10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

  ☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

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: 0-14549

First US Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	63-0843362
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

131 West Front Street Post Office Box 249 Thomasville, AL	36784
(Address of Principal Executive Offices)	(Zip Code)

(334) 636-5424

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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    ☒  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 Regulations 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    ☒  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	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	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    ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 9, 2016
Common Stock, $0.01 par value	6,043,292 shares

1

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

(Previously Known As United Security Bancshares, Inc. and Subsidiaries)

		PAGE
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
Interim Condensed Consolidated Balance Sheets at September 30, 2016 (Unaudited) and December 31, 2015		4
Interim Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)		5
Interim Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)		6
Interim Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (Unaudited)		7
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)		8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	49
ITEM 4.	CONTROLS AND PROCEDURES	50
	PART II. OTHER INFORMATION	51
ITEM 1.	LEGAL PROCEEDINGS	51
ITEM 1A.	RISK FACTORS	51
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51
ITEM 6.	EXHIBITS	51
Signature Page		52

2

FORWARD-LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). In addition, First US Bancshares, Inc. ("Bancshares") and, together with its subsidiaries, (the “Company”), through its senior management, from time to time makes forward-looking statements concerning its expected future operations and performance and other developments. The words “estimate,” “project,” “intend,” “anticipate,” “expect,” “believe,” “continues” and similar expressions are indicative of forward-looking statements. Such forward-looking statements are necessarily estimates reflecting the Company’s best judgment based on current information and involve a number of risks and uncertainties, and various factors could cause results to differ materially from those contemplated by such forward-looking statements. Such factors could include those identified from time to time in the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements, including the risk factors described in Part I, Item 1A of the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. Specifically, with respect to statements relating to loan demand, growth and earnings potential, geographic expansion and the adequacy of the allowance for loan losses for the Company, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy generally and in the Company’s service areas, the availability of quality loans in the Company’s service areas, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and collateral values. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to revise forward-looking statements to reflect circumstances or events that occur after the dates on which the forward-looking statements are made, except as required by law.

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

(Previously Known As United Security Bancshares, Inc. and Subsidiaries)

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Share and Per Share Data)

	September 30,			December 31,
	2016			2015
	(Unaudited)
ASSETS
Cash and due from banks	$	7,618		$	7,088
Interest-bearing deposits in banks		18,475			36,984
Total cash and cash equivalents		26,093			44,072
Investment securities available-for-sale, at fair value		181,251			198,843
Investment securities held-to-maturity, at amortized cost		28,315			32,359
Federal Home Loan Bank stock, at cost		1,368			1,025
Loans, net of allowance for loan losses of $3,668 and $3,781, respectively		317,121			255,432
Premises and equipment, net		15,481			12,084
Cash surrender value of bank-owned life insurance		14,525			14,292
Accrued interest receivable		1,847			1,833
Other real estate owned		5,391			6,038
Other assets		8,915			9,804
Total assets	$	600,307		$	575,782
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	493,828		$	479,258
Accrued interest expense		231			180
Other liabilities		7,063			6,960
Short-term borrowings		5,337			7,354
Long-term debt		15,000			5,000
Total liabilities		521,459			498,752
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,329,060 shares issued; 6,043,102 and 6,038,554 shares outstanding, respectively		73			73
Surplus		10,723			10,558
Accumulated other comprehensive income, net of tax		1,169			536
Retained earnings		87,660			86,693
Less treasury stock: 1,285,958 and 1,290,506 shares at cost, respectively		(20,764	)		(20,817	)
Noncontrolling interest		(13	)		(13	)
Total shareholders’ equity		78,848			77,030
Total liabilities and shareholders’ equity	$	600,307		$	575,782

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

4

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

(Previously Known As United Security Bancshares, Inc. and Subsidiaries)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016		2015			2016		2015
	(Unaudited)					(Unaudited)
Interest income:
Interest and fees on loans	$	6,773	$	6,160		$	19,192	$	18,815
Interest on investment securities		987		1,168			3,242		3,569
Total interest income		7,760		7,328			22,434		22,384
Interest expense:
Interest on deposits		532		557			1,568		1,721
Interest on borrowings		55		4			115		19
Total interest expense		587		561			1,683		1,740
Net interest income		7,173		6,767			20,751		20,644
Provision (reduction in reserve) for loan losses		680		(78	)		1,383		(199	)
Net interest income after provision (reduction in reserve) for loan losses		6,493		6,845			19,368		20,843
Non-interest income:
Service and other charges on deposit accounts		463		465			1,306		1,391
Credit insurance income		256		150			570		339
Other income, net		589		375			1,503		1,258
Net gain on sales and prepayments of investment securities		259		6			657		367
Total non-interest income		1,567		996			4,036		3,355
Non-interest expense:
Salaries and employee benefits		4,334		4,106			12,734		12,513
Net occupancy and equipment		830		744			2,381		2,347
Other real estate/foreclosure expense, net		124		247			370		814
Other expense		2,060		1,993			6,184		5,500
Total non-interest expense		7,348		7,090			21,669		21,174
Income before income taxes		712		751			1,735		3,024
Provision for income taxes		162		207			406		870
Net income	$	550	$	544		$	1,329	$	2,154
Basic net income per share	$	0.09	$	0.09		$	0.22	$	0.35
Diluted net income per share	$	0.09	$	0.09		$	0.21	$	0.34
Dividends per share	$	0.02	$	0.02		$	0.06	$	0.06

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

5

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

(Previously Known As United Security Bancshares, Inc. and Subsidiaries)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Unaudited)						(Unaudited)
Net income	$	550		$	544		$	1,329		$	2,154
Other comprehensive income:
Unrealized holding gains (losses) on securities available-for-sale arising during period, net of tax expense (benefit) of $(39), $(41), $656 and $(423), respectively		(66	)		(69	)		1,125			(707	)
Reclassification adjustment for net gains on available-for-sale securities realized in net income, net of tax of $93, $0, $238 and $136, respectively		(160	)		—			(410	)		(223	)
Unrealized holding gains (losses) arising during the period on effective cash flow hedge derivatives, net of tax expense (benefit) of $34, $0, $(48) and $0, respectively		57			—			(82	)		—
Other comprehensive income (loss)		(169	)		(69	)		633			(930	)
Total comprehensive income	$	381		$	475		$	1,962		$	1,224

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

6

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

(Previously Known As United Security Bancshares, Inc. and Subsidiaries)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

	Nine Months Ended
	September 30,
	2016			2015
	(Unaudited)
Cash flows from operating activities:
Net income	$	1,329		$	2,154
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		726			640
Provision (reduction in reserve) for loan losses		1,383			(199	)
Deferred income tax provision		368			846
Net gain on sale and prepayment of investment securities		(657	)		(359	)
Stock-based compensation expense		218			302
Net amortization of securities		1,163			1,268
Net loss on premises and equipment, repossessed assets and other real estate		573			657
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable		(14	)		445
Decrease in other assets		224			963
Increase (decrease) in accrued interest expense		51			(32	)
Decrease in other liabilities		(27	)		(618	)
Net cash provided by operating activities		5,337			6,067
Cash flows from investing activities:
Purchase of investment securities, available-for-sale		(49,236	)		(54,410	)
Purchase of investment securities, held-to-maturity		(13,850	)		(22,317	)
Proceeds from sales of investment securities, available-for-sale		30,439			15,754
Proceeds from maturities and prepayments of investment securities, available-for-sale		37,131			36,664
Proceeds from maturities and prepayments of investment securities, held-to-maturity		17,779			16,990
Net increase (decrease) in Federal Home Loan Bank stock		(343	)		222
Proceeds from the sale of premises and equipment and other real estate		1,208			2,849
Net change in loan portfolio		(64,081	)		19,759
Purchases of premises and equipment		(4,554	)		(3,111	)
Net cash provided by (used in) investing activities		(45,507	)		12,400
Cash flows from financing activities:
Net increase (decrease) in customer deposits		14,570			(20,393	)
Net increase (decrease) in short-term borrowings		(2,017	)		739
Proceeds from (repayment of) long-term Federal Home Loan Bank advances		10,000			(5,000	)
Dividends paid		(362	)		(363	)
Net cash provided by (used in) financing activities		22,191			(25,017	)
Net decrease in cash and cash equivalents		(17,979	)		(6,550	)
Cash and cash equivalents, beginning of period		44,072			34,166
Cash and cash equivalents, end of period	$	26,093		$	27,616
Supplemental disclosures:
Cash paid for:
Interest	$	1,632		$	1,772
Income taxes		85			63
Non-cash transactions:
Assets acquired in settlement of loans	$	1,009		$	2,241
Reissuance of Treasury stock as compensation		53			69

The accompanying notes are an integral part of these Interim Condensed Consolidated Statements.

7

FIRST US BANCSHARES, INC. AND SUBSIDIARIES

(Previously Known As United Security Bancshares, Inc. and Subsidiaries)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. GENERAL

The accompanying unaudited interim condensed consolidated financial statements include the accounts of First US Bancshares, Inc. (formerly known as United Security Bancshares, Inc.) (“Bancshares”) and its subsidiaries (collectively, the “Company”). Bancshares is the parent holding company of First US Bank (the “Bank” or “FUSB”). The Bank operates a finance company, Acceptance Loan Company, Inc. (“ALC”). All significant intercompany transactions and accounts have been eliminated.

The unaudited interim condensed consolidated financial statements, in the opinion of management, reflect all adjustments necessary for a fair presentation of consolidated financial position, results of operations and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of results expected for the fiscal year ending December 31, 2016. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), management believes that the disclosures herein are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. The accounting policies followed by the Company are set forth in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. Certain amounts in the 2015 condensed consolidated financial statements have been reclassified to conform to the 2016 method of presentation, including approximately $0.7 million that was reclassified from other liabilities to surplus on the Interim Condensed Consolidated Balance Sheet as of December 31, 2015 related to shares of stock that had been accrued as of the balance sheet date as deferred compensation for members of the Company's Board of Directors.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all current recognition thresholds and will require companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale debt securities. For public business entities, ASU 2016-13 is effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. Institutions will be required to apply the changes through a cumulative-effect adjustment to their retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-10, “Revenue from Contracts with Customers (Topic 606)-Identifying Performance Obligations and Licensing.”  Issued in April 2016, ASU 2016-10 clarifies ASC Topic 606, “Revenue from Contracts with Customers" with respect to (i) identifying performance obligations; and (ii) the licensing implementation guidance.  Since the amendments in ASU 2016-10 affect the guidance in ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which is not yet effective, this ASU will become effective when ASU 2014-09 becomes effective.  The amendments of ASU 2016-10 are effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-09, “Compensation-Stock Compensation (Topic 718)-Improvements to Employee Share-Based Payment Accounting.”  Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions, including (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes; (6) the practical expedient for estimating the expected term; and (7) intrinsic value.  The amendments of ASU 2016-09 are effective for interim and annual periods beginning after December 15, 2016.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” Issued in March 2016, ASU 2016-08 clarifies certain principal versus agent considerations within the implementation guidance of ASC Topic 606, “Revenue from Contracts with Customers.” Since the amendments in ASU 2016-08 affect the guidance in ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which is not yet effective, this ASU will become effective when ASU 2014-09 becomes effective.  The amendments of ASU 2016-08 are effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.” Issued in March 2016, ASU 2016-05 clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under ASC Topic 815 does not, in and of itself, require de-designation of that hedging relationship, provided that all other hedge accounting criteria continue to be met.  The amendments of ASU 2016-05 are effective for interim and annual periods beginning after December 15, 2016.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-02, “Leases (Topic 842).” Issued in February 2016, ASU 2016-02 will require organizations that lease assets (lessees) to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases with a term of more than 12 months. The recognition, measurement and presentation of expenses and cash flows arising from a lease are not significantly changed under ASU 2016-02. There will continue to be differentiation between finance leases and operating leases. For finance leases, a lessee will be required to (i) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (ii) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of income; and (iii) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability within operating activities on the statement of cash flows. For operating leases, a lessee will be required to (i) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (ii) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and (iii) classify all cash payments within operating activities in the statement of cash flows. The accounting applied by the lessor in a lease transaction remains largely unchanged from previous U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

8

ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification).”  Issued in January 2016, ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information.  The amendments to ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value, with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; and (iii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” Issued in April 2015, ASU 2015-05 provides guidance on how customers should evaluate whether cloud computing arrangements contain a software license that should be accounted for separately. A customer that determines that such an arrangement contains a software license must account for the license consistently with the acquisition of other software licenses. If an arrangement does not contain a software license, then the customer is required to account for it as a service contract. As a result, all software licenses within the scope of this guidance will be accounted for consistently with other licenses of intangible assets. The guidance is effective for annual and interim periods beginning after December 15, 2015. Entities can elect to apply the guidance either retrospectively or prospectively to all cloud computing arrangements entered into or materially modified after the effective date. ASU 2015-05 became effective for the Company on January 1, 2016 and was applied using the prospective transition method.  The adoption of ASU 2015-05 did not have a material impact on the Company’s consolidated financial statements.

ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” Issued in February 2015, ASU 2015-02 is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability companies and certain entities involved in securitization transactions. ASU 2015-02 focuses on the consolidation criteria for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The new standard simplifies and improves current U.S. GAAP by: (i) placing more emphasis on risk of loss when determining a controlling financial interest; (ii) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”); and (iii) changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. ASU 2015-02 became effective for the Company on January 1, 2016. The adoption of ASU 2015-02 did not have a material impact on the Company’s consolidated financial statements.

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).”  Issued in May 2014, ASU 2014-09 will add FASB ASC Topic 606, Revenue from Contracts with Customers, and will supersede revenue recognition requirements in FASB ASC Topic 605, Revenue Recognition and certain cost guidance in FASB ASC Topic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts.  ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction-specific requirements under the existing standards.  ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount.  The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled.  Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services is transferred to the customer.  ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in each contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in each contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.  In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09.  The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application.  If the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application regarding (1) the amount by which each financial statement line item is affected in the current reporting period and (2) an explanation of the reasons for significant changes.  ASU 2015-14, “Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,” issued in August 2015, defers the effective date of ASU 2014-09 by one year.  ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements, as well as the most appropriate method of application; however, regardless of the method of application selected, the adoption of ASU 2014-09 is not expected to have a material impact on the Company’s consolidated financial statements.

9

3. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding. Included in basic shares are certain shares that have been accrued as of the balance sheet date as deferred compensation for members of the Company's Board of Directors. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period. The dilutive shares consist of shares issuable upon the exercise of nonqualified stock options granted to employees and members of the Company’s Board of Directors pursuant to the Company's 2013 Incentive Plan (the “2013 Incentive Plan”) previously approved by the Company’s shareholders. The following table reflects weighted average shares used to calculate basic and diluted net income per share for the periods presented.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Basic shares		6,151,701		6,139,148		6,147,325		6,137,207
Dilutive shares		272,550		177,050		272,550		177,050
Diluted shares		6,424,251		6,316,198		6,419,875		6,314,257

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in Thousands, Except Per Share Data)
Net income	$	550	$	544	$	1,329	$	2,154
Basic net income per share	$	0.09	$	0.09	$	0.22	$	0.35
Diluted net income per share	$	0.09	$	0.09	$	0.21	$	0.34

4. COMPREHENSIVE INCOME

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities or changes in the fair value of cash flow derivatives.

5. INVESTMENT SECURITIES

Details of investment securities available-for-sale and held-to-maturity as of September 30, 2016 and December 31, 2015 were as follows:

	Available-for-Sale
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	96,845	$	1,534	$	(38	)	$	98,341
Commercial		69,430		280		(384	)		69,326
Obligations of states and political subdivisions		10,153		582		—			10,735
Obligations of U.S. government-sponsored agencies		2,000		6		—			2,006
Corporate notes		762		1		—			763
U.S. Treasury securities		80		—		—			80
Total	$	179,270	$	2,403	$	(422	)	$	181,251

10

	Held-to-Maturity
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	16,052	$	81	$	—		$	16,133
Obligations of U.S. government-sponsored agencies		10,121		59		(2	)		10,178
Obligations of states and political subdivisions		2,142		33		(3	)		2,172
Total	$	28,315	$	173	$	(5	)	$	28,483

	Available-for-Sale
	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	135,104	$	998	$	(608	)	$	135,494
Commercial		45,961		164		(616	)		45,509
Obligations of states and political subdivisions		14,071		931		(4	)		14,998
Obligations of U.S. government-sponsored agencies		1,999		—		(17	)		1,982
Corporate notes		780		—		—			780
U.S. Treasury securities		80		—		—			80
Total	$	197,995	$	2,093	$	(1,245	)	$	198,843

	Held-to-Maturity
	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	16,321	$	33	$	(170	)	$	16,184
Obligations of U.S. government-sponsored agencies		13,766		19		(71	)		13,714
Obligations of states and political subdivisions		2,272		18		(4	)		2,286
Total	$	32,359	$	70	$	(245	)	$	32,184

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of September 30, 2016 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	2,007	$	2,016	$	—	$	—
Maturing after one to five years		5,400		5,501		2,064		2,109
Maturing after five to ten years		75,845		77,084		7,215		7,247
Maturing after ten years		96,018		96,650		19,036		19,127
Total	$	179,270	$	181,251	$	28,315	$	28,483

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities generally mature earlier than their weighted-average contractual maturities because of principal prepayments.

11

The following table reflects gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2016 and December 31, 2015.

	Available-for-Sale
	September 30, 2016
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	7,855	$	(15	)	$	1,954	$	(23	)
Commercial		28,829		(82	)		11,498		(302	)
U.S. Treasury securities		80		—			—		—
Total	$	36,764	$	(97	)	$	13,452	$	(325	)

	Held-to-Maturity
	September 30, 2016
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,948	$	—		$	—	$	—
Obligations of U.S. government-sponsored agencies		1,397		(2	)		—		—
Obligations of states and political subdivisions		563		(3	)		—		—
Total	$	3,908	$	(5	)	$	—	$	—

	Available-for-Sale
	December 31, 2015
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	83,403	$	(458	)	$	9,061	$	(150	)
Commercial		24,337		(272	)		8,918		(344	)
Obligations of U.S. government-sponsored agencies		1,982		(17	)		—		—
Corporate notes		779		—			—		—
Obligations of states and political subdivisions		707		(4	)		—		—
Total	$	111,208	$	(751	)	$	17,979	$	(494	)

	Held-to-Maturity
	December 31, 2015
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	14,143	$	(170	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		11,163		(44	)		1,560		(27	)
Obligations of states and political subdivisions		572		(4	)		—		—
Total	$	25,878	$	(218	)	$	1,560	$	(27	)

Management evaluates securities for other-than-temporary impairment no less frequently than quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (i) the length of time and the extent to which fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) whether the Company intends to sell securities and (iv) whether it is more likely than not that the Company will be required to sell the securities before recovery of their amortized cost bases.

12

As of September 30, 2016, 12 debt securities had been in a loss position for more than 12 months, and 29 debt securities had been in a loss position for less than 12 months. As of December 31, 2015, 13 debt securities had been in a loss position for more than 12 months, and 102 debt securities had been in a loss position for less than 12 months. As of both September 30, 2016 and December 31, 2015, the losses for all securities were considered to be a direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers. Further, the Company has the current intent and ability to retain its investments in the issuers for a period of time that management believes to be sufficient to allow for any anticipated recovery in fair value. Therefore, the Company did not recognize any other-than-temporary impairments as of September 30, 2016 and December 31, 2015.

Investment securities available-for-sale with a carrying value of $83.3 million and $61.3 million as of September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and for other purposes.

Gains realized on sales of securities available-for-sale were approximately $0.6 million for the nine months ended September 30, 2016 and $0.4 million for the nine months ended September 30, 2015. There were no losses on sales of securities during the nine months ended September 30, 2016 or the year ended December 31, 2015.

6. LOANS AND ALLOWANCE FOR LOAN LOSSES

Portfolio Segments

The Company has divided the loan portfolio into eight portfolio segments, each with different risk characteristics described as follows:

Construction, land development and other land loans – Commercial construction, land and land development loans include loans for the development of residential housing projects, loans for the development of commercial and industrial use property and loans for the purchase and improvement of raw land. These loans are secured in whole or in part by the underlying real estate collateral and are generally guaranteed by the principals of the borrowing entity.

Secured by 1-4 family residential properties – These loans include conventional mortgage loans on one-to-four family residential properties. These properties may serve as the borrower’s primary residence, vacation home or investment property. Also included in this portfolio are home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows customers to borrow against the equity in their home.

Secured by multi-family residential properties – This portfolio segment includes mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties – This portfolio segment includes real estate loans secured by commercial and industrial properties, office or mixed-use facilities, strip shopping centers or other commercial property. These loans are generally guaranteed by the principals of the borrowing entity.

Other real estate loans – Other real estate loans are loans primarily for agricultural production, secured by mortgages on farmland.

Commercial and industrial loans – This portfolio segment includes loans to commercial customers for use in the normal course of business. These credits may be loans and lines of credit to financially strong borrowers, secured by inventories, equipment or receivables, and are generally guaranteed by the principals of the borrowing entity.

Consumer loans – This portfolio segment includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purposes and all other direct consumer installment loans.

Other loans – Other loans include credit cards, overdrawn checking accounts reclassified to loans and overdraft lines of credit.

13

As of September 30, 2016 and December 31, 2015, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	September 30, 2016
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	24,610	$	—	$	24,610
Secured by 1-4 family residential properties		32,559		14,462		47,021
Secured by multi-family residential properties		16,801		—		16,801
Secured by non-farm, non-residential properties		97,859		—		97,859
Other		185		—		185
Commercial and industrial loans		54,459		—		54,459
Consumer loans		6,289		80,915		87,204
Other loans		46		—		46
Total loans		232,808		95,377		328,185
Less: Unearned interest, fees and deferred cost		191		7,205		7,396
Allowance for loan losses		1,216		2,452		3,668
Net loans	$	231,401	$	85,720	$	317,121

	December 31, 2015
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	11,827	$	—	$	11,827
Secured by 1-4 family residential properties		30,730		17,233		47,963
Secured by multi-family residential properties		11,845		—		11,845
Secured by non-farm, non-residential properties		83,883		—		83,883
Other		115		—		115
Commercial and industrial loans		29,377		—		29,377
Consumer loans		7,057		76,131		83,188
Other loans		379		—		379
Total loans		175,213		93,364		268,577
Less: Unearned interest, fees and deferred cost		149		9,215		9,364
Allowance for loan losses		1,329		2,452		3,781
Net loans	$	173,735	$	81,697	$	255,432

Although the Company has a diversified loan portfolio, 56.8% and 58.0% of the portfolio was concentrated in loans secured by real estate located primarily within a single geographic region of the United States as of September 30, 2016 and December 31, 2015, respectively. As of September 30, 2016, loans with variable interest rate payment terms totaled $89.1 million of the Bank’s loan portfolio, while loans with fixed interest rate payment terms totaled $143.7 million of the portfolio. As of December 31, 2015, variable rate loans totaled $55.3 million of the Bank’s portfolio, while fixed rate loans totaled $119.6 million. At ALC, all loans are originated under fixed interest rate payment terms.

Related Party Loans

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with non-related parties. Management believes that such loans do not represent more than a normal risk of collectability, nor do they present other unfavorable features. The aggregate balances of such related party loans and commitments as of September 30, 2016 and December 31, 2015 were $2.8 million and $2.9 million, respectively. During the nine months ended September 30, 2016, there was one new loan to a related party, and repayments by active related parties were $0.1 million. During the year ended December 31, 2015, there were no new loans to related parties, and repayments by active related parties were $0.2 million.

14

Allowance for Loan Losses

The following tables present changes in the allowance for loan losses by loan portfolio segment and loan type as of September 30, 2016 and December 31, 2015. While no portion of the allowance is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, these tables represent management's allocation of the allowance for loan losses to specific loan categories as of the dates indicated.

