Edgar Filing: ROMA FINANCIAL CORP

f10q_063011-0375.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			June 30, 2011

	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 000-52000


	ROMA FINANCIAL CORPORATION
	(Exact name of registrant as specified in its charter)


	UNITED STATES						51-0533946
	(State or other jurisdiction of						(I.R.S. Employer
	Incorporation or organization)						Identification Number)

	2300 Route 33, Robbinsville, New Jersey					08691
	(Address of principal executive offices)					(Zip Code)

	Registrant’s telephone number, including area code:		(609) 223-8300

	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 twelve 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [ ]Accelerated filer [ X ] Non-accelerated filer [ ] Smaller reporting company [ ]

	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, July 20, 2011:

	$0.10 par value common stock - 30,320,927 shares outstanding

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX

		Page
		Number
PART I - FINANCIAL INFORMATION

Item 1:	Financial Statements

	Consolidated Statements of Financial Condition	2
	at June 30, 2011 and December 31, 2010 (Unaudited)

	Consolidated Statements of Income for the Three & Six Months Ended	3
	June 30, 2011 and 2010 (Unaudited)

	Consolidated Statements of Changes in Stockholders’ Equity for the Six	4
	Months Ended June 30, 2011 and 2010 (Unaudited)

	Consolidated Statements of Cash Flows for the Six Months	5
	Ended June 30, 2011 and 2010 (Unaudited)

	Notes to Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of	39
	Financial Condition and Results of Operations

Item 3:	Quantitative and Qualitative Disclosure About Market Risk	45

Item 4:	Controls and Procedures	46


PART II - OTHER INFORMATION		46

Item 1:	Legal Proceedings

Item 1A:	Risk Factors

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

Item 3:	Defaults Upon Senior Securities

Item 4:	(Reserved)

Item 5:	Other Information

Item 6:	Exhibits

SIGNATURES		48

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

			June 30,		December 31,
		2011		2010
	(In thousands, except for share data)
Assets
Cash and amounts due from depository institutions		$	19,776	$	17,958
Interest-bearing deposits in other banks			38,481		44,220
Money market funds			30,076		27,409
Cash and Cash Equivalents			88,333		89,587
Investment securities available for sale (“AFS”), at fair value			48,060		52,513
Investment securities held to maturity (“HTM”), at amortized cost (fair value of $271,790 and $238,785, respectively)			270,661		244,421
Mortgage-backed securities held to maturity, at amortized cost (fair value of $457,411 and $425,462, respectively)			446,776		421,114
Loans receivable, net of allowance for loan losses ($10,712 and $9,844, respectively)			918,286		893,842
Real estate and other repossessed assets owned			3,935		3,689
Real estate owned via equity investment			3,943		3,979
Real estate held for sale			1,152		1,164
Premises and equipment, net			47,869		47,355
Federal Home Loan Bank of New York and ACBB stock			5,403		4,789
Accrued interest receivable			8,089		8,030
Bank owned life insurance			28,343		28,073
Goodwill			1,826		1,826
Deferred tax asset			13,904		14,281
Other assets			5,120		4,491
Total Assets		$	1,891,700	$	1,819,154

Liabilities and Stockholders’ Equity

Liabilities

Deposits:
Non-interest bearing	$	68,359		$	64,778
Interest bearing		1,506,446			1,438,782
Total deposits		1,574,805			1,503,560
Federal Home Loan Bank of New York advances		33,446			35,000
Securities sold under agreements to repurchase		40,000			40,000
Subordinated debentures		1,910			1,904
Securities purchased and not settled		11,000			11,004
Advance payments by borrowers for taxes and insurance		3,219			2,776
Accrued interest payable and other liabilities		11,309			12,434
Total Liabilities		1,675,689			1,606,678

Stockholders’ Equity
Common stock, $0.10 par value, 45,000,000 shares authorized, 32,731,875 shares issued;
30,320,927 and 30,280,927 shares outstanding, respectively		3,274			3,274
Paid-in capital		99,708			99,585
Retained earnings		155,046			152,911
Unearned shares held by Employee Stock Ownership Plan		(5,413	)		(5,683	)
Treasury stock, 2,410,948 and 2,450,948 shares, respectively		(35,335	)		(35,880	)
Accumulated other comprehensive loss		(3,055	)		(3,463	)
Total Roma Financial Corporation stockholders’ equity		214,225			210,744
Noncontrolling interest		1,786			1,732
Total Stockholders’ Equity		216,011			212,476
Total Liabilities and Stockholders’ Equity	$	1,891,700		$	1,819,154

See notes to consolidated financial statements.

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2011		2010		2011		2010
	(In thousands, except for share and per share data)
Interest Income
Loans, including fees	$	11,664	$	8,437	$	23,385	$	16,662
Mortgage-backed securities held to maturity		4,406		3,413		8,712		6,558
Investment securities held to maturity		2,207		3,070		4,439		6,336
Securities available for sale		273		138		541		284
Other interest-earning assets		149		103		242		198

