f10q_123112-5468.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________

FORM 10-Q
(Mark One)
     
X
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   
EXCHANGE ACT OF 1934
     
For the quarterly period ended
December 31, 2012
     
OR
     
   
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   
EXCHANGE ACT OF 1934
     
For the transition period from
 
to
     
     
Commission File Number  001-33246
     
MSB FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
     
     
UNITED STATES
 
34-1981437
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification Number)
     
1902 Long Hill Road, Millington, New Jersey
 
07946-0417
(Address of principal executive offices)
 
(Zip Code)
     
Registrant’s telephone number, including area code
(908) 647-4000
     
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 [  ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]
 
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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [  ]
Accelerated filer [  ]
Non-accelerated filer [  ]
Smaller reporting company [X]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes [  ] No  [X]
 
The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: February 8, 2013:
     
$0.10 par value common stock 5,015,937 shares outstanding
 
 
 

 


MSB FINANCIAL CORP. AND SUBSIDIARIES

INDEX

   
Page
   
Number
PART I - FINANCIAL INFORMATION
   
     
Item 1:
Consolidated Financial Statements (Unaudited)
 
 
       
 
    Consolidated Statements of Financial Condition
   
 
    at December 31, 2012 and June 30, 2012
 
2
       
 
    Consolidated Statements of Comprehensive (Loss) Income for the
   
 
    Three and Six Months Ended December 31, 2012 and 2011
 
3
       
 
    Consolidated Statements of Cash Flows for the Six Months
   
 
    Ended December 31, 2012 and 2011
 
5
       
 
Notes to Consolidated Financial Statements (Unaudited)
 
6
       
Item 2:
Management’s Discussion and Analysis of
 
34
 
Financial Condition and Results of Operations
   
       
Item 3:
Quantitative and Qualitative Disclosures About Market Risk
 
42
       
Item 4:
Controls and Procedures
 
42
     
     
PART II - OTHER INFORMATION
   
     
Item 1:
Legal Proceedings
 
42
       
Item 1A:
Risk Factors
 
42
       
Item 2:
Unregistered Sales of Equity Securities and Use of Proceeds
 
43
       
Item 3:
Defaults Upon Senior Securities
 
43
       
Item 4:
Mine Safety Disclosures
 
43
       
Item 5:
Other Information
 
43
       
Item 6:
Exhibits
 
43
     
SIGNATURES
 
44
     
CERTIFICATIONS
   
 
 
 

 
ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MSB FINANCIAL CORP AND SUBSIDARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
   
December 31,
   
June 30,
 
   
2012
   
2012
 
   
(Dollars in thousands,
except per share amount)
 
                 
Cash and due from banks
 
$
11,924
   
$
21,090
 
Interest-earning demand deposits with banks
   
3,713
     
12,667
 
                 
Cash and Cash Equivalents
   
15,637
     
33,757
 
                 
Trading securities
   
-
     
52
 
Securities held to maturity (fair value of $70,878 and $51,540,
respectively)
   
69,938
     
50,706
 
Loans receivable, net of allowance for loan losses of $5,320 and
$3,065, respectively
   
233,752
     
240,520
 
Other real estate owned
   
784
     
 
Premises and equipment
   
9,140
     
9,400
 
Federal Home Loan Bank of New York stock, at cost
   
1,365
     
1,365
 
Bank owned life insurance
   
6,811
     
6,115
 
Accrued interest receivable
   
1,223
     
1,341
 
Other assets
   
4,987
     
4,091
 
                 
Total Assets
 
$
343,637
   
$
347,347
 
Liabilities and Stockholders’ Equity
               
Liabilities
               
Deposits:
               
Non-interest bearing
 
$
17,829
   
$
17,251
 
Interest bearing
   
264,180
     
266,547
 
                 
Total Deposits
   
282,009
     
283,798
 
                 
Advances from Federal Home Loan Bank of New York
   
20,000
     
20,000
 
Advance payments by borrowers for taxes and insurance
   
72
     
97
 
Other liabilities
   
2,522
     
2,574
 
                 
Total Liabilities
   
304,603
     
306,469
 
                 
Commitments and Contingencies
   
     
 
Stockholders’ Equity
               
Common stock, par value $0.10; 10,000,000 shares authorized; 5,620,625
issued; 5,020,137 and 5,085,292 shares outstanding, respectively
   
562
     
562
 
Paid-in capital
   
24,353
     
24,214
 
Retained earnings
   
20,400
     
22,067
 
Unallocated common stock held by ESOP (101,171 and 109,602 shares,
respectively)
   
(1,012
)
   
(1,096
)
Treasury stock, at cost, 600,488 and 535,333 shares, respectively
   
(5,176
)
   
(4,768
)
Accumulated other comprehensive loss
   
(93
)
   
(101
)
                 