	FUSB
	Nine Months Ended September 30, 2016
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	133		$	1,118		$	27		$	37		$	14	$	1,329
Charge-offs		(1	)		(40	)		(30	)		(10	)		—		(81	)
Recoveries		28			234			40			16			—		318
Provision		(31	)		(378	)		(26	)		64			21		(350	)
Ending balance		129			934			11			107			35		1,216
Ending balance individually evaluated for impairment		—			413			—			5			—		418
Ending balance collectively evaluated for impairment	$	129		$	521		$	11		$	102		$	35	$	798
Loan receivables:
Ending balance		54,459			139,455			6,289			32,559			46		232,808
Ending balance individually evaluated for impairment		—			2,107			—			—			—		2,107
Ending balance collectively evaluated for impairment	$	54,459		$	137,348		$	6,289		$	32,559		$	46	$	230,701

	ALC
	Nine Months Ended September 30, 2016
	Commercial & Industrial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,201		$	251		$	—	$	2,452
Charge-offs		—		—		(2,218	)		(49	)		—		(2,267	)
Recoveries		—		—		500			34			—		534
Provision		—		—		1,808			(75	)		—		1,733
Ending balance		—		—		2,291			161			—		2,452
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,291		$	161		$	—	$	2,452
Loan receivables:
Ending balance		—		—		80,915			14,462			—		95,377
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	80,915		$	14,462		$	—	$	95,377

15

	FUSB and ALC
	Nine Months Ended September 30, 2016
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	133		$	1,118		$	2,228		$	288		$	14	$	3,781
Charge-offs		(1	)		(40	)		(2,248	)		(59	)		—		(2,348	)
Recoveries		28			234			540			50			—		852
Provision		(31	)		(378	)		1,782			(11	)		21		1,383
Ending balance		129			934			2,302			268			35		3,668
Ending balance individually evaluated for impairment		—			413			—			5			—		418
Ending balance collectively evaluated for impairment	$	129		$	521		$	2,302		$	263		$	35	$	3,250
Loan receivables:
Ending balance		54,459			139,455			87,204			47,021			46		328,185
Ending balance individually evaluated for impairment		—			2,107			—			—			—		2,107
Ending balance collectively evaluated for impairment	$	54,459		$	137,348		$	87,204		$	47,021		$	46	$	326,078

	FUSB
	Year Ended December 31, 2015
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141		$	2,810		$	114		$	421		$	—	$	3,486
Charge-offs		—			(767	)		(17	)		(68	)		—		(852	)
Recoveries		61			12			70			111			—		254
Provision		(69	)		(937	)		(139	)		(428	)		14		(1,559	)
Ending balance		133			1,118			28			36			14		1,329
Ending balance individually evaluated for impairment		80			230			—			—			—		310
Ending balance collectively evaluated for impairment	$	53		$	888		$	28		$	36		$	14	$	1,019
Loan receivables:
Ending balance		29,377			107,670			7,057			30,730			379		175,213
Ending balance individually evaluated for impairment		444			2,018			—			252			—		2,714
Ending balance collectively evaluated for impairment	$	28,933		$	105,652		$	7,057		$	30,478		$	379	$	172,499

16

	ALC
	Year Ended December 31, 2015
	Commercial & Industrial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,336		$	346		$	—	$	2,682
Charge-offs		—		—		(2,552	)		(187	)		—		(2,739	)
Recoveries		—		—		712			22			—		734
Provision		—		—		1,706			69			—		1,775
Ending balance		—		—		2,202			250			—		2,452
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,202		$	250		$	—	$	2,452
Loan receivables:
Ending balance		—		—		76,131			17,233			—		93,364
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	76,131		$	17,233		$	—	$	93,364

	FUSB and ALC
	Year Ended December 31, 2015
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141		$	2,810		$	2,450		$	767		$	—	$	6,168
Charge-offs		—			(767	)		(2,569	)		(255	)		—		(3,591	)
Recoveries		61			12			782			133			—		988
Provision		(69	)		(937	)		1,567			(359	)		14		216
Ending balance		133			1,118			2,230			286			14		3,781
Ending balance individually evaluated for impairment		80			230			—			—			—		310
Ending balance collectively evaluated for impairment	$	53		$	888		$	2,230		$	286		$	14	$	3,471
Loan receivables:
Ending balance		29,377			107,670			83,188			47,963			379		268,577
Ending balance individually evaluated for impairment		444			2,018			—			252			—		2,714
Ending balance collectively evaluated for impairment	$	28,933		$	105,652		$	83,188		$	47,711		$	379	$	265,863

Credit Quality

The Bank utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, each loan is graded based on pre-determined risk metrics and categorized into one of nine risk grades. These risk grades can be summarized into categories described as pass, special mention, substandard, doubtful and loss, as described in further detail below.

● Pass (Risk Grades 1-5): Loans in this category include obligations in which the probability of default is considered low.

● Special Mention (Risk Grade 6): Loans in this category exhibit potential credit weaknesses or downward trends deserving Bank management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Although a special mention asset has a higher probability of default than pass-rated categories, its default is not imminent.

17

● Substandard (Risk Grade 7): Loans in this category have defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

● Doubtful (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans, with the added characteristic that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable or improbable. Serious problems exist such that partial loss of principal is likely; however, because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans’ classification as estimated losses is deferred until a more exact status may be determined. Such pending factors may include proposed merger, acquisition or liquidation procedures, capital injection, perfection of liens on additional collateral and refinancing plans. Loans classified as doubtful may include loans to borrowers that have demonstrated a history of failing to live up to agreements.

● Loss (Risk Grade 9): Loans are classified in this category when borrowers are deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectable and of such little value that continuance as active assets of the Bank is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not prudent to defer writing off these assets, even though partial recovery may be effected in the future.

At ALC, because the loan portfolio is more uniform in nature, each loan is categorized into one of two risk grades, depending on whether the loan is considered to be performing or nonperforming. Performing loans are loans that are paying principal and interest in accordance with a contractual agreement. Nonperforming loans are loans that are either not paying as contractually agreed or that have demonstrated characteristics that indicate a probability of loss.

The tables below illustrate the carrying amount of loans by credit quality indicator as of September 30, 2016.

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	23,075	$	—	$	1,535	$	—	$	24,610
Secured by 1-4 family residential properties		31,450		217		892		—		32,559
Secured by multi-family residential properties		16,801		—		—		—		16,801
Secured by non-farm, non-residential properties		93,344		3,787		728		—		97,859
Other		185		—		—		—		185
Commercial and industrial loans		53,310		881		268		—		54,459
Consumer loans		6,173		—		116		—		6,289
Other loans		46		—		—		—		46
Total	$	224,384	$	4,885	$	3,539	$	—	$	232,808

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	14,213	$	249	$	14,462
Consumer loans		79,664		1,251		80,915
Total	$	93,877	$	1,500	$	95,377

18

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2015.

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	9,862	$	—	$	1,965	$	—	$	11,827
Secured by 1-4 family residential properties		29,252		228		1,250		—		30,730
Secured by multi-family residential properties		11,845		—		—		—		11,845
Secured by non-farm, non-residential properties		78,647		4,315		921		—		83,883
Other		115		—		—		—		115
Commercial and industrial loans		28,170		482		725		—		29,377
Consumer loans		6,905		—		152		—		7,057
Other loans		379		—		—		—		379
Total	$	165,175	$	5,025	$	5,013	$	—	$	175,213

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	16,964	$	269	$	17,233
Consumer loans		74,743		1,388		76,131
Total	$	91,707	$	1,657	$	93,364

The following tables provide an aging analysis of past due loans by class as of September 30, 2016.

	FUSB
	As of September 30, 2016
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	86	$	86	$	24,524	$	24,610	$	—
Secured by 1-4 family residential properties		61		15		208		284		32,275		32,559		—
Secured by multi-family residential properties		—		—		—		—		16,801		16,801		—
Secured by non-farm, non-residential properties		—		—		—		—		97,859		97,859		—
Other		—		—		—		—		185		185		—
Commercial and industrial loans		26		17		—		43		54,416		54,459		—
Consumer loans		30		—		9		39		6,250		6,289		—
Other loans		—		—		—		—		46		46		—
Total	$	117	$	32	$	303	$	452	$	232,356	$	232,808	$	—

19

	ALC
	As of September 30, 2016
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		55		20		244		319		14,143		14,462		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans		900		504		1,247		2,651		78,264		80,915		—
Other loans		—		—		—		—		—		—		—
Total	$	955	$	524	$	1,491	$	2,970	$	92,407	$	95,377	$	—

The following tables provide an aging analysis of past due loans by class as of December 31, 2015.

	FUSB
	As of December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	86	$	86	$	11,741	$	11,827	$	—
Secured by 1-4 family residential properties		118		206		360		684		30,046		30,730		—
Secured by multi-family residential properties		—		—		—		—		11,845		11,845		—
Secured by non-farm, non-residential properties		530		—		148		678		83,205		83,883		—
Other		—		—		—		—		115		115		—
Commercial and industrial loans		22		52		—		74		29,303		29,377		—
Consumer loans		49		4		83		136		6,921		7,057		—
Other loans		—		—		—		—		379		379		—
Total	$	719	$	262	$	677	$	1,658	$	173,555	$	175,213	$	—

20

	ALC
	As of December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		91		206		252		549		16,684		17,233		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans		965		567		1,377		2,909		73,222		76,131		—
Other loans		—		—		—		—		—		—		—
Total	$	1,056	$	773	$	1,629	$	3,458	$	89,906	$	93,364	$	—

The following table provides an analysis of non-accruing loans by class as of September 30, 2016 and December 31, 2015.

	Loans on Non-Accrual Status
	September 30, 2016		December 31, 2015
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	86	$	339
Secured by 1-4 family residential properties		731		968
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		61		213
Commercial and industrial loans		22		47
Consumer loans		1,366		1,535
Total loans	$	2,266	$	3,102

Impaired Loans

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 related loan agreement. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the liquidation of the collateral. All loans of $0.5 million or more that have a credit quality risk grade of seven or above are identified for impairment analysis. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

21

As of September 30, 2016, the carrying amount of impaired loans consisted of the following:

	September 30, 2016
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		—		—		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	—	$	—	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	1,361	$	1,361	$	305
Secured by 1-4 family residential properties		195		195		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		551		551		108
Commercial and industrial		—		—		—
Total loans with an allowance recorded	$	2,107	$	2,107	$	418
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	1,361	$	1,361	$	305
Secured by 1-4 family residential properties		195		195		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		551		551		108
Commercial and industrial		—		—		—
Total impaired loans	$	2,107	$	2,107	$	418

22

As of December 31, 2015, the carrying amount of impaired loans consisted of the following:  

	December 31, 2015
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		54		54		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	54	$	54	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	95
Secured by 1-4 family residential properties		198		198		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		573		573		130
Commercial and industrial		444		444		80
Total loans with an allowance recorded	$	2,660	$	2,660	$	310
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	95
Secured by 1-4 family residential properties		252		252		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		573		573		130
Commercial and industrial		444		444		80
Total impaired loans	$	2,714	$	2,714	$	310

The average net investment in impaired loans and interest income recognized and received on impaired loans during the nine months ended September 30, 2016 and the year ended December 31, 2015 were as follows:

	September 30, 2016
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,388	$	32	$	32
Secured by 1-4 family residential properties		245		10		11
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		559		25		24
Commercial and industrial		—		—		—
Total	$	2,192	$	67	$	67

23

	December 31, 2015
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,493	$	44	$	46
Secured by 1-4 family residential properties		139		14		14
Secured by multi-family residential properties		1,892		—		—
Secured by non-farm, non-residential properties		3,329		35		36
Commercial and industrial		264		26		26
Total	$	7,117	$	119	$	122

Loans on which the accrual of interest has been discontinued amounted to $2.3 million and $3.1 million as of September 30, 2016 and December 31, 2015, respectively. If interest on those loans had been accrued, there would have been $30 thousand and $0.1 million of interest accrued for the nine-month period ended September 30, 2016 and year ended December 31, 2015, respectively. Interest income related to these loans for the nine-month period ended September 30, 2016 and for the year ended December 31, 2015 was $4 thousand and $0.3 million, respectively.

Troubled Debt Restructurings

Troubled debt restructurings include loans with respect to which concessions have been granted to borrowers that generally would not have otherwise been considered had the borrowers not been experiencing financial difficulty. The concessions may include payment schedule modifications, interest rate reductions, maturity date extensions, modifications of note structure, principal balance reductions or some combination of these concessions. Restructured loans may involve loans remaining on non-accrual, moving to non-accrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Non-accrual restructured loans are included with all other non-accrual loans. In addition, all accruing restructured loans are reported as troubled debt restructurings. Generally, restructured loans remain on non-accrual until the customer has attained a sustained period of repayment performance under the modified loan terms (generally a minimum of six months). However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can meet the new terms and whether the loan should be returned to or maintained on non-accrual status. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, then the loan remains on non-accrual. As of September 30, 2016 and December 31, 2015, respectively, the Company had $0.2 million and $1.5 million of non-accruing loans that were previously restructured and that remained on non-accrual status. For the nine months ended September 30, 2016, the Company had $287 thousand in restructured loans that were restored to accrual status based on a sustained period of repayment performance. For the year ended December 31, 2015, the Company had no restructured loans that were restored to accrual status based on a sustained period of repayment performance.

The following table provides the number of loans remaining in each loan category, as of September 30, 2016 and December 31, 2015, that the Bank had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

	September 30, 2016						December 31, 2015
	Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance		Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		2	$	1,960	$	1,341		3	$	2,220	$	1,698
Secured by 1-4 family residential properties		4		335		257		4		200		103
Secured by non-farm, non-residential properties		2		113		44		2		113		52
Commercial loans		2		116		90		2		116		94
Total		10	$	2,524	$	1,732		11	$	2,649	$	1,947

24

Restructured loan modifications primarily included maturity date extensions and payment schedule modifications. There were no modifications to principal balances of the loans that were restructured. Accordingly, there was no impact on the Company’s allowance for loan losses resulting from the modifications. None of the loans that were previously modified in a troubled debt restructuring as of September 30, 2016 and December 31, 2015 have defaulted subsequent to modification.

All loans with a principal balance of $0.5 million or more that have been modified in a troubled debt restructuring are considered impaired and evaluated individually for impairment. The nature and extent of impairment of restructured loans, including those that have experienced a subsequent payment default, are considered in the determination of an appropriate level of allowance for loan losses. This evaluation resulted in an allowance for loan losses attributable to such restructured loans of $5 thousand and $1 thousand as of September 30, 2016 and December 31, 2015, respectively.

7. OTHER REAL ESTATE OWNED

Other real estate and certain other assets acquired in foreclosure are reported at the lower of the investment in the loan or the fair value of the property, less estimated costs to sell. The following table summarizes foreclosed property activity as of the nine months ended September 30, 2016 and 2015:

	September 30, 2016
	FUSB			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	5,327		$	711		$	6,038
Transfers from loans		255			149			404
Sales proceeds		(655	)		(259	)		(914	)
Gross gains		—			27			27
Gross losses		(40	)		(73	)		(113	)
Net gains (losses)		(40	)		(46	)		(86	)
Impairment		—			(51	)		(51	)
Ending balance	$	4,887		$	504		$	5,391

	September 30, 2015
	FUSB			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	6,997		$	738		$	7,735
Transfers from loans		1,439			263			1,702
Sales proceeds		(2,225	)		(144	)		(2,369	)
Gross gains		4			—			4
Gross losses		(210	)		(73	)		(283	)
Net gains (losses)		(206	)		(73	)		(279	)
Impairment		(44	)		(89	)		(133	)
Ending balance	$	5,961		$	695		$	6,656

Valuation adjustments are recorded in other non-interest expense and are primarily post-foreclosure write-downs that are a result of continued declining property values based on updated appraisals or other indications of value, such as offers to purchase. Fair value less estimated cost to sell of foreclosed residential real estate held by the Company was $1.1 million and $1.5 million as of September 30, 2016 and 2015, respectively. In addition, the Company held $0.1 and $0.2 million in consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of September 30, 2016 and December 31, 2015, respectively.

25

8. INVESTMENT IN LIMITED PARTNERSHIP

The Company holds investments in affordable housing projects for which it provides funding as a limited partner and has received tax credits related to its investments in the projects based on its partnership share. The net assets of the partnership consist primarily of apartment complexes, and the primary liabilities consist of those associated with the operation of the partnership. The Company has determined that this structure requires evaluation as a VIE under Accounting Standards Codification (“ASC”) Topic 810, Consolidation. The Company consolidates one fund in which it has a 99.9% limited partnership interest. Assets recorded by the Company as a result of the consolidation were less than $0.1 million as of both September 30, 2016 and December 31, 2015.

9. SHORT-TERM BORROWINGS

Short-term borrowings consist of federal funds purchased, securities sold under repurchase agreements and short-term Federal Home Loan Bank (“FHLB”) advances. Short-term borrowings totaled $5.4 million and $7.4 million as of September 30, 2016 and December 31, 2015, respectively.

Federal funds purchased, which represent unsecured lines of credit that generally mature within one to four days, are available to the Company through arrangements with correspondent banks and the Federal Reserve. As of both September 30, 2016 and December 31, 2015, there were no federal funds purchased outstanding, and the Company had $18.8 million in available unused lines of credit with correspondent banks and the Federal Reserve.

Securities sold under repurchase agreements, which are secured borrowings, generally are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The Company monitors the fair value of the underlying securities on a daily basis. Securities sold under repurchase agreements as of September 30, 2016 and December 31, 2015 totaled $0.3 million and $0.4 million, respectively.

Short-term FHLB advances are secured borrowings available to the Company as an alternative funding source. The Company had $5.0 million in outstanding FHLB advances with a maturity date of less than six months as of September 30, 2016. As of December 31, 2015, the Company had $7.0 million in outstanding FHLB advances with a maturity date of less than six months.

10. LONG-TERM DEBT

The Company uses FHLB advances as an alternative to funding sources with similar maturities, such as certificates of deposit or other deposit programs. These advances often offer more attractive rates than other mid- and long-term financing options. They are also flexible, allowing the Company to quickly obtain the necessary maturities and rates that best suit its overall asset/liability strategy. The Company had long-term FHLB advances outstanding of $15.0 million and $5.0 million as of September 30, 2016 and December 31, 2015, respectively. Long-term FHLB advances with remaining terms to maturity of less than 12 months were $5.0 million as of September 30, 2016. There were no long-term FHLB advances with remaining terms to maturity of less than 12 months as of December 31, 2015.

Pledged assets associated with FHLB advances totaled $21.1 million and $14.0 million as of September 30, 2016 and December 31, 2015, respectively. As of September 30, 2016 and December 31, 2015, the Company had $160.4 million and $152.5 million, respectively, in remaining credit from the FHLB (subject to available collateral).

11. INCOME TAXES

The provision for income taxes was $0.4 million and $0.9 million for the nine-month periods ended September 30, 2016 and 2015, respectively. The Company’s effective tax rate was 23.4% and 28.8%, respectively, for the same periods. The effective tax rate is impacted by recurring permanent differences, such as those associated with bank-owned life insurance and tax-exempt investments and loan income.

26

The Company had a net deferred tax asset of $7.1 million and $7.8 million as of September 30, 2016 and December 31, 2015, respectively. The reduction in the net deferred tax asset resulted primarily from reductions in net operating loss carryforwards, as well as the impact of changes in the fair value of securities available-for-sale.

12. DEFERRED COMPENSATION PLANS

The Bank has entered into supplemental compensation benefits agreements with certain directors and executive officers.  The measurement of the liability under these agreements includes estimates involving life expectancy, length of time before retirement and the expected returns on the bank-owned life insurance policies used to fund those agreements. Should these estimates prove to be materially wrong, the cost of these agreements could change accordingly. The related deferred compensation obligation to these directors and executive officers included in other liabilities was $3.5 million and $3.6 million as of September 30, 2016 and December 31, 2015, respectively.

In addition, non-employee directors may elect to defer payment of all or any portion of their director fees under the Company's Non-Employee Directors’ Deferred Compensation Plan (the “Deferral Plan”). The Deferral Plan, which was ratified by shareholders at the annual meeting held on May 11, 2004, permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash and/or shares of the Company’s common stock. The Company uses shares held as treasury stock to satisfy stock-based obligations. A total of 111,195 shares and 103,571 shares were deferred under the Deferral Plan as of September 30, 2016 and December 31, 2015, respectively. Cash deferrals under the Deferral Plan were less than $0.1 million as of September 30, 2016 and December 31, 2015.

13. STOCK OPTION GRANTS

In accordance with the Company’s 2013 Incentive Plan, stock option awards have been granted to certain employees and non-employee directors. The awards were granted with an exercise price equal to the market price of the Company’s common stock on the date of grant and have vesting periods ranging from one to three years, with 10-year contractual terms. The Company expects to use shares held as treasury stock to satisfy share option exercises. Currently, the Company holds a sufficient number of treasury shares to satisfy potential exercises.

The Company recognizes the cost of services received in exchange for stock option awards based on the grant date fair value of the award, with compensation expense recognized on a straight-line basis over the award’s vesting period. The fair value of outstanding awards was determined using the Black-Scholes option pricing model based on the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock.

	2016			2015
Risk-free interest rate		1.58	%		1.52	%
Expected term	7.5 years			7.5 years
Expected stock price volatility		25.25	%		54.04	%
Dividend yield		1.50	%		1.50	%

The following table summarizes the Company's stock option activity for the periods presented.

	Nine Months Ended
	September 30, 2016				September 30, 2015
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of period		175,550	$	8.17		83,400	$	8.09
Granted		97,000		8.30		96,150		8.23
Exercised		—		—		—		—
Expired		—		—		—		—
Forfeited		—		—		2,500		8.09
Options outstanding, end of period		272,550	$	8.21		177,050	$	8.16
Options exercisable, end of period		175,550	$	8.17		81,900	$	8.09

Stock-based compensation expense related to stock options totaled $0.1 million and $0.2 million for the nine-month periods ended September 30, 2016 and 2015, respectively. The aggregate intrinsic value of stock options outstanding (calculated as the amount by which the market value of underlying stock exceeds the exercise price of the option) was $0.4 million as of September 30, 2016 and $0.1 million as of  September 30, 2015.

27

14. DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives Designated as Hedging Instruments

On April 1, 2016, the Bank entered into a forward interest rate swap contract on a variable rate FHLB advance (indexed to three-month LIBOR) with a total notional amount of $10.0 million. The interest rate swap contract was designated as a derivative instrument in a cash flow hedge under ASC Topic 815, Derivatives and Hedging, with the objective of protecting the quarterly interest rate payments on the FHLB advance from the risk of variability of those payments resulting from changes in the three-month LIBOR interest rate throughout the seven-year period beginning on April 5, 2016 and ending on April 5, 2023. Under the swap arrangement, which became effective on April 5, 2016, the Bank will pay a fixed interest rate of 1.46% and receive a variable interest rate based on three-month LIBOR on the total notional amount of $10.0 million, with quarterly net settlements.

No ineffectiveness related to the interest rate swap designated as a cash flow hedge was recognized in the consolidated statements of operations for the three- and nine-month periods ended September 30, 2016. The accumulated net after-tax loss related to the effective cash flow hedge included in accumulated other comprehensive income totaled $82 thousand as of September 30, 2016. Amounts reported in accumulated other comprehensive income related to this derivative are reclassified to other interest expense as interest payments are made on the Bank's variable rate FHLB advance.

