	December 31, 2014
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Securities available-for-sale
U.S. government-sponsored entities	$	10,993	$	—	$	10,993	$	—
Residential agency mortgage-backed	43,221		—		43,221		—

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2015 and the year ended December 31, 2014.

The following tables set forth the Company’s assets that were measured at fair value on a non-recurring basis:

	September 30, 2015
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Other real estate owned:
One—to-four family	$	143	$	—	$	—	$	143
Multi-family and commercial	166		—		—		166

	December 31, 2014
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			For Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans:
One-to-four family	$	201	$	—	$	—	$	201
Multi-family and commercial	346		—		—		346
Other real estate owned:
One-to-four family	412		—		—		412
Multi-family and commercial	1,299		—		—		1,299

At September 30, 2015, other real estate owned, which is carried at fair value less estimated costs to sell, had a carrying amount of $1,778, net of a valuation allowance of $529, resulting in a write-down of $359 during the nine months ended September 30, 2015. At December 31, 2014, other real estate owned had a carrying amount of $2,021, net of a valuation allowance of $310, resulting in a write-down of $86 during 2014.

At December 31, 2014, loans which are measured for impairment using the fair value of the collateral for collateral dependent loans impaired loans, had a recorded investment of $547, with no valuation allowance, resulting in an additional provision for loan losses of $134 for 2014.

The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis:

	September 30, 2015
			Valuation		Range
	Fair Value		Technique(s)	Unobservable Input(s)	(Weighted Average)
Other real estate owned:
One-to-four family	$	143	Sales comparison approach	Adjustment for differences between the comparable sales	(24.5)-3.7%(-7.82%)
Multi-family and commercial	166		Sales comparison approach	Adjustment for differences between the comparable sales	5.7-55.4% (34.2%)

At September 30, 2015, the Bank also had a commercial real estate owned property with a carrying value of $940,000, which is supported by an approved cash purchase offer.  As of December 31, 2014, the value was supported by an appraisal, and was included in the level 3 assets in the below table as of 12/31/2014.

	December 31, 2014
			Valuation		Range
	Fair Value		Technique(s)	Unobservable Input(s)	(Weighted Average)
Impaired loans:
One-to-four family	$	201	Sales comparison approach	Adjustment for differences between the comparable Sales	0.0-7.0% (-4.8%)
Multi-family and commercial	346		Sales comparison approach	Adjustment for differences between the comparable sales	0.0-56.7% (18.2%)
Other real estate owned:
One-to-four family	412		Sales comparison approach	Adjustment for differences between the comparable sales	0.0-5.3% (-6.5%)
Multi-family and commercial	90		Sales comparison approach	Adjustment for differences between the comparable sales	5.7-55.4% (34.2%)
	1,209		Income approach	Adjustment for differences in net operating income expectations	13.1% (13.1%)
				Capitalization rate	8.3% (8.3%)

The carrying amount and estimated fair value of financial instruments not previously presented were as follows.

	September 30, 2015
	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	29,807	$	29,807	$	—	$	—	$	29,807
Securities held-to-maturity	327		—		333		—		333
Loans, net	115,697		—		—		114,734		114,734
FHLB stock	1,291		N/A		N/A		N/A		N/A
Accrued interest receivable	425		—		16		409		425
Financial liabilities
Non-interest-bearing deposits	$	21,754	$	21,754	$	—	$	—	$	21,754
Interest-bearing deposits	144,780		—		144,954		—		144,954
FHLB advances	5,000		—		5,055		—		5,055
Advances from borrowers for taxes	1,190		—		1,190		—		1,190
Accrued interest payable	11		—		11		—		11

	December 31, 2014
	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	32,898	$	32,898	$	—	$	—	$	32,898
Securities held-to-maturity	331		—		341		—		341
Loans, net (less impaired loans)	113,583		—		—		113,316		113,316
FHLB stock	1,768		N/A		N/A		N/A		N/A
Accrued interest receivable	438		—		20		418		438
Financial liabilities
Non-interest-bearing deposits	$	20,905	$	20,905	$	—	$	—	$	20,905
Interest-bearing deposits	145,344		—		145,444		—		145,444
FHLB advances	12,000		—		12,163		—		12,163
Advances from borrowers for taxes	2,068		—		2,068		—		2,068
Accrued interest payable	28		—		28		—		28

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

(a)Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1

(b)Securities Held-to-Maturity

The carrying amounts of held to maturity securities are determined using a pricing matrix resulting in a Level 2 classification.

(c)FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(d)Loans

The fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

(e)Accrued Interest Receivable

The carrying amount of accrued interest receivable approximates its fair value and is classified as Level 2 for securities and Level 3 for loans.

(f)Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) and are classified as Level 1.  The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date are classified as a Level 2. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(g)Federal Home Loan Bank Advances

The fair value of Federal Home Loan Bank  advances, which are at a fixed rate, are estimated using discounted cash flow analyses based on current rates for similar advances resulting in a Level 2 classification.

(h)Securities Sold Under Agreements to Repurchase

The carrying amounts of securities sold under agreements to repurchase approximate fair value resulting in a Level 2 classification.

(i)Advances From Borrowers For Taxes

The carrying values of short-term borrowings approximated fair value and are classified as Level 2.

(j)Accrued Interest Payable

The carrying amount of accrued interest payable approximates its fair value and is classified as Level 2.