Total Interest Income		18,699		15,161		37,319		30,038

Interest Expense
Deposits	4,744	4,117	9,348	8,318
Borrowings	691	614	1,380	1,214

Total Interest Expense	5,435	4,731	10,728	9,532

Net Interest Income	13,264	10,430	26,591	20,506

Provision for loan losses	1,313	769	2,113	2,041

Net Interest Income after Provision for Loan Losses	11,951	9,661	24,478	18,465

Non-Interest Income
Commissions on sales of title policies	271		239	474		450
Fees and service charges on deposits and loans	419		399	814		806
Income from bank owned life insurance	304		283	609		560
Net gain from sale of mortgage loans originated for sale	90		130	167		185
Net gain for sale of available for sale securities	21		28	38		51
Realized (loss) from real estate owned	(37	)	-	(107	)	-
Other	313		290	591		570

Total Non-Interest Income	1,381		1,369	2,586		2,622

Non-Interest Expense
Salaries and employee benefits		6,119			4,638			12,187			9,020
Net occupancy expense of premises		1,115			685			2,383			1,393
Equipment		898			669			1,783			1,327
Data processing fees		616			410			1,182			827
Federal Deposit Insurance Premium		618			301			1,216			602
Advertising		397			212			566			346
Acquisition costs		-			411			-			525
Other		1,508			1,414			2,931			2,358

Total Non-Interest Expense		11,271			8,740			22,248			16,398

Income Before Income Taxes		2,061			2,290			4,816			4,689

Income Taxes		636			805			1,520			1,578

Net income		1,425			1,485			3,296			3,111
Plus: net gain attributable to the noncontrolling interest		(36	)		(21	)		(54	)		(49	)

Net Income attributable to Roma Financial Corporation	$	1,389		$	1,464		$	3,242		$	3,062
Net income attributable to Roma Financial Corporation per common share
Basic and Diluted	$	.05		$	.05		$	.11		$	.10
Dividends Declared Per Share	$	.08		$	.08		$	.16		$	.16

Weighted Average Number of Common Shares Outstanding
Basic and Diluted		30,153,310			30,641,573			30,145,272			30,687,459

See notes to consolidated financial statements.

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands)


	Shares Amount					Paid-in Capital			Retained Earnings			Unearned Shares Held by ESOP			Accumulated Other Comprehensive (Loss)			Treasury Stock			Non-controlling Interest		Total
Balance December 31, 2009		30,933		$	3,274	$	98,921		$	150,131		$	(6,224	)	$	(2,313	)	$	(29,214	)	$	1,645	$	216,220
Comprehensive income:
Net income for the six months
ended June 30, 2010										3,062												49		3,111
Other comprehensive income net of taxes:
Unrealized gain on available for sale securities net of income taxes $(1,014) and reclassification adjustment of ($51)																1,430								1,430
Total comprehensive income																								4,541
Treasury shares repurchased		(196	)																(2,344	)				(2,344	)
Treasury shares released		44					(703	)											703					-
Dividends declared										(1,195	)													(1,195	)
Stock-based compensation							625																	625
ESOP shares earned							52						271											323
Balance June 30, 2010		30,781		$	3,274	$	98,895		$	151,998		$	(5,953	)	$	(883	)	$	(30,855	)	$	1,694	$	218,170

Balance December 31, 2010		30,281		$	3,274	$	99,585		$	152,911		$	(5,683	)	$	(3,463	)	$	(35,880	)	$	1,732	$	212,476
Comprehensive income:
Net income for the six months
ended June 30, 2011										3,242												54		3,296
Other comprehensive income net of taxes:
Unrealized gain on available for sale securities net of income taxes ($298) and reclassification adjustment ($38)																408								408
Total comprehensive income																								3,704
Treasury shares released		40					(545	)											545					-
Dividends declared										(1,107	)													(1,107	)
Stock-based compensation							656																	656
ESOP shares earned							12						270											282
Balance June 30, 2011		30,321		$	3,274	$	99,708		$	155,046		$	(5,413	)	$	(3,055	)	$	(35,335	)	$	1,786	$	216,011

See notes to consolidated financial statements

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2011		2010
	(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,296		$	3,111
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,209			952
Amortization of premiums and accretion of discounts on securities		51			(311	)
Accretion of deferred loan fees and discounts		(73	)		(102	)
Amortization of net premiums on loans		441			-
Amortization of premiums on deposits		(158	)		-
Gain on sale of securities available for sale		(38	)		(51	)
Net gain on sale of mortgage loans originated for sale		(167	)		(185	)
Mortgage loans originated for sale		(7,250	)		(9,258	)
Proceeds from sales of mortgage loans originated for sale		7,417			9,443
Net realized loss on sale of real estate owned		107			-
Provision for loan losses		2,113			2,041
Stock-based compensation, including warrants		656			625
ESOP shares earned		282			323
(Increase) decrease in accrued interest receivable		(59	)		466
Increase in cash surrender value of bank owned life insurance		(506	)		(468	)
Increase in other assets		(629	)		(44	)
(Decrease) in accrued interest payable		(169	)		(158	)
Decrease (increase) in deferred income taxes		79			(104	)
(Decrease) in other liabilities		(950	)		(581	)

Net Cash Provided by Operating Activities		5,652			5,699

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from maturities, calls and principal repayments of securities available for sale	4,794		7,071
Proceeds from sale of securities available for sale	2,038		2,055
Purchases of securities available for sale	(2,732	)	(10,003	)
Proceeds from maturities, calls and principal repayments of investment securities held to maturity	40,363		172,487
Purchases of investment securities held to maturity	(55,576	)	(110,890	)
Principal repayments on mortgage-backed securities held to maturity	37,310		36,625
Purchases of mortgage-backed securities held to maturity	(72,957	)	(70,479	)
Net increase in loans receivable	(29,240	)	(25,815	)
Purchase of bank owned life insurance	-		(169	)
Proceeds from life insurance redemption	236		-
Additions to premises and equipment and real estate owned via equity investment	(1,675	)	(2,834	)
Proceeds from sale of real estate owned	1,962		-
(Purchase) of Federal Home Loan Bank of New York and ACBB stock	(614	)	(698	)