Derivatives Not Designated as Hedging Instruments

In 2014, the Bank entered into three separate interest rate cap agreements to mitigate risks associated with increases in interest rates on an aggregate notional amount of $40 million. The interest rate caps qualify as derivatives but were not designated as hedging instruments. Accordingly, changes in the fair value of the instruments are included in results of operations. Under the three agreements, the Bank paid an up-front premium totaling approximately $126 thousand in return for the ability to receive cash flows if interest rates rise above a strike rate indexed to three-month LIBOR. The agreements have contractual terms that mature at various dates in 2017. As of September 30, 2016, the strike rate had not been achieved on any of the three agreements, and accordingly, the Bank has received no cash flows associated with the agreements. Since the inception of the agreements, on a quarterly basis, the Bank has recorded the current fair value of the derivatives within other assets on the Bank’s consolidated balance sheet, with changes in the fair value included in interest expense on the Bank’s consolidated statements of operations. As of September 30, 2016, the fair value of each of the three derivative agreements was zero. During the nine months ended September 30, 2016, approximately $3 thousand was recognized as interest expense associated with the agreements.

15. SEGMENT REPORTING

Under ASC Topic 280, Segment Reporting, certain information is disclosed for the two reportable operating segments of the Company, FUSB and ALC. The reportable segments were determined using the internal management reporting system. These segments comprise the Company’s and FUSB’s significant subsidiaries. The accounting policies for each segment are the same as those described in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. The segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions have been eliminated to determine the consolidated balances. The results for the two reportable segments of the Company are included in the tables below.

						All
	FUSB			ALC		Other			Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended September 30, 2016:
Net interest income	$	3,917		$	3,253	$	3		$	—		$	7,173
Provision (reduction in reserve) for loan losses		100			580		—			—			680
Total non-interest income		1,159			316		973			(881	)		1,567
Total non-interest expense		4,636			2,403		474			(165	)		7,348
Income (loss) before income taxes		340			586		502			(716	)		712
Provision for income taxes		52			196		(86	)		—			162
Net income (loss)	$	288		$	390	$	588		$	(716	)	$	550
Other significant items:
Total assets	$	602,123		$	89,347	$	84,291		$	(175,454	)	$	600,307
Total investment securities		209,486			—		80			—			209,566
Total loans, net		308,423			85,720		—			(77,022	)		317,121
Investment in subsidiaries		5			—		78,737			(78,737	)		5
Fixed asset additions		960			16		—			—			976
Depreciation and amortization expense		193			54		—			—			247
Total interest income from external customers		3,415			4,345		—			—			7,760
Total interest income from affiliates		1,092			—		3			(1,095	)		—
For the nine months ended September 30, 2016:
Net interest income	$	11,199		$	9,544	$	8		$	—		$	20,751
Provision (reduction in reserve) for loan losses		(350	)		1,733		—			—			1,383
Total non-interest income		3,002			909		2,481			(2,356	)		4,036
Total non-interest expense		13,435			7,306		1,373			(445	)		21,669
Income (loss) before income taxes		1,116			1,414		1,116			(1,911	)		1,735
Provision for income taxes		224			484		(302	)		—			406
Net income (loss)	$	892		$	930	$	1,418		$	(1,911	)	$	1,329
Other significant items:
Fixed asset additions		4,521			33		—			—			4,554
Depreciation and amortization expense		564			162		—			—			726
Total interest income from external customers		9,750			12,684		—			—			22,434
Total interest income from affiliates		3,140			—		8			(3,148	)		—

28

						All
	FUSB			ALC		Other			Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended September 30, 2015:
Net interest income	$	3,598		$	3,166	$	3		$	—		$	6,767
Provision (reduction in reserve) for loan losses		(400	)		322		—			—			(78	)
Total non-interest income		755			234		847			(840	)		996
Total non-interest expense		4,443			2,430		360			(143	)		7,090
Income before income taxes		310			648		490			(697	)		751
Provision for income taxes		43			236		(72	)		—			207
Net income	$	267		$	412	$	562		$	(697	)	$	544
Other significant items:
Total assets	$	550,341		$	85,066	$	82,167		$	(169,037	)	$	548,537
Total investment securities		238,929			—		80			—			239,009
Total loans, net		229,721			80,779		—			(72,785	)		237,715
Investment in subsidiaries		5			—		76,883			(76,883	)		5
Fixed asset additions		1,250			2		—			—			1,252
Depreciation and amortization expense		151			61		—			—			212
Total interest income from external customers		3,162			4,166		—			—			7,328
Total interest income from affiliates		1,000			—		3			(1,003	)		—
For the nine months ended September 30, 2015:
Net interest income	$	11,433		$	9,203	$	8		$	—		$	20,644
Provision (reduction in reserve) for loan losses		(1,370	)		1,171		—			—			(199	)
Total non-interest income		2,766			689		3,053			(3,153	)		3,355
Total non-interest expense		13,110			7,400		1,103			(439	)		21,174
Income before income taxes		2,459			1,321		1,958			(2,714	)		3,024
Provision for income taxes		678			475		(283	)		—			870
Net income	$	1,781		$	846	$	2,241		$	(2,714	)	$	2,154
Other significant items:
Fixed asset additions	$	2,860		$	251	$	—		$	—		$	3,111
Depreciation and amortization expense		459			181		—			—			640
Total interest income from external customers		10,379			12,004		1			—			22,384
Total interest income from affiliates		2,801			—		7			(2,808	)		—

29

16. GUARANTEES, COMMITMENTS AND CONTINGENCIES

The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making these commitments as it does for on-balance sheet instruments. For interest rate swap transactions and commitments to purchase or sell securities for forward delivery, the contract or notional amounts do not represent exposure to credit loss. The Bank controls the credit risk of these derivative instruments through credit approvals, limits and monitoring procedures. Certain derivative contracts have credit risk for the carrying value plus the amount to replace such contracts in the event of counterparty default. All of the Bank’s financial instruments are held for risk management and not for trading purposes. During the nine-month periods ended September 30, 2016 and 2015, respectively, there were no credit losses associated with derivative contracts.

In the normal course of business, there are outstanding commitments and contingent liabilities, such as commitments to extend credit, letters of credit and others that are not included in the consolidated financial statements. The financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the financial statements. A summary of these commitments and contingent liabilities is presented below:

	September 30, 2016		December 31, 2015
	(Dollars in Thousands)
Standby letters of credit	$	183	$	683
Commitments to extend credit	$	41,950	$	61,427

Standby letters of credit are contingent commitments issued by the Bank generally to guarantee the performance of a customer to a third party. The Bank has recourse against the customer for any amount that it is required to pay to a third party under a standby letter of credit. Revenues are recognized over the lives of the standby letters of credit. As of September 30, 2016 and December 31, 2015, the potential amount of future payments that the Bank could be required to make under its standby letters of credit, which represent the Bank’s total credit risk in this category, is included in the table above.

A commitment to extend credit is an agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon the extension of credit, is based on management’s credit evaluation of the counterparty. Collateral varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

Commitments to purchase securities for delayed delivery require the Bank to purchase a specified security at a specified price for delivery on a specified date. Similarly, commitments to sell securities for delayed delivery require the Bank to sell a specified security at a specified price for delivery on a specified date. Market risk arises from potential movements in security values and interest rates between the commitment and delivery dates. As of both September 30, 2016 and December 31, 2015, there were no outstanding commitments to purchase securities for delayed delivery and no outstanding commitments to sell securities for delayed delivery.

During the third quarter of 2016, the Bank entered into an agreement with a general contractor to manage construction of an office complex on a parcel of land located in the Birmingham, Alabama area that was purchased by the Bank during the first quarter of 2016. The office complex, which is expected to be approximately 40,000 square feet in size, will house a retail branch of the Bank, as well as the Bank’s commercial lending team in the Birmingham area and certain other officers of the Bank. Approximately 25% of the square footage of the office complex will be utilized by the Bank, with the remainder to be leased to commercial tenants. Construction began on the office complex during the third quarter and is expected to be completed during 2017. As of September 30, 2016, $0.5 million in cost had been incurred under the agreement, with estimated remaining commitments totaling $8.6 million. Additional expenses could be incurred under the agreement based on changes to building specifications at the discretion of the Bank and the occurrence of certain events specified in the contract. In addition to the agreement with the general contractor, the Bank estimates additional expenditures of approximately $4.0 million will be incurred for completion of office finishes, tenant improvements, furniture and fixtures, architectural fees and certain other developmental costs. As costs associated with the construction are incurred, they are recorded in premises and equipment as construction in process. Upon completion of construction and placement of the office complex into service, depreciation expense associated with the office complex is currently estimated to be approximately $0.4 million annually.

Litigation

The Company is a party to certain ordinary course litigation, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

30

17. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The assumptions used in the estimation of the fair value of the Company’s financial instruments are detailed below. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather represent a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Fair Value Hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. In determining fair value, the Company uses various methods, including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk generally and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

● Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange or Nasdaq. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

● Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

● Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

The Company rarely transfers assets and liabilities measured at fair value between Level 1 and Level 2 measurements. Trading account assets and securities available-for-sale may be periodically transferred to or from Level 3 valuation based on management’s conclusion regarding the best method of pricing for an individual security. Such transfers are accounted for as if they occurred at the beginning of a reporting period. There were no such transfers during the nine months ended September 30, 2016 or the year ended December 31, 2015.

Fair Value Measurements on a Recurring Basis

Securities Available-for-Sale

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include exchange-traded equities. Level 2 securities include U.S. Treasury and agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. Level 2 fair values are obtained from quoted prices of securities with similar characteristics. In certain cases, where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Interest Rate Derivative Agreements

Interest rate derivative agreements are used by the Company to mitigate risk associated with changes in interest rates. The fair value of these agreements is based on information obtained from third-party financial institutions. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party valuations. The Company classifies these derivative assets within Level 2 of the valuation hierarchy.

31

The following table presents assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015. 

	Fair Value Measurements as of September 30, 2016 Using
	Totals At September 30, 2016			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	98,341		$	—	$	98,341		$	—
Commercial		69,326			—		69,326			—
Obligations of states and political subdivisions		10,735			—		10,735			—
Obligations of U.S. government-sponsored agencies		2,006			—		2,006			—
Corporate notes		763			—		763			—
U.S. Treasury securities		80			—		80			—
Other liabilities - derivatives		(130	)		—		(130	)		—

	Fair Value Measurements as of December 31, 2015 Using
	Totals At December 31, 2015		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	135,494	$	—	$	135,494	$	—
Commercial		45,509		—		45,509		—
Obligations of states and political subdivisions		14,998		—		14,998		—
Obligations of U.S. government-sponsored agencies		1,982		—		1,982		—
Corporate notes		780		—		780		—
U.S. Treasury securities		80		—		80		—
Other assets - derivatives		3		—		3		—

Fair Value Measurements on a Non-recurring Basis

Impaired Loans

Loans that are considered impaired are loans for which, based on current information and events, it is probable that the Company will be unable to collect all principal and interest payments due under the contractual terms of the loan agreement. Impaired loans can be measured based on the present value of expected payments using the loan’s original effective rate as the discount rate, the loan’s observable market price or the fair value of the collateral less estimated selling cost if the loan is collateral-dependent. For the Company, the fair value of impaired loans is primarily measured based on the value of the collateral securing the loans (typically real estate). The Company determines the fair value of the collateral based on independent appraisals performed by qualified licensed appraisers. The appraisals may include a single valuation approach or a combination of approaches, including comparable sales and income approaches. Appraised values are discounted for estimated costs to sell and may be discounted further based on management’s knowledge of the collateral, changes in market conditions since the most recent appraisal and/or management’s knowledge of the borrower and the borrower’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Impaired loans are evaluated by management for additional impairment at least quarterly and are adjusted accordingly.

32

OREO

OREO consists of properties obtained through foreclosure or in satisfaction of loans and is recorded at the lower of the loan’s carrying amount or the fair value of the property, less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.

Other Assets

Included within other assets are certain assets that were formerly included as premises and equipment, but have been removed from service, and as of the balance sheet date, were designated as assets to be disposed of by sale. These include assets associated with branches of the Bank that have been closed. When an asset is designated as held for sale, the Company ceases depreciation of the asset, and the asset is recorded at the lower of its carrying amount or fair value less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.

The following table presents the balances of impaired loans, OREO, and other assets measured at fair value on a non-recurring basis as of September 30, 2016 and December 31, 2015.

	Fair Value Measurements as of September 30, 2016 Using
	Totals At September 30, 2016		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	1,690	$	—	$	—	$	1,690
OREO		5,391						5,391
Other assets		73		—		—		73

	Fair Value Measurements as of December 31, 2015 Using
	Totals At December 31, 2015		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	2,350	$	—	$	—	$	2,350
OREO		6,038		—		—		6,038

33

Non-recurring Fair Value Measurements Using Significant Unobservable Inputs

The following table presents information regarding assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2016. The table includes the valuation techniques and the significant unobservable inputs utilized. The range of each unobservable input and the weighted average within the range utilized as of September 30, 2016 are both included. Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value September 30, 2016		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Impaired loans	$	1,690	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9% - 10% (9.5%)
OREO	$	5,391	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9% - 10% (9.5%)
Other assets	$	73	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9% - 10% (9.5%)

Impaired Loans

Impaired loans are valued based on multiple data points indicating the fair value for each loan. The primary data point is the appraisal value of the underlying collateral, to which a discount is applied. Management establishes this discount or comparability adjustment based on recent sales of similar property types. As liquidity in the market increases or decreases, the comparability adjustment and the resulting asset valuation are impacted.

OREO

OREO under a binding contract for sale is valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Other Assets

Assets designated as held for sale that are under binding contract are valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash, due from banks and federal funds sold: The carrying amount of cash, due from banks and federal funds sold approximates fair value.

Federal Home Loan Bank stock: Based on the redemption provision of the FHLB, the stock has no quoted market value and is carried at cost.

Investment securities: Fair values of investment securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments.

Derivative instruments: The fair value of derivative instruments is based on information obtained from a third-party financial institution. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party information.

Accrued interest receivable and payable: The carrying amount of accrued interest approximates fair value.

34

Loans, net: For variable-rate loans, fair values are based on carrying values. Fixed-rate commercial loans, other installment loans and certain real estate mortgage loans are valued using discounted cash flows. The discount rate used to determine the present value of these loans is based on interest rates currently being charged by the Company on loans that are comparable as to credit risk and term.

Demand and savings deposits: The fair values of demand deposits are equal to the carrying value of such deposits. Demand deposits include non-interest-bearing demand deposits, savings accounts, NOW accounts and money market demand accounts.

Time deposits: The fair values of relatively short-term time deposits are equal to their carrying values. Discounted cash flows are used to value long-term time deposits. The discount rate used is based on interest rates currently being offered by the Company on comparable deposits as to amount and term.

Short-term borrowings: These borrowings may consist of federal funds purchased, securities sold under agreements to repurchase and the floating rate borrowings from the FHLB account. Due to the short-term nature of these borrowings, fair values approximate carrying values.

Long-term debt: The fair value of this debt is estimated using discounted cash flows based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements as of September 30, 2016 and December 31, 2015.

Off-balance sheet instruments: The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance sheet financial instruments is based on fees currently charged to enter into such agreements.

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of September 30, 2016 and December 31, 2015, were as follows:

	September 30, 2016
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	26,093	$	26,093	$	26,093	$	—	$	—
Investment securities available-for-sale		181,251		181,251		—		181,251		—
Investment securities held-to-maturity		28,315		28,483		—		28,483		—
Federal Home Loan Bank stock		1,368		1,368		—		—		1,368
Loans, net of allowance for loan losses		317,121		312,042		—		—		312,042
Liabilities:
Deposits		493,828		493,871		—		493,871		—
Short-term borrowings		5,337		5,337		—		5,337		—
Long-term borrowings		15,000		14,992		—		14,992		—
Other liabilities - derivatives		130		130		—		130		—

	December 31, 2015
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	44,072	$	44,072	$	44,072	$	—	$	—
Investment securities available-for-sale		198,843		198,843		—		198,843		—
Investment securities held-to-maturity		32,359		32,184		—		32,184		—
Federal Home Loan Bank stock		1,025		1,025		—		—		1,025
Loans, net of allowance for loan losses		255,432		256,392		—		—		256,392
Other assets – derivatives		3		3		—		3		—
Liabilities:
Deposits		479,258		478,833		—		478,833		—
Short-term borrowings		7,354		7,352		—		7,352		—
Long-term borrowings		5,000		4,977		—		4,977		—

35

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DESCRIPTION OF THE COMPANY’S BUSINESS

First US Bancshares, Inc. ("Bancshares") (formerly known as United Security Bancshares, Inc.), a Delaware corporation, is a bank holding company with its principal offices in Thomasville, Alabama. Bancshares operates one commercial banking subsidiary, First US Bank (the “Bank” or “FUSB”). As of September 30, 2016, in addition to a loan production office in Jefferson County, Alabama, that opened in April 2016, the Bank operated and served its customers through eighteen banking offices located in Bucksville, Butler, Calera, Centreville, Coffeeville, Columbiana, Fulton, Gilbertown, Grove Hill, Harpersville, Jackson, Thomasville, Tuscaloosa and Woodstock, Alabama. On July 29, 2016, the Bank's Brent office was permanently closed.

The Bank owns all of the stock of Acceptance Loan Company, Inc., an Alabama corporation (“ALC”). ALC is a finance company organized for the purpose of making and purchasing consumer loans. ALC’s principal office is located in Mobile, Alabama. The Bank is the funding source for ALC. As of September 30, 2016, in addition to its principal office, ALC operated twenty-one finance company offices located in Alabama and southeast Mississippi.

The Bank provides a wide range of commercial banking services to small- and medium-sized businesses, property managers, business executives, professionals and other individuals, while ALC’s business is focused on consumer lending.

FUSB Reinsurance, Inc., an Arizona corporation and a wholly owned subsidiary of the Bank (“FUSB Reinsurance”), reinsures or “underwrites” credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. FUSB Reinsurance is responsible for the first level of risk on these policies up to a specified maximum amount, and a primary third-party insurer retains the remaining risk. The third-party insurer is also responsible for performing most of the administrative functions of FUSB Reinsurance on a contract basis.

Delivery of the best possible financial services to customers remains an overall operational focus of Bancshares and its subsidiaries (collectively, the “Company”). We recognize that attention to detail and responsiveness to customers’ desires are critical to customer satisfaction. The Company continues to upgrade technology, both in its financial services and in the training of its 269 full-time equivalent employees, to ensure customer satisfaction and convenience.

The preparation of the Company’s consolidated financial statements requires management to make subjective judgments associated with estimates. These estimates are necessary to comply with accounting principles generally accepted in the United States of America and general banking practices. These estimates include accounting for the allowance for loan losses, other real estate owned, valuation of deferred tax assets and fair value measurements. A description of these estimates, which significantly affect the determination of consolidated financial position, results of operations and cash flows, is set forth in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015.

The emphasis of this discussion is a comparison of assets, liabilities and shareholders’ equity as of September 30, 2016 to December 31, 2015, while comparing income and expense for the three- and nine-month periods ended September 30, 2016 and 2015.

All yields and ratios presented and discussed herein are recorded and presented on the accrual basis and not on the tax-equivalent basis, unless otherwise indicated.

This information should be read in conjunction with the Company’s unaudited consolidated financial statements and related notes appearing elsewhere in this report and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" appearing in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015.

EXECUTIVE OVERVIEW

The Company earned net income of $550 thousand, or $0.09 per diluted common share, during the three months ended September 30, 2016, compared to $544 thousand, or $0.09 per diluted common share, during the corresponding three-month period of 2015. Pre-provision net interest income was $7.2 million during the third quarter of 2016, compared to $6.8 million during the third quarter of 2015, an increase of $0.4 million. Non-interest income increased by $0.6 million comparing the third quarter of 2016 to the third quarter of 2015, resulting from increases in gains on the sale of investment securities, credit insurance income and other ancillary revenue sources. The increases in net interest income and non-interest income were offset by increases in the provision for loan losses of $0.8 million and non-interest expense of $0.3 million. The growth in both net interest income and the provision for loan losses was driven by increased average loan balances at both the Bank and ALC, while the increase in non-interest expense resulted from increases in salaries and employee benefits, and to a lesser extent occupancy and equipment costs. The provision for income taxes was reduced by approximately $0.1 million comparing the two quarters.

For the nine months ended September 30, 2016, net income totaled $1.3 million, or $0.21 per diluted common share, compared to $2.2 million, or $0.34 per diluted common share, for the corresponding period of 2015. The decrease resulted primarily from significantly higher loan loss provisioning in the first nine months of 2016 due to substantial loan growth during the period. For the nine months ended September 30, 2016, the provision for loan losses totaled $1.4 million, compared to a negative provision (reduction in reserve) for loan losses of $0.2 million for the nine months ended September 30, 2015, a net increase of $1.6 million. In addition, non-interest expense increased by $0.5 million during the nine months ended September 30, 2016 compared to the same period of 2015. The increases in the provision for loan losses and non-interest expense were partially offset by increases in non-interest income of $0.7 million and reductions in the provision for income taxes of $0.5 million.

Additional discussion of significant financial results for the first nine months of 2016 are included below.

36

● Net loans increased $61.7 million, an increase of 23.4% from December 31, 2015, or 32.2% on an annualized basis. Of the total growth, $57.7 million was attributable to the Bank’s portfolio (which is primarily commercial in nature), while $4.0 million was attributable to growth in ALC’s consumer loan portfolio. Of the Bank’s total loan growth during the nine-month period, $25.1 million represented commercial and industrial (C&I) loans, $14.0 million represented real estate loans secured by non-farm, non-residential collateral, $12.8 million represented construction real estate loans, and $6.8 million represented residential real estate arrangements. These increases were partially offset by approximately $1.0 million in net reductions in other loan categories. The growth in the Bank’s portfolio is indicative of management’s ongoing efforts to broaden the Bank’s commercial loan portfolio with a diversified mix of real estate and C&I loans. Approximately 51% of the Bank’s new loan growth during 2016 was in variable rate lending arrangements, while 49% was at fixed rates. As of September 30, 2016, the Bank’s fixed rate loans totaled $143.7 million, while variable rate loans totaled $89.1 million.   The loan growth at ALC was comprised of $9.7 million in growth in point-of-sale consumer lending with prominent retail partners, partially offset by reductions of $2.7 million and $3.0 million in ALC’s real estate and traditional consumer lending portfolios, respectively. Point-of-sale retail lending continues to be a primary focus of ALC management, as it broadens the diversification of ALC’s portfolio with consumer loans that are generally of higher credit quality than traditional consumer loans.

● Due to the growth in loan demand, management redeployed certain investment assets to the loan portfolio. As a result, the investment securities portfolio (including both available-for-sale and held-to-maturity securities) decreased to $209.6 million as of September 30, 2016, compared to $231.2 million as of December 31, 2015. Reductions in the investment securities portfolio occurred through a combination of scheduled maturities, debtor-initiated calls of securities prior to maturity, and sales of securities from the available-for-sale portfolio initiated by management. Growth in deposits and borrowings also contributed to the funding side of the Company’s balance sheet. Total deposits increased $14.6 million, while short-term borrowings and long-term debt increased $8.0 million on a net basis, comparing balances as of September 30, 2016 to December 31, 2015.

● Non-performing assets decreased $1.5 million from levels as of December 31, 2015, to $7.7 million as of September 30, 2016. Non-performing assets as a percentage of total assets were reduced to 1.28% as of September 30, 2016, compared to 1.59% as of December 31, 2015 and 1.98% as of September 30, 2015. Of the total decrease during the first nine months of 2016, $0.7 million represented reductions in OREO, while $0.8 million was attributable to reductions in non-accrual loans.