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LOANS

9 Months Ended

Sep. 30, 2015

LOANS

LOANS

NOTE 3 - LOANS

Loans were as follows:

	September 30,					December 31,
	2015					2014
	Amount			Percent		Amount			Percent
Mortgage:
One—to-four family	$	100,701		86.3	%	$	97,214		84.4	%
Multi-family and commercial	8,791			7.5		9,493			8.3
Home equity	6,943			6.0		8,069			7.0
Consumer and other	214			0.2		349			0.3
	116,649			100.0	%	115,125			100.0	%
Allowance for loan losses	(1,085		)			(1,103		)
Net deferred costs and other	133					108
Loans, net	$	115,697				$	114,130

The following tables present the activity in the allowance for loan losses by portfolio segment:

	For the Three Months Ended September 30, 2015
				Multi-family
	One—to-Four			and		Home		Consumer
	Family			Commercial		Equity		and Other		Total
Allowances for loan losses:
Beginning balance	$	846		$	214	$	20	$	—	$	1,080
Provision for loan losses	—			—		—		—		—
Charge-offs	(8		)	—		—		—		(8		)
Recoveries	13			—		—		—		13
Total ending allowance balance	$	851		$	214	$	20	$	—	$	1,085

	For the Nine Months Ended September 30, 2015
				Multi-family
	One-to-Four			and			Home			Consumer
	Family			Commercial			Equity			and Other		Total
Allowances for loan losses:
Beginning balance	$	822		$	259		$	22		$	—	$	1,103
Provision for loan losses	172			(40		)	(2		)	—		130
Charge-offs	(160		)	(7		)	—			—		(167		)
Recoveries	17			2			—			—		19
Total ending allowance balance	$	851		$	214		$	20		$	—	$	1,085

	For the Three Months Ended September 30, 2014
				Multi-family
	One—to-Four			and			Home		Consumer
	Family			Commercial			Equity		and Other		Total
Allowances for loan losses:
Beginning balance	$	925		$	253		$	25	$	1	$	1,204
Provision for loan losses	—			207			—		—		207
Charge-offs	(47		)	(160		)	—		—		(207		)
Recoveries	1			1			—		—		2
Total ending allowance balance	$	879		$	301		$	25	$	1	$	1,206

	For the Nine Months Ended September 30, 2014
Allowances for loan losses:
Beginning balance	$	823		$	466		$	109		$	1	$	1,399
Provision for loan losses	161			610			(84		)	—		687
Charge-offs	(108		)	(778		)	—			—		(886		)
Recoveries	3			3			—			—		6
Total ending allowance balance	$	879		$	301		$	25		$	1	$	1,206

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method:

	September 30, 2015
			Multi-Family				Consumer
	One—to-Four		and		Home		and
	Family		Commercial		Equity		Other		Total
Allowance for loan losses:
Loans individually evaluated for impairment	$	214	$	—	$	—	$	—	$	214
Loans collectively evaluated for impairment	637		214		20		—		871
Total ending allowance balance	$	851	$	214	$	20	$	—	$	1,085
Loans:
Loans individually evaluated for impairment	$	1,537	$	697	$	—	$	—	$	2,234
Loans collectively evaluated for impairment	99,164		8,094		6,943		214		114,415
Total ending loans balance	$	100,701	$	8,791	$	6,943	$	214	$	116,649

	December 31, 2014
			Multi-Family				Consumer
	One-to-Four		and		Home		and
	Family		Commercial		Equity		Other		Total
Allowance for loan losses:
Loans individually evaluated for impairment	$	234	$	—	$	—	$	—	$	234
Loans collectively evaluated for impairment	588		259		22		—		869
Total ending allowance balance	$	822	$	259	$	22	$	—	$	1,103
Loans:
Loans individually evaluated for impairment	$	1,564	$	899	$	—	$	—	$	2,463
Loans collectively evaluated for impairment	95,650		8,594		8,069		349		112,662
Total ending loans balance	$	97,214	$	9,493	$	8,069	$	349	$	115,125

	As of September 30, 2015						As of December 31, 2014
					Allowance						Allowance
	Unpaid				for Loan		Unpaid				for Loan
	Principal		Recorded		Losses		Principal		Recorded		Losses
	Balance		Investment		Allocated		Balance		Investment		Allocated
With no related allowance recorded:
One—to-four family	$	401	$	288	$	—	$	410	$	297	$	—
Multi-family and commercial	987		697		—		1,185		899		—
Home equity	—		—		—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,388		985		—		1,595		1,196		—
With an allowance recorded:
One—to-four family	1,291		1,249		214		1,300		1,267		234
Multi-family and commercial	—		—		—		—
Home equity	—		—		—		—		—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,291		1,249		214		1,300		1,267		234
Total	$	2,679	$	2,234	$	214	$	2,895	$	2,463	$	234

	For the Three Months						For the Three Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
One—to-four family	$	290	$	3	$	—	$	299	$	3	$	—
Multi-family and commercial	703		—		9		1,787		1		6
Home equity	—		—		—				—		—
Consumer and other	—		—		—				—		—
Subtotal	993		3		9		2,086		4		6

	For the Three Months						For the Three Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
One—to-four family	1,253		12		—		1,175		17		—
Multi-family and commercial	—		—		—		—		—		—
Home equity	—		—		—				—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,253		12		—		1,175		17		—
Total	$	2,246	$	15	$	9	$	3,261	$	21	$	6

	For the Nine Months						For the Nine Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
One—to-four family	$	292	$	12	$	—	$	199	$	10	$	—
Multi-family and commercial	708		—		21		1,911		1		12
Home equity	—		—		—		—		—		—
Subtotal	1,000		12		21		2,110		11		12
With an allowance recorded:
One—to-four family	1,255		39		—		1,276		47		—
Multi-family and commercial	—		—		—		191		—		—
Home equity	—		—		—		—		—		—
Subtotal	1,255		39		—		1,467		47		—
Total	$	2,255	$	51	$	21	$	3,577	$	58	$	12

The recorded investment in loans excludes accrued interest receivable and loan origination costs, net, due to immateriality.

Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.  The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans:

					Loans Past Due Over
	Nonaccrual				90 Days Still Accruing
	September 30,		December 31,		September 30,		December 31,
	2015		2014		2015		2014
One—to-four family	$	1,128	$	1,886	$	—	$	—
Multi-family and commercial	697		900		—		—
Home equity	34		192		—		—
Consumer and other	—		—		—		—
Total	$	1,859	$	2,978	$	—	$	—

The following tables present the aging of the recorded investment in past due loans by class of loans:

	September 30, 2015
	30 - 59		60 - 89		Greater Than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
One—to-four family	$	572	$	207	$	220	$	999	$	99,702	$	100,701
Multi-family and commercial	—		196		—		196		8,595		8,791
Home equity	—		34		—		34		6,909		6,943
Consumer and other	—		—		—		—		214		214
Total	$	572	$	437	$	220	$	1,229	$	115,420	$	116,649

	December 31, 2014
	30 - 59		60 - 89		Greater Than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
One-to-four family	$	245	$	305	$	753	$	1,303	$	95,911	$	97,214
Multi-family and commercial	206		—		379		585		8,908		9,493
Home equity	88		44		35		167		7,902		8,069
Consumer and other	—		—		—		—		349		349
Total	$	539	$	349	$	1,167	$	2,055	$	113,070	$	115,125

Troubled Debt Restructurings

Troubled debt restructurings by accrual status and specific reserves allocated to troubled debt restructurings were as follows:

	September 30,			December 31,
	2015			2014
Accrual status	$	1,225		$	1,431
Non-accrual status	1,009			1,032
	2,234			2,463
Specific reserves allocated	(214		)	(234		)
Net	$	2,020		$	2,229

No additional loan commitments were outstanding to these borrowers at September 30, 2015 and December 31, 2014. Loans are returned to accrual status after a period of satisfactory payment performance under the terms of the restructuring, but no earlier than six months.

The following tables present loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2015:

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Loans	Investment		Investment
September 30, 2015
One-to—four family	1	$	217	$	219
Multi-family and commercial	—	—		—
Home equity	—	—		—
Consumer and other	—	—		—
Total	1	$	217	$	219

The recorded investment increased due to real estate taxes. The troubled debt restructuring described above was evaluated for impairment prior to modification, did not result in an increase in the allowance for loan losses upon modification, and resulted in no additional charge-offs for the three and nine months ended September 30, 2015. There were no new troubled debt restructurings made during the three months ended September 30, 2015 and the three and nine months ended September 30, 2014.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.  The following table presents the loan by class modified as a troubled debt restructuring for which there was a payment default within twelve months following the modification during the nine months ended September 30, 2015.

	Number of	Recorded
	Loans	Investment
September 30, 2015
One-to—four family loans	1	$	217
Total	1	$	217

There were no 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, 2014. There were no troubled debt restructurings for which there was a payment default during the three months ended September 30, 2015.

The terms of certain other loans were modified during the three and nine months ended September 30, 2015 and 2014 that did not meet the definition of a troubled debt restructuring. These loan balances were not material in the three and nine months ended September 30, 2015 and 2014.

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. This evaluation is performed under the Company’s internal underwriting policy.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on 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 Company analyzes loans individually by classifying the loans as to credit risk.  This analysis includes one —to four-family, multi-family and commercial real estate loans, home equity loans, and consumer and other. This analysis is performed on a quarterly basis.  The Company uses the following definitions for risk ratings:

Special Mention.  Loans classified 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 Company’s credit position at 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 Company 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 characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.  As of September 30, 2015 and December 31, 2014, the risk category of loans by class of loans was as follows:

	September 30, 2015
			Special
	Pass		Mention		Substandard		Doubtful		Total
One —to- four family	$	97,136	$	—	$	3,565	$	—	$	100,701
Multi-family and commercial	1,329		141		7,321		—		8,791
Home equity	6,875		—		68		—		6,943
Consumer and other	214		—		—		—		214
Total	$	105,554	$	141	$	10,954	$	—	$	116,649

	December 31, 2014
			Special
	Pass		Mention		Substandard		Doubtful		Total
One—to-four family	$	94,007	$	—	$	3,207	$	—	$	97,214
Multi-family and commercial	2,649		102		6,742		—		9,493
Home equity	7,641		—		428		—		8,069
Consumer and other	349		—		—		—		349
Total	$	104,646	$	102	$	10,377	$	—	$	115,125

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SECURITIES (Details 5) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Less Than 12 Months
Fair Value	$ 3,940	$ 8,104
Unrealized Loss	(4)	(18)
12 Months or More
Fair Value	11,080	14,748
Unrealized Loss	(138)	(207)
Total
Fair Value	15,020	22,852
Unrealized Loss	(142)	(225)
U.S. government-sponsored entities
Less Than 12 Months
Fair Value	1,999	4,992
Unrealized Loss	(1)	(8)
12 Months or More
Fair Value		998
Unrealized Loss		(2)
Total
Fair Value	1,999	5,990
Unrealized Loss	(1)	(10)
Residential agency mortgage-backed
Less Than 12 Months
Fair Value	1,941	3,112
Unrealized Loss	(3)	(10)
12 Months or More
Fair Value	11,080	13,750
Unrealized Loss	(138)	(205)
Total
Fair Value	13,021	16,862
Unrealized Loss	$ (141)	$ (215)

