## Securities 

Management determines the appropriate classification of debt securities at the time of purchase and re- evaluates such designation as of each balance sheet date. 

Securities classified as available - for -sale are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income ( loss). Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of securities below their cost that are deemed to be other - than- temporary are reflected in earnings as realized losses. In estimating other - than - temporary impairment losses, management considers ( 1) the length of time and the extent to which the fair value has been less than cost, ( 2) the financial condition and near -term prospects of the issuer, 3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value, and ( 4) whether it is likely the Bank intends to sell or will have to sell the security prior to recovery. Realized gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. 

## Loans Receivable 

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees are deferred and recognized as an adjustment of the yield ( interest income) of the related loans. The Bank is generally amortizing these amounts over the contractual life of the loan. 

The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is 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 generally is either applied against principal or reported as interest income, according to management’ s judgment as to the collectibility 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 collectibility of the total contractual principal and interest is no longer in doubt. 

## Allowance for Loan Losses 

The allowance for loan losses is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the allowance for loan losses and subsequent recoveries, if any, are credited to the allowance. 

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management’ s periodic evaluation of the adequacy of the allowance is based on 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. 