Net Cash Used in Investing Activities	(76,091	)	(2,650	)

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase in deposits		71,403			94,138
Increase in advance payments by borrowers for taxes and insurance		443			152
Dividends paid to minority stockholders of Roma Financial Corp.		(1,107	)		(1,207	)
Redemption of Federal Home Loan Bank of New York advances		(5,054	)		(1,087	)
Proceeds from Federal Home Loan Bank of New York advances		3,500			7,000
Purchases of treasury stock		-			(2,344	)

Net Cash Provided by Financing Activities		69,185			96,652
Net (Decrease) Increase in Cash and Cash Equivalents		(1,254	)		99,701

Cash and Cash Equivalents – BEGINNING		89,587			50,895

Cash and Cash Equivalents – Ending	$	88,333		$	150,596

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont’d)

(Unaudited)

	Six Months Ended June 30,
	2011	2010
	(In thousands)

Supplementary Cash Flows Information

Income taxes paid, net	$	3,037	$	1,232
Interest paid	$	10,897	$	9,690
Securities purchased and not settled	$	11,000	$	43,468
Loan receivable transferred to other repossessed assets	$	2,315	$	400

See notes to consolidated financial statements.

ROMA FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE A – ORGANIZATION

Roma Financial Corporation (the “Company”) is a federally-chartered corporation organized in January 2005 for the purpose of acquiring all of the capital stock that Roma Bank issued in its mutual holding company reorganization. Roma Financial Corporation’s principal executive offices are located at 2300 Route 33, Robbinsville, New Jersey 08691 and its telephone number at that address is (609) 223-8300.

Roma Financial Corporation, MHC is a federally-chartered mutual holding company that was formed in January 2005 in connection with the mutual holding company reorganization. Roma Financial Corporation, MHC has not engaged in any significant business since its formation. So long as Roma Financial Corporation MHC is in existence, it will at all times own a majority of the outstanding stock of Roma Financial Corporation.

Roma Bank is a federally-chartered stock savings bank. It was originally founded in 1920 and received its federal charter in 1991. Roma Bank’s deposits are federally insured by the Deposit Insurance Fund as administered by the Federal Deposit Insurance Corporation. Roma Bank is regulated by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. The Office of Thrift Supervision also regulates Roma Financial Corporation, MHC and Roma Financial Corporation as savings and loan holding companies.

RomAsia Bank is a federally-chartered stock savings bank. RomAsia Bank received all regulatory approvals on June 23, 2008 to be a federal savings bank and began operations on that date. The Company invested $13.4 million in RomAsia Bank and currently holds a 89.55% ownership interest. RomAsia Bank is regulated by the Office of Thrift Supervision. Roma Bank and RomAsia Bank are collectively referred to as (the “Banks”). Pursuant to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as of July 21, 2011, Roma Financial Corporation MHC and Roma Financial Corporation will be regulated by the Federal Reserve Bank of Philadelphia and Roma Bank and RomAsia by the Office of the Comptroller of the Currency.

The Banks offer traditional retail banking services, one-to four-family residential mortgage loans, multi-family and commercial mortgage loans, construction loans, commercial business loans and consumer loans, including home equity loans and lines of credit. Roma Bank operates from its main office in Robbinsville, New Jersey, and twenty-three branch offices located in Mercer, Burlington, Camden and Ocean Counties, New Jersey. RomAsia Bank operates from its main office in Monmouth Junction, New Jersey and a branch in Edison, New Jersey. As of June 30, 2011, the Banks had 315 full-time employees and 59 part-time employees. Roma Bank maintains a website at www.romabank.com.

Throughout this document, references to “we,” “us,” or “our” refer to the Banks or the Company, or both, as the context indicates.

NOTE B - BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, Roma Bank and Roma Bank’s wholly-owned subsidiaries, Roma Capital Investment Corp. (the “Investment Co.”) and General Abstract and Title Agency (the “Title Co.”), and the Company’s majority owned investment of 89.55% in RomAsia Bank. The consolidated statements also include the Company’s 50% interest in 84 Hopewell, LLC (the “LLC”), a real estate investment which is consolidated according to the requirements of Accounting Standards Codification Topic 810, Variable Interest Entities. All significant inter-company accounts and transactions have been eliminated in consolidation. These statements were prepared in accordance with instructions for Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States of America.

NOTE B - BASIS OF PRESENTATION (Continued)

In the opinion of management, all adjustments which are necessary for a fair presentation of the consolidated financial statements have been made at and for the three and six months ended June 30, 2011 and 2010. The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the results which may be expected for the entire fiscal year or other interim periods.

The December 31, 2010 data in the consolidated statements of financial condition was derived from the Company’s audited consolidated financial statements for that date. That data, along with the interim financial information presented in the consolidated statements of financial condition, income, changes in stockholders’ equity and cash flows should be read in conjunction with the 2010 audited consolidated financial statements for the year ended December 31, 2010, including the notes thereto included in the Company’s Annual Report on Form 10-K.