XML

SECURITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
SECURITIES
Amortized Cost	$ 48,006	$ 54,248
Gross Unrealized Gains	221	191
Gross Unrealized Losses	(142)	(225)
Fair Value	48,085	54,214
U.S. government-sponsored entities
SECURITIES
Amortized Cost	8,000	11,000
Gross Unrealized Gains	4	3
Gross Unrealized Losses	(1)	(10)
Fair Value	8,003	10,993
Residential agency mortgage-backed
SECURITIES
Amortized Cost	40,006	43,248
Gross Unrealized Gains	217	188
Gross Unrealized Losses	(141)	(215)
Fair Value	$ 40,082	$ 43,221

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SECURITIES (Tables)

9 Months Ended

Sep. 30, 2015

SECURITIES

Schedule of fair value of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss)

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. government-sponsored entities	$	8,000	$	4	$	(1	)	$	8,003
Residential agency mortgage-backed	40,006		217		(141		)	40,082
Total	$	48,006	$	221	$	(142	)	$	48,085

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. government-sponsored entities	$	11,000	$	3	$	(10	)	$	10,993
Residential agency mortgage-backed	43,248		188		(215		)	43,221
Total	$	54,248	$	191	$	(225	)	$	54,214

Schedule of amortized cost, unrecognized gains and losses, and fair values of securities held-to-maturity

	September 30, 2015
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Residential agency mortgage-backed	$	7	$	—	$	—	$	7
State and municipal	320		6		—		326
Total	$	327	$	6	$	—	$	333

	December 31, 2014
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Residential agency mortgage-backed	$	11	$	—	$	—	$	11
State and municipal	320		10		—		330
Total	$	331	$	10	$	—	$	341

Schedule of expected maturities of securities

	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due after one year through five years	$	8,000	$	8,003	$	260	$	265
Due after five years through ten years	—		—		60		61
Residential agency mortgage-backed	40,006		40,082		7		7
Total	$	48,006	$	48,085	$	327	$	333

Schedule of proceeds from sales of securities and the associated gains

	Three Months		Nine Months		Three Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2015		2015		2014		2014
Proceeds from sale	$	—	$	3,306	$	3,889	$	11,297
Gross realized gains	—		74		56		123

Schedule of securities with unrealized losses at year end not recognized in income, by length of time that individual securities have been in a continuous unrealized loss position

	September 30, 2015
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. government- sponsored entities	$	1,999	$	(1	)	$	—	$	—		$	1,999	$	(1	)
Residential agency mortgage-backed	1,941		(3		)	11,080		(138		)	13,021		(141		)
Total temporarily impaired	$	3,940	$	(4	)	$	11,080	$	(138	)	$	15,020	$	(142	)

	December 31, 2014
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. government- sponsored entities	$	4,992	$	(8	)	$	998	$	(2	)	$	5,990	$	(10	)
Residential agency mortgage-backed	3,112		(10		)	13,750		(205		)	16,862		(215		)
Total temporarily impaired	$	8,104	$	(18	)	$	14,748	$	(207	)	$	22,852	$	(225	)

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2015

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 5 - EARNINGS PER SHARE

According to the provisions of FASB ASC 260, Earnings Per Share, non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. ESOP shares are considered outstanding for basic and diluted earnings per share when the shares are committed to be released. The Company’s non-vested restricted stock awards qualify as participating securities.

Net income is allocated between the common stock and participating securities pursuant to the two-class method, based on their rights to receive dividends, participate in earnings or absorb losses. Basic earnings per common share is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating non-vested restricted shares.

The table below calculates the earnings per share for the three months and nine months ended September 30, 2015 and 2014:

	Three Months						Nine Months
	September 30,						September 30,
	2015			2014			2015			2014
Basic
Net income	$	47		$	329		$	14		$	2,036
Distributed earnings allocated to participated securities	2			3			7			3
Undistributed earnings allocated to participated securities	(1		)	5			(7		)	13
Net earnings allocated to common shareholders	$	46		$	321		$	14		$	2,020
Weighted average common shares outstanding including participating securities	2,087,361			2,252,924			2,094,192			2,228,180
Less: Participating securities	(38,780		)	(56,267		)	(48,947		)	(21,641		)
Weighted-average common shares outstanding for basic	2,048,581			2,196,657			2,045,245			2,206,539
Basic earnings per common share	$	0.02		$	0.15		$	0.01		$	0.92
Diluted
Net earnings allocated to common stock	$	46		$	321		$	14		$	2,020
Weighted average common shares outstanding for basic	2,048,581			2,196,657			2,045,245			2,206,539
Add: dilutive effects of assumed exercise of stock options and stock awards	15,167			—			11,831			—
Weighted-average common shares outstanding for diluted	2,063,748			2,196,657			2,057,076			2,206,539
Diluted earnings per common share	$	0.02		$	0.15		$	0.01		$	0.92

At September 30, 2015 and 2014, there were 1,375 anti-dilutive stock options, respectively.

Employee stock ownership plan shares are considered outstanding for this calculation unless unearned. At September 30, 2015 and 2014, there were 105,032 and 108,783 shares unearned from the employee stock ownership plan, respectively.

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EQUITY INCENTIVE PLAN

9 Months Ended

Sep. 30, 2015

EQUITY INCENTIVE PLAN

EQUITY INCENTIVE PLAN

NOTE 6 — EQUITY INCENTIVE PLAN

The Company’s 2014 Equity Incentive Plan provides for grants of stock options, stock awards, stock units, awards, performance stock awards, stock appreciations rights, and other equity-based awards to key employees and nonemployee directors. As of September 30, 2015, the Company has only granted stock options and stock awards. The Company recognizes stock compensation costs for services received in a share-based payment transaction over the required service period, generally defined as the vesting period.