● Pre-provision net interest income increased $0.1 million for the nine months ended September 30, 2016, compared to the same period in 2015, primarily due to loan growth at both the Bank and ALC, partially offset by reduced average yields on loans at both entities. The increase in loan volume was most pronounced at the Bank. The Bank’s average net loans during the nine months ended September 30, 2016 totaled $197.5 million, compared to $170.3 million during the nine months ended September 30, 2015. At ALC, average net loans were $85.5 million during the nine months ended September 30, 2016, compared to $77.3 million for the corresponding period of 2015. Yield on loans declined at both entities as a result of the current sustained low interest rate environment, coupled with management’s continued focus on maintaining established credit standards as the loan portfolio grows. In addition, despite overall growth in interest-bearing deposits and borrowings, the Company was able to reduce interest expense by $57 thousand  comparing the nine months ended September 30, 2016 to the same period of 2015, as a result of the sustained low interest rate environment. Despite reductions in yield on loans at both the Bank and ALC, the reduction in funding costs, as well as the shift in the Company’s earning-asset mix to a higher percentage of loans as compared to lower-yielding investment securities, enabled the Company to maintain net yield on interest-earning assets at a reasonably consistent level. Net yield on interest-earning assets was 5.16% for the nine months ended September 30, 2016, compared to 5.33% during the nine months ended September 30, 2015.

● The provision for loan losses increased $1.6 million comparing the nine months ended September 30, 2016 to the corresponding period of 2015. The increase resulted primarily from the significant growth in loans for the Company, as well as the continued stabilization of credit quality in the Bank’s loan portfolio. Over the past two years, the Bank has experienced substantial improvement in the credit quality of its loan portfolio, as evidenced by declining historical loss rates in the calculation of the allowance for loan losses. This resulted in negative provisions (reductions in reserve) in prior periods, which had a positive impact on the Company’s pre-tax income. As the credit quality of the portfolio continues to stabilize, these reductions in reserve have decreased substantially.

● Non-interest income increased $0.7 million during the nine months ended September 30, 2016 compared to the corresponding period of 2015. The increase was attributable to increased gains on the sale of investment securities at the Bank, credit insurance income earned primarily at ALC and other ancillary revenue sources. These increases were partially offset by reductions in service charges on deposit accounts at the Bank. 

● Non-interest expense increased $0.5 million for the nine months ended September 30, 2016 compared to the corresponding period of 2015 as a result of increased salaries and employee benefits and information technology services, as well as expenses associated with the closure of one of the Bank’s retail branches.  These increases were partially offset by reductions in other real estate/foreclosure expenses.  

The Company continues to maintain excess funding capacity to provide adequate liquidity for loan growth, capital expenditures and ongoing operations. The Company benefits from a strong deposit base, a liquid investment securities portfolio and access to funding from a variety of sources, including federal funds lines, Federal Home Loan Bank (“FHLB”) advances and brokered deposits. Management believes that continued success in loan growth efforts at both the Bank and ALC, combined with continued adherence to established credit underwriting standards, will strengthen both the diversity and credit quality of the Company’s loan portfolio, while improving interest and fee income on loans.

37

RESULTS OF OPERATIONS

	Three Months Ended					Nine Months Ended
	September 30,		September30,			September 30,		September 30,
	2016		2015			2016		2015
	(Dollars in Thousands)
Interest income	$	7,760	$	7,328		$	22,434	$	22,384
Interest expense		587		561			1,683		1,740
Net interest income		7,173		6,767			20,751		20,644
Provision (reduction in reserve) for loan losses		680		(78	)		1,383		(199	)
Net interest income after provision for loan losses		6,493		6,845			19,368		20,843
Non-interest income		1,567		996			4,036		3,355
Non-interest expense		7,348		7,090			21,669		21,174
Income before income taxes		712		751			1,735		3,024
Provision for income taxes		162		207			406		870
Net income	$	550	$	544		$	1,329	$	2,154

Net Interest Income

Net interest income is calculated as the difference between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates, as well as volume and mix changes in earning assets and interest-bearing liabilities, can materially impact net interest income. The Company’s earning assets are comprised of loans at both the Bank and ALC, as well as taxable and nontaxable investments and federal funds sold by the Bank. Interest-bearing liabilities are comprised of interest-bearing demand deposits and savings and time deposits, as well as short-term borrowings and long-term debt. Net interest income for the Company totaled $20.8 million and $20.6 million for the nine months ended September 30, 2016 and 2015, respectively.

38

The following tables show, for the three and nine months ended September 30, 2016 and September 30, 2015, the average balances of each principal category of assets, liabilities and shareholders’ equity. Additionally, the tables provide an analysis of interest revenue or expense associated with each category, along with the accompanying yield or rate percentage. Net yield is calculated for each period presented as net interest income divided by average total interest-earning assets.

	Three Months Ended							Three Months Ended
	September 30, 2016							September 30, 2015
	Average Balance		Interest		Annualized Yield/ Rate %			Average Balance		Interest		Annualized Yield/ Rate %
	(Dollars in Thousands)
ASSETS
Interest-earning assets:
Loans – FUSB (Note A)	$	223,739	$	2,428		4.34	%	$	159,110	$	1,994		5.01	%
Loans – ALC (Note A)		88,783		4,345		19.57	%		83,072		4,166		20.06	%
Taxable investments		218,135		869		1.59	%		250,857		1,022		1.63	%
Non-taxable investments		11,927		106		3.56	%		16,845		146		3.47	%
Federal funds sold		8,967		12		0.54			—		—		—
Total interest-earning assets		551,551		7,760		5.63	%		509,884		7,328		5.75	%
Non-interest-earning assets:
Other assets		49,796							47,463
Total	$	601,347						$	557,347
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Demand deposits	$	151,365	$	140		0.37	%	$	143,190	$	150		0.42	%
Savings deposits		78,415		37		0.19	%		74,064		34		0.18	%
Time deposits		182,567		355		0.78	%		183,263		372		0.81	%
Borrowings		20,289		55		1.08	%		3,547		5		0.56	%
Total interest-bearing liabilities		432,636		587		0.54	%		404,064		561		0.56	%
Non-interest-bearing liabilities:
Demand deposits		82,097							69,083
Other liabilities		7,919							8,192
Shareholders’ equity		78,695							76,008
Total	$	601,347						$	557,347
Net interest income (Note B)			$	7,173						$	6,767
Net yield on interest-earning assets						5.20	%						5.31	%

Note A	—	For the purpose of these computations, non-accruing loans are included in the average loan amounts outstanding. At the Bank, these loans averaged $0.9 million and $2.2 million for the three months ended September 30, 2016 and 2015, respectively. At ALC, these loans averaged $1.5 million and $1.6 million for the respective periods presented.
Note B	—	Loan fees are included in the interest amounts presented. At the Bank, loan fees totaled $0.1 million for both the three months ended September 30, 2016 and 2015. At ALC, loan fees totaled $0.7 million and $0.8 million for the respective periods presented.

39

	Nine Months Ended							Nine Months Ended
	September 30, 2016							September 30, 2015
	Average Balance		Interest		Annualized Yield/ Rate %			Average Balance		Interest		Annualized Yield/ Rate %
	(Dollars in Thousands)
ASSETS
Interest-earning assets:
Loans – FUSB (Note A)	$	197,460	$	6,508		4.39	%	$	170,268	$	6,811		5.33	%
Loans – ALC (Note A)		85,504		12,684		19.78	%		77,300		12,004		20.71	%
Taxable investments		234,409		2,843		1.62	%		252,613		3,126		1.65	%
Non-taxable investments		14,073		382		3.62	%		16,495		443		3.58	%
Federal funds sold		4,288		17		0.53	%		—		—		—
Total interest-earning assets		535,734		22,434		5.58	%		516,676		22,384		5.78	%
Non-interest-earning assets:
Other assets		49,222							47,485
Total	$	584,956						$	564,161
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Demand deposits	$	149,162	$	410		0.37	%	$	147,681	$	438		0.40	%
Savings deposits		77,411		108		0.19	%		73,300		101		0.18	%
Time deposits		180,949		1,050		0.77	%		185,363		1,182		0.85	%
Borrowings		15,467		115		0.99	%		4,918		19		0.52	%
Total interest-bearing liabilities		422,989		1,683		0.53	%		411,262		1,740		0.56	%
Non-interest-bearing liabilities:
Demand deposits		76,157							69,064
Other liabilities		7,750							7,837
Shareholders’ equity		78,060							75,998
Total	$	584,956						$	564,161
Net interest income (Note B)			$	20,751						$	20,644
Net yield on interest-earning assets						5.16	%						5.33	%

Note A	—	For the purpose of these computations, non-accruing loans are included in the average loan amounts outstanding. At the Bank, these loans averaged $1.2 million and $2.5 million for the nine months ended September 30, 2016 and 2015, respectively. At ALC, these loans averaged $1.6 million and $1.7 million for the respective periods presented.
Note B	—	Loan fees are included in the interest amounts presented. At the Bank, loan fees totaled $0.3 million for both the nine months ended September 30, 2016 and 2015. At ALC, loan fees totaled $2.1 million and $2.5 million for the respective periods presented.

Net interest income increased $0.4 million and $0.1 million in the three- and nine-month periods ended September 30, 2016, compared to the corresponding periods of 2015. The increases in both periods resulted from increased average loan balances at both the Bank and ALC. The Bank’s average loan balance increased $64.6 million comparing the three months ended September 30, 2016 to the three months ended September 30, 2015. For the nine months ended September 30, 2016 compared to the corresponding period of 2015, the Bank’s average loan balance increased by $27.2 million. The majority of the Bank’s loan growth was in real estate loans secured by non-farm, non-residential collateral, construction real estate, and the commercial and industrial (C&I) portfolio. ALC’s average loan balance increased by $5.7 million for the three months ended September 30, 2016, compared to the same period in 2015. Comparing the nine-month period ended September 30, 2016 to the same period in 2015, ALC’s average loan volume increased $8.2 million. The majority of ALC’s loan growth during both periods was in its point-of-sale consumer lending portfolio.

At both the Bank and ALC, the increases in net interest income that resulted from loan growth were partially offset by reductions in yield. Reduced yields resulted from the general interest rate environment, which remained at relatively low levels during the first nine months of 2016, as well as management’s ongoing strategic efforts over the past several years to focus on problem asset resolution and improve the credit quality of the loan portfolio through the tightening of credit standards.

The average balance of the Bank’s investment securities portfolio was reduced in both the three- and nine-month periods ended September 30, 2016. These reductions resulted in decreased interest income of $0.2 million and $0.3 million on investment securities for the three- and nine-month periods ended September 30, 2016, respectively, compared to the corresponding periods of 2015. The investment securities portfolio provides an additional source of liquidity and diversification, as well as a resource to enhance interest income. Changes in the investment portfolio result primarily from management’s decisions on the allocation of assets to higher-yielding loan portfolios and non-interest-earning assets.

40

Interest expense remained relatively consistent comparing both the three- and nine-month periods ended September 30, 2016 to the corresponding periods of 2015 despite growth in average balances of interest-bearing liability accounts. Average rates on interest-bearing liabilities were reduced in both the three- and nine-month periods ended September 30, 2016, primarily as a result of changes in the mix of deposits into lower cost demand deposits and away from higher cost time deposits.

We expect that continued growth of net loan volumes at both the Bank and ALC with loans of sufficient credit quality will enable management to enhance net interest income; however, in the current interest rate environment, it is expected that the average yield on new loan originations will generally be lower than the yield on loans in the Bank’s existing portfolio. At both the Bank and ALC, management is continuing to focus efforts on new loan origination within the parameters of established credit policy, while also maintaining vigilance in the deployment of strategies to effectively manage risks associated with interest rate fluctuations. Net interest income could experience downward pressure as a result of increased competition for quality loan opportunities, lower reinvestment yields and fewer opportunities to reduce future funding costs.

Provision (Reduction in Reserve) for Loan Losses

The provision for loan losses is an expense used to establish the allowance for loan losses. Actual loan losses, net of recoveries, are charged directly to the allowance for loan losses. The expense recorded for each reporting period is a reflection of actual net losses experienced during the period and management’s judgment as to the adequacy of the allowance to absorb losses inherent in the portfolio as of the balance sheet date. The Company’s provision for loan losses was $0.7 million and $1.4 million for the three and nine months ended September 30, 2016, respectively, compared to a credit (or reduction in reserve) of $0.1 million and $0.2 million for the three and nine months ended September 30, 2015, respectively.

The following table presents the provision (reduction in reserve) for loan losses for the Bank and ALC for the three and nine months ended September 30, 2016 and 2015.

	Three Months Ended					Nine Months Ended
	September 30,		September 30,			September 30,			September 30,
	2016		2015			2016			2015
FUSB	$	100	$	(400	)	$	(350	)	$	(1,370	)
ALC		580		322			1,733			1,171
Total	$	680	$	(78	)	$	1,383		$	(199	)

The Bank's provision for loan losses totaled $0.1 million for the three months ended September 30, 2016.  A reduction in the reserve for loan losses occurred during all other periods presented. These reductions resulted from improvement in the overall credit quality of the Bank’s loan portfolio, including declining historical loss rates used in the calculation of the allowance for loan losses. As of September 30, 2016, the Bank’s allowance for loan losses as a percentage of loans was 0.52%, compared to 1.22% as of September 30, 2015. For the three months ended September 30, 2016, the Bank experienced net charge-offs of $22 thousand, compared to net charge-offs of $0.1 million during the three months ended September 30, 2015. For the nine months ended September 30, 2016, the Bank experienced net recoveries of $0.2 million, compared to net charge-offs of $0.2 million during the nine months ended September 30, 2015. 

At ALC, the provision for loan losses increased by approximately $0.6 million comparing the nine months ended September 30, 2016 to the nine months ended September 30, 2015. The increase resulted from growth in ALC’s loan balances. As of September 30, 2016, ALC’s allowance for loan losses as a percentage of loans was 2.78%, compared to 2.89% as of September 30, 2015. During the three months ended September 30, 2016, net charge-offs at ALC totaled $0.6 million, compared to net charge-offs of $0.5 million during the three months ended September 30, 2015. For the nine months ended September 30, 2016, net charge-offs at ALC totaled $1.7 million, compared to net charge-offs of $1.4 million during the nine months ended September 30, 2015.

Based on management's evaluation of the portfolio, we believe that the Company's allowance for loan losses is adequate to absorb losses inherent in the loan portfolio as of September 30, 2016. While we believe that the methodologies and calculations that heve been used in the determination of the allowance are adequate, our conclusions are based on estimates and judgments and are, therefore, approximate and imprecise. Factors beyond our control, such as changes in economic conditions impacting the national economy or the local service areas in which we operate, may negatively and materially affect asset quality and the adequacy of the allowance for loan losses, as well as the resulting provision for loan losses. Furthermore, the reductions in the reserve for loan losses recorded by the Bank in 2016 and prior periods are not expected to continue at any significant level on an ongoing basis.

41

Non-Interest Income

Non-interest income represents fees and income derived from sources other than interest-earning assets. The following table presents the major components of non-interest income. Expanded discussion of certain significant non-interest income items and fluctuations is provided below the table.

	Three Months Ended September 30,										Nine Months Ended September 30,
	2016		2015		$ Change			% Change			2016		2015		$ Change			% Change
	(Dollars in Thousands)										(Dollars in Thousands)
Service charges and other fees on deposit accounts	$	463	$	465	$	(2	)		(0.4	)%	$	1,306	$	1,391	$	(85	)		(6.1	)%
Credit insurance commissions and fees		256		150		106			70.7	%		570		339		231			68.1	%
Bank-owned life insurance		105		106		(1	)		(0.9	)%		316		315		1			0.3	%
Net gain on sale and prepayment of investment securities		259		6		253			N/M			657		367		290			79.0	%
Other income		483		269		214			79.6	%		1,187		943		244			25.9	%
Total non-interest income	$	1,566	$	996	$	570			57.2	%	$	4,036	$	3,355	$	681			20.3	%

N/M: not meaningful                                                                                                                                                                               

Service Charges and Other Fees on Deposit Accounts

Service charges and other fees are generated on deposit accounts held at the Bank. Revenues in this category were consistent comparing the three months ended September 30, 2016 to the same period in 2015.  The decrease in this category for the nine months ended September 30, 2016 compared to the corresponding period in 2015 resulted primarily from decreased fees generated from customer overdrafts and non-sufficient funds charges. Revenues from these sources have generally declined in recent years and are generally not expected to increase at a significant rate in the near future.

Credit Insurance Commissions and Fees

Credit insurance commissions and fees are generated from credit life and credit accident and health insurance policies offered at both the Bank and ALC to consumer loan customers through FUSB Reinsurance. The majority of these sales have historically been generated at ALC. The increase in non-interest income in this category during the three and nine months ended September 30, 2016 compared to the corresponding periods of 2015 resulted primarily from a renewed focus by ALC management on generating these types of sales during the period.  In general, however, revenues from this category of non-interest income have declined in recent years as ALC management has shifted the loan portfolio mix to loans of higher credit quality. This mix-shift has resulted in a larger proportion of borrowers who generally do not have a significant need for credit insurance. Accordingly, income from credit insurance commissions and fees is not expected to increase at a significant rate for the foreseeable future.

Bank-owned Life Insurance

The Bank utilizes bank-owned life insurance as a tool to offset the cost of certain retirement benefit programs. The income derived from bank-owned life insurance represents the increase in the cash surrender value of the policies (which is generally non-taxable) over the periods presented. The cash surrender value of the policies totaled $14.5 million and $14.3 million as of September 30, 2016 and December 31, 2015, respectively. The insurance policies are adjustable-rate assets with minimum guaranteed rates of interest between 2% and 4%. Accordingly, management does not expect significant fluctuation in the income derived from these assets.

Net Gain on Sale and Prepayment of Investment Securities

The investment securities portfolio is used by management to provide liquidity, to generate interest income, and for use as collateral for public deposits and wholesale funding. Management reviews the securities in the investment portfolio periodically and, from time to time, may determine that it is appropriate to sell securities that are designated as securities available-for-sale. When this occurs, a gain or loss is recorded as the difference between the fair value of the security on the date of sale and the security’s carrying value. In addition, a gain may be recognized for prepayment penalties earned by the Company when a security is called by the debtor prior to its maturity date. During the nine months ended September 30, 2016, securities with a carrying value of $30.4 million were sold, while securities with a carrying value of $54.7 million were prepaid before maturity. As a result of these transactions, the Company realized net gains on the sale of securities of $0.7 million and $0.3 million during the nine-month periods ended September 30, 2016 and 2015, respectively. No losses were realized on the sale or prepayment of securities in either nine-month period ended September 30, 2016 or 2015. The determination of whether to sell investment securities is made by management based on specific facts and circumstances at a given point in time. Accordingly, no assessment can be made as to the level of gains or losses that could be incurred from sales of investment securities or prepayment penalties in the future.

Other Income

Other non-interest income includes fee income generated by the Bank for ancillary services, such as letters of credit, ATMs, debit and credit cards, wire transfers and real estate rental. In addition, other non-interest income is generated at ALC for ancillary services including ALC’s auto club membership program, which provides members with emergency roadside assistance, lock and key services and reimbursement for emergency travel expenses. The increase in non-interest income during the three and nine months ended September 30, 2016, compared to the corresponding periods of 2015, resulted from increased sales of ancillary services, primarily auto club membership programs, at ALC, totaling approximately $0.1 million in both periods presented. In addition, the Bank earned approximately $0.2 million in additional non-interest income during the third quarter of 2016 that was associated with the settlement of previously disputed litigation. Given the nature of the types of revenues categorized as other income, there is uncertainty as to the level of revenue that will be derived from these sources in the future.

42

Non-Interest Expense

Non-interest expense represents expenses incurred from sources other than interest-bearing liabilities. The following table presents the major components of non-interest expense for the periods indicated. Expanded discussion of certain significant non-interest expense items and fluctuations is provided below the table.

	Three Months Ended September 30,										Nine Months Ended September 30,
	2016		2015		$ Change			% Change			2016		2015		$ Change			% Change
	(Dollars in Thousands)										(Dollars in Thousands)
Salaries and employee benefits	$	4,334	$	4,106	$	228			5.6	%	$	12,734	$	12,513	$	221			1.8	%
Net occupancy and equipment		830		744		86			11.6	%		2,381		2,347		34			1.4	%
Other real estate/foreclosure expense:
Write-downs, net of gain or loss on sale		47		102		(55	)		(53.9	)%		137		413		(276	)		(66.8	)%
Carrying costs		77		145		(68	)		(46.9	)%		233		401		(168	)		(41.9	)%
Total other real estate/foreclosure expense		124		247		(123	)		(49.8	)%		370		814		(444	)		(54.5	)%
Insurance expense and assessments		255		261		(6	)		(2.3	)%		775		798		(23	)		(2.9	)%
Other		1,805		1,732		73			4.2	%		5,409		4,702		707			15.0	%
Total non-interest expense	$	7,348	$	7,090	$	258			3.6	%	$	21,669	$	21,174	$	495			2.3	%

Salaries and Employee Benefits

Salaries and employee benefits, the largest category of non-interest expense, totaled $2.9 million at the Bank and $1.4 million at ALC for the third quarter of 2016, compared to $2.7 million at the Bank and $1.4 million at ALC during the third quarter of 2015. For the nine-month period ended September 30, 2016, salaries and benefits expense totaled $8.3 million at the Bank and $4.4 million at ALC, compared to $8.1 million at the Bank and $4.4 million at ALC for the nine months ended September 30, 2015. The expense amounts for the Bank are inclusive of salaries and benefits paid to certain members of management and employees for work performed on behalf of Bancshares, as well as current and deferred fees paid to members of the Bank’s and Bancshares’ Boards of Directors. Management remains committed to providing salaries and benefits packages to employees at competitive levels in order to ensure that we continue to provide quality service to our customers. Accordingly, we expect salaries and employee benefits expense to generally increase commensurate with market-based increases over time.

Net Occupancy and Equipment Expense

This category of non-interest expense includes expenses associated with depreciation of buildings, equipment and furniture and fixtures, rent of office space, utilities expense and maintenance and repair costs. The majority of the Bank’s office space is owned, while the majority of ALC’s office space is leased. The increase in this category of expense during both the three and nine months ended September 30, 2016 compared to the same periods of 2015 resulted primarily from increases in depreciation and rent expenses. For the nine months ended September 30, 2016, these increases were offset in part by reduced expenses at the Bank associated with changes in service contract arrangements with the Bank's primary core processing vendor. Occupancy and equipment expense is expected to increase over time as the Company depreciates expenditures associated with capital improvements. During the three and nine months ended September 30, 2016, the Company recorded $1.0 million and $4.5 million, respectively, in additions to premises and equipment. The majority of these expenditures were associated with the purchase of land and construction in process related to an office complex being constructed by the Bank in the Birmingham, Alabama metropolitan area. The office complex, for which construction is expected to be completed in 2017, will house a retail branch of the Bank, as well as the Bank’s commercial lending team in Birmingham and certain other officers of the Bank. Approximately 25% of the square footage of the office complex will be utilized by the Bank, with the remainder to be leased to commercial tenants. Based on management’s current estimates, it is expected that placement of the office complex into service will result in approximately $0.4 million in additional depreciation expense annually. Upon full lease-up of the office complex, management expects that the majority of depreciation expense, as well as additional operating costs associated with the complex, would be recovered through lease revenue; however, no assurance can be given regarding the office complex being fully leased by third-party tenants or the timing of such third-party leases.

Other Real Estate / Foreclosure Expense

Other real estate / foreclosure expense includes both the cost of carrying OREO and write-downs of OREO. Cost of carrying OREO includes property taxes, attorneys’ fees, maintenance costs, security costs and the cost of obtaining independent property appraisals. Write-downs include impairments recorded on existing OREO properties in order to carry the property at the lower of cost or fair value, less estimated cost to sell.

Both OREO write-downs and carrying costs decreased during the three and nine months ended September 30, 2016, compared to the corresponding periods of 2015, as a result of continued reduction in the levels of OREO at the Bank and ALC. OREO totaled $4.9 million and $0.5 million at the Bank and ALC, respectively, as of September 30, 2016, compared to $6.0 million and $0.7 million, respectively, as of December 31, 2015, a decrease of $1.3 million for the Company on a consolidated basis.