The Investment Co. was incorporated in the State of New Jersey effective September 4, 2004, and began operations October 1, 2004. The Investment Co. is subject to the investment company provisions of the New Jersey Corporation Business Tax Act. The Title Co. was incorporated in the State of New Jersey effective March 7, 2005 and commenced operations April 1, 2005. The Company, together with two individuals, formed a limited liability company, 84 Hopewell, LLC. The LLC was formed to build a commercial office building in which is located the Company’s Hopewell branch, corporate offices for the other LLC members construction company and tenant space. The Company invested $370,000 in the LLC and provided a loan in the amount of $3.6 million to the LLC. The Company and the other 50% owner’s construction company both have signed lease commitments to the LLC.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). 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 date 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. The allowance for loan losses represents management’s best estimate of losses known and inherent in the portfolio that are both probable and reasonable to estimate. While management uses the most current information available to estimate losses on loans, actual losses are dependent on future events and, as such, increases in the allowance for loan losses may be necessary.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Banks’ allowance for loan losses. Such agencies may require the Banks to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.

In accordance with Accounting Standards Codification (“FASB ASC”) Topic 855, Subsequent Events, management has evaluated subsequent events until the date of issuance of these financial statements, and concluded that no events occurred that were of a material nature.

NOTE C - CONTINGENCIES

The Company, from time to time, is a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of such litigation, if any, would not have a material adverse effect, as of June 30, 2011, on the Company’s consolidated financial position or results of operations.

NOTE D – EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of common shares actually outstanding adjusted for Employee Stock Ownership Plan (“ESOP”) shares not yet committed to be released. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of outstanding stock options and unvested stock awards, if dilutive, using the treasury stock method. Shares issued and reacquired during any period are weighted for the portion of the period they were outstanding.

Outstanding stock options and restricted stock grants for the three and six months ended June 30, 2011 were not considered in the calculation of diluted earnings per share because they were antidilutive.

NOTE E – ACQUISITION

On July 16, 2010, the Company completed its acquisition of Sterling Banks, Inc., the holding company for Sterling Bank. The final consideration paid in the transaction to stockholders of Sterling Banks, Inc. consisted of $2.52 per share, or $14,725,000, in cash.

The Company accounted for the transaction using the acquisition method pursuant to FASB ASC 805 “Business Combinations”. Accordingly, the Company recorded merger and acquisition expenses totaling $924 thousand, in non-interest expense other, during the year ended December 31, 2010. The Company’s results of operations include Sterling Banks, Inc. and Sterling Bank from the date of

NOTE E – ACQUISITION (continued)

acquisition. Additionally, ASC 805 “Business Combinations” requires an acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date.

The Company acquired loans with a fair value of $272.3 million. Included in this amount was $47.4 million of loans with evidence of deterioration of credit quality since origination for which it was probable, at the time of the acquisition, that the Company would be unable to collect all contractually required payments due. In accordance with the “Loans and Debt Securities Acquired with Deteriorating Credit Quality” section of FASB ASC 310 “Receivables,” the Company recorded a non accretable credit mark discount of $15.6 million, which is defined as the loans’ contractually required payments receivable in excess of the amount of their cash flows expected to be collected. The Company considered factors such as payment history, collateral values, and accrual status when determining whether there was evidence of deterioration of a loan’s credit quality at the acquisition date.

We estimated the fair value for most loans acquired from Sterling Bank by utilizing a methodology wherein loans with comparable characteristics were aggregated by type of collateral, remaining maturity, and repricing terms. Cash flows for each pool were determined by estimating future credit losses and the rate of prepayments. Projected cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. To estimate the fair value of the remaining loans, we analyzed the value of the underlying collateral of the loans, assuming the fair values of the loans were derived from the eventual sale of the collateral. The value of the collateral was based on completed appraisals adjusted to the valuation date based on recognized industry indices. We discounted those values using market derived rates of return, with consideration given to the period of time and costs associated with the foreclosure and disposition of the collateral. There was no carryover of Sterling’s allowance for loan losses associated with the loans acquired as the loans were initially recorded at fair value.

Information about the acquired Sterling loan portfolio as of July 16, 2010 is as follows:

Contractually required principal and interest at acquisition	$	285,506
Contract cash flows not expected to be collected (nonaccretable discount)		(15,647	)
Expected cash flows at acquisition		269,859
Interest component of expected cash
flows (accretable premium)		2,454
Fair value of acquired loans	$	272,313

Certificates of deposit accounts were valued by comparing the contractual cost of the portfolio to an identical portfolio bearing current market rates. The projected cash flows from maturing certificates were calculated based on contractual rates. The fair value of the certificates of deposit was calculated by discounting their contractual cash flows at a market rate for a certificate of deposit with a corresponding maturity.

The fair value of borrowings and subordinated debentures assumed was determined by estimating projected future cash outflows and discounting them at a market rate of interest.

The goodwill, which is not amortized for book purposes, was assigned to the Company and is not deductible for tax purposes.

NOTE F – STOCK BASED COMPENSATION

Equity Incentive Plan

At the Annual Meeting held on April 23, 2008, stockholders of the Company approved the Roma Financial Corporation 2008 Equity Incentive Plan.