For stock options, certain key employees and nonemployee directors were granted options to purchase shares of the Company’s common stock at fair value at the date of the grant (exercise price). The options become exercisable in equal installments over a five-year period from the date of grant, and they expire ten years from the date of grant. Compensation cost is determined by estimating the fair value of the option on the date of the grant using a closed form option valuation (Black-Scholes) model. Expected volatilities are based on historical volatilities of the Company’s common stock. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferrable. The risk-free interest rate for the expected term of the option is based on the U.S. treasury yield curve in effect at the time of grant. There were 118,132 options granted in May 2014 with a strike price of $11.99, 4,000 options granted in June 2015 with a strike price of $15.00 and 10,000 options granted with a strike price of $14.85. During the nine months ended September 30, 2015, there were 23,624 options vested, 16,800 options forfeited, 4,200 options were exercised, and no options expired. Total unrecognized compensation expense for stock options was $100 as of September 30, 2015. Compensation expense totaled $20 and $9 for the nine months ended September 30, 2015 and 2014, respectively. Management expects outstanding options to vest over the weighted average remaining vesting period of 3.8 years.

For stock awards, the compensation cost is based on the grant date fair value of the award (as determined by quoted market prices) and is recognized over the vesting period. The Company’s stock awards vest based on a service period of five years. The unamortized cost of shares not yet earned (vested) is reported as a reduction of stockholders’ equity. The Company awarded 56,267 shares of stock in May 2014 and 6,000 shares in August 2015. During the nine months ended September 30, 2015, there were 11,251 awards vested and 9,612 awards forfeited. Total unrecognized compensation expense for awards was $475 as of September 30, 2015. Compensation expense totaled $95 and $45 for the nine months ended September 30, 2015 and 2014, respectively. Management expects outstanding awards to vest over the weighted average remaining vesting period of 3.8 years.

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LOANS (Tables)

9 Months Ended

Sep. 30, 2015

LOANS

Schedule of loans

	September 30,					December 31,
	2015					2014
	Amount			Percent		Amount			Percent
Mortgage:
One—to-four family	$	100,701		86.3	%	$	97,214		84.4	%
Multi-family and commercial	8,791			7.5		9,493			8.3
Home equity	6,943			6.0		8,069			7.0
Consumer and other	214			0.2		349			0.3
	116,649			100.0	%	115,125			100.0	%
Allowance for loan losses	(1,085		)			(1,103		)
Net deferred costs and other	133					108
Loans, net	$	115,697				$	114,130

Schedule of activity in the allowance for loan losses by portfolio segment

	For the Three Months Ended September 30, 2015
				Multi-family
	One—to-Four			and		Home		Consumer
	Family			Commercial		Equity		and Other		Total
Allowances for loan losses:
Beginning balance	$	846		$	214	$	20	$	—	$	1,080
Provision for loan losses	—			—		—		—		—
Charge-offs	(8		)	—		—		—		(8		)
Recoveries	13			—		—		—		13
Total ending allowance balance	$	851		$	214	$	20	$	—	$	1,085

	For the Nine Months Ended September 30, 2015
				Multi-family
	One-to-Four			and			Home			Consumer
	Family			Commercial			Equity			and Other		Total
Allowances for loan losses:
Beginning balance	$	822		$	259		$	22		$	—	$	1,103
Provision for loan losses	172			(40		)	(2		)	—		130
Charge-offs	(160		)	(7		)	—			—		(167		)
Recoveries	17			2			—			—		19
Total ending allowance balance	$	851		$	214		$	20		$	—	$	1,085

	For the Three Months Ended September 30, 2014
				Multi-family
	One—to-Four			and			Home		Consumer
	Family			Commercial			Equity		and Other		Total
Allowances for loan losses:
Beginning balance	$	925		$	253		$	25	$	1	$	1,204
Provision for loan losses	—			207			—		—		207
Charge-offs	(47		)	(160		)	—		—		(207		)
Recoveries	1			1			—		—		2
Total ending allowance balance	$	879		$	301		$	25	$	1	$	1,206

	For the Nine Months Ended September 30, 2014
Allowances for loan losses:
Beginning balance	$	823		$	466		$	109		$	1	$	1,399
Provision for loan losses	161			610			(84		)	—		687
Charge-offs	(108		)	(778		)	—			—		(886		)
Recoveries	3			3			—			—		6
Total ending allowance balance	$	879		$	301		$	25		$	1	$	1,206

Schedule of balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method

	September 30, 2015
			Multi-Family				Consumer
	One—to-Four		and		Home		and
	Family		Commercial		Equity		Other		Total
Allowance for loan losses:
Loans individually evaluated for impairment	$	214	$	—	$	—	$	—	$	214
Loans collectively evaluated for impairment	637		214		20		—		871
Total ending allowance balance	$	851	$	214	$	20	$	—	$	1,085
Loans:
Loans individually evaluated for impairment	$	1,537	$	697	$	—	$	—	$	2,234
Loans collectively evaluated for impairment	99,164		8,094		6,943		214		114,415
Total ending loans balance	$	100,701	$	8,791	$	6,943	$	214	$	116,649

	December 31, 2014
			Multi-Family				Consumer
	One-to-Four		and		Home		and
	Family		Commercial		Equity		Other		Total
Allowance for loan losses:
Loans individually evaluated for impairment	$	234	$	—	$	—	$	—	$	234
Loans collectively evaluated for impairment	588		259		22		—		869
Total ending allowance balance	$	822	$	259	$	22	$	—	$	1,103
Loans:
Loans individually evaluated for impairment	$	1,564	$	899	$	—	$	—	$	2,463
Loans collectively evaluated for impairment	95,650		8,594		8,069		349		112,662
Total ending loans balance	$	97,214	$	9,493	$	8,069	$	349	$	115,125