Although management continued to reduce OREO levels during the three- and nine-month periods ended September 30, 2016, there continues to be uncertainty with respect to economic conditions and real estate values in certain of the service areas in which both the Bank and ALC operate. In addition, as the level of OREO is reduced, it becomes more difficult to work out remaining OREO at the same pace as previously experienced. Accordingly, continued reduction of carrying costs cannot be expected with any level of certainty. Furthermore, if the national or local economy weakens, or if real estate values decline further in the Company's primary service areas, then additional write-downs of existing OREO could be required. Additionally, the pace of migration of properties into OREO could increase, resulting in the potential for increased levels of both write-downs and carrying cost.

43

Insurance Expense and Assessments

This category of non-interest expense includes the cost of corporate insurance maintained by the Company, as well as FDIC insurance and state banking assessments. The Bank pays assessments to the FDIC based on a prescribed regulatory calculation that factors in average total assets and the Company’s supervisory ratings, as determined by regulatory examinations. Total expense in this category decreased modestly during the three- and nine-month periods ended September 30, 2016 compared to the corresponding periods of 2015. In general, this category of expense is expected to increase over time based on growth in the Company’s balance sheet and expansion of the Company's activities.

Other

This category includes the costs of professional services (including legal, accounting and auditing), information technology and advertising/marketing fees, as well as costs associated with recording and filing, telephone, postage, stationery and printing, employee training and other miscellaneous expenses.  Approximately $0.5 million of the increase in this category during the nine months ended September 30, 2016, compared to the same period of 2015, was driven by expenses associated with information technology services provided by the Bank’s core processing vendor. In addition, approximately $0.1 million of the increase was associated with the closure of one of the Bank’s branches. The branch closing was undertaken as part of an effort to evaluate the profitability of branches and make adjustments that will positively impact the Company’s cost structure over time, while maintaining the Bank's ability to effectively serve its customer base. Management currently anticipates additional branch closures to occur during the fourth quarter of 2016.  The remaining portion of increased expenses for the nine months ended September 30, 2016, as well as for the third quarter of 2016 compared to the third quarter of 2015, resulted primarily from losses on the sale of fixed assets at ALC.

Management will continue to maintain vigilance in the evaluation of all expenses in this category; however, the level of other non-interest expense is generally expected to increase over time as a result of continued focus on technology, training, marketing and business development.

Provision for Income Taxes

The provision for income taxes was $0.2 million for both of the three-month periods ended September 30, 2016 and 2015. The effective tax rate was 22.8% for the third quarter of 2016, compared to 27.6% for the third quarter of 2015. For the nine months ended September 30, 2016 and 2015, the effective tax rate was 23.4% and 28.8%, respectively. The Company’s effective tax rate is expected to fluctuate based on recurring items, such as changes in tax-exempt interest income earned from bank-qualified municipal bonds and loans and the cash surrender value of bank-owned life insurance. Management makes decisions about whether to invest in tax-exempt instruments on a case-by-case basis after considering a number of factors, including investment return, credit quality and the consistency of such investments with the Company’s overall strategy. The Company’s effective tax rate is expected to fluctuate commensurate with the level of these investments as compared to total pre-tax income.

BALANCE SHEET ANALYSIS

Investment Securities

The investment securities portfolio is used by management to provide liquidity, to generate interest income and for use as collateral for public deposits and wholesale funding. Risk and return can be adjusted by altering the duration, composition and/or balance of the portfolio. The expected average life of securities in the investment portfolio was 2.7 years and 2.9 years as of September 30, 2016 and December 31, 2015, respectively.

Available-for-sale securities are recorded at estimated fair value, with unrealized gains or losses recognized, net of taxes, in accumulated other comprehensive income, a separate component of shareholders’ equity. As of September 30, 2016, available-for-sale securities totaled $181.3 million, or 86.5% of the total investment portfolio, compared to $198.8 million, or 86.0% of the total investment portfolio, as of December 31, 2015. Available-for-sale securities consisted of residential and commercial mortgage-backed securities, U.S. Treasury securities, obligations of U.S. government-sponsored agencies, obligations of state and political subdivisions and corporate notes.

Held-to-maturity securities are recorded at amortized cost and represent securities that the Company both intends and has the ability to hold to maturity. As of September 30, 2016, held-to-maturity securities totaled $28.3 million, or 13.5% of the total investment portfolio, compared to $32.4 million, or 14.0% of the total investment portfolio, as of December 31, 2015. Held-to-maturity securities consisted of commercial mortgage-backed securities, obligations of U.S. government-sponsored agencies and obligations of state and political subdivisions.

Due to the growth in loan demand, management redeployed certain investment assets to the loan portfolio. As a result, the investment securities portfolio (including both available-for-sale and held-to-maturity securities) decreased to $209.6 million as of September 30, 2016, compared to $231.2 million as of December 31, 2015. In addition, the Company realized gains on the sale of securities totaling $0.7 million and $0.4 million for the nine-month periods ended September 30, 2016 and 2015, respectively. Sales transactions affecting the Bank’s investment portfolio are directed by asset and liability management activities and strategies. The “pruning” of the portfolio is designed to maintain the strength of the investment portfolio.

44

Loans and Allowance for Loan Losses

The tables below summarize loan balances by portfolio segment for both FUSB and ALC at the end of each of the most recent five quarters as of September 30, 2016.

	FUSB
	2016						2015
	September 30,		June 30		March 31,		December 31,		September 30,
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	24,610	$	24,306	$	18,023	$	11,827	$	11,900
Secured by 1-4 family residential properties		32,559		33,326		30,623		30,730		32,049
Secured by multi-family residential properties		16,801		5,972		11,580		11,845		13,005
Secured by non-farm, non-residential properties		97,859		105,541		82,754		83,883		75,840
Other		185		190		168		115		116
Commercial and industrial loans		54,459		38,160		34,568		29,377		18,796
Consumer loans		6,289		6,366		6,614		7,057		6,848
Other loans		46		364		407		379		486
Total loans	$	232,808	$	214,225	$	184,737	$	175,213	$	159,040
Less unearned interest, fees and deferred cost		191		192		174		149		164
Allowance for loan losses		1,216		1,138		1,068		1,329		1,941
Net loans	$	231,401	$	212,895	$	183,495	$	173,735	$	156,935

	ALC
	2016						2015
	September 30,		June 30,		March 31,		December 31,		September 30,
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		14,462		15,430		16,265		17,233		17,993
Secured by multi-family residential properties		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—
Other		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—
Consumer loans		80,915		80,886		74,669		76,131		74,767
Other loans		—		—		—		—		—
Total loans	$	95,377	$	96,316	$	90,934	$	93,364	$	92,760
Less unearned interest, fees and deferred cost		7,205		7,857		8,147		9,215		9,576
Allowance for loan losses		2,452		2,453		2,307		2,452		2,404
Net loans	$	85,720	$	86,006	$	80,480	$	81,697	$	80,780

45

The tables below summarize changes in the allowance for loan losses and certain asset quality ratios at the end of each of the most recent five quarters as of September 30, 2016 at both FUSB and ALC.

	FUSB
	2016									2015
	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
	(Dollars in Thousands)
Balance at beginning of period	$	1,138		$	1,068		$	1,329		$	1,941		$	2,449
Charge-offs:
Commercial and industrial		(1	)		—			—			—			—
Commercial real estate		(40	)		—			—			(490	)		(173	)
Residential real estate		(3	)		(7	)		—			—			(27	)
Consumer		(3	)		(6	)		(21	)		(1	)		(2	)
Total charge-offs		(47	)		(13	)		(21	)		(491	)		(202	)
Recoveries		25			253			40			68			94
Net recoveries (charge-offs)		(22	)		240			19			(423	)		(108	)
Provision (reduction in reserve) for loan losses		100			(170	)		(280	)		(189	)		(400	)
Ending balance	$	1,216		$	1,138		$	1,068		$	1,329		$	1,941
as a % of loans		0.52	%		0.53	%		0.58	%		0.76	%		1.22	%

	ALC
	2016									2015
	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
	(Dollars in Thousands)
Balance at beginning of period	$	2,453		$	2,307		$	2,452		$	2,404		$	2,559
Charge-offs:
Commercial and industrial		—			—			—			—			—
Commercial real estate		—			—			—			—			—
Residential real estate		(28	)		(16	)		(5	)		(14	)		(30	)
Consumer		(707	)		(746	)		(765	)		(706	)		(618	)
Total charge-offs		(735	)		(762	)		(770	)		(720	)		(648	)
Recoveries		154			202			178			164			170
Net recoveries (charge-offs)		(581	)		(560	)		(592	)		(556	)		(478	)
Provision (reduction in reserve) for loan losses		580			706			447			604			323
Ending balance	$	2,452		$	2,453		$	2,307		$	2,452		$	2,404
as a % of loans		2.78	%		2.77	%		2.79	%		2.91	%		2.89	%

46

Nonperforming Assets

Nonperforming assets at the end of the five most recent quarters as of September 30, 2016 were as follows:

	Consolidated
	2016									2015
	September 30,			June 30,			March 31,			December 31,			September 30,
	(Dollars in Thousands)
Non-accrual loans	$	2,266		$	2,619		$	3,277		$	3,102		$	4,222
Other real estate owned		5,391			5,405			5,356			6,038			6,656
Total	$	7,657		$	8,024		$	8,633		$	9,140		$	10,878
Nonperforming assets as a percentage of loans and other real estate		2.37	%		2.61	%		3.17	%		3.45	%		4.37	%
Nonperforming assets as a percentage of total assets		1.28	%		1.33	%		1.50	%		1.59	%		1.98	%

	FUSB
	2016									2015
	September 30,			June 30,			March 31,			December 31,			September 30,
	(Dollars in Thousands)
Non-accrual loans	$	766		$	1,086		$	1,463		$	1,445		$	2,624
Other real estate owned		4,887			4,944			4,702			5,327			5,961
Total	$	5,653		$	6,030		$	6,165		$	6,772		$	8,585
Nonperforming assets as a percentage of loans and other real estate		2.38	%		2.75	%		3.26	%		3.75	%		5.21	%
Nonperforming assets as a percentage of total assets		0.94	%		1.00	%		1.07	%		1.17	%		1.56	%

	ALC
	2016									2015
	September 30,			June 30,			March 31,			December 31,			September 30,
	(Dollars in Thousands)
Non-accrual loans	$	1,500		$	1,533		$	1,814		$	1,657		$	1,598
Other real estate owned		504			461			654			711			695
Total	$	2,004		$	1,994		$	2,468		$	2,368		$	2,293
Nonperforming assets as a percentage of loans and other real estate		2.26	%		2.24	%		2.96	%		2.79	%		2.73	%
Nonperforming assets as a percentage of total assets		2.24	%		2.22	%		2.93	%		2.76	%		2.70	%

Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. The concessions generally involve modification of the terms of the loan, such as changes in payment schedule or interest rate, which generally would not otherwise be considered. Restructured loans can involve loans remaining on non-accrual, moving to non-accrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Non-accrual restructured loans are included and treated with all other non-accrual loans. In addition, all accruing restructured loans are reported as troubled debt restructurings. Generally, restructured loans remain on non-accrual until the customer has attained a sustained period of repayment performance under the modified loan terms (generally a minimum of six months). However, performance prior to the restructuring or significant events that coincide with the restructuring are considered in assessing whether the borrower can meet the new terms and whether the loan should be returned to accrual or maintained on non-accrual status. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, then the loan remains on non-accrual. The Company had $0.2 million and $1.0 million of non-accruing loans that were restructured and remained on non-accrual status as of September 30, 2016 and 2015, respectively. During the three months ended September 30, 2016, the Company had no restructured loans that were restored to accrual status based on a sustained period of repayment performance. For the three months ended September 30, 2015, the Company had no restructured loans that were restored to accrual status based on a sustained period of repayment performance. 

47

Deposits

Total deposits increased by 3.0% to $493.8 million as of September 30, 2016, from $479.3 million as of December 31, 2015. Core deposits, which exclude time deposits of $250 thousand or more, provide for a relatively stable funding source that supports earning assets. Core deposits totaled $463.8 million, or 93.9% of total deposits, as of September 30, 2016, compared to $454.2 million, or 94.8% of total deposits, as of December 31, 2015.

Deposits, in particular core deposits, have historically been the Company’s primary source of funding and have enabled the Company to successfully meet both short-term and long-term liquidity needs. Deposit levels fluctuate throughout the year based on certain seasonal trends, as well as specific circumstances impacting deposit customers. Management anticipates that deposits will continue to be the Company’s primary source of funding in the future, and we will continue to monitor deposit levels closely to help ensure an adequate level of funding for the Company’s activities. However, various economic and competitive factors could affect this funding source in the future, including increased competition from other financial institutions in deposit gathering, national and local economic conditions and interest rate policies adopted by the Federal Reserve and other central banks.

Other Interest-Bearing Liabilities

Other interest-bearing liabilities consist of federal funds purchased, securities sold under agreements to repurchase and FHLB advances. We continue to utilize this category as an alternative source of funds. During the third quarter of 2016, these borrowings represented 2.64% of average interest-bearing liabilities, compared with 0.24% in the third quarter of 2015.

Shareholders’ Equity

The Company has historically placed great emphasis on maintaining its strong capital base. As of September 30, 2016, shareholders’ equity totaled $78.8 million, or 13.1% of total assets, compared to $77.0 million, or 13.4% of total assets, as of December 31, 2015. Management believes that this level of equity is an indicator of the financial soundness of the Company and the Company’s ability to sustain future growth and profitability. The increase in shareholders’ equity during the period ended September 30, 2016 resulted from continued growth in retained earnings and increases in accumulated other comprehensive income related to changes in the fair value of investment securities available-for-sale. The fair value of the available-for-sale portfolio fluctuates based primarily on changes in interest rates. Accordingly, the net unrealized gains during the third quarter of 2016 are not necessarily indicative of future performance of the portfolio.

The Company’s Board of Directors evaluates dividend payments based on the Company’s level of earnings and our desire to maintain a strong capital base, as well as regulatory requirements relating to the payment of dividends. During each of the three-month periods ended September 30, 2016 and 2015, the Company declared dividends of $0.02 per common share, or approximately $0.1 million.

As of both September 30, 2016 and December 31, 2015, the Company retained approximately $20.8 million in treasury stock. The Company initiated a share repurchase program in January 2006, under which the Company was authorized to repurchase up to 642,785 shares of common stock before December 31, 2007. In December 2007, and in each year since, the Board of Directors has extended the expiration date of the share repurchase program for an additional year. Currently, the share repurchase program is set to expire on December 31, 2016. There are 242,303 shares available for repurchase under this plan, at management’s discretion. No shares were purchased under this program during the first nine months of 2016 or 2015.

As of September 30, 2016 and December 31, 2015, a total of 111,195 and 103,571 shares of stock, respectively, were deferred in connection with the Company's Non-Employee Directors’ Deferred Compensation Plan. The plan permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash and/or shares of common stock. All deferred fees, whether in the form of cash or shares of stock, are reflected as compensation expense in the period earned. The Company classifies all deferred directors' fees allocated to be paid in shares of stock as equity surplus. The Company uses shares of treasury stock to satisfy these obligations when due.

LIQUIDITY AND CAPITAL RESOURCES

The asset portion of the balance sheet provides liquidity primarily from two sources: (1) principal payments and maturities of loans and (2) maturities and principal payments from the investment portfolio. Other short-term investments, such as federal funds sold, may also provide additional sources of liquidity. Loans maturing or repricing in one year or less totaled $124.7 million as of September 30, 2016 and $97.8 million as of December 31, 2015. Investment securities forecasted to mature or reprice in one year or less are estimated to be $16.0 million as of September 30, 2016.

Although the majority of the securities portfolio has a legal final maturity exceeding 10 years, a substantial percentage of the portfolio provides monthly principal and interest payments and consists of securities that are readily marketable and easily convertible into cash on short notice. As of September 30, 2016, the investment securities portfolio had an estimated average life of 2.71 years, and approximately 84.5% of the portfolio (including both available-for-sale and held-to-maturity investments) was expected to be repaid within five years. However, management does not rely solely on the investment portfolio to generate cash flows to fund loans, capital expenditures, dividends, debt repayment and other cash requirements. These activities are also funded by cash flows from loan payments, as well as increases in deposits and short-term borrowings.

48

The liability portion of the balance sheet provides liquidity through interest-bearing and non-interest-bearing deposit accounts, which represent the Company’s primary sources of funds. In addition, federal funds purchased, FHLB advances, securities sold under agreements to repurchase and short-term and long-term borrowings are additional sources of available liquidity. Liquidity management involves the continual monitoring of the sources and uses of funds to maintain an acceptable cash position. Long-term liquidity management focuses on considerations related to the total balance sheet structure. The Bank manages the pricing of its deposits to maintain a desired deposit balance. In addition, the Bank invests in short-term interest-earning assets, which provide liquidity to meet lending requirements.

As of September 30, 2016 and December 31, 2015, respectively, the Company had $20.0 million and $12.0 million in outstanding borrowings under FHLB advances. The Company had up to $160.4 million and $152.5 million in remaining unused credit from the FHLB (subject to available collateral) as of September 30, 2016 and December 31, 2015, respectively. In addition, the Company had $18.8 million in unused established federal funds lines as of September 30, 2016 and December 31, 2015, respectively.

Management is not aware of any condition that currently exists that would have a material adverse effect on the liquidity, capital resources or operation of the Company. However, the Company is a defendant in certain claims and legal actions arising in the ordinary course of business. See Note 16, “Guarantees, Commitments and Contingencies,” in the Notes to the Interim Condensed Consolidated Financial Statements herein for further discussion.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary purpose in managing interest rate risk is to invest capital effectively and preserve the value created by our core banking business. This is accomplished through the development and implementation of lending, funding, pricing and hedging strategies designed to maximize net interest income performance under varying interest rate environments, subject to liquidity and interest rate risk guidelines. Effective interest rate sensitivity management ensures that both assets and liabilities respond to changes in interest rates within an acceptable time frame, thereby minimizing the effect of such interest rate movements on short- and long-term net interest margin and net interest income.

Financial simulation models are the primary tools used to measure interest rate exposure. Using a wide range of scenarios, management is provided with extensive information on the potential impact on net interest income caused by changes in interest rates. In these simulations, assumptions are made about the direction and volatility of interest rates, the slope of the yield curve and the changing composition of the Company’s balance sheet resulting from both strategic plans and customer behavior. Simulation models also incorporate management’s assumptions regarding such factors as loan and deposit growth, pricing, prepayment speeds and spreads between interest rates.

49

Measuring Interest Rate Sensitivity

Interest rate sensitivity is a function of the repricing characteristics of all of the Company’s portfolio of assets and liabilities. These repricing characteristics are the timeframes during which the interest-earning assets and interest-bearing liabilities are subject to fluctuation based on changes in interest rates, either at replacement or maturity, during the life of the instruments. Measuring interest rate sensitivity is a function of the differences in the volume of assets and the volume of liabilities that are subject to repricing in future time periods. These differences are known as interest sensitivity gaps and are usually calculated for segments of time and on a cumulative basis.

The Company measures changes in net interest income and net interest margin on a monthly basis through income simulation over various interest rate shock scenarios, including plus or minus 1%, 2%, 3% and 4% scenarios. Each month, management evaluates how changes in short- and long-term interest rates may impact future profitability, as reflected in the Company’s net interest margin.

Also on a monthly basis, management calculates how changes in interest rates would impact the market value of the Company’s assets and liabilities, as well as its long-term profitability. The process is similar to assessing short-term risk but emphasizes and is measured over a five-year period, which allows for a more comprehensive assessment of longer-term repricing and cash flow imbalances that may not be captured by short-term net interest margin simulations. The results of these calculations are representative of long-term interest rate risk, both in terms of changes in the present value of the Company’s assets and liabilities and long-term changes in core profitability.

See Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of the Company's Annual Report on Form 10-K as of and for the year ended December 31, 2015 for additional disclosures related to market risk.

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Securities Exchange Act of 1934 (the “Exchange Act”) reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

The Company’s management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of September 30, 2016, pursuant to the evaluation of these controls and procedures required by Rule 13a-15 of the Exchange Act. Based on that evaluation, the Company’s management concluded, as of September 30, 2016, that the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed in the Company’s periodic filings with the SEC is recorded, processed, summarized and reported within the time periods specified.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

50

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 16 to Item 1, “Guarantees, Commitments and Contingencies,” for information regarding certain litigation matters relating to the Company.

The Company is a party to certain ordinary course litigation, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015 that could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, of shares of Bancshares’ common stock during the third quarter of 2016.

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)		Maximum Number of Shares that May Yet Be Purchased Under the Programs (1)
July 1 – July 31		—	$	—		—		242,303
August 1 – August 31		—	$	—		—		242,303
September 1 – September 30		—	$	—		—		242,303
Total		—	$	—		—		242,303

(1) On December 16, 2015, the Board of Directors extended the share repurchase program previously approved by the Board on January 19, 2006. Under the repurchase program, the Company is authorized to repurchase up to 642,785 shares of common stock. The expiration date of the extended repurchase program is December 31, 2016. As of September 30, 2016, there were 242,303 shares that may still be purchased under the program.

ITEM 6. EXHIBITS

The exhibits listed in the Index to Exhibits below are filed herewith or incorporated herein by reference as noted.

51

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST US BANCSHARES, INC.

DATE: November 9, 2016

BY:	/s/ Thomas S. Elley
	Thomas S. Elley
	Its Vice President, Treasurer and Assistant Secretary, Chief Financial Officer and Principal Accounting Officer (Duly Authorized Officer and Principal Financial Officer)

52

INDEX TO EXHIBITS

Exhibit No.	Description
3.1	Certificate of Incorporation of United Security Bancshares, Inc., (incorporated herein by reference to Exhibit 3(i) to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (File No. 000-14549), filed on November 12, 1999).
3.1A	Certificate of Amendment to the Certificate of Incorporation of United Security Bancshares, Inc. (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 000-14549), filed on October 11, 2016).
3.2	Bylaws of First US Bancshares, Inc. (incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 000-14549), filed on October 11, 2016).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data Files for the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, James F. House, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First US Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2016

By:	/s/ James F. House
	James F. House
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Thomas S. Elley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First US Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2016

By:	/s/ Thomas S. Elley
	Thomas S. Elley
	Vice President, Treasurer and Assistant Secretary, Chief Financial Officer and Principal Accounting Officer

EX-32

Exhibit 32

CERTIFICATION

PURSUANT TO 18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, James F. House, President and Chief Executive Officer of First US Bancshares, Inc., and Thomas S. Elley, Vice President, Treasurer and Assistant Secretary, Chief Financial Officer and Principal Accounting Officer of First US Bancshares, Inc., certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of First US Bancshares, Inc. for the fiscal quarter ended September 30, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of First US Bancshares, Inc.