The 2008 Plan enables the Board of Directors to grant stock options to executives, other key employees and nonemployee directors. The options granted under the Plan may be either incentive stock options or non-qualified stock options. The Company has reserved 1,292,909 shares of common stock for issuance upon the exercise of options granted under the 2008 Plan and 517,164 shares for grants of restricted stock. The Plan will terminate in ten years from the grant date. Options will be granted with an exercise price not less than the Fair Market Value of a share of Common Stock on the date of the grant. Options may not be granted for a term greater than ten years. Stock options granted under the Incentive Plan are subject to limitations under Section 422 of the Internal Revenue Code. The number of shares available under the 2008 Plan, the number of shares subject to outstanding options and the exercise price of outstanding options will be adjusted to reflect any stock dividend, stock split, merger, reorganization or other event generally affecting the number of Company’s outstanding shares.

NOTE F – STOCK BASED COMPENSATION (continued)

On June 25, 2008 directors, senior officers and certain employees of the Company were granted, in the aggregate, 820,000 stock options and awarded 222,000 shares of restricted stock.

On June 15, 2011 directors of the Company were granted, in the aggregate, 32,000 stock options and awarded 54,000 shares of restricted stock.

At June 30, 2011 there were 471,709 shares available for option grants under the 2008 Plan, and 247,164 shares available for grants of restricted stock.

The Company accounts for stock based compensation under FASB ASC Topic 718, “Compensation-Stock Compensation”. ASC Topic 718 covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. ASC Topic 718 requires that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured based on the fair value of the equity or liability instruments issued.

ASC Topic 718 also requires the Company to realize as a financing cash flow rather than an operating cash flow, as previously required, the benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense. In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 107, the Company classified share-based compensation for employees and outside directors within “salaries and employee benefits” in the consolidated statement of income to correspond with the same line item as the cash compensation paid.

The stock options will vest over a five year service period and are exercisable within ten years. Compensation expense for all option grants is recognized over the awards’ respective requisite service period.

Restricted shares vest over a five year service period. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period of the awards of five years. The number of shares granted and the grant date market price of the Company’s common stock determines the fair value of the restricted shares under the Company’s restricted stock plan.

The following is a summary of the status of the Company’s stock option activity and related information for the six months ended June 30, 2011:

	Number of Stock Options			Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life	Aggregate Intrinsic Value

Balance at December 31, 2010		797,200		$	13.67	7.50 years
Granted		32,000			13.67
Forfeited		(8,000	)		13.67

Balance at June 30, 2011		821,200			13.67	7.10 years	$	0.00

Exercisable at June 30, 2011		493,200		$	13.67

The fair value of stock options granted June 15, 2011 was:

Expected life	6.5 years
Risk-free rate		2.26	%
Volatility		35.42	%
Dividend yield		3.32	%
Fair Value	$	1.70

NOTE F – STOCK BASED COMPENSATION (Continued)

The following is a summary of the status of the Company’s restricted shares as of June 30, 2011 and changes during the six months ended June 30, 2011:

	Number of Restricted Shares			Weighted Average Grant Date Fair Value
Non-vested restricted shares as December 31, 2010		120,000		$	13.67
Granted		54,000			9.63
Vested		(40,000	)		13.67
Non-vested restricted shares as June 30, 2011		134,000		$	12.04

Stock option and stock award expenses included in compensation expense were $275,000 and $544,000, respectively, for the three and six months ended June 30, 2011 with respective tax benefits of $110,000 and $218,000; and $300,000 and $597,000 for the three and six months ended June 30, 2010, with respective tax benefits of $120,000 and $230,000. At June 30, 2011, there was approximately $2.8 million of unrecognized cost, related to outstanding stock options and restricted shares, which will be recognized over a period of approximately 2.59 years.

Equity Incentive Plan – RomAsia Bank

The stockholders of RomAsia Bank approved an equity incentive plan in 2009. On January 6, 2010, directors, senior officers and certain employees of the RomAsia Bank were granted, in the aggregate, options to purchase 75,500 shares of RomAsia common stock.

The Plan enables the Board of Directors of RomAsia Bank to grant stock options to executives, other key employees and nonemployee directors. The options granted under the Plan may be either incentive stock options or non-qualified stock options. RomAsia has reserved 225,000 shares of it’s common stock for issuance upon the exercise of options granted under the Plan. The Plan will terminate in ten years from the grant date. Options will be granted with an exercise price not less than the Fair Market Value of a share of RomAsia’s Common Stock on the date of the grant. Options may not be granted for a term greater than ten years. The stock options vest over a five year service period and are exercisable within ten years. Stock options granted under the Incentive Plan are subject to limitations under Section 422 of the Internal Revenue Code. The number of shares available under the Plan, the number of shares subject to outstanding options and the exercise price of outstanding options will be adjusted to reflect any stock dividend, stock split, merger, reorganization or other event generally affecting the number of Company’s outstanding shares. At June 30, 2011, there were 155,000 shares available for option grants under the Plan.

The following is a summary of the status of the RomAsia’s stock option activity and related information for the six months ended June 30, 2011:

	Number of Stock Options			Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life	Aggregate Intrinsic Value

Balance at January 1, 2010		-		$	-
Granted		75,500			8.47
Forfeited		-			-
Balance at January 1, 2011		75,500		$	8.47
Granted		-			-
Forfeited		(5,500	)	$	8.47

Balance at June 30, 2011		70,000		$	8.47	8.77 years	$	0.00

Exercisable at June 30, 2011		14,800

Stock option expense, related to the RomAsia plan included within compensation expense was $11,000 and $22,000, respectively, for the three and six months ended June 30, 2011, with related tax benefits of $5,000 and $9,000; and $11,000 and $21,000, respectively, for the three and six months ended June 30, 2010, with related tax benefits of $5,000 and $9,000. At June 30, 2011, approximately $138,000 of unrecognized cost, related to outstanding stock options, will be recognized over a period of approximately 3.77 years.