Total Stockholders’ Equity
   
39,034
     
40,878
 
                 
Total Liabilities and Stockholders’ Equity
 
$
343,637
   
$
347,347
 

See notes to unaudited consolidated financial statements.
2

 
MSB FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)

    
Three Months Ended
   
Six Months Ended
 
   
December 31,
   
December 31,
 
   
2012
   
2011
   
2012
   
2011
 
   
(In thousands, except share amounts)
 
Interest Income:
                       
  Loans receivable, including fees
  $ 2,618     $ 3,010     $ 5,368     $ 6,113  
  Securities held to maturity
    360       518       725       1,003  
  Other
    22       21       49       44  
Total Interest Income
    3,000       3,549       6,142       7,160  
                                 
Interest Expense
                               
  Deposits
    517       710       1,072       1,450  
  Borrowings
    172       172       344       345  
Total Interest Expense
    689       882       1,416       1,795  
                                 
Net Interest Income
    2,311       2,667       4,726       5,365  
                                 
Provision for Loan Losses
    2,973       375       3,719       988  
 
                               
Net Interest (Loss) Income after Provision for Loan Losses
    (662 )     2,292       1,007       4,377  
                                 
Non-Interest Income
                               
  Fees and service charges
    78       82       161       165  
  Income from bank owned life insurance
    56       51       108       101  
  Unrealized gain (loss) on trading securities
    0       3       1       (12 )
  Other
    28       37       51       63  
Total Non-Interest Income
    162       173       321       317  
                                 
Non-Interest Expenses
                               
  Salaries and employee benefits
    986       957       1,921       1,942  
  Directors compensation
    129       116       256       231  
  Occupancy and equipment
    349       377       705       787  
  Service bureau fees
    127       108       266       216  
  Advertising
    32       48       72       96  
  FDIC assessment
    72       75       146       148  
  Professional services
    171       125       285       262  
  Other
    256       253       475       437  
Total Non-Interest Expenses
    2,122       2,059       4,126       4,119  
                                 
(Loss) Income before Income Taxes
    (2,622 )     406       (2,798 )     575  
Income Taxes
    (1,047 )     182       (1,131 )     240  
Net (Loss) Income
    (1,575 )     224       (1,667 )     335  
Weighted average number of common stock shares
                               
outstanding - basic and diluted
    4,940       5,015       4,950       5,028  
(Loss) Earnings per common share - basic and diluted
  $ (.32 )   $ .04     $ (.34 )   $ .07  

See notes to unaudited consolidated financial statements.
 
3

 

 
MSB FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)


Consolidated Statements of Comprehensive (Loss) Income – (Continued)


    
Three Months Ended
   
Six Months Ended
 
   
December 31,
   
December 31,
 
   
2012
   
2011
   
2012
   
2011
 
   
(In thousands, except per share amounts)
 
Other comprehensive income, net of tax
                               
                                 
Defined benefit pension plans:
                               
Amortization of prior service cost included in net periodic
 
$
 
1
   
$
2
   
$
3
   
$
3
 
pension cost, net of tax of $1 and $1; and $2 and $3, for the
                               
three and six months, respectively.
                               
                                 
Less: amortization of unrecognized loss, net of tax of $2 and $1;
                               
and $4 and $2 for the three and six months, respectively.
   
3
     
2
     
5
     
4
 
                                 
Other comprehensive income
   
4
     
4
     
8
     
7
 
                                 
    Comprehensive (loss) income
 
$
(1,571
)
 
$
228
   
$
(1,659
)
 
$
342
 


See notes to unaudited consolidated financial statements.

 
4

 

MSB Financial Corp and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
   
 
Six Months Ended
December 31,
 
   
2012
   
2011
 
   
(In thousands)
 
Cash Flows from Operating Activities:
           
  Net (Loss) Income
  $ (1,667 )   $ 335  
  Adjustments to reconcile net (loss) income to net
               
cash provided by operating activities:
               
     Net accretion of securities discounts and deferred loan fees and costs
    (186 )     (65 )
     Depreciation and amortization of premises and equipment
    289       301  
     Stock based compensation and allocation of ESOP stock
    223       220  
     Provision for loan losses
    3,719       988  
     (Gain) loss on sale of other real estate owned
    14       (9 )
     Income from bank owned life insurance
    (108 )     (101 )
     Unrealized (gain) loss on trading securities
    (1 )     12  
     Decrease (increase) in accrued interest receivable
    118       (153 )
     Increase in other assets
    (902 )     (200 )
     Increase (decrease) in other liabilities
    (36 )     74  
  Net Cash Provided by Operating Activities
    1,463       1,402  
 
               
Cash Flows from Investing Activities:
               
     Activity in held to maturity securities:
               