BY:	/s/ James F. House
	James F. House
	President and Chief Executive Officer
	November 9, 2016
BY:	/s/ Thomas S. Elley
	Thomas S. Elley
	Vice President, Treasurer and Assistant Secretary, Chief Financial Officer and Principal Accounting Officer
	November 9, 2016

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 09, 2016
Document Information [Line Items]
Entity Registrant Name	FIRST US BANCSHARES INC
Entity Central Index Key	0000717806
Trading Symbol	fusb
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		6,043,292
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Interim Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Cash and due from banks	$ 7,618,000	$ 7,088,000
Interest-bearing deposits in banks	18,475,000	36,984,000
Total cash and cash equivalents	26,093,000	44,072,000
Investment securities available-for-sale, at fair value	181,251,000	198,843,000
Investment securities held-to-maturity, at amortized cost	28,315,000	32,359,000
Federal Home Loan Bank stock, at cost	1,368,000	1,025,000
Loans, net of allowance for loan losses of $3,668 and $3,781, respectively	317,121,000	255,432,000
Premises and equipment, net	15,481,000	12,084,000
Cash surrender value of bank-owned life insurance	14,525,000	14,292,000
Accrued interest receivable	1,847,000	1,833,000
Other real estate owned	5,391,000	6,038,000
Other assets	8,915,000	9,804,000
Total assets	600,307,000	575,782,000
Deposits	493,828,000	479,258,000
Accrued interest expense	231,000	180,000
Other liabilities	7,063,000	6,960,000
Short-term Debt	5,337,000	7,354,000
Long-term debt	15,000,000	5,000,000
Total liabilities	521,459,000	498,752,000
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized; 7,329,060 shares issued; 6,043,102 and 6,038,554 shares outstanding, respectively	73,000	73,000
Surplus	10,723,000	10,558,000
Accumulated other comprehensive income, net of tax	1,169,000	536,000
Retained earnings	87,660,000	86,693,000
Less treasury stock: 1,285,958 and 1,290,506 shares at cost, respectively	(20,764,000)	(20,817,000)
Noncontrolling interest	(13,000)	(13,000)
Total shareholders’ equity	78,848,000	77,030,000
Total liabilities and shareholders’ equity	$ 600,307,000	$ 575,782,000

XML

Interim Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Loans, allowance for loan losses	$ 3,668	$ 3,781
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	7,329,060	7,329,060
Common stock, shares outstanding (in shares)	6,043,102	6,038,554
Treasury stock, shares (in shares)	1,285,958	1,290,506

XML

Interim Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income:
Interest and fees on loans	$ 6,773,000	$ 6,160,000	$ 19,192,000	$ 18,815,000
Interest on investment securities	987,000	1,168,000	3,242,000	3,569,000
Total interest income	7,760,000	7,328,000	22,434,000	22,384,000
Interest expense:
Interest on deposits	532,000	557,000	1,568,000	1,721,000
Interest on borrowings	55,000	4,000	115,000	19,000
Total interest expense	587,000	561,000	1,683,000	1,740,000
Net interest income	7,173,000	6,767,000	20,751,000	20,644,000
Provision (reduction in reserve) for loan losses	680,000	(78,000)	1,383,000	(199,000)
Net interest income after provision (reduction in reserve) for loan losses	6,493,000	6,845,000	19,368,000	20,843,000
Non-interest income:
Service and other charges on deposit accounts	463,000	465,000	1,306,000	1,391,000
Credit insurance income	256,000	150,000	570,000	339,000
Other income, net	589,000	375,000	1,503,000	1,258,000
Net gain on sales and prepayments of investment securities	259,000	6,000	657,000	367,000
Total non-interest income	1,567,000	996,000	4,036,000	3,355,000
Non-interest expense:
Salaries and employee benefits	4,334,000	4,106,000	12,734,000	12,513,000
Net occupancy and equipment	830,000	744,000	2,381,000	2,347,000
Other real estate/foreclosure expense, net	124,000	247,000	370,000	814,000
Other expense	2,060,000	1,993,000	6,184,000	5,500,000
Total non-interest expense	7,348,000	7,090,000	21,669,000	21,174,000
Income before income taxes	712,000	751,000	1,735,000	3,024,000
Provision for income taxes	162,000	207,000	406,000	870,000
Net income	$ 550,000	$ 544,000	$ 1,329,000	$ 2,154,000
Basic net income per share (in dollars per share)	$ 0.09	$ 0.09	$ 0.22	$ 0.35
Diluted net income per share (in dollars per share)	0.09	0.09	0.21	0.34
Dividends per share (in dollars per share)	$ 0.02	$ 0.02	$ 0.06	$ 0.06

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income	$ 550	$ 544	$ 1,329	$ 2,154
Other comprehensive income:
Unrealized holding gains (losses) on securities available-for-sale arising during period, net of tax expense (benefit) of $(39), $(41), $656 and $(423), respectively	(66)	(69)	1,125	(707)
Reclassification adjustment for net gains on available-for-sale securities realized in net income, net of tax of $93, $0, $238 and $136, respectively	(160)		(410)	(223)
Unrealized holding gains (losses) arising during the period on effective cash flow hedge derivatives, net of tax expense (benefit) of $34, $0, $(48) and $0, respectively	57		(82)
Other comprehensive income (loss)	(169)	(69)	633	(930)
Total comprehensive income	$ 381	$ 475	$ 1,962	$ 1,224

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Unrealized holding gains (losses) on securities available-for-sale arising during period, tax expense	$ (39,000)	$ (41,000)	$ 656,000	$ (423,000)
Reclassification adjustment for net gains on available-for-sale securities realized in net income,tax	93,000	0	238,000	136,000
Change in accumlated loss on effective cash flow hedge derivatives, tax	$ 34,000	$ 0	$ (48,000)	$ 0

XML

Interim Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 1,329,000	$ 2,154,000
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	726,000	640,000
Provision (reduction in reserve) for loan losses	1,383,000	(199,000)
Deferred income tax provision	368,000	846,000
Net gain on sale and prepayment of investment securities	(657,000)	(367,000)
Stock-based compensation expense	218,000	302,000
Net amortization of securities	(1,163,000)	(1,268,000)
Net loss on premises and equipment, repossessed assets and other real estate	573,000	657,000
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable	(14,000)	445,000
Decrease in other assets	224,000	963,000
Increase (decrease) in accrued interest expense	51,000	(32,000)
Decrease in other liabilities	(27,000)	(618,000)
Net cash provided by operating activities	5,337,000	6,067,000
Cash flows from investing activities:
Purchase of investment securities, available-for-sale	(49,236,000)	(54,410,000)
Purchase of investment securities, held-to-maturity	(13,850,000)	(22,317,000)
Proceeds from sales of investment securities, available-for-sale	30,439,000	15,754,000
Proceeds from maturities and prepayments of investment securities, available-for-sale	37,131,000	36,664,000
Proceeds from maturities and prepayments of investment securities, held-to-maturity	17,779,000	16,990,000
Net increase (decrease) in Federal Home Loan Bank stock	(343,000)	222,000
Proceeds from the sale of premises and equipment and other real estate	1,208,000	2,849,000
Net change in loan portfolio	(64,081,000)	19,759,000
Purchases of premises and equipment	(4,554,000)	(3,111,000)
Net cash provided by (used in) investing activities	(45,507,000)	12,400,000
Cash flows from financing activities:
Net increase (decrease) in customer deposits	14,570,000	(20,393,000)
Net increase (decrease) in short-term borrowings	(2,017,000)	739,000
Proceeds from (repayment of) long-term Federal Home Loan Bank advances	10,000,000	(5,000,000)
Dividends paid	(362,000)	(363,000)
Net cash provided by (used in) financing activities	22,191,000	(25,017,000)
Net decrease in cash and cash equivalents	(17,979,000)	(6,550,000)
Cash and cash equivalents, beginning of period	44,072,000	34,166,000
Cash and cash equivalents, end of period	26,093,000	27,616,000
Cash paid for:
Interest	1,632,000	1,772,000
Income taxes	85,000	63,000
Non-cash transactions:
Assets acquired in settlement of loans	1,009,000	2,241,000
Reissuance of Treasury stock as compensation	$ 53,000	$ 69,000

XML

Note 1 - General

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Nature of Operations [Text Block]

1. GENERAL

The accompanying unaudited interim condensed consolidated financial statements include the accounts of First US Bancshares, Inc. (formerly known as United Security Bancshares, Inc.) (“Bancshares”) and its subsidiaries (collectively, the “Company”). Bancshares is the parent holding company of First US Bank (the “Bank” or “FUSB”). The Bank operates a finance company, Acceptance Loan Company, Inc. (“ALC”). All significant intercompany transactions and accounts have been eliminated.

The unaudited interim condensed consolidated financial statements, in the opinion of management, reflect all adjustments necessary for a fair presentation of consolidated financial position, results of operations and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of results expected for the fiscal year ending December 31, 201

6. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), management believes that the disclosures herein are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. The accounting policies followed by the Company are set forth in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. Certain amounts in the 2015 condensed consolidated financial statements have been reclassified to conform to the 2016 method of presentation, including approximately $0.7 million that was reclassified from other liabilities to surplus on the Interim Condensed Consolidated Balance Sheet as of December 31, 2015 related to shares of stock that had been accrued as of the balance sheet date as deferred compensation for members of the Company's Board of Directors.

XML

Note 2 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

2. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“

ASU”) 2016-13

,

"Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.”

Issued in June 2016, ASU 2016-13 removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all current recognition thresholds and will require companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale debt securities. For public business entities, ASU 2016-13 is effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. Institutions will be required to apply the changes through a cumulative-effect adjustment to their retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-10, “

Revenue from Contracts with Customers (Topic 606)-Identifying Performance Obligations and Licensing.”  

Issued in April 2016, ASU 2016-10 clarifies

ASC Topic 606, “Revenue from Contracts with Customers"

with respect to (i) identifying performance obligations; and (ii) the licensing implementation guidance.  Since the amendments in ASU 2016-10 affect the guidance in ASU 2014-09,

“Revenue from Contracts with Customers (Topic 606),”

which is not yet effective, this ASU will become effective when ASU 2014-09 becomes effective.  The amendments of ASU 2016-10 are effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-09, “

Compensation-Stock Compensation (Topic 718)-Improvements to Employee Share-Based Payment Accounting.”  

Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions, including (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes; (6) the practical expedient for estimating the expected term; and (7) intrinsic value.  The amendments of ASU 2016-09 are effective for interim and annual periods beginning after December 15, 2016.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-08,

“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).”

Issued in March 2016, ASU 2016-08 clarifies certain principal versus agent considerations within the implementation guidance of

ASC Topic 606, “Revenue from Contracts with Customers.”

Since the amendments in ASU 2016-08 affect the guidance in ASU 2014-09,

“Revenue from Contracts with Customers (Topic 606),”

which is not yet effective, this ASU will become effective when ASU 2014-09 becomes effective.  The amendments of ASU 2016-08 are effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-05

,

“Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.”

Issued in March 2016, ASU 2016-05clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under ASC Topic 815 does not, in and of itself, require de-designation of that hedging relationship, provided that all other hedge accounting criteria continue to be met.  The amendments of ASU 2016-05 are effective for interim and annual periods beginning after December 15, 2016.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-02, “Leases (Topic 842).”

Issued in February 2016, ASU 2016-02 will require organizations that lease assets (lessees) to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases with a term of more than 12 months. The recognition, measurement and presentation of expenses and cash flows arising from a lease are not significantly changed under ASU 2016-02. There will continue to be differentiation between finance leases and operating leases. For finance leases, a lessee will be required to (i) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (ii) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of income; and (iii) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability within operating activities on the statement of cash flows. For operating leases, a lessee will be required to (i) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (ii) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and (iii) classify all cash payments within operating activities in the statement of cash flows. The accounting applied by the lessor in a lease transaction remains largely unchanged from previous U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-01, “

Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification).”

  Issued in January 2016, ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information.  The amendments to ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value, with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; and (iii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2015-05, “

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.”

Issued in April 2015, ASU 2015-05 provides guidance on how customers should evaluate whether cloud computing arrangements contain a software license that should be accounted for separately. A customer that determines that such an arrangement contains a software license must account for the license consistently with the acquisition of other software licenses. If an arrangement does not contain a software license, then the customer is required to account for it as a service contract. As a result, all software licenses within the scope of this guidance will be accounted for consistently with other licenses of intangible assets. The guidance is effective for annual and interim periods beginning after December 15, 2015. Entities can elect to apply the guidance either retrospectively or prospectively to all cloud computing arrangements entered into or materially modified after the effective date. ASU 2015-05 became effective for the Company on January 1, 2016 and was applied using the prospective transition method.  The adoption of ASU 2015-05 did not have a material impact on the Company’s consolidated financial statements.

ASU 2015-02,

“

Consolidation (Topic 810): Amendments to the Consolidation Analysis

.”

Issued in February 2015, ASU 2015-02 is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability companies and certain entities involved in securitization transactions. ASU 2015-02 focuses on the consolidation criteria for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The new standard simplifies and improves current U.S. GAAP by: (i) placing more emphasis on risk of loss when determining a controlling financial interest; (ii) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (

“

VIE

”

); and (iii) changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. ASU 2015-02 became effective for the Company on January 1, 2016. The adoption of ASU 2015-02 did not have a material impact on the Company’s consolidated financial statements.

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).”

  Issued in May 2014, ASU 2014-09 will add

FASB ASC Topic 606, Revenue from Contracts with Customers,

and will supersede revenue recognition requirements in

FASB ASC Topic 605, Revenue Recognition

and certain cost guidance in

FASB ASC Topic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts.

  ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction-specific requirements under the existing standards.  ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount.  The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled.  Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services is transferred to the customer.  ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in each contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in each contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.  In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09.  The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application.  If the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application regarding (1) the amount by which each financial statement line item is affected in the current reporting period and (2) an explanation of the reasons for significant changes.  

ASU 2015-14,

“Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,”

issued in August 2015, defers the effective date of ASU 2014-09 by one year.  ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements, as well as the most appropriate method of application; however, regardless of the method of application selected, the adoption of ASU 2014-09 is not expected to have a material impact on the Company’s consolidated financial statements.

XML

Note 3 - Net Income Per Share

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

3. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding. Included in basic shares are certain shares that have been accrued as of the balance sheet date as deferred comp

ensation for members of the Company's Board of Directors. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period. The dilutive shares consist of shares issuable upon the exercise of nonqualified stock options granted to employees and members of the Company’s Board of Directors pursuant to the Company's 2013 Incentive Plan (the “2013 Incentive Plan”) previously approved by the Company’s shareholders. The following table reflects weighted average shares used to calculate basic and diluted net income per share for the periods presented.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Basic shares		6,151,701		6,139,148		6,147,325		6,137,207
Dilutive shares		272,550		177,050		272,550		177,050
Diluted shares		6,424,251		6,316,198		6,419,875		6,314,257

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in Thousands, Except Per Share Data)
Net income	$	550	$	544	$	1,329	$	2,154
Basic net income per share	$	0.09	$	0.09	$	0.22	$	0.35
Diluted net income per share	$	0.09	$	0.09	$	0.21	$	0.34

XML

Note 4 - Comprehensive Income

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

4. COMPREHENSIVE INCOME

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company

’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities or changes in the fair value of cash flow derivatives.

XML

Note 5 - Investment Securities

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

5. INVESTMENT SECURITIES

Details of investment securities available-for-sale and held-to-maturity as of September

30, 2016 and December 31, 2015 were as follows:

	Available-for-Sale
	September 30 , 201 6
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	96,845	$	1,534	$	(38	)	$	98,341
Commercial		69,430		280		(384	)		69,326
Obligations of states and political subdivisions		10,153		582		—			10,735
Obligations of U.S. government-sponsored agencies		2,000		6		—			2,006
Corporate notes		762		1		—			763
U.S. Treasury securities		80		—		—			80
Total	$	179,270	$	2,403	$	(422	)	$	181,251

	Held-to-Maturity
	September 30 , 201 6
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	16,052	$	81	$	—		$	16,133
Obligations of U.S. government-sponsored agencies		10,121		59		(2	)		10,178
Obligations of states and political subdivisions		2,142		33		(3	)		2,172
Total	$	28,315	$	173	$	(5	)	$	28,483

	Available-for-Sale
	December 31, 201 5
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	135,104	$	998	$	(608	)	$	135,494
Commercial		45,961		164		(616	)		45,509
Obligations of states and political subdivisions		14,071		931		(4	)		14,998
Obligations of U.S. government-sponsored agencies		1,999		—		(17	)		1,982
Corporate notes		780		—		—			780
U.S. Treasury securities		80		—		—			80
Total	$	197,995	$	2,093	$	(1,245	)	$	198,843

	Held-to-Maturity
	December 31, 201 5
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	16,321	$	33	$	(170	)	$	16,184
Obligations of U.S. government-sponsored agencies		13,766		19		(71	)		13,714
Obligations of states and political subdivisions		2,272		18		(4	)		2,286
Total	$	32,359	$	70	$	(245	)	$	32,184

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of September 30

, 2016 are presented in the following table:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	2,007	$	2,016	$	—	$	—
Maturing after one to five years		5,400		5,501		2,064		2,109
Maturing after five to ten years		75,845		77,084		7,215		7,247
Maturing after ten years		96,018		96,650		19,036		19,127
Total	$	179,270	$	181,251	$	28,315	$	28,483

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities generally mature earlier than their weighted-average contractual maturities because of principal prepayments.

The following table reflects gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of

September 30, 2016 and December 31, 2015.

	Available-for-Sale
	September 30 , 201 6
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	7,855	$	(15	)	$	1,954	$	(23	)
Commercial		28,829		(82	)		11,498		(302	)
U.S. Treasury securities		80		—			—		—
Total	$	36,764	$	(97	)	$	13,452	$	(325	)

	Held-to-Maturity
	September 30 , 201 6
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,948	$	—		$	—	$	—
Obligations of U.S. government-sponsored agencies		1,397		(2	)		—		—
Obligations of states and political subdivisions		563		(3	)		—		—
Total	$	3,908	$	(5	)	$	—	$	—

	Available-for-Sale
	December 31, 201 5
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	83,403	$	(458	)	$	9,061	$	(150	)
Commercial		24,337		(272	)		8,918		(344	)
Obligations of U.S. government-sponsored agencies		1,982		(17	)		—		—
Corporate notes		779		—			—		—
Obligations of states and political subdivisions		707		(4	)		—		—
Total	$	111,208	$	(751	)	$	17,979	$	(494	)

	Held-to-Maturity
	December 31, 201 5
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	14,143	$	(170	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		11,163		(44	)		1,560		(27	)
Obligations of states and political subdivisions		572		(4	)		—		—
Total	$	25,878	$	(218	)	$	1,560	$	(27	)

Management evaluates securities for other-than-temporary impairment no less frequently than quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (i) the length of time and the extent to which fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) whether the Company intends to sell securities and (iv) whether it is more likely than not that the Company will be required to sell the securities before recovery of their amortized cost bases.

As of September

30, 2016, 12 debt securities had been in a loss position for more than 12 months, and 29 debt securities had been in a loss position for less than 12 months. As of December 31, 2015, 13 debt securities had been in a loss position for more than 12 months, and 102 debt securities had been in a loss position for less than 12 months. As of both September 30, 2016 and December 31, 2015, the losses for all securities were considered to be a direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers. Further, the Company has the current intent and ability to retain its investments in the issuers for a period of time that management believes to be sufficient to allow for any anticipated recovery in fair value. Therefore, the Company did not recognize any other-than-temporary impairments as of September 30, 2016 and December 31, 2015.

Investment securities available-for-sale with a carrying value of $83.3

million and $61.3 million as of September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and for other purposes.

Gains realized on sales of securities available-for-sale were approximately

$0.6 million for the nine months ended September 30, 2016 and $0.4 million for the nine months ended September 30, 2015. There were no losses on sales of securities during the nine months ended September 30, 2016 or the year ended December 31, 2015.

XML

Note 6 - Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

6. LOANS AND ALLOWANCE FOR LOAN LOSSES

Portfolio Segments

The Company has divided the loan portfolio into eight portfolio segments, each with different risk characteristics described as follows:

Construction, land development and other land loans

– Commercial construction, land and land development loans include loans for the development of residential housing projects, loans for the development of commercial and industrial use property and loans for the purchase and improvement of raw land. These loans are secured in whole or in part by the underlying real estate collateral and are generally guaranteed by the principals of the borrowing entity.

Secured by 1-4 family residential properties

– These loans include conventional mortgage loans on one-to-four family residential properties. These properties may serve as the borrower’s primary residence, vacation home or investment property. Also included in this portfolio are home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows customers to borrow against the equity in their home.

Secured by multi-family residential properties

– This portfolio segment includes mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties

– This portfolio segment includes real estate loans secured by commercial and industrial properties, office or mixed-use facilities, strip shopping centers or other commercial property. These loans are generally guaranteed by the principals of the borrowing entity.

Other real estate loans

– Other real estate loans are loans primarily for agricultural production, secured by mortgages on farmland.

Commercial and industrial loans

– This portfolio segment includes loans to commercial customers for use in the normal course of business. These credits may be loans and lines of credit to financially strong borrowers, secured by inventories, equipment or receivables, and are generally guaranteed by the principals of the borrowing entity.

Consumer loans

– This portfolio segment includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purposes and all other direct consumer installment loans.

Other loans

– Other loans include credit cards, overdrawn checking accounts reclassified to loans and overdraft lines of credit.

As of

September 30, 2016 and December 31, 2015, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	September 30 , 201 6
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	24,610	$	—	$	24,610
Secured by 1-4 family residential properties		32,559		14,462		47,021
Secured by multi-family residential properties		16,801		—		16,801
Secured by non-farm, non-residential properties		97,859		—		97,859
Other		185		—		185
Commercial and industrial loans		54,459		—		54,459
Consumer loans		6,289		80,915		87,204
Other loans		46		—		46
Total loans		232,808		95,377		328,185
Less: Unearned interest, fees and deferred cost		191		7,205		7,396
Allowance for loan losses		1,216		2,452		3,668
Net loans	$	231,401	$	85,720	$	317,121

	December 31, 201 5
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	11,827	$	—	$	11,827
Secured by 1-4 family residential properties		30,730		17,233		47,963
Secured by multi-family residential properties		11,845		—		11,845
Secured by non-farm, non-residential properties		83,883		—		83,883
Other		115		—		115
Commercial and industrial loans		29,377		—		29,377
Consumer loans		7,057		76,131		83,188
Other loans		379		—		379
Total loans		175,213		93,364		268,577
Less: Unearned interest, fees and deferred cost		149		9,215		9,364
Allowance for loan losses		1,329		2,452		3,781
Net loans	$	173,735	$	81,697	$	255,432

Although the Company has a diversified loan portfolio,

56.8% and 58.0% of the portfolio was concentrated in loans secured by real estate located primarily within a single geographic region of the United States as of September 30, 2016 and December 31, 2015, respectively. 

As of September 30, 2016, loans with variable interest rate payment terms totaled $89.1 million of the Bank

’s loan portfolio, while loans with fixed interest rate payment terms totaled $143.7 million of the portfolio. As of December 31, 2015, variable rate loans totaled $55.3 million of the Bank’s portfolio, while fixed rate loans totaled $119.6 million. At ALC, all loans are originated under fixed interest rate payment terms.

Related Party Loans

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with

non-related parties. Management believes that such loans do not represent more than a normal risk of collectability, nor do they present other unfavorable features. The aggregate balances of such related party loans and commitments as of September 30, 2016 and December 31, 2015 were $2.8 million and $2.9 million, respectively. During the nine months ended September 30, 2016, there was one new loan to a related party, and repayments by active related parties were $0.1 million. During the year ended December 31, 2015, there were no new loans to related parties, and repayments by active related parties were $0.2 million.

Allowance for Loan Losses

The following tables present changes in the allowance for loan losses by loan portfolio segment and loan type as of

September 30, 2016 and December 31, 2015. While no portion of the allowance is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, these tables represent management's allocation of the allowance for loan losses to specific loan categories as of the dates indicated.