Schedule of impaired loans by class of loans

	As of September 30, 2015						As of December 31, 2014
					Allowance						Allowance
	Unpaid				for Loan		Unpaid				for Loan
	Principal		Recorded		Losses		Principal		Recorded		Losses
	Balance		Investment		Allocated		Balance		Investment		Allocated
With no related allowance recorded:
One—to-four family	$	401	$	288	$	—	$	410	$	297	$	—
Multi-family and commercial	987		697		—		1,185		899		—
Home equity	—		—		—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,388		985		—		1,595		1,196		—
With an allowance recorded:
One—to-four family	1,291		1,249		214		1,300		1,267		234
Multi-family and commercial	—		—		—		—
Home equity	—		—		—		—		—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,291		1,249		214		1,300		1,267		234
Total	$	2,679	$	2,234	$	214	$	2,895	$	2,463	$	234

	For the Three Months						For the Three Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
One—to-four family	$	290	$	3	$	—	$	299	$	3	$	—
Multi-family and commercial	703		—		9		1,787		1		6
Home equity	—		—		—				—		—
Consumer and other	—		—		—				—		—
Subtotal	993		3		9		2,086		4		6

	For the Three Months						For the Three Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
One—to-four family	1,253		12		—		1,175		17		—
Multi-family and commercial	—		—		—		—		—		—
Home equity	—		—		—				—		—
Consumer and other	—		—		—		—		—		—
Subtotal	1,253		12		—		1,175		17		—
Total	$	2,246	$	15	$	9	$	3,261	$	21	$	6

	For the Nine Months						For the Nine Months
	Ended September 30, 2015						Ended September 30, 2014
	Average		Interest		Cash		Average		Interest		Cash
	Recorded		Income		Basis		Recorded		Income		Basis
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
One—to-four family	$	292	$	12	$	—	$	199	$	10	$	—
Multi-family and commercial	708		—		21		1,911		1		12
Home equity	—		—		—		—		—		—
Subtotal	1,000		12		21		2,110		11		12
With an allowance recorded:
One—to-four family	1,255		39		—		1,276		47		—
Multi-family and commercial	—		—		—		191		—		—
Home equity	—		—		—		—		—		—
Subtotal	1,255		39		—		1,467		47		—
Total	$	2,255	$	51	$	21	$	3,577	$	58	$	12

Schedule of recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans

					Loans Past Due Over
	Nonaccrual				90 Days Still Accruing
	September 30,		December 31,		September 30,		December 31,
	2015		2014		2015		2014
One—to-four family	$	1,128	$	1,886	$	—	$	—
Multi-family and commercial	697		900		—		—
Home equity	34		192		—		—
Consumer and other	—		—		—		—
Total	$	1,859	$	2,978	$	—	$	—

Schedule of aging of the recorded investment in past due loans by class of loans

	September 30, 2015
	30 - 59		60 - 89		Greater Than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
One—to-four family	$	572	$	207	$	220	$	999	$	99,702	$	100,701
Multi-family and commercial	—		196		—		196		8,595		8,791
Home equity	—		34		—		34		6,909		6,943
Consumer and other	—		—		—		—		214		214
Total	$	572	$	437	$	220	$	1,229	$	115,420	$	116,649

	December 31, 2014
	30 - 59		60 - 89		Greater Than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
One-to-four family	$	245	$	305	$	753	$	1,303	$	95,911	$	97,214
Multi-family and commercial	206		—		379		585		8,908		9,493
Home equity	88		44		35		167		7,902		8,069
Consumer and other	—		—		—		—		349		349
Total	$	539	$	349	$	1,167	$	2,055	$	113,070	$	115,125

Schedule of troubled debt restructurings by accrual status and specific reserves allocated to troubled debt restructurings

	September 30,			December 31,
	2015			2014
Accrual status	$	1,225		$	1,431
Non-accrual status	1,009			1,032
	2,234			2,463
Specific reserves allocated	(214		)	(234		)
Net	$	2,020		$	2,229

Schedule of loans by class modified as troubled debt restructurings

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Loans	Investment		Investment
September 30, 2015
One-to—four family	1	$	217	$	219
Multi-family and commercial	—	—		—
Home equity	—	—		—
Consumer and other	—	—		—
Total	1	$	217	$	219

Schedule of loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification

	Number of	Recorded
	Loans	Investment
September 30, 2015
One-to—four family loans	1	$	217
Total	1	$	217

Schedule of risk category of loans by class of loans

	September 30, 2015
			Special
	Pass		Mention		Substandard		Doubtful		Total
One —to- four family	$	97,136	$	—	$	3,565	$	—	$	100,701
Multi-family and commercial	1,329		141		7,321		—		8,791
Home equity	6,875		—		68		—		6,943
Consumer and other	214		—		—		—		214
Total	$	105,554	$	141	$	10,954	$	—	$	116,649

	December 31, 2014
			Special
	Pass		Mention		Substandard		Doubtful		Total
One—to-four family	$	94,007	$	—	$	3,207	$	—	$	97,214
Multi-family and commercial	2,649		102		6,742		—		9,493
Home equity	7,641		—		428		—		8,069
Consumer and other	349		—		—		—		349
Total	$	104,646	$	102	$	10,377	$	—	$	115,125