      Purchases
    (42,810 )     (39,970 )
      Maturities, calls and principal repayments
    23,656       17,421  
     Net decrease in loans receivable
    1,840       7,610  
     Purchase of premises and equipment
    (29 )     (59 )
     Purchase of bank owned life insurance
    (588 )      
     Proceeds from sale of other real estate owned
    517       870  
     Proceeds from sale of trading securities
    53        
  Net Cash Used in Investing Activities
    (17,361 )     (14,128 )
 
               
Cash Flows from Financing Activities:
               
     Net (decrease) increase in deposits
    (1,789 )     915  
     Decrease in advance payments by borrowers for taxes and insurance
    (25 )     (164 )
     Cash dividends paid to minority shareholders
          (109 )
     Purchase of treasury stock
    (408 )     (374 )
  Net Cash (Used in) Provided by Financing Activities
    (2,222 )     268  
                 
  Net Decrease in Cash and Cash Equivalents
    (18,120 )     (12,458 )
Cash and Cash Equivalents – Beginning
    33,757       30,976  
Cash and Cash Equivalents – Ending
  $ 15,637     $ 18,518  
                 
Supplementary Cash Flows Information
               
  Interest paid
  $ 1,417     $ 1,789  
  Income taxes paid
  $ 150     $  
  Loan receivable transferred to other real estate owned
  $ 1,317     $  
 
See notes to unaudited consolidated financial statements.
 
5

 

MSB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


Note 1 – Organization and Business

MSB Financial Corp. (the “Company”) is a federally-chartered corporation organized in 2004 for the purpose of acquiring all of the capital stock that Millington Savings Bank (the “Savings Bank”) issued in its mutual holding company reorganization. The Company’s principal business is the ownership and operation of the Savings Bank.
 
MSB Financial, MHC (the “MHC”) is a federally-chartered mutual holding company that was formed in 2004 in connection with the mutual holding company reorganization of the Savings Bank. The MHC has not engaged in any significant business other than its ownership interest in the Company since its formation. So long as the MHC is in existence, it will at all times own a majority of the outstanding stock of the Company. At December 31, 2012, the MHC owned 61.6% of the Company’s outstanding common shares.
 
The Savings Bank is a New Jersey chartered stock savings bank and its deposits are insured by the Federal Deposit Insurance Corporation. The primary business of the Savings Bank is attracting retail deposits from the general public and using those deposits together with funds generated from operations, principal repayments on securities and loans and borrowed funds, for its lending and investing activities. The Savings Bank’s loan portfolio primarily consists of one-to-four family residential loans, commercial loans, and consumer loans. It also invests in U.S. government obligations and mortgage-backed securities. The Savings Bank is regulated by the New Jersey Department of Banking and Insurance and the Federal Deposit Insurance Corporation. The Board of Governors of the Federal Reserve System (the “Federal Reserve”) regulates the MHC and the Company as savings and loan holding companies.
 
The primary business of Millington Savings Service Corp (the “Service Corp”) was the ownership and operation of a single commercial rental property. This property was sold during the year ended June 30, 2007. Currently the Service Corp is inactive.

Note 2 – Basis of Consolidated Financial Statement Presentation

              The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Savings Bank, and the Savings Bank’s wholly owned subsidiary the Service Corp. All significant intercompany accounts and transactions have been eliminated in consolidation.  These consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X, and therefore, do not include all information or notes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
 
In the opinion of management, all adjustments, consisting of only normal recurring adjustments or accruals, which are necessary for a fair presentation of the consolidated financial statements have been made at December 31, 2012 and June 30, 2012 and for the three and six months ended December 31, 2012 and 2011.  The results of operations for the three and six months ended December 31, 2012 are not necessarily indicative of the results which may be expected for an entire fiscal year or other interim periods.

 
6

 
 
The data in the consolidated statement of financial condition at June 30, 2012 was derived from the Company’s audited consolidated financial statements as of and for the year then ended. That data, along with the interim financial information presented in the consolidated statements of financial condition, comprehensive (loss) income, and cash flows should be read in conjunction with the audited consolidated financial statements as of and for the year ended June 30, 2012, including the notes thereto included in the Company’s Annual Report on Form 10-K.
 
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.
 
              A material estimate that is particularly susceptible to significant change relates to the determination of the allowance for loan losses. Management believes that the allowance for loan losses is adequate. While management uses all available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions in the Savings Bank’s market area.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Savings Bank’s allowance for loan losses. Such agencies may require the Savings Bank to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examinations.
 
Note 3 – Subsequent Events

In accordance with Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (the “ASC”) Topic 855, Subsequent Events, management has evaluated potential subsequent events through the date the consolidated financial statements were issued.

Note 4 – Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period, exclusive of the unallocated shares held by the Employee Stock Ownership Plan (“ESOP”) and unvested shares of restricted stock. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Diluted earnings per share is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities exercisable (such as stock options) or which could be converted into common stock, if dilutive, using the treasury stock method.  Diluted earnings per share did not differ from basic earnings per share for the three and six months ended December 31, 2012 and 2011, as the 275,410 weighted average number of outstanding stock options were all anti-dilutive.