	FUSB
	Nine M onths Ended September 30 , 201 6
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	133		$	1,118		$	27		$	37		$	14	$	1,329
Charge-offs		(1	)		(40	)		(30	)		(10	)		—		(81	)
Recoveries		28			234			40			16			—		318
Provision		(31	)		(378	)		(26	)		64			21		(350	)
Ending balance		129			934			11			107			35		1,216
Ending balance individually evaluated for impairment		—			413			—			5			—		418
Ending balance collectively evaluated for impairment	$	129		$	521		$	11		$	102		$	35	$	798
Loan receivables:
Ending balance		54,459			139,455			6,289			32,559			46		232,808
Ending balance individually evaluated for impairment		—			2,107			—			—			—		2,107
Ending balance collectively evaluated for impairment	$	54,459		$	137,348		$	6,289		$	32,559		$	46	$	230,701

	ALC
	Nine Months Ended September 30 , 201 6
	Commercial & Industrial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,201		$	251		$	—	$	2,452
Charge-offs		—		—		(2,218	)		(49	)		—		(2,267	)
Recoveries		—		—		500			34			—		534
Provision		—		—		1,808			(75	)		—		1,733
Ending balance		—		—		2,291			161			—		2,452
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,291		$	161		$	—	$	2,452
Loan receivables:
Ending balance		—		—		80,915			14,462			—		95,377
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	80,915		$	14,462		$	—	$	95,377

	FUSB and ALC
	Nine Months Ended September 30 , 201 6
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	133		$	1,118		$	2,228		$	288		$	14	$	3,781
Charge-offs		(1	)		(40	)		(2,248	)		(59	)		—		(2,348	)
Recoveries		28			234			540			50			—		852
Provision		(31	)		(378	)		1,782			(11	)		21		1,383
Ending balance		129			934			2,302			268			35		3,668
Ending balance individually evaluated for impairment		—			413			—			5			—		418
Ending balance collectively evaluated for impairment	$	129		$	521		$	2,302		$	263		$	35	$	3,250
Loan receivables:
Ending balance		54,459			139,455			87,204			47,021			46		328,185
Ending balance individually evaluated for impairment		—			2,107			—			—			—		2,107
Ending balance collectively evaluated for impairment	$	54,459		$	137,348		$	87,204		$	47,021		$	46	$	326,078

	FUSB
	Year Ended December 31, 201 5
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141		$	2,810		$	114		$	421		$	—	$	3,486
Charge-offs		—			(767	)		(17	)		(68	)		—		(852	)
Recoveries		61			12			70			111			—		254
Provision		(69	)		(937	)		(139	)		(428	)		14		(1,559	)
Ending balance		133			1,118			28			36			14		1,329
Ending balance individually evaluated for impairment		80			230			—			—			—		310
Ending balance collectively evaluated for impairment	$	53		$	888		$	28		$	36		$	14	$	1,019
Loan receivables:
Ending balance		29,377			107,670			7,057			30,730			379		175,213
Ending balance individually evaluated for impairment		444			2,018			—			252			—		2,714
Ending balance collectively evaluated for impairment	$	28,933		$	105,652		$	7,057		$	30,478		$	379	$	172,499

	ALC
	Year Ended December 31, 201 5
	Commercial & Industrial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,336		$	346		$	—	$	2,682
Charge-offs		—		—		(2,552	)		(187	)		—		(2,739	)
Recoveries		—		—		712			22			—		734
Provision		—		—		1,706			69			—		1,775
Ending balance		—		—		2,202			250			—		2,452
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,202		$	250		$	—	$	2,452
Loan receivables:
Ending balance		—		—		76,131			17,233			—		93,364
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	76,131		$	17,233		$	—	$	93,364

	FUSB and ALC
	Year Ended December 31, 201 5
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141		$	2,810		$	2,450		$	767		$	—	$	6,168
Charge-offs		—			(767	)		(2,569	)		(255	)		—		(3,591	)
Recoveries		61			12			782			133			—		988
Provision		(69	)		(937	)		1,567			(359	)		14		216
Ending balance		133			1,118			2,230			286			14		3,781
Ending balance individually evaluated for impairment		80			230			—			—			—		310
Ending balance collectively evaluated for impairment	$	53		$	888		$	2,230		$	286		$	14	$	3,471
Loan receivables:
Ending balance		29,377			107,670			83,188			47,963			379		268,577
Ending balance individually evaluated for impairment		444			2,018			—			252			—		2,714
Ending balance collectively evaluated for impairment	$	28,933		$	105,652		$	83,188		$	47,711		$	379	$	265,863

Credit Quality

The Bank utilizes a

credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, each loan is graded based on pre-determined risk metrics and categorized into one of nine risk grades. These risk grades can be summarized into categories described as pass, special mention, substandard, doubtful and loss, as described in further detail below.

● Pass (Risk Grades 1-5): Loans in this category include obligations in which the probability of default is considered low.

● Special Mention (Risk Grade 6): Loans in this category exhibit potential credit weaknesses or downward trends deserving Bank management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Although a special mention asset has a higher probability of default than pass-rated categories, its default is not imminent.

● Substandard (Risk Grade 7): Loans in this category have defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

● Doubtful (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans, with the added characteristic that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable or improbable. Serious problems exist such that partial loss of principal is likely; however, because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans’ classification as estimated losses is deferred until a more exact status may be determined. Such pending factors may include proposed merger, acquisition or liquidation procedures, capital injection, perfection of liens on additional collateral and refinancing plans. Loans classified as doubtful may include loans to borrowers that have demonstrated a history of failing to live up to agreements.

● Loss (Risk Grade 9): Loans are classified in this category when borrowers are deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectable and of such little value that continuance as active assets of the Bank is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not prudent to defer writing off these assets, even though partial recovery may be effected in the future.

At ALC, because the loan portfolio is more uniform in nature, each loan is categorized into one of two risk grades, depending on whether the loan is considered to be performing or nonperforming. Performing loans are loans that are paying principal and interest in accordance with

a contractual agreement. Nonperforming loans are loans that are either not paying as contractually agreed or that have demonstrated characteristics that indicate a probability of loss.

The tables below illustrate the carrying amount of loans by credit quality indicator as of September

30, 2016.

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	23,075	$	—	$	1,535	$	—	$	24,610
Secured by 1-4 family residential properties		31,450		217		892		—		32,559
Secured by multi-family residential properties		16,801		—		—		—		16,801
Secured by non-farm, non-residential properties		93,344		3,787		728		—		97,859
Other		185		—		—		—		185
Commercial and industrial loans		53,310		881		268		—		54,459
Consumer loans		6,173		—		116		—		6,289
Other loans		46		—		—		—		46
Total	$	224,384	$	4,885	$	3,539	$	—	$	232,808

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	14,213	$	249	$	14,462
Consumer loans		79,664		1,251		80,915
Total	$	93,877	$	1,500	$	95,377

The tables below illustrate the carrying amount of loans by credit quality indicator as of December

 31, 2015.

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	9,862	$	—	$	1,965	$	—	$	11,827
Secured by 1-4 family residential properties		29,252		228		1,250		—		30,730
Secured by multi-family residential properties		11,845		—		—		—		11,845
Secured by non-farm, non-residential properties		78,647		4,315		921		—		83,883
Other		115		—		—		—		115
Commercial and industrial loans		28,170		482		725		—		29,377
Consumer loans		6,905		—		152		—		7,057
Other loans		379		—		—		—		379
Total	$	165,175	$	5,025	$	5,013	$	—	$	175,213

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	16,964	$	269	$	17,233
Consumer loans		74,743		1,388		76,131
Total	$	91,707	$	1,657	$	93,364

The following tables provide an aging analysis of past due loans by class as of September

30, 2016.

	FUSB
	As of September 30 , 201 6
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	86	$	86	$	24,524	$	24,610	$	—
Secured by 1-4 family residential properties		61		15		208		284		32,275		32,559		—
Secured by multi-family residential properties		—		—		—		—		16,801		16,801		—
Secured by non-farm, non-residential properties		—		—		—		—		97,859		97,859		—
Other		—		—		—		—		185		185		—
Commercial and industrial loans		26		17		—		43		54,416		54,459		—
Consumer loans		30		—		9		39		6,250		6,289		—
Other loans		—		—		—		—		46		46		—
Total	$	117	$	32	$	303	$	452	$	232,356	$	232,808	$	—

	ALC
	As of September 30 , 201 6
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		55		20		244		319		14,143		14,462		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans		900		504		1,247		2,651		78,264		80,915		—
Other loans		—		—		—		—		—		—		—
Total	$	955	$	524	$	1,491	$	2,970	$	92,407	$	95,377	$	—

The following tables provide an aging analysis of past due loans by class as of December 31, 201

5.

	FUSB
	As of December 31, 201 5
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	86	$	86	$	11,741	$	11,827	$	—
Secured by 1-4 family residential properties		118		206		360		684		30,046		30,730		—
Secured by multi-family residential properties		—		—		—		—		11,845		11,845		—
Secured by non-farm, non-residential properties		530		—		148		678		83,205		83,883		—
Other		—		—		—		—		115		115		—
Commercial and industrial loans		22		52		—		74		29,303		29,377		—
Consumer loans		49		4		83		136		6,921		7,057		—
Other loans		—		—		—		—		379		379		—
Total	$	719	$	262	$	677	$	1,658	$	173,555	$	175,213	$	—

	ALC
	As of December 31, 201 5
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		91		206		252		549		16,684		17,233		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans		965		567		1,377		2,909		73,222		76,131		—
Other loans		—		—		—		—		—		—		—
Total	$	1,056	$	773	$	1,629	$	3,458	$	89,906	$	93,364	$	—

The following table provides an analysis of non-accruing loans by class as of September

30, 2016 and December 31, 2015.

	Loans on Non-Accrual Status
	September 30 , 201 6		December 31, 201 5
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	86	$	339
Secured by 1-4 family residential properties		731		968
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		61		213
Commercial and industrial loans		22		47
Consumer loans		1,366		1,535
Total loans	$	2,266	$	3,102

Impaired Loans

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 related loan agreement. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported at the present value of estimated future cash flows using the loan

’s existing rate or at the fair value of collateral if repayment is expected solely from the liquidation of the collateral. All loans of $0.5 million or more that have a credit quality risk grade of seven or above are identified for impairment analysis. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

As of September

30, 2016, the carrying amount of impaired loans consisted of the following:

	September 30 , 201 6
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		—		—		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	—	$	—	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	1,361	$	1,361	$	305
Secured by 1-4 family residential properties		195		195		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		551		551		108
Commercial and industrial		—		—		—
Total loans with an allowance recorded	$	2,107	$	2,107	$	418
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	1,361	$	1,361	$	305
Secured by 1-4 family residential properties		195		195		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		551		551		108
Commercial and industrial		—		—		—
Total impaired loans	$	2,107	$	2,107	$	418

As of December

 31, 2015, the carrying amount of impaired loans consisted of the following:  

	December 31, 201 5
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		54		54		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	54	$	54	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	95
Secured by 1-4 family residential properties		198		198		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		573		573		130
Commercial and industrial		444		444		80
Total loans with an allowance recorded	$	2,660	$	2,660	$	310
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	95
Secured by 1-4 family residential properties		252		252		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		573		573		130
Commercial and industrial		444		444		80
Total impaired loans	$	2,714	$	2,714	$	310

The average net investment in impaired loans and interest income recognized and received on impaired loans

during the nine months ended September 30, 2016 and the year ended December 31, 2015 were as follows:

	September 30 , 201 6
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,388	$	32	$	32
Secured by 1-4 family residential properties		245		10		11
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		559		25		24
Commercial and industrial		—		—		—
Total	$	2,192	$	67	$	67

	December 31, 201 5
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,493	$	44	$	46
Secured by 1-4 family residential properties		139		14		14
Secured by multi-family residential properties		1,892		—		—
Secured by non-farm, non-residential properties		3,329		35		36
Commercial and industrial		264		26		26
Total	$	7,117	$	119	$	122

Loans on which the accrual of interest has been discontinued amounted to $2.3

million and $3.1 million as of September 30, 2016 and December 31, 2015, respectively. If interest on those loans had been accrued, there would have been $30 thousand and $0.1 million of interest accrued for the nine-month period ended September 30, 2016 and year ended December 31, 2015, respectively. Interest income related to these loans for the nine-month period ended September 30, 2016 and for the year ended December 31, 2015 was $4 thousand and $0.3 million, respectively.

Troubled Debt Restructurings

Troubled debt restructurings include loans with respect to which concessions have been granted to borrowers that generally would not have otherwise been considered had the borrowers not been experiencing financial difficulty. The concessions may include payment schedule modifications, interest rate reductions, maturity date extensions, modification

s of note structure, principal balance reductions or some combination of these concessions. Restructured loans may involve loans remaining on non-accrual, moving to non-accrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Non-accrual restructured loans are included with all other non-accrual loans. In addition, all accruing restructured loans are reported as troubled debt restructurings. Generally, restructured loans remain on non-accrual until the customer has attained a sustained period of repayment performance under the modified loan terms (generally a minimum of six months). However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can meet the new terms and whether the loan should be returned to or maintained on non-accrual status. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, then the loan remains on non-accrual. As of September 30, 2016 and December 31, 2015, respectively, the Company had $0.2 million and $1.5 million of non-accruing loans that were previously restructured and that remained on non-accrual status. For the nine months ended September 30, 2016, the Company had $287 thousand in restructured loans that were restored to accrual status based on a sustained period of repayment performance. For the year ended December 31, 2015, the Company had no restructured loans that were restored to accrual status based on a sustained period of repayment performance.

The following table provides the number of loans

remaining in each loan category, as of September 30, 2016 and December 31, 2015, that the Bank had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

	September 30 , 201 6						December 31, 201 5
	Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance		Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		2	$	1,960	$	1,341		3	$	2,220	$	1,698
Secured by 1-4 family residential properties		4		335		257		4		200		103
Secured by non-farm, non-residential properties		2		113		44		2		113		52
Commercial loans		2		116		90		2		116		94
Total		10	$	2,524	$	1,732		11	$	2,649	$	1,947

Restructured loan modifications primarily included maturity date extensions and payment schedule modifications. There were no modifications to principal balances of the loans that were restructured. Accordingly, there was no impact on the Company

’s allowance for loan losses resulting from the modifications. None of the loans that were previously modified in a troubled debt restructuring as of September 30, 2016 and December 31, 2015 have defaulted subsequent to modification.

All loans with a principal balance of $0.5 million or more that have been modified in a troubled debt restructuring are considered impaired and evaluated individually for impairment. The nature and extent of impairment of restructured loans, including those that have experienced a subsequent payment default, are considered in the determination of an appropriate level of allowance for loan losses. This evaluation resulted in an allowance for loan losses attributable to such restructured loans of

$5 thousand and $1 thousand as of September 30, 2016 and December 31, 2015, respectively.

XML

Note 7 - Other Real Estate Owned

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Real Estate Owned [Text Block]

7. OTHER REAL ESTATE OWNED

Other real estate and certain other assets acquired in foreclosure are reported at the lower of the investment in the loan or the fair value of the property, less estimated costs to sell. The following table summarizes foreclosed property activity as of the

nine months ended September 30, 2016 and 2015:

	September 30 , 201 6
	FUSB			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	5,327		$	711		$	6,038
Transfers from loans		255			149			404
Sales proceeds		(655	)		(259	)		(914	)
Gross gains		—			27			27
Gross losses		(40	)		(73	)		(113	)
Net gains (losses)		(40	)		(46	)		(86	)
Impairment		—			(51	)		(51	)
Ending balance	$	4,887		$	504		$	5,391

	September 30 , 201 5
	FUSB			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	6,997		$	738		$	7,735
Transfers from loans		1,439			263			1,702
Sales proceeds		(2,225	)		(144	)		(2,369	)
Gross gains		4			—			4
Gross losses		(210	)		(73	)		(283	)
Net gains (losses)		(206	)		(73	)		(279	)
Impairment		(44	)		(89	)		(133	)
Ending balance	$	5,961		$	695		$	6,656

Valuation adjustments are recorded in other non-interest expense and are primarily post-foreclosure write-downs that are a result of continued declining property values based on updated appraisals or other indications of value, such as offers to purchase.

Fair value less estimated cost to sell of foreclosed residential real estate held by the Company was $1.1 million and $1.5 million as of September 30, 2016 and 2015, respectively. In addition, the Company held $0.1 and $0.2 million in consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of September 30, 2016 and December 31, 2015, respectively.

XML

Note 8 - Investment in Limited Partnership

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Variable Interest Entity Disclosure [Text Block]

8. INVESTMENT IN LIMITED PARTNERSHIP

The Company holds investments in affordable housing projects for which it provides funding as a limited partner and has received tax credits related to its investments in the projects based on its partnership share. The net assets of the partnership consist primarily of apartment complexes

, and the primary liabilities consist of those associated with the operation of the partnership. The Company has determined that this structure requires evaluation as a VIE under Accounting Standards Codification (“ASC”) Topic 810,

Consolidation.

The Company consolidates one fund in which it has a 99.9% limited partnership interest. Assets recorded by the Company as a result of the consolidation were less than $0.1 million as of both September 30, 2016 and December 31, 2015.

XML

Note 9 - Short-term Borrowings

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Short-term Debt [Text Block]

9. SHORT-TERM BORROWINGS

Short-term borrowings consist of federal funds purchased, securities sold under repurchase agreements

and short-term Federal Home Loan Bank (“FHLB”) advances. Short-term borrowings totaled $5.4 million and $7.4 million as of September 30, 2016 and December 31, 2015, respectively.

Federal funds purchased, which represent unsecured lines of credit that generally mature within one to four days, are available to the Company through arrangements with correspondent banks and the Federal Reserve. As of both September 30, 2016 and December 31, 2015, there were no federal funds purchased outstanding, and the Company had $18.8 million in available unused lines of credit with correspondent banks and the Federal Reserve.

Securities sold under repurchase agreements, which are secured borrowings, generally are reflected at the amount of cash received in

connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The Company monitors the fair value of the underlying securities on a daily basis. Securities sold under repurchase agreements as of September 30, 2016 and December 31, 2015 totaled $0.3 million and $0.4 million, respectively.

Short-term FHLB advances are secured borrowings available to the Company as an alternative funding source.

The Company had $5.0 million in outstanding FHLB advances with a maturity date of less than six months as of September 30, 2016. As of December 31, 2015, the Company had $7.0 million in outstanding FHLB advances with a maturity date of less than six months.

XML

Note 10 - Long-term Debt

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Long-term Debt [Text Block]

10. LONG-TERM DEBT

The Company uses

FHLB advances as an alternative to funding sources with similar maturities, such as certificates of deposit or other deposit programs. These advances often offer more attractive rates than other mid- and long-term financing options. They are also flexible, allowing the Company to quickly obtain the necessary maturities and rates that best suit its overall asset/liability strategy. The Company had long-term FHLB advances outstanding of $15.0 million and $5.0 million as of September 30, 2016 and December 31, 2015, respectively. Long-term FHLB advances with remaining terms to maturity of less than 12 months were $5.0 million as of September 30, 2016. There were no long-term FHLB advances with remaining terms to maturity of less than 12 months as of December 31, 2015.

Pledged assets associated with FHLB advances totaled $21.1 million and $14.0 million as of September 30, 2016 and

December 31, 2015, respectively. As of September 30, 2016 and December 31, 2015, the Company had $160.4 million and $152.5 million, respectively, in remaining credit from the FHLB (subject to available collateral).

XML

Note 11 - Income Taxes

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11. INCOME TAXES

The provision for income taxes was $0.4

million and $0.9 million for the nine-month periods ended September 30, 2016 and 2015, respectively. The Company’s effective tax rate was 23.4% and 28.8%, respectively, for the same periods. The effective tax rate is impacted by recurring permanent differences, such as those associated with bank-owned life insurance and tax-exempt investments and loan income.

The Company had a net deferred tax asset of $7.1

million and $7.8 million as of September 30, 2016 and December 31, 2015, respectively. The reduction in the net deferred tax asset resulted primarily from reductions in net operating loss carryforwards, as well as the impact of changes in the fair value of securities available-for-sale.

XML

Note 12 - Deferred Compensation Plans

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

12. DEFERRED COMPENSATION PLANS

The Bank has entered into supplemental compensation benefits agreements with certain directors and executive officers.  The measurement of the liability under these agreements includes estimates involving life expectancy, length of time before retirement and the expected returns on the bank-owned life insurance policies used to fund those agreements. Should these estimates prove to be materially wrong, the cost of these agreements could change accordingly. The

related deferred compensation obligation to these directors and executive officers included in other liabilities was $3.5 million and $3.6 million as of September 30, 2016 and December 31, 2015, respectively.

In addition, non-employee directors may elect to defer payment of all or any

portion of their director fees under the Company's Non-Employee Directors’ Deferred Compensation Plan (the “Deferral Plan”). The Deferral Plan, which was ratified by shareholders at the annual meeting held on May 11, 2004, permits non-employee directors to invest their directors’ fees and to receive the adjusted value of the deferred amounts in cash and/or shares of the Company’s common stock. The Company uses shares held as treasury stock to satisfy stock-based obligations. A total of 111,195 shares and 103,571 shares were deferred under the Deferral Plan as of September 30, 2016 and December 31, 2015, respectively. Cash deferrals under the Deferral Plan were less than $0.1 million as of September 30, 2016 and December 31, 2015.

XML

Note 13 - Stock Option Grants

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

13. STOCK OPTION GRANTS

In accordance with the Company

’s 2013 Incentive Plan, stock option awards have been granted to certain employees and non-employee directors. The awards were granted with an exercise price equal to the market price of the Company’s common stock on the date of grant and have vesting periods ranging from one to three years, with 10-year contractual terms. The Company expects to use shares held as treasury stock to satisfy share option exercises. Currently, the Company holds a sufficient number of treasury shares to satisfy potential exercises.

The Company recognizes the cost of services received in exchange for stock option awards based on the grant date fair value of the award, with compensation expense recognized on a straight-line b

asis over the award’s vesting period. The fair value of outstanding awards was determined using the Black-Scholes option pricing model based on the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock.

	2016			2015
Risk-free interest rate		1.58	%		1.52	%
Expected term	7.5 years			7.5 years
Expected stock price volatility		25.25	%		54.04	%
Dividend yield		1.50	%		1.50	%

The following table summarizes the Company's stock option activity for the periods presented.

	Nine Months Ended
	September 30 , 201 6				September 30 , 201 5
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of period		175,550	$	8.17		83,400	$	8.09
Granted		97,000		8.30		96,150		8.23
Exercised		—		—		—		—
Expired		—		—		—		—
Forfeited		—		—		2,500		8.09
Options outstanding, end of period		272,550	$	8.21		177,050	$	8.16
Options exercisable, end of period		175,550	$	8.17		81,900	$	8.09

Stock-based compensation expense related to stock options totaled $0.1 million and $0.2 million for the nine-month periods ended September 30, 2016 and 2015, respectively. The aggregate intrinsic value of stock options outstanding (calculated as the

amount by which the market value of underlying stock exceeds the exercise price of the option) was $0.4 million as of September 30, 2016 and $0.1 million as of  September 30, 2015.

XML

Note 14 - Derivative Financial Instruments

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

14. DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives Designated as Hedging Instruments

On April 1, 2016, the Bank entered into a forward interest rate swap contract on a variable rate FHLB advance (indexed to three-month LIBOR) with a total notional amount

of $10.0 million. The interest rate swap contract was designated as a derivative instrument in a cash flow hedge under

ASC Topic 815, Derivatives and Hedging,

with the objective of protecting the quarterly interest rate payments on the FHLB advance from the risk of variability of those payments resulting from changes in the three-month LIBOR interest rate throughout the seven-year period beginning on April 5, 2016 and ending on April 5, 2023. Under the swap arrangement, which became effective on April 5, 2016, the Bank will pay a fixed interest rate of 1.46% and receive a variable interest rate based on three-month LIBOR on the total notional amount of $10.0 million, with quarterly net settlements.

No ineffectiveness related to the interest rate swap designated as a cash

flow hedge was recognized in the consolidated statements of operations for the three- and nine-month periods ended September 30, 2016. The accumulated net after-tax loss related to the effective cash flow hedge included in accumulated other comprehensive income totaled $82 thousand as of September 30, 2016. Amounts reported in accumulated other comprehensive income related to this derivative are reclassified to other interest expense as interest payments are made on the Bank's variable rate FHLB advance.