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FAIR VALUES (Details 3) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Impaired loans	$ 2,234,000	$ 2,463,000
Fair Value, Other real estate owned	1,249,000	1,751,000
Non-recurring | Significant Unobservable Inputs (Level 3) | One-to-four-family
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Impaired loans		201,000
Fair Value, Other real estate owned	143,000	412,000
Non-recurring | Significant Unobservable Inputs (Level 3) | Multi-family and commercial
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Impaired loans		346,000
Fair Value, Other real estate owned	166,000	1,299,000
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | One-to-four-family | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Impaired loans		$ 201,000
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | One-to-four-family | Sales comparison approach | Minimum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)		0.00%
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | One-to-four-family | Sales comparison approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)		7.00%
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | One-to-four-family | Sales comparison approach | Weighted Average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)		(4.80%)
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | Multi-family and commercial | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Impaired loans		$ 346,000
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | Multi-family and commercial | Sales comparison approach | Minimum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)		0.00%
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | Multi-family and commercial | Sales comparison approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)		56.70%
Non-recurring | Significant Unobservable Inputs (Level 3) | Impaired loans | Multi-family and commercial | Sales comparison approach | Weighted Average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)		18.20%
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | Cash purchase offer
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Other real estate owned	940,000
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | One-to-four-family | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Other real estate owned	$ 143,000	$ 412,000
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | One-to-four-family | Sales comparison approach | Minimum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)	(24.50%)	0.00%
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | One-to-four-family | Sales comparison approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)	3.70%	5.30%
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | One-to-four-family | Sales comparison approach | Weighted Average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)	(7.82%)	(6.50%)
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | Multi-family and commercial | Sales comparison approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Other real estate owned	$ 166,000	$ 90,000
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | Multi-family and commercial | Sales comparison approach | Minimum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)	5.70%	5.70%
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | Multi-family and commercial | Sales comparison approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)	55.40%	55.40%
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | Multi-family and commercial | Sales comparison approach | Weighted Average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for difference between comparable sales (as a percent)	34.20%	34.20%
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | Multi-family and commercial | Income approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Fair Value, Other real estate owned		$ 1,209,000
Adjustment for differences in net operating income expectations (as a percent)		13.10%
Capitalization rate (as a percent)		8.30%
Non-recurring | Significant Unobservable Inputs (Level 3) | Other real estate owned | Multi-family and commercial | Income approach | Weighted Average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Adjustment for differences in net operating income expectations (as a percent)		13.10%
Capitalization rate (as a percent)		8.30%

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SECURITIES (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Investments by rolling maturity, Available-for-Sale, Amortized Cost
Due after one year through five years	$ 8,000
Residential agency mortgage-backed	40,006
Total	48,006
Investments by rolling maturity, Available-for-Sale, Fair Value
Due after one year through five years	8,003
Residential agency mortgage-backed	40,082
Fair Value	48,085	$ 54,214
Investments by rolling maturity, Held-to-Maturity, Amortized Cost
Due after one year through five years	260
Due after five years through ten years	60
Residential agency mortgage-backed	7
Amortized Cost	327	331
Investments by rolling maturity, Held-to-Maturity, Fair Value
Due after one year through five years	265
Due after five years through ten years	61
Residential agency mortgage-backed	7
Fair Value	$ 333	$ 341

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LOANS (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method
Loans individually evaluated for impairment	$ 214		$ 234
Loans collectively evaluated for impairment	871		869
Total ending allowance balance	1,085	$ 1,080	1,103	$ 1,206	$ 1,204	$ 1,399
Loans
Loans individually evaluated for impairment	2,234		2,463
Loans collectively evaluated for impairment	114,415		112,662
Total ending loans balance	116,649		115,125
One-to-four-family
Allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method
Loans individually evaluated for impairment	214		234
Loans collectively evaluated for impairment	637		588
Total ending allowance balance	851	846	822	879	925	823
Loans
Loans individually evaluated for impairment	1,537		1,564
Loans collectively evaluated for impairment	99,164		95,650
Total ending loans balance	100,701		97,214
Multi-family and commercial
Allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method
Loans collectively evaluated for impairment	214		259
Total ending allowance balance	214	214	259	301	253	466
Loans
Loans individually evaluated for impairment	697		899
Loans collectively evaluated for impairment	8,094		8,594
Total ending loans balance	8,791		9,493
Home equity
Allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method
Loans collectively evaluated for impairment	20		22
Total ending allowance balance	20	$ 20	22	25	25	109
Loans
Loans collectively evaluated for impairment	6,943		8,069
Total ending loans balance	6,943		8,069
Consumer and other
Allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method
Total ending allowance balance				$ 1	$ 1	$ 1
Loans
Loans collectively evaluated for impairment	214		349
Total ending loans balance	$ 214		$ 349

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	$ 47	$ 329	$ 14	$ 2,036
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the period	339	(170)	187	460
Reclassification adjustment for (gains) losses included in net income		(56)	(74)	(123)
Related income tax (expense) benefit	(132)	91	(45)	(134)
Total other comprehensive income (loss)	207	(135)	68	203
Comprehensive income (loss)	$ 254	$ 194	$ 82	$ 2,239

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SECURITIES

9 Months Ended

Sep. 30, 2015

SECURITIES

SECURITIES

NOTE 2 - SECURITIES

The fair value of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. government-sponsored entities	$	8,000	$	4	$	(1	)	$	8,003
Residential agency mortgage-backed	40,006		217		(141		)	40,082
Total	$	48,006	$	221	$	(142	)	$	48,085

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. government-sponsored entities	$	11,000	$	3	$	(10	)	$	10,993
Residential agency mortgage-backed	43,248		188		(215		)	43,221
Total	$	54,248	$	191	$	(225	)	$	54,214

The amortized cost, unrecognized gains and losses, and fair values of securities held-to-maturity were as follows:

	September 30, 2015
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Residential agency mortgage-backed	$	7	$	—	$	—	$	7
State and municipal	320		6		—		326
Total	$	327	$	6	$	—	$	333

	December 31, 2014
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Residential agency mortgage-backed	$	11	$	—	$	—	$	11
State and municipal	320		10		—		330
Total	$	331	$	10	$	—	$	341

Expected maturities of securities at September 30, 2015 were as follows.  Securities not due at a single maturity date (mortgage-backed securities) are shown separately.

