Since the end of 2010, FHLB borrowings remained unchanged at $87.0 million, subordinated debentures remained unchanged at $6.0 million and other borrowings remained unchanged at $5.0 million.

Stockholders’ equity was $23.0 million, or 5% of the Company’s total assets, at September 30, 2011. At September 30, 2011, the Bank’s Total Risk-Based Capital ratio was 12.20%, its Tier 1 Risk-Based Capital ratio was 10.91%, and its Core Capital and Tangible Capital ratios were 8.16%.

As previously announced, the Company is currently implementing a Recapitalization Plan to increase equity capital and reduce debt and senior securities, including a sale of additional common stock and exchanges of preferred stock for common stock at a discount to the liquidation amount, to further strengthen the Company’s capital ratios, and position the Bank for future growth.

Asset Quality

Non-performing assets (“NPAs”), comprised of non-performing loans (“NPLs”) and REO, were $53.3 million, or 12.63% of total assets, at September 30, 2011, as compared to $56.0 million, or 12.53% of total assets, at June 30, 2011 and $46.5 million, or 9.60% of total assets, at December 31, 2010. During the first nine months of 2011, NPLs, including non-performing loans held for sale, were $48.0 million compared to $43.4 million at the end of 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.

Despite the increase in NPLs since December 31, 2010, our total NPLs have declined during each of the last two quarters. Also, our total delinquencies and our total classified loans, which include NPLs, have declined in each of the first three quarters of 2011. In addition, at September 30, 2011, approximately $15.3 million, or 32%, of our NPLs were paying currently. The NPLs at September 30, 2011 included 28 church loans totaling $23.9 million, 16 commercial real estate loans totaling $9.9 million, 18 one-to-four family residential real estate loans totaling $8.1 million, 11 multi-family residential real estate loans totaling $5.5 million, a commercial loan for $285 thousand, and a land loan for $313 thousand.

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