NOTE F – STOCK BASED COMPENSATION (Continued)

Employee Stock Ownership Plan

Roma Bank has an Employee Stock Ownership Plan (“ESOP”) for the benefit of employees who meet the eligibility requirements defined in the plan. The ESOP trust purchased 811,750 shares of common stock as part of the stock offering using proceeds from a loan from the Company. The total cost of the shares purchased by the ESOP trust was $8.1 million, reflecting a cost of $10 per share. Roma Bank makes cash contributions to the ESOP on a quarterly basis sufficient to enable the ESOP to make the required loan payments to the Company. The loan bears an interest rate of 8.25% with principal and interest payable in equal quarterly installments over a fifteen year period. The loan is secured by the shares of the stock purchased.

Shares purchased with the loan proceeds were initially pledged as collateral for the term loan and are held in a suspense account for future allocation among participants. Contributions to the ESOP and shares released from the suspense account will be allocated among the participants on the basis of compensation, as described by the Plan, in the year of allocation. As shares are committed to be released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations. Roma Bank made its first loan payment in October 2006. As of June 30, 2011 there were 541,170 unearned shares. The Company’s ESOP compensation expense was $142 and $282 thousand, respectively, for the three and six months ended June 30, 2011; and $159 and $323 thousand, respectively, for the three and six months ended June 30, 2010.

NOTE G – STOCK WARRANTS

RomAsia Bank issued warrants to purchase 150,500 shares of RomAsia Common Stock (the “warrants”), bearing an exercise price of $10.00 per share, to the Founding Stockholders who subscribed initially for 150,500 shares of RomAsia Common Stock and provided $1,505,000 to pay RomAsia’s organizational expenses. The warrants were issued on June 23, 2008.

The warrants will become exercisable in three equal installments on the first, second and third anniversaries after their respective dates of issuance. Warrants will be convertible into one share of RomAsia Common Stock and will be transferable only in compliance with the Securities Act of 1933, as amended, and applicable state securities laws. RomAsia may redeem the Warrants at a price of $1.00 per Warrant at any time after January 1, 2012 upon 60 days prior written notice to the holders thereof.

The Warrants provide that, in the event that RomAsia’s capital falls below certain minimum requirements, the FDIC or the OTS may require RomAsia to notify the holders of the Warrants that such holders must exercise the Warrants within 30 days of such notice, or such longer period as the FDIC or OTS may prescribe, or forfeit all rights to purchase shares of RomAsia Common Stock under the Warrants after the expiration of such period.

The Warrants expire ten years after being issued. In the event a holder fails to exercise the Warrants prior to their expiration, the Warrants will expire and the holder thereof will have no further rights with respect to the Warrants.

The Warrant expense for minority shareholders, (10.45% ownership), for the three and six months ended June 30, 2011 was $68,000 and $90,000, respectively, with a related tax benefit of $29,000 and $39,000; and 2010, was $14,000, and $28,000, respectively, and related deferred taxes were recorded at $6,000, and $12,000, respectively. The warrant expense for the majority shareholder, Roma Financial Corporation, was eliminated in consolidation. The warrants were 100% vested at June 30, 2011.

NOTE H- REAL ESTATE OWNED VIA EQUITY INVESTMENTS

In 2008, Roma Bank, together with two individuals, formed 84 Hopewell, LLC. The LLC was formed to build a commercial office building which includes Roma Bank’s Hopewell branch, corporate offices for the other 50% owners’ construction company and tenant space. Roma Bank made a cash investment of approximately $360,000 in the LLC and provided a loan to the LLC in the amount of $3.6 million. Roma Bank and the construction company both have signed lease commitments to the LLC. With the adoption of guidance in regards to variable interest entities now codified in FASB ASC Topic 810, “Consolidation”, the Company is required to perform an analysis to determine whether such an investment meets the criteria for consolidation into the Company’s financial statements. As of June 30, 2011 and December 31, 2010, this variable interest entity met the requirements of ASC Topic 810 for consolidation based on Roma Bank being the primary financial beneficiary. This was determined based on the amount invested by the Bank compared to the other partners to the LLC and the lack of personal guarantees. As of June 30, 2011, the LLC had $4.0 million in fixed assets and a loan from Roma Bank for $3.4 million, which was eliminated in consolidation. The LLC had accrued interest payable to the Bank of $11 thousand at June 30, 2011 and during the six months then ended the Bank had paid $50 thousand in rent to the LLC. Both of these amounts were

NOTE H- REAL ESTATE OWNED VIA EQUITY INVESTMENTS (continued)

eliminated in consolidation. Roma Bank’s 50% share of the LLC’s net income for the three and six months ended June 30, 2011 was $24 thousand and $32 thousand.