	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due after one year through five years	$	8,000	$	8,003	$	260	$	265
Due after five years through ten years	—		—		60		61
Residential agency mortgage-backed	40,006		40,082		7		7
Total	$	48,006	$	48,085	$	327	$	333

Securities with a carrying value of approximately $8,836 and $10,161 at September 30, 2015 and December 31, 2014, respectively were pledged to secure public deposits and for other purposes as required or permitted by law.

The proceeds from sales of securities and the associated gains for the three and nine months ended September 30, 2015 and 2014 are listed below:

	Three Months		Nine Months		Three Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2015		2015		2014		2014
Proceeds from sale	$	—	$	3,306	$	3,889	$	11,297
Gross realized gains	—		74		56		123

Securities with unrealized losses not recognized in income, by length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	September 30, 2015
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. government- sponsored entities	$	1,999	$	(1	)	$	—	$	—		$	1,999	$	(1	)
Residential agency mortgage-backed	1,941		(3		)	11,080		(138		)	13,021		(141		)
Total temporarily impaired	$	3,940	$	(4	)	$	11,080	$	(138	)	$	15,020	$	(142	)

	December 31, 2014
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. government- sponsored entities	$	4,992	$	(8	)	$	998	$	(2	)	$	5,990	$	(10	)
Residential agency mortgage-backed	3,112		(10		)	13,750		(205		)	16,862		(215		)
Total temporarily impaired	$	8,104	$	(18	)	$	14,748	$	(207	)	$	22,852	$	(225	)

Unrealized losses on securities have not been recognized because the issuer’s securities are of high credit quality (rated AA or higher), management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value was largely due to changes in interest rates.  The fair value is expected to recover as the securities approach maturity.

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LOANS (Details 4) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
With no related allowance recorded:
Unpaid Principal Balance	$ 1,388		$ 1,388		$ 1,595
Recorded Investment	985		985		1,196
Allowance for Loan Losses Allocated	214		214		234
Average Recorded Investment	993	$ 2,086	1,000	$ 2,110
Interest Income Recognized	3	4	12	11
Cash Basis Recognized	9	6	21	12
With an allowance recorded:
Unpaid Principal Balance	1,291		1,291		1,300
Recorded Investment	1,249		1,249		1,267
Allowance for Loan Losses Allocated	214		214		234
Average Recorded Investment	1,253	1,175	1,255	1,467
Interest Income Recognized	12	17	39	47
Cash Basis Recognized	9	6	21	12
Total
Unpaid Principal Balance	2,679		2,679		2,895
Recorded investment	2,234		2,234		2,463
Allowance for Loan Losses Allocated	214		214		234
Average Recorded Investment	2,246	3,261	2,255	3,577
Interest Income Recognized	15	21	51	58
Cash Basis Recognized	9	6	21	12
One-to-four-family
With no related allowance recorded:
Unpaid Principal Balance	401		401		410
Recorded Investment	288		288		297
Allowance for Loan Losses Allocated	214		214		234
Average Recorded Investment	290	299	292	199
Interest Income Recognized	3	3	12	10
With an allowance recorded:
Unpaid Principal Balance	1,291		1,291		1,300
Recorded Investment	1,249		1,249		1,267
Allowance for Loan Losses Allocated	214		214		234
Average Recorded Investment	1,253	1,175	1,255	1,276
Interest Income Recognized	12	17	39	47
Total
Allowance for Loan Losses Allocated	214		214		234
Multi-family and commercial
With no related allowance recorded:
Unpaid Principal Balance	987		987		1,185
Recorded Investment	697		697		$ 899
Average Recorded Investment	703	1,787	708	1,911
Interest Income Recognized		1		1
Cash Basis Recognized	9	6	21	12
With an allowance recorded:
Average Recorded Investment				191
Cash Basis Recognized	9	6	21	12
Total
Cash Basis Recognized	$ 9	$ 6	$ 21	$ 12

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EQUITY INCENTIVE PLAN (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended			9 Months Ended
	Aug. 31, 2015	Jun. 30, 2015	May. 31, 2014	Sep. 30, 2015	Sep. 30, 2014
Shares
Exercised (in shares)				4,200
Forfeited (in shares)				3,337
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options exercisable period				5 years
Options expiration period				10 years
Shares
Granted (in shares)			118,132
Exercised (in shares)				4,200
Vested (in shares)				23,624
Forfeited (in shares)				16,800
Expired (in shares)				0
Weighted Average Exercise Price
Granted (in dollars per share)			$ 11.99
Additional disclosures
Total unrecognized compensation expense				$ 100
Compensation expense				$ 20	$ 9
Remaining vesting period				3 years 9 months 18 days
Stock Option | Strike Price of $15.00
Shares
Granted (in shares)		4,000
Weighted Average Exercise Price
Granted (in dollars per share)		$ 15.00
Stock Option | Strike Price of $14.85
Shares
Granted (in shares)		10,000
Weighted Average Exercise Price
Granted (in dollars per share)		$ 14.85
Stock Awards
Additional disclosures
Vesting period				5 years
Granted (in shares)	6,000		56,267
Vested (in shares)				11,251
Forfeited (in shares)				9,612
Total unrecognized compensation expense				$ 475
Compensation expense				$ 95	$ 45
Remaining vesting period				3 years 9 months 18 days

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SECURITIES (Details 2) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
SECURITIES
Amortized Cost	$ 327	$ 331
Gross Unrecognized Gains	6	10
Fair Value	333	341
Residential agency mortgage-backed
SECURITIES
Amortized Cost	7	11
Fair Value	7	11
State and municipal
SECURITIES
Amortized Cost	320	320
Gross Unrecognized Gains	6	10
Fair Value	$ 326	$ 330