Note 5 – Stock Based Compensation

On March 10, 2008 the Company’s stockholders approved the 2008 Stock Compensation and Incentive Plan (the “2008 Plan”). This plan permits the granting of up to 275,410 options to purchase Company common stock. Pursuant to the 2008 Plan, on May 9, 2008, the Board of Directors granted 275,410 options having an exercise price of $10.75 per share, the fair market value of the Company’s common stock at the grant date. The grant date fair value of the options was estimated to be $2.99 per share based on the Black-Scholes option pricing model. Options are exercisable for 10 years from date of grant.  At December 31, 2012, stock based compensation expense not yet recognized in income amounted to $55,000 which is expected to be recognized over a weighted average remaining period of 0.3 years.  
 
 
7

 
The Company recognized stock based compensation expense related to these awards of $41,000 and $82,000 for each of the three and six month periods ended December 31, 2012 and 2011, respectively.

On November 9, 2009 the Company’s 2008 Plan was amended. The primary purpose of the amendment was to increase the number of shares of Company common stock authorized for issuance under the 2008 Plan from 275,410 to 385,574; with such additional shares to be available for awards in the form of restricted stock awards.  The Company repurchased 110,164 shares of the Company common stock for an aggregate purchase price of $932,000 and on December 14, 2009 granted the shares to certain employees and directors.  The restricted stock awards vest over a five year period and expensed over that time based on the fair value of the Company’s common stock at the date of grant.  During each of the three and six month periods ended December 31, 2012 and 2011, the Company recognized stock based compensation expense related to these awards of $45,000 and $90,000 with a tax benefit of $18,000 and $36,000, respectively.  As of December 31, 2012, $351,000 in stock based compensation expense related to these awards remains to be recognized.
 
Note 6 - Fair Value Measurements
 
The Company uses fair value measurements to record fair value adjustments to certain assets and to determined fair value disclosures.
 
FASB ASC Topic 820, Fair Market Value Disclosures (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.
 
ASC 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
 
    ·  
Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
 
    ·  
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the
 
 
 
8

 
 
 
 
asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
 
    ·  
Level 3 Inputs –  Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
 
A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.  An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
 
In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
 
Assets Measured at Fair Value on a Recurring Basis
 
The following table summarizes financial assets measured at fair value on a recurring basis at June 30, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 
June 30, 2012
   
 
Level 1
Inputs
 
Level 2
Inputs
 
Level 3
Inputs
 
Total Fair
Value
   
 
(In thousands)
 
                         
Trading securities
  $ 52     $     $     $ 52  
 
Securities classified as trading securities are reported at fair value utilizing Level 1 inputs. For these securities, the Company arrives at the fair value based upon the quoted market price at the close of business on the last business day on or prior to the statement of financial condition date.  There were no assets measured at fair value on a recurring basis at December 31, 2012.
 

 
9

 
 
Assets Measured at Fair Value on a Non-Recurring Basis

Certain financial and non-financial assets are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
 
The following table summarizes those assets measured at fair value on a non-recurring basis as of December 31, 2012 and June 30, 2012:

   
December 31, 2012
   
   
Level 1
Inputs
   
Level 2
Inputs
   
Level 3
Inputs
 
Total Fair
Value
   
   
(In thousands)
 
Impaired loans
  $     $     $ 9,579     $ 9,579  
Other real estate owned
  $     $     $ 784       784  

   
June 30, 2012
   
   
Level 1
Inputs
   
Level 2
Inputs
   
Level 3
Inputs
   
Total Fair
Value
   
   
(In thousands)
 
Impaired loans
  $     $     $ 10,683     $ 10,683  

An impaired loan is measured for impairment at the time the loan is identified as impaired.  Loans are considered impaired when based on current information and events it is probable that payments of interest and principal will not be made in accordance with the contractual terms of the loan agreement.  The Company’s impaired loans are generally collateral dependent and, as such, are carried at the lower of cost or estimated fair value less estimated selling costs.  Fair values are estimated through current appraisals and adjusted as necessary to reflect current market conditions and as such are classified as Level 3.

Other real estate owned is carried at the lower of cost or fair value less estimated selling costs.  The fair value of other real estate is determined based upon independent third-party appraisals of the properties.  These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.  As of June 30, 2012 there was no further impairment of the other real estate owned balance below the cost basis established at the time the other real estate owned was originally recognized.
 