NOTE I – INVESTMENT AND MORTGAGE-BACKED SECURITIES

The following summarizes the amortized cost and estimated fair value of securities available for sale at June 30, 2011 and December 31, 2010 with gross unrealized gains and losses therein:

June 30, 2011
Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
(In Thousands)

Available for sale:
Mortgage-backed securities-U.S. Government Sponsored Enterprises (GSE’s)	$	23,262	$	193	$	216	$	23,239
Obligations of state and political subdivisions		7,485		151		10		7,626
U.S. Government (including agencies)		13,353		99		171		13,281
Equity securities		50		9		-		59
Mutual fund shares		2,944		-		80		2,864
Corporate bond		1,000		-		9		991

	$	48,094	$	452	$	486	$	48,060

December 31, 2010
Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
(In Thousands)

Available for sale:
Mortgage-backed securities-U.S. Government Sponsored Enterprises (GSE’s)	$	24,180	$	168	$	349	$	23,999
Obligations of state and political subdivisions		8,761		50		151		8,660
U.S. Government (including agencies)		16,384		17		382		16,019
Equity securities		50		3		-		53
Mutual fund shares		2,877		-		83		2,794
Corporate Bond		1,000		-		12		988

	$	53,252	$	238	$	977	$	52,513

NOTE I – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related securities available for sale are as follows:

Less than 12 Months		More than 12 Months		Total
Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
(In Thousands)

June 30, 2011:
Mortgage-backed securities-GSE’s	$	14,028	$	216	$	-	$	-	$	14,028	$	216
Obligations of state & political subdivisions		1,753		10		-		-		1,753		10
U.S. Government, (including agencies)		6,828		171		-		-		6,828		171
Mutual funds		-		-		2,864		80		2,864		80
Corporate bond		494		6		497		3		991		9

	$	23,103	$	403	$	3,361	$	83	$	26,464	$	486

Less than 12 Months		More than 12 Months		Total
Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
(In Thousands)

December 31, 2010:
Mortgage-backed securities-GSE’s	$	17,061	$	349	$	-	$	-	$	17,061	$	349
U.S. Government (including agencies)		13,002		382		-		-		13,002		382
Obligations of state & political subdivisions		4,114		151		-		-		4,114		151
Corporate Bond		988		12						988		12
Mutual funds		-		-		2,793		83		2,793		83

	$	35,165	$	894	$	2,793	$	83	$	37,958	$	977

NOTE I – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

The amortized cost and estimated fair value of securities available for sale at June 30, 2011 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:

	Amortized Cost		Fair Value
	(in Thousands)

One year or less	$	-	$	-
After one to five years		2,782		2,827
After five to ten years		9,971		10,045
After ten years		8,085		8,035
Total		20,838		20,907
Mortgage-backed securities		23,262		23,239
Equity securities		50		59
Mutual funds		2,944		2,864
Corporate Bond		1,000		991
Total	$	48,094	$	48,060

The following summarizes the amortized cost and estimated fair value of securities held to maturity at June 30, 2011 and December 31, 2010 with gross unrealized gains and losses therein:

	June 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
	(In Thousands)
Held to maturity:
U.S. Government (including agencies)	$	252,666	$	2,524	$	1,803		$	253,387
Obligations of state and political subdivisions		16,724		502		74			17,152
Corporate bond and other		1,271		8		28			1,251

	$	270,661	$	3,034	$	1,905		$	271,790

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
	(In Thousands)
Held to maturity:
U.S. Government (including agencies)	$	227,522	$	357	$	5,890	$	221,989
Obligations of state and political subdivisions		15,628		190		303		15,515
Corporate bond and other		1,271		10		-		1,281

	$	244,421	$	557	$	6,193	$	238,785

NOTE I – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related securities held to maturity are as follows:

Less than 12 Months		More than 12 Months		Total
Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
(In Thousands)

June 30, 2011
U.S. Government (including agencies)	$	140,744	$	1,786	$	2,980	$	17	$	143,724	$	1,803
Obligations of state & political subdivisions		2,835		74		-		-		2,835		74
Corporate		258		28		-		-		258		28
	$	143,837	$	1,888	$	2,980	$	17	$	146,817	$	1,905

December 31, 2010
U.S. Government (including agencies)	$	169,833	$	5,890	$	-	$	-	$	169,833	$	5,890
Obligations of state & political subdivisions		6,582		273		1,680		30		8,262		303
	$	176,415	$	6,163	$	1,680	$	30	$	178,095	$	6,193

The amortized cost and estimated fair value of securities held to maturity at June 30, 2011 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:

			Amortized Cost		Fair Value
			(In Thousands)

One year or less	$	100	$	100
After one to five years		25,066		25,198
After five to ten years		103,750		105,969
After ten years		141,745		140,523
Total	$	270,661	$	271,790

Proceeds from the sale of securities available for sale amounted to $520 thousand and $2.0 million for the three and six months ended June 30, 2011, with gross realized gains of $23 thousand and $40 thousand, and gross realized losses of $2 thousand $2 thousand, respectively. Proceeds from the sale of securities available for sale amounted to $1.6 million and $2.1 million for the three and six months ended June 30, 2010, with gross realized gains of $28 thousand and $51 thousand, respectively. There were no gross realized losses on the sale of available for sale securities in 2010.

Management evaluates securities for other-than-temporary-impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

In determining OTTI under the ASC Topic 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial condition and near term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary-

NOTE I – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

impairment decline exists involves a high degree of subjectivity and judgment and is based on information available to management at a point in time. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

When OTTI for debt securities, occurs under the model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If any entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable tax benefit. The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

At June 30, 2011, the Company’s available for sale and held to maturity debt securities portfolios consisted of approximately 205 securities, of which 96 were in an unrealized loss position for less than twelve months and 2 were in a loss position for more than twelve months. No OTTI charges were recorded for the three or six months ended June 30, 2011. The Company does not intend to sell these securities and it is not more likely than not that we will be required to sell these securities. Unrealized losses primarily relate to interest rate fluctuations and not credit concerns.

