Non-performing assets (“NPAs”), comprised of non-performing loans (“NPLs”) and REO, were $50.1 million, or 11.97% of total assets, at December 31, 2011, as compared to $53.3 million, or 12.63% of total assets, at September 30, 2011 and $46.5 million, or 9.60% of total assets, at December 31, 2010. At December 31, 2011, NPLs, including non-performing loans held for sale, were $43.1 million compared to $48.0 million at September 30, 2011 and $43.4 million December 31, 2010. These loans consist of delinquent loans that are 90 days or more past due and troubled debt restructurings (“TDRs”) that do not qualify for accrual status.
Our total NPLs have declined during each of the last three quarters of 2011. Also, our total delinquencies and our total classified loans, which include NPLs, have declined in each of the four quarters of 2011. In addition, at December 31, 2011, approximately $19.3 million, or 45%, of our NPLs were paying currently. The NPLs at December 31, 2011 included 29 church loans totaling $23.5 million, 17 one-to-four family residential real estate loans totaling $7.9 million, 14 commercial real estate loans totaling $6.3 million, 9 multi-family residential real estate loans totaling $5.0 million, a land loan for $302 thousand, and a consumer loan for $70 thousand.
During 2011, REO increased by $4.0 million to $7.0 million from $3.0 million at the end of 2010. At December 31, 2011 the Bank’s REO consisted of three one-to-four family residential properties, four commercial real estate properties, and six church buildings. As part of our efforts to reduce non-performing assets, we sold 17 REO properties for total proceeds of $4.7 million, and recorded a corresponding net loss of $35 thousand, during 2011.
At December 31, 2011 our allowance for loan losses was $16.2 million, or 4.73% of our gross loans receivable, compared to $20.5 million, or 5.08% of our gross loans, at year-end 2010. The ratio of the allowance for loan losses to NPLs, excluding loans held for sale, decreased to 42.85% at December 31, 2011, compared to 54.53% at year-end 2010. Despite the decrease in the allowance ratio, management believes that the remaining loss potential has been reduced as certain losses inherent in our NPLs have been recognized as charge-offs which resulted in a lower ratio of the allowance for loan losses to NPLs. As of December 31, 2011, 57% of our NPLs had already been written down to their adjusted fair value less estimated selling costs, by establishing specific reserves or charged-off as necessary.