 
10

 
 
For Level 3 assets measured at fair value on non-recurring basis as of December 31, 2012 and June 30, 2012, the significant unobservable inputs used in fair value measurements were as follows:

       
As of December 31, 2012
 
       
Fair Value
Estimate
 
Valuation
Techniques
 
Unobservable
Input
 
Range (Weighted
Average)
 
       
(Dollars in thousands)
 
Impaired loans
   
$
9,579
   
 
Appraisal of
   
    Appraisal
       
               
collateral
   
    adjustments
   
0% to - 18.4% (2.9%)
 
                     
    Liquidation
       
                     
    expense
   
4.8% to -18.8% (9.6%)
 
                               
Other real estate owned
   
$
         784
     
Appraisal of
   
    Liquidation
       
               
collateral
   
    expense
   
4.0% -5.0% (4.3%)
 
 
 

       
As of June 30, 2012
 
       
Fair Value
Estimate
 
Valuation
Techniques
 
Unobservable
Input
 
Range (Weighted
Average)
 
       
(Dollars in thousands)
 
Impaired loans
   
$
10,683
   
 
Appraisal of
   
    Appraisal
       
               
collateral
   
    adjustments
   
0% to - 19.5% (6.5%)
 
                     
    Liquidation
       
                     
    expense
   
4.6% to -28.2% (8.1%)
 
 
 
11

 
 
Disclosure about Fair Value of Financial Instruments
 
Fair value of a financial instrument is defined above. Significant estimates were used for the purposes of disclosing fair values. Estimated fair values have been determined using the best available data and estimation methodology suitable for each category of financial instruments. However, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective reporting dates, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported.
 
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.
 
The following presents the carrying amount and the fair value as of December 31, 2012 and June 30, 2012, and placement in the fair value hierarchy, of the Company’s financial instruments which are carried on the consolidated statement of financial condition at cost and are not measured or recorded at fair value on a recurring basis.  This table excludes financial instruments for which the carrying amount approximates fair value, which includes cash and cash equivalents, Federal Home Loan Bank stock, accrued interest receivable, interest and non-interest bearing demand, savings and club deposits, and accrued interest payable.
 
     Carrying      Fair      Level 1      Level 2      Level 3  
As of December 31, 2012    Amount     Value       Inputs     Inputs       Inputs  
                               
Financial assets:
                             
Securities held to maturity
  $ 69,938     $ 70,878     $ -     $ 70,878     $ -  
Loans receivable (1)
    233,752       239,994       -       -     $ 239,994  
                                         
Financial liabilities:
                                       
Certificate of deposits
    114,716       116,740       -       116,740       -  
Advances from Federal Home Loan Bank of New York
    20,000       21,186       -       21,186       -  
                                         
As of June 30, 2012
                                       
Financial assets:
                                       
Securities held to maturity
    50,706       51,540       -       51,540       -  
Loans receivable (1)
    240,520       245,055       -               245,055  
                                         
Financial liabilities:
                                       
Certificate of deposits
    119,656       122,135       -       122,135       -  
Advances from Federal Home Loan Bank of New York
    20,000       22,455       -       22,455       -  
                                         
(1) Includes impaired loans measured at fair value on a non-recurring basis as discussed above.
 

Methods and assumptions used to estimate fair values of financial instruments not previously disclosed are as follows:
 
 
12

 

Cash and Cash Equivalents
 
For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.
 
Securities Held to Maturity
 
The fair value for securities held to maturity is based on quoted market prices, where available. If quoted market prices are not available, fair value is estimated using quoted market prices for similar securities.
 
Loans Receivable
 
The fair value of loans is based upon a multitude of sources, including assumed current market rates by category and the Company’s current offering rates.  Both fixed and variable rate loan fair values are derived at using a discounted cash flow methodology.  For variable rate loans, repricing term, including next repricing date, repricing frequency and repricing rate are factored into the discounted cash flow formula.
 
Federal Home Loan Bank of New York Stock
 
The carrying amount of Federal Home Loan Bank of New York stock approximates fair value since the Company is generally able to redeem this stock at par.
 
Accrued Interest Receivable and Payable
 
The carrying amounts of accrued interest receivable and payable approximate fair value due to the short term nature of these instruments.
 
Deposits
 
Fair values for demand and savings and club accounts are, by definition, equal to the amount payable on demand at the reporting date. Fair values of certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar instruments with similar maturities.
 
Advances from Federal Home Loan Bank of New York
 
Fair values of advances are estimated using discounted cash flow analyses, based on rates currently available to the Company for advances from the Federal Home Loan Bank of New York with similar terms and remaining maturities.
 
Off-Balance Sheet Financial Instruments
 
Fair values of commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account market interest rates, the remaining terms, and the present credit worthiness of the counterparties.  As of December 31, 2012 and June 30, 2012, the fair value of the commitments to extend credit was not considered to be material.
 