The available for sale mutual funds consist of CRA investments which currently have an unrealized loss of approximately $80 thousand. They have been in a loss position for the last two years with the greatest unrealized loss being approximately $176 thousand. Management does not believe the mutual fund securities available for sale are OTTI due to reasons of credit quality. The Company does not intend to sell these securities and it is not more likely than not that we will be required to sell these securities. Accordingly, as of June 30, 2011, management believes the impairments are temporary and no impairment loss has been realized in the Company’s consolidated income statement.

Approximately $109.7 million of securities held to maturity are pledged as collateral for Federal Home Loan Bank of New York (“FHLBNY”) advances, borrowings, and deposits at June 30, 2011.

The following tables set forth the composition of our mortgage- backed securities portfolio as of June 30, 2011 and December 31, 2010:

June 30, 2011
Carrying Value	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
(In Thousands)

Government National Mortgage Association	$	8,768	$	217	$	117	$	8,868
Federal Home Loan Mortgage Corporation		171,569		5,249		1,190		175,628
Federal National Mortgage Association		259,616		7,270		1,068		265,818
Collateralized mortgage obligations-GSE’s		6,823		274		-		7,097

	$	446,776	$	13,010	$	2,375	$	457,411

NOTE I – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

December 31, 2010
Carrying Value	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
(In Thousands)

Government National Mortgage Association	$	9,988	$	204	$	107	$	10,085
Federal Home Loan Mortgage Corporation		172,969		4,188		2,782		174,375
Federal National Mortgage Association		229,951		5,206		2,629		232,529
Collateralized mortgage obligations-GSE’s		8,206		310		42		8,473

	$	421,114	$	9,908	$	5,560	$	425,462

The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related mortgage-backed securities held to maturity are as follows:

Less than 12 Months		More than 12 Months		Total
Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
(In Thousands)

June 30, 2011
Government National Mortgage Association	$	3,093	$	117	$	-	$	-	$	3,093	$	117
Federal Home Loan Mortgage Corporation		53,491		1,178		428		12		53,919		1,190
Federal National Mortgage Association		57,340		1,067		8		1		57,348		1,068
	$	113,924	$	2,362	$	436	$	13	$	114,360	$	2,375

Less than 12 Months		More than 12 Months		Total
Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
(In Thousands)

December 31, 2010:
Government National Mortgage Association	$	3,836	$	107	$	-	$	-	$	3,836	$	107
Federal Home Loan Mortgage Corporation		83,451		2,781		19		1		83,470		2,782
Federal National Mortgage Association		83,252		2,628		8		1		83,260		2,629
Collateralized mortgage obligations		1,920		42		-		-		1,920		42

	$	172,459	$	5,558	$	27	$	2	$	172,486	$	5,560

NOTE I – INVESTMENT AND MORTGAGE-BACKED SECURITIES (Continued)

As of June 30, 2011, there were 4 Government National Mortgage Association, 28 Federal Home Loan Mortgage Corporation, and, 32 Federal National Mortgage Association securities with unrealized losses. Management does not believe that any of the individual unrealized losses represent an other-than-temporary impairment. The unrealized losses on mortgage-backed securities relate primarily to fixed interest rate and, to a lesser extent, adjustable interest rate securities. Such losses are the result of changes in interest rates and not credit concerns. The Bank, the Investment Co. and RomAsia Bank do not intend to sell these securities and it is not more likely than not that they will be required to sell these securities, therefore, no OTTI is required.

The amortized cost and estimated fair value of mortgage backed securities held to maturity at June 30, 2011 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:

			Amortized Cost		Fair Value
			(In Thousands)

One year or less	$	-	$	-
After one to five years		20,333		21,137
After five to ten years		63,118		65,227
After ten years		363,325		371,047
Total	$	446,776	$	457,411

NOTE J – LOANS RECEIVABLE, NET

Loans receivable, net at June 30, 2011 and December 31, 2010 were comprised of the following:

		June 30,		December 31,
		2011		2010
	(In Thousands)
Real estate mortgage loans:
Residential mortgage	$	380,872	$	358,503
Commercial real estate		281,878		273,177
		662,750		631,680
Construction:
Commercial real estate		26,208		18,055
Residential		12,484		19,142
		38,692		37,197
Consumer:
Home equity		203,586		202,926
Other		1,477		1,760
		205,063		204,686
Commercial		31,040		36,125

Total loans		937,545		909,688
Less:
Allowance for loan losses		10,712		9,844
Deferred loan fees		754		663
Loans in process		7,793		5,339
		19,259		15,846
Total loans receivable, net	$	918,286	$	893,842

NOTE J – LOANS RECEIVABLE, NET (continued)

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
	(In thousands)
Commercial	$	1,461	$	2,178
Commercial real estate		21,381		17,481
Commercial real estate – construction		4,396		4,870
Residential mortgage		7,625		5,515
Residential construction		9,520		9,246
Home equity and other consumer		1,265		1,120
Total	$	45,648	$	40,410

A loan is considered impaired when based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loans, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.