 
13

 
 
Note 7 - Loans Receivable and Allowance for Credit Losses
 
The composition of loans receivable at December 31, 2012 and June 30, 2012 was as follows:
 

 
December 31, 2012
   
June 30, 2012
 
 
(In thousands)
 
Residential mortgage:
             
One-to-four family
$
139,922
   
$
141,927
 
Home equity
 
46,169
     
49,224
 
               
   
186,091
     
191,151
 
               
 Commercial real estate
 
32,206
     
32,181
 
 Construction
 
11,608
     
11,669
 
 Commercial and industrial
 
10,529
     
10,092
 
               
   
54,343
     
53,942
 
Consumer:
             
Deposit accounts
 
676
     
728
 
Automobile
 
165
     
194
 
Personal
 
26
     
23
 
Overdraft protection
 
175
     
162
 
               
   
1,042
     
1,107
 
               
   
241,476
     
246,200
 
               
Loans in process
 
(2,032
)
   
(2,261
)
Deferred loan fees
 
(372
)
   
(354
)
               
 
$
239,072
   
$
243,585
 
 
Loans are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct loan origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan.
 
For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. Certain loans may remain on accrual status if they are in the process of collection and are either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.  The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

 
14

 
The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management’s estimate of losses inherent in the loan portfolio as of the statement of financial condition date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded loan commitments and is recorded in other liabilities, when required, on the consolidated statement of financial condition. The allowance for credit losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. All, or part, of the principal balance of loans receivable that are deemed uncollectible are charged against the allowance for loan losses when management determines that the repayment of that amount is highly unlikely.  Any subsequent recoveries are credited to the allowance.  Non-residential consumer loans are generally charged off no later than 120 days past due on a contractual basis, earlier in the event of bankruptcy, or if there is an amount deemed uncollectible.  

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance.  The allowance is based on the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.
 
In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Savings Bank’s allowance for loan losses. Such agencies may require the Savings Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.
 
The allowance calculation methodology includes segregation of the total loan portfolio into segments. The Company’s loans receivable portfolio is comprised of the following segments: residential mortgage, commercial real estate, construction, commercial and industrial and consumer.  Some segments of the Company’s loan receivable portfolio are further disaggregated into classes which allows management to more accurately monitor risk and performance.
 
The residential mortgage loan segment is disaggregated into two classes: one-to-four family loans, which are primarily first liens, and home equity loans, which consist of first and second liens.  The commercial real estate loan segment includes owner and non-owner occupied loans which have medium risk based on historical experience with these type loans.  The construction loan segment is further disaggregated into two classes: one-to-four family owner occupied, which includes land loans, whereby the owner is known and there is less risk, and other, whereby the property is generally under development and tends to have more risk than the one-to-four family owner occupied loans.  The commercial and industrial loan segment consists of loans made for the purpose of financing the activities of commercial customers. The majority of commercial and industrial loans are secured by real estate and thus carry a lower risk than traditional commercial and industrial loans.  The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers pools of loans by loan class. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these classes of loans, adjusted for qualitative factors.  These qualitative risk factors include:
 
 
15

 

1.
Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.
2.
National, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans.
3.
Nature and volume of the portfolio and terms of loans.
4.
Experience, ability, and depth of lending management and staff.
5.
Volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications.
6.
Quality of the Company’s loan review system, and the degree of oversight by the Company’s Board of Directors.
7.
Existence and effect of any concentrations of credit and changes in the level of such concentrations.
8.
Effect of external factors, such as competition and legal and regulatory requirements.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation.

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
 
Impaired Loans
 
Management evaluates individual loans in all of the loan segments (including loans in residential mortgage and consumer segments) for possible impairment if the recorded investment in the loan is greater than $200,000 and if the loan is either in nonaccrual status or is risk rated Substandard or worse or has been modified in a troubled debt restructuring.  A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management 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. Management determines the significance of payment delays and payment shortfalls on a 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.
 
Loans whose terms are modified are classified as a troubled debt restructuring (“TDR”) if the Company grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a TDR generally involve a reduction in interest rate, a below market rate given the associated credit risk, or an extension of a loan’s stated maturity date. Non-accrual TDRs are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification.  Loans classified as TDRs are designated as impaired until they are ultimately repaid in full or foreclosed and sold.  The nature and extent of impairment of TDRs, including those which experienced a subsequent default, is considered in the determination of an appropriate level of allowance for loan losses.
 
Once the determination has been made that a loan is impaired, impairment is measured by comparing the recorded investment in the loan to one of the following: (a) the present value of expected cash flows (discounted at the loan’s effective interest rate), (b) the loan’s observable market price or (c) the fair value of collateral adjusted for expected selling costs.  The method is selected on a loan by loan basis with management primarily utilizing the fair value of collateral method.
 
 
16

 
The estimated fair values of the real estate collateral are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.
 
The estimated fair values of the non-real estate collateral, such as accounts receivable, inventory and equipment, are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.
 
The evaluation of the need and amount of the allowance for impaired loans and whether a loan can be removed from impairment status is made on a quarterly basis.  The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.
 
 
17

 
 
The following tables present impaired loans by class, segregated by those for which a related allowance was required and those for which a related allowance was not necessary as of December 31, 2012 and June 30, 2012.  The average recorded investment and interest income recognized is presented for the three and six month periods ended December 31, 2012 and 2011.


   
December 31, 2012
   
June 30, 2012
 
         
Unpaid
               
Unpaid
       
   
Recorded
   
Principal
   
Related
   
Recorded
   
Principal
   
Related
 
   
Investment
   
Balance
   
Allowance
   
Investment
   
Balance
   
Allowance
 
   
(In thousands)
 
With no related allowance recorded:
                                   
   Residential mortgage
                                   
        One-to-four family
  $ 11,316     $ 11,835     $ -     $ 10,622     $ 10,980     $ -  
        Home equity
    3,563       3,637       -       2,933       3,071       -  
   Commercial real estate
    827       842       -       2,995       3,032       -  
   Construction
                                               
        One-to-four family occupied
    -       -               225       225          
        Other
    -       -       -       -       -       -  
   Commercial and industrial
    499       499       -       342       342       -  
      16,205       16,813       -       17,117       17,650       -  
With an allowance recorded:
                                               
   Residential mortgage
                                               
        One-to-four family
    3,203       3,671       156       4,096       4,637       304  
        Home equity
    904       1,362       107       719       988       264  
   Commercial real estate
    2,498       2,726       307       459       459       41  
   Construction
                                               
        One-to-four family occupied
    1,708       1,937       17       1,940       1,940       147  
        Other
    760       735       65       1,033       1,007       190  
   Commercial and industrial
    605       689       178       722       722       153  
      9,678       11,120       830       8,969       9,753       1,099  
Total:
                                               
   Residential mortgage
                                               
        One-to-four family
    14,519       15,506       156       14,718       15,617       304  
        Home equity
    4,467       4,999       107       3,652       4,059       264  
   Commercial real estate
    3,325       3,568       307       3,454       3,491       41  
   Construction
                                               
        One-to-four family occupied
    1,708       1,937       17       2,165       2,165       147  
        Other
    760       735       65       1,033       1,007       190  
   Commercial and industrial
    1,104       1,188       178       1,064       1,064       153  
    $ 25,883     $ 27,933     $ 830     $ 26,086     $ 27,403     $ 1,099  
                                                 
 
 
As of December 31, 2012 and June 30, 2012, impaired loans listed above included $14.9 million and $15.4 million, respectively, of loans previously modified in TDRs and as such are considered impaired under GAAP.  As of December 31, 2012 and June 30, 2012, $8.5 million and $8.3 million, respectively, of these loans have been performing in accordance with their modified terms for an extended period of time and as such remain in accrual status.

 
18

 


 

   
Three Months Ended
December 31, 2012
   
Three Months Ended
December 31, 2011
 
   
Average
   
Interest
   
Average
   
Interest
 
   
Recorded
   
Income
   
Recorded
   
Income
 
   
Investment
   
Recognized
   
Investment
   
Recognized
 
    (In thousands)  
With no related allowance recorded:
                       
   Residential
                       
        One-to-four family
  $ 11,034     $ 83     $ 10,710     $ 67  
        Home equity
    3,566       31       2,836       36  
   Commercial real estate
    1,173       9       3,134       18  
   Construction
                               
        One-to-four family occupied
    855       -       -       -  
        Other
    382       -       -       -  
   Commercial and industrial
    396       9       409       3  
      17,406       132       17,089       124  
With an allowance recorded:
                               
   Residential mortgage
                               
        One-to-four family
    4,014       16       4,086       16  
        Home equity
    587       -       1,182       -  
   Commercial real estate
    2,174       12       459       13  
   Construction
                               
        One-to-four family occupied
    854       21       970       21  
        Other
    380       -       1,997       -  
   Commercial and industrial
    611       2       747       7  
      8,620       51       9,441       57  
Total:
                               
   Residential mortgage
                               
        One-to-four family
    15,048       99       14,796       83  
        Home equity
    4,153       31       4,018       36  
   Commercial real estate
    3,347       21       3,593       31  
   Construction
                               
        One-to-four family occupied
    1,709       21       970       21  
        Other
    762       -       1,997       -  
   Commercial and industrial
    1,007       11       1,156       10  
    $ 26,026     $ 183     $ 26,530       181  
                                 

 
19

 

   
Six Months Ended
December 31, 2012
   
Six Months Ended
December 31, 2011
 
   
Average
   
Interest
   
Average
   
Interest
 
   
Recorded
   
Income
   
Recorded
   
Income
 
   
Investment
   
Recognized
   
Investment
   
Recognized
 
    (In thousands)  
With no related allowance recorded:
                       
   Residential
                       
        One-to-four family
  $ 10,897     $ 165     $ 8,807     $ 168  
        Home equity
    3,355       69       1,970       67  
   Commercial real estate
    1,780       16       3,165       57  
   Construction
                               
        One-to-four family occupied
    645       -       -       -  
        Other
    255       -       -       -  
   Commercial and industrial
    378       15       243       4  
      17,310       265       14,185       296  
With an allowance recorded:
                               
   Residential mortgage
                               
        One-to-four family
    4,041       41       2,198       38  
        Home equity
    631       7       943       2  
   Commercial real estate
    1,602       19       229       13  
   Construction
                               
        One-to-four family occupied
    1,216       41       970       42  
        Other
    598       -       1,027       -  
   Commercial and industrial
    648       3       620       7  
      8,736       111       5,987       102  
Total:
                               
   Residential mortgage
                               
        One-to-four family
    14,938       206       11,005       206  
        Home equity
    3,986       76       2,913       69  
   Commercial real estate
    3,382       35       3,394       70  
   Construction
                               
        One-to-four family occupied
    1,861       41       970       42  
        Other
    853       -       1,027       -  
   Commercial and industrial
    1,026       18       863       11  
    $ 26,046     $ 376     $ 20,172       398  
                                 
 
 
20

 

Credit Quality Indicators
 
Management uses a ten point internal risk rating system to monitor the credit quality of the loans in the Company’s commercial real estate, construction and commercial and industrial loan segments.  The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually or when credit deficiencies, such as delinquent loan payments, arise. The criticized rating categories utilized by management generally follow bank regulatory definitions. The first six risk rating categories are considered not criticized, and are aggregated as “Pass” rated.  The “Special Mention” category includes assets that are currently protected, but are potentially weak, resulting in increased credit risk and deserving management’s close attention.  If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects.  Loans classified “Substandard” have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  These include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans classified “Doubtful” have all the weaknesses inherent in loans classified “Substandard” with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.  Loans classified as a “Loss” are considered uncollectible and subsequently charged off.
 
 
 

 
21

 


    The following tables present the classes of the loans receivable portfolio summarized by the aggregate “Pass” and the criticized categories of “Special Mention”, “Substandard”, “Doubtful” and “Loss” within the internal risk rating system as of December 31, 2012 and June 30, 2012:
 
As of December 31, 2012
 
Pass
   
Special Mention
   
Substandard
   
Doubtful
   
Loss
   
Total
 
   
(In thousands)
 
Commercial real estate
 
$
26,893
   
$
2,495
   
$
750
   
$
1,748
   
$
258
   
$
32,144
 
Construction
                                               
One-to-four family owner occupied
   
3,600
     
-
     
1,691
     
-
     
17
     
5,308
 
Other
   
2,339
     
1,150
     
-
     
695
     
66
     
4,250
 
Commercial and Industrial
   
9,062
     
358
     
347
     
559
     
178
     
10,504
 
                                                 
Total
 
$
41,894
   
$
4,003
   
$
2,788
   
$
3,002
   
$
519
   
$
52,206
 


 
As of June 30, 2012
 
Pass
   
Special Mention
   
Substandard
   
Doubtful
   
Loss
   
Total
 
   
(In thousands)
 
Commercial real estate
 
$
26,610
   
$
2,861
   
$
1,355
   
$
1,262
   
$
41
   
$
32,129
 
Construction
                                               
One-to-four family owner occupied
   
1,774
     
1,793
     
225
     
-
     
147
     
3,939
 
Other
   
3,322
     
1,150
     
-
     
791
     
190
     
5,453
 
Commercial and Industrial
   
8,767
     
68
     
207
     
874
     
153
     
10,069
 
                                                 
Total
 
$
40,473
   
$
5,872
   
$
1,787
   
$
2,927
   
$
531
   
$
51,590
 

 
 
22

 
 
Management further monitors the performance and credit quality of the loan receivable portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.  The following tables represent the classes of the loans receivable portfolio summarized by aging categories of performing loans and non-accrual loans as of December 31, 2012 and June 30, 2012:
 
As of  December 31, 2012
 
30-59 Days
Past Due
   
60-89 Days
Past Due
   
Greater
than 90
Days
   
Total
Past Due
   
Current
   
Total Loans
Receivables
   
Nonaccrual
Loans
   
Loans Receivable >
90 Days and
Accruing
 
   
(In thousands)
 
Residential Mortgage
                                               
One-to-four family
 
$
3,163
     
2,284
     
7,171
     
12,618
   
$
127,039
   
$
139,657
   
$
8,744
   
$
1,097
 
Home equity
   
1,363
     
70
     
1,336
     
2,769
     
43,398
     
46,167
     
1,482
     
185
 
Commercial real estate
   
1,912
     
-
     
1,468
     
3,380
     
28,764
     
32,144
     
2,687
     
-
 
Construction
                                                               
One-to-four family owner
occupied
   
-
     
-
     
-
     
-
     
5,308
     
5,308
     
-
     
-
 
Other
   
-
     
-
     
760
     
760
     
3,490
     
4,250
     
761
     
-
 
Commercial and industrial
   
445
     
58
     
502
     
1,005
     
9,499
     
10,504