Derivatives Not Designated as Hedging Instruments

In 2014, the Bank entered into three separate interest rate cap agreements to mitigate risks assoc

iated with increases in interest rates on an aggregate notional amount of $40 million. The interest rate caps qualify as derivatives but were not designated as hedging instruments. Accordingly, changes in the fair value of the instruments are included in results of operations. Under the three agreements, the Bank paid an up-front premium totaling approximately $126 thousand in return for the ability to receive cash flows if interest rates rise above a strike rate indexed to three-month LIBOR. The agreements have contractual terms that mature at various dates in 2017. As of September 30, 2016, the strike rate had not been achieved on any of the three agreements, and accordingly, the Bank has received no cash flows associated with the agreements. Since the inception of the agreements, on a quarterly basis, the Bank has recorded the current fair value of the derivatives within other assets on the Bank’s consolidated balance sheet, with changes in the fair value included in interest expense on the Bank’s consolidated statements of operations. As of September 30, 2016, the fair value of each of the three derivative agreements was zero. During the nine months ended September 30, 2016, approximately $3 thousand was recognized as interest expense associated with the agreements.

XML

Note 15 - Segment Reporting

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

15. SEGMENT REPORTING

Under

ASC Topic 280,

Segment Reporting

, certain information is disclosed for the two reportable operating segments of the Company, FUSB and ALC. The reportable segments were determined using the internal management reporting system. These segments comprise the Company’s and FUSB’s significant subsidiaries. The accounting policies for each segment are the same as those described in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. The segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions have been eliminated to determine the consolidated balances. The results for the two reportable segments of the Company are included in the tables below.

						All
	FUSB			ALC		Other			Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended September 30 , 201 6 :
Net interest income	$	3,917		$	3,253	$	3		$	—		$	7,173
Provision (reduction in reserve) for loan losses		100			580		—			—			680
Total non-interest income		1,159			316		973			(881	)		1,567
Total non-interest expense		4,636			2,403		474			(165	)		7,348
Income (loss) before income taxes		340			586		502			(716	)		712
Provision for income taxes		52			196		(86	)		—			162
Net income (loss)	$	288		$	390	$	588		$	(716	)	$	550
Other significant items:
Total assets	$	602,123		$	89,347	$	84,291		$	(175,454	)	$	600,307
Total investment securities		209,486			—		80			—			209,566
Total loans, net		308,423			85,720		—			(77,022	)		317,121
Investment in subsidiaries		5			—		78,737			(78,737	)		5
Fixed asset additions		960			16		—			—			976
Depreciation and amortization expense		193			54		—			—			247
Total interest income from external customers		3,415			4,345		—			—			7,760
Total interest income from affiliates		1,092			—		3			(1,095	)		—
For the nine months ended September 30, 2016:
Net interest income	$	11,199		$	9,544	$	8		$	—		$	20,751
Provision (reduction in reserve) for loan losses		(350	)		1,733		—			—			1,383
Total non-interest income		3,002			909		2,481			(2,356	)		4,036
Total non-interest expense		13,435			7,306		1,373			(445	)		21,669
Income (loss) before income taxes		1,116			1,414		1,116			(1,911	)		1,735
Provision for income taxes		224			484		(302	)		—			406
Net income (loss)	$	892		$	930	$	1,418		$	(1,911	)	$	1,329
Other significant items:
Fixed asset additions		4,521			33		—			—			4,554
Depreciation and amortization expense		564			162		—			—			726
Total interest income from external customers		9,750			12,684		—			—			22,434
Total interest income from affiliates		3,140			—		8			(3,148	)		—

						All
	FUSB			ALC		Other			Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended September 30 , 201 5 :
Net interest income	$	3,598		$	3,166	$	3		$	—		$	6,767
Provision (reduction in reserve) for loan losses		(400	)		322		—			—			(78	)
Total non-interest income		755			234		847			(840	)		996
Total non-interest expense		4,443			2,430		360			(143	)		7,090
Income before income taxes		310			648		490			(697	)		751
Provision for income taxes		43			236		(72	)		—			207
Net income	$	267		$	412	$	562		$	(697	)	$	544
Other significant items:
Total assets	$	550,341		$	85,066	$	82,167		$	(169,037	)	$	548,537
Total investment securities		238,929			—		80			—			239,009
Total loans, net		229,721			80,779		—			(72,785	)		237,715
Investment in subsidiaries		5			—		76,883			(76,883	)		5
Fixed asset additions		1,250			2		—			—			1,252
Depreciation and amortization expense		151			61		—			—			212
Total interest income from external customers		3,162			4,166		—			—			7,328
Total interest income from affiliates		1,000			—		3			(1,003	)		—
For the nine months ended September 30, 2015:
Net interest income	$	11,433		$	9,203	$	8		$	—		$	20,644
Provision (reduction in reserve) for loan losses		(1,370	)		1,171		—			—			(199	)
Total non-interest income		2,766			689		3,053			(3,153	)		3,355
Total non-interest expense		13,110			7,400		1,103			(439	)		21,174
Income before income taxes		2,459			1,321		1,958			(2,714	)		3,024
Provision for income taxes		678			475		(283	)		—			870
Net income	$	1,781		$	846	$	2,241		$	(2,714	)	$	2,154
Other significant items:
Fixed asset additions	$	2,860		$	251	$	—		$	—		$	3,111
Depreciation and amortization expense		459			181		—			—			640
Total interest income from external customers		10,379			12,004		1			—			22,384
Total interest income from affiliates		2,801			—		7			(2,808	)		—

XML

Note 16 - Guarantees, Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

16 . GUARANTEES, COMMITMENTS AND CONTINGENCIES

The Bank

’s exposure to credit loss in the event of nonperformance by the other party for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making these commitments as it does for on-balance sheet instruments. For interest rate swap transactions and commitments to purchase or sell securities for forward delivery, the contract or notional amounts do not represent exposure to credit loss. The Bank controls the credit risk of these derivative instruments through credit approvals, limits and monitoring procedures. Certain derivative contracts have credit risk for the carrying value plus the amount to replace such contracts in the event of counterparty default. All of the Bank’s financial instruments are held for risk management and not for trading purposes. During the nine-month periods ended September 30, 2016 and 2015, respectively, there were no credit losses associated with derivative contracts.

In the normal course of business, there are outstanding commitments and contingent liabilities, such as commitments to extend credit, letters of credit and others

that are not included in the consolidated financial statements. The financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the financial statements. A summary of these commitments and contingent liabilities is presented below:

	September 30 , 201 6		December 31, 201 5
	(Dollars in Thousands)
Standby letters of credit	$	183	$	683
Commitments to extend credit	$	41,950	$	61,427

Standby letters of credit are contingent commitments issued by the Bank generally to guarantee the performance of a customer to a third party. The Bank has recourse against the customer for any amount that it is required to pay to a third party under a standby letter of credit. Revenues are recognized over the lives of the standby letters of credit. As of

September 30, 2016 and December 31, 2015, the potential amount of future payments that the Bank could be required to make under its standby letters of credit, which represent the Bank’s total credit risk in this category, is included in the table above.

A commitment

to extend credit is an agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon the extension of credit, is based on management’s credit evaluation of the counterparty. Collateral varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

Commitments to purchase securities for delayed delivery require the Bank to purchase a specified security at a specified price for delivery on a specified date. Similarly, commitments to sell securities for delayed delivery require the Bank to sell a specified security at a specified price for delivery on a specified date. Market risk arises from potential movements in security values and interest rates between the commitment and delivery dates. 

As of both September 30, 2016 and December 31, 2015, there were no outstanding commitments to purchase securities for delayed delivery and no outstanding commitments to sell securities for delayed delivery.

During the third quarter of 2016, the Bank entered into an agreement with a general contractor to manage construction of an office complex on a parcel of land located in the Birmingham, Alabama area that was purchased by the Bank during

the first quarter of 2016. The office complex, which is expected to be approximately 40,000 square feet in size, will house a retail branch of the Bank, as well as the Bank’s commercial lending team in the Birmingham area and certain other officers of the Bank. Approximately 25% of the square footage of the office complex will be utilized by the Bank, with the remainder to be leased to commercial tenants. Construction began on the office complex during the third quarter and is expected to be completed during 2017. As of September 30, 2016, $0.5 million in cost had been incurred under the agreement, with estimated remaining commitments totaling $8.6 million. Additional expenses could be incurred under the agreement based on changes to building specifications at the discretion of the Bank and the occurrence of certain events specified in the contract. In addition to the agreement with the general contractor, the Bank estimates additional expenditures of approximately $4.0 million will be incurred for completion of office finishes, tenant improvements, furniture and fixtures, architectural fees and certain other developmental costs. As costs associated with the construction are incurred, they are recorded in premises and equipment as construction in process. Upon completion of construction and placement of the office complex into service, depreciation expense associated with the office complex is currently estimated to be approximately $0.4 million annually.

Litigation

The Company is a party to

certain ordinary course litigation, and the Company intends to vigorously defend itself in all such litigation. In the opinion of the Company, based on review and consultation with legal counsel, the outcome of such ordinary course litigation should not have a material adverse effect on the Company’s consolidated financial statements or results of operations.

XML

Note 17 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

17. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows the provisions of

ASC Topic 820,

Fair Value Measurements and Disclosures

, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The assumptions used in the estimation of the fair value of the Company’s financial instruments are detailed below. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather represent a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Fair Value Hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. In determining fair value, the Company uses various methods, including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk generally and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

● Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange or Nasdaq. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

● Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

● Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

The Company rarely transfers assets and liabilities measured at fair value between Level 1 and Level 2 measurements. Trading account assets and securities available-for-sale may be periodically transferred to or from Level 3 valuation based on management

’s conclusion regarding the best method of pricing for an individual security. Such transfers are accounted for as if they occurred at the beginning of a reporting period. There were no such transfers during the nine months ended September 30, 2016 or the year ended December 31, 2015.

Fair Value Measurements on a Recurring Basis

Securities

Available-for-Sale

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include exchange-traded equities. Level 2 securities include U.S. Treasury and agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. Level 2 fair values are obtained from quoted prices of securities with similar characteristics. In certain cases, where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Interest Rate Derivative Agreements

Interest rate derivative agreements are used by the Company to mitigate risk associated with changes in interest rates.

The fair value of these agreements is based on information obtained from third-party financial institutions. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party valuations. The Company classifies these derivative assets within Level 2 of the valuation hierarchy.

The following table presents assets and liabilities measured at fair value on a recurring basis as of

September 30, 2016 and December 31, 2015. 

	Fair Value Measurements as of September 30 , 201 6 Using
	Totals At September 30 , 201 6			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	98,341		$	—	$	98,341		$	—
Commercial		69,326			—		69,326			—
Obligations of states and political subdivisions		10,735			—		10,735			—
Obligations of U.S. government-sponsored agencies		2,006			—		2,006			—
Corporate notes		763			—		763			—
U.S. Treasury securities		80			—		80			—
Other liabilities - derivatives		(130	)		—		(130	)		—

	Fair Value Measurements as of December 31, 201 5 Using
	Totals At December 31, 201 5		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	135,494	$	—	$	135,494	$	—
Commercial		45,509		—		45,509		—
Obligations of states and political subdivisions		14,998		—		14,998		—
Obligations of U.S. government-sponsored agencies		1,982		—		1,982		—
Corporate notes		780		—		780		—
U.S. Treasury securities		80		—		80		—
Other assets - derivatives		3		—		3		—

Fair Value Measurements on a Non-recurring Basis

Impaired Loans

Loans that are considered impaired are loans for which, based on current information and events, it is probable that the Company will be unable to collect all principal and interest payments due under the contractual terms of the loan agreement. Impaired loans can be measured based on the present value of expected payments using the loan

’s original effective rate as the discount rate, the loan’s observable market price or the fair value of the collateral less estimated selling cost if the loan is collateral-dependent. For the Company, the fair value of impaired loans is primarily measured based on the value of the collateral securing the loans (typically real estate). The Company determines the fair value of the collateral based on independent appraisals performed by qualified licensed appraisers. The appraisals may include a single valuation approach or a combination of approaches, including comparable sales and income approaches. Appraised values are discounted for estimated costs to sell and may be discounted further based on management’s knowledge of the collateral, changes in market conditions since the most recent appraisal and/or management’s knowledge of the borrower and the borrower’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Impaired loans are evaluated by management for additional impairment at least quarterly and are adjusted accordingly.

OREO

OREO consists of properties obtained through foreclosure or in satisfaction of loans and is recorded at the lower of the loan

’s carrying amount or the fair value of the property, less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.

Other Assets

Included within other assets

are certain assets that were formerly included as premises and equipment, but have been removed from service, and as of the balance sheet date, were designated as assets to be disposed of by sale. These include assets associated with branches of the Bank that have been closed. When an asset is designated as held for sale, the Company ceases depreciation of the asset, and the asset is recorded at the lower of its carrying amount or fair value less estimated cost to sell. Estimates of fair value are generally based on third-party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes discounted based on management’s knowledge of the property and/or changes in market conditions from the date of the most recent appraisal. Such discounts are typically unobservable inputs for determining fair value.

The following table presents the balances of impaired loans, OREO, and other assets measured at fair value on a non-recurring basis as of

September 30, 2016 and December 31, 2015.

	Fair Value Measurements as of September 30 , 201 6 Using
	Totals At September 30 , 201 6		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	1,690	$	—	$	—	$	1,690
OREO		5,391						5,391
Other assets		73		—		—		73

	Fair Value Measurements as of December 31, 201 5 Using
	Totals At December 31, 201 5		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	2,350	$	—	$	—	$	2,350
OREO		6,038		—		—		6,038

Non-recurring Fair Value Measurements Using Significant Unobservable Inputs

The following table presents information regarding assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of September

30, 2016. The table includes the valuation techniques and the significant unobservable inputs utilized. The range of each unobservable input and the weighted average within the range utilized as of September 30, 2016 are both included. Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.

	Level 3 Significant Unobservable Input Assumptions
	Fair Value September 30 , 201 6		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Impaired loans	$	1,690	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9 % - 10% (9 .5%)
OREO	$	5,391	Discount to appraised  value of property based on recent market activity for sales of similar properties	Appraisal comparability  adjustment (discount)	9% - 10% (9.5%)
Other assets	$	73	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9 % - 10% (9.5 %)

Impaired Loans

Impaired loans are valued based on multiple data points indicating the fair value for each loan. The primary data point is the appraisal value of the underlying collateral, to which a discount is applied. Management establishes this discount or comparability adjustment based on recent sales of similar property types. As liquidity in the market increases or decreases, the comparability adjustment and the resulting asset valuation are impacted.

OREO

OREO under a binding contract for sale is valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Other Assets

Assets designated as held for sale that are under binding contract are valued based on contract price. If no sales contract is pending for a specific property, management establishes a comparability adjustment to the appraised value based on

historical activity, considering proceeds for properties sold versus the corresponding appraised value. Increases or decreases in realization for properties sold impact the comparability adjustment for similar assets remaining on the balance sheet.

Fair Value of Financial Instruments

ASC Topic 825, Financial

Instruments

, requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash, due from banks and federal funds sold:

The carrying amount of cash, due from banks and federal funds sold approximates fair value.

Federal Home Loan Bank stock:

Based on the redemption provision of the FHLB, the stock has no quoted market value and is carried at cost.

Investment securities:

Fair values of investment securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments.

Derivative instruments:

The fair value of derivative instruments is based on information obtained from a third-party financial institution. This information is periodically evaluated by the Company and, as necessary, corroborated against other third-party information.

Accrued interest receivable and payable:

The carrying amount of accrued interest approximates fair value.

Loans, net:

For variable-rate loans, fair values are based on carrying values. Fixed-rate commercial loans, other installment loans and certain real estate mortgage loans are valued using discounted cash flows. The discount rate used to determine the present value of these loans is based on interest rates currently being charged by the Company on loans that are comparable as to credit risk and term.

Demand and savings deposits:

The fair values of demand deposits are equal to the carrying value of such deposits. Demand deposits include non-interest-bearing demand deposits, savings accounts, NOW accounts and money market demand accounts.

Time deposits:

The fair values of relatively short-term time deposits are equal to their carrying values. Discounted cash flows are used to value long-term time deposits. The discount rate used is based on interest rates currently being offered by the Company on comparable deposits as to amount and term.

Short-term borrowings:

These borrowings may consist of federal funds purchased, securities sold under agreements to repurchase and the floating rate borrowings from the FHLB account. Due to the short-term nature of these borrowings, fair values approximate carrying values.

Long-term debt:

The fair value of this debt is estimated using discounted cash flows based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements as of September 30, 2016 and December 31, 2015.

Off-balance sheet instruments:

The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance sheet financial instruments is based on fees currently charged to enter into such agreements.

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company

’s financial instruments as of September 30, 2016 and December 31, 2015, were as follows:

	September 30 , 201 6
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	26,093	$	26,093	$	26,093	$	—	$	—
Investment securities available-for-sale		181,251		181,251		—		181,251		—
Investment securities held-to-maturity		28,315		28,483		—		28,483		—
Federal Home Loan Bank stock		1,368		1,368		—		—		1,368
Loans, net of allowance for loan losses		317,121		312,042		—		—		312,042
Liabilities:
Deposits		493,828		493,871		—		493,871		—
Short-term borrowings		5,337		5,337		—		5,337		—
Long-term borrowings		15,000		14,992		—		14,992		—
Other liabilities - derivatives		130		130		—		130		—

	December 31, 201 5
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	44,072	$	44,072	$	44,072	$	—	$	—
Investment securities available-for-sale		198,843		198,843		—		198,843		—
Investment securities held-to-maturity		32,359		32,184		—		32,184		—
Federal Home Loan Bank stock		1,025		1,025		—		—		1,025
Loans, net of allowance for loan losses		255,432		256,392		—		—		256,392
Other assets – derivatives		3		3		—		3		—
Liabilities:
Deposits		479,258		478,833		—		478,833		—
Short-term borrowings		7,354		7,352		—		7,352		—
Long-term borrowings		5,000		4,977		—		4,977		—

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Standards Update (“

ASU”) 2016-13

,

"Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.”

Issued in June 2016, ASU 2016-13 removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all current recognition thresholds and will require companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows not expected to be collected over the financial asset’s contractual term. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale debt securities. For public business entities, ASU 2016-13 is effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. Institutions will be required to apply the changes through a cumulative-effect adjustment to their retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-10, “

Revenue from Contracts with Customers (Topic 606)-Identifying Performance Obligations and Licensing.”  

Issued in April 2016, ASU 2016-10 clarifies

ASC Topic 606, “Revenue from Contracts with Customers"

with respect to (i) identifying performance obligations; and (ii) the licensing implementation guidance.  Since the amendments in ASU 2016-10 affect the guidance in ASU 2014-09,

“Revenue from Contracts with Customers (Topic 606),”

which is not yet effective, this ASU will become effective when ASU 2014-09 becomes effective.  The amendments of ASU 2016-10 are effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-09, “

Compensation-Stock Compensation (Topic 718)-Improvements to Employee Share-Based Payment Accounting.”  

Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions, including (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes; (6) the practical expedient for estimating the expected term; and (7) intrinsic value.  The amendments of ASU 2016-09 are effective for interim and annual periods beginning after December 15, 2016.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-08,

“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).”

Issued in March 2016, ASU 2016-08 clarifies certain principal versus agent considerations within the implementation guidance of

ASC Topic 606, “Revenue from Contracts with Customers.”

Since the amendments in ASU 2016-08 affect the guidance in ASU 2014-09,

“Revenue from Contracts with Customers (Topic 606),”

which is not yet effective, this ASU will become effective when ASU 2014-09 becomes effective.  The amendments of ASU 2016-08 are effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-05

,

“Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.”

Issued in March 2016, ASU 2016-05clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under ASC Topic 815 does not, in and of itself, require de-designation of that hedging relationship, provided that all other hedge accounting criteria continue to be met.  The amendments of ASU 2016-05 are effective for interim and annual periods beginning after December 15, 2016.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-02, “Leases (Topic 842).”

Issued in February 2016, ASU 2016-02 will require organizations that lease assets (lessees) to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases with a term of more than 12 months. The recognition, measurement and presentation of expenses and cash flows arising from a lease are not significantly changed under ASU 2016-02. There will continue to be differentiation between finance leases and operating leases. For finance leases, a lessee will be required to (i) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (ii) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of income; and (iii) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability within operating activities on the statement of cash flows. For operating leases, a lessee will be required to (i) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (ii) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and (iii) classify all cash payments within operating activities in the statement of cash flows. The accounting applied by the lessor in a lease transaction remains largely unchanged from previous U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2016-01, “

Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification).”

  Issued in January 2016, ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information.  The amendments to ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value, with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; and (iii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

ASU 2015-05, “

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.”

Issued in April 2015, ASU 2015-05 provides guidance on how customers should evaluate whether cloud computing arrangements contain a software license that should be accounted for separately. A customer that determines that such an arrangement contains a software license must account for the license consistently with the acquisition of other software licenses. If an arrangement does not contain a software license, then the customer is required to account for it as a service contract. As a result, all software licenses within the scope of this guidance will be accounted for consistently with other licenses of intangible assets. The guidance is effective for annual and interim periods beginning after December 15, 2015. Entities can elect to apply the guidance either retrospectively or prospectively to all cloud computing arrangements entered into or materially modified after the effective date. ASU 2015-05 became effective for the Company on January 1, 2016 and was applied using the prospective transition method.  The adoption of ASU 2015-05 did not have a material impact on the Company’s consolidated financial statements.

ASU 2015-02,

“

Consolidation (Topic 810): Amendments to the Consolidation Analysis

.”

Issued in February 2015, ASU 2015-02 is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability companies and certain entities involved in securitization transactions. ASU 2015-02 focuses on the consolidation criteria for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The new standard simplifies and improves current U.S. GAAP by: (i) placing more emphasis on risk of loss when determining a controlling financial interest; (ii) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (

“

VIE

”

); and (iii) changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. ASU 2015-02 became effective for the Company on January 1, 2016. The adoption of ASU 2015-02 did not have a material impact on the Company’s consolidated financial statements.

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).”

  Issued in May 2014, ASU 2014-09 will add

FASB ASC Topic 606, Revenue from Contracts with Customers,

and will supersede revenue recognition requirements in

FASB ASC Topic 605, Revenue Recognition

and certain cost guidance in

FASB ASC Topic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts.

  ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction-specific requirements under the existing standards.  ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount.  The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled.  Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services is transferred to the customer.  ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in each contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in each contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.  In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09.  The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application.  If the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application regarding (1) the amount by which each financial statement line item is affected in the current reporting period and (2) an explanation of the reasons for significant changes.  

ASU 2015-14,

“Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,”

issued in August 2015, defers the effective date of ASU 2014-09 by one year.  ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements, as well as the most appropriate method of application; however, regardless of the method of application selected, the adoption of ASU 2014-09 is not expected to have a material impact on the Company’s consolidated financial statements.

XML

Note 3 - Net Income Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Basic shares		6,151,701		6,139,148		6,147,325		6,137,207
Dilutive shares		272,550		177,050		272,550		177,050
Diluted shares		6,424,251		6,316,198		6,419,875		6,314,257

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in Thousands, Except Per Share Data)
Net income	$	550	$	544	$	1,329	$	2,154
Basic net income per share	$	0.09	$	0.09	$	0.22	$	0.35
Diluted net income per share	$	0.09	$	0.09	$	0.21	$	0.34

XML

Note 5 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Investment Securities Available-for-sale and Held-to-Maturity [Table Text Block]

	Available-for-Sale
	September 30 , 201 6
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	96,845	$	1,534	$	(38	)	$	98,341
Commercial		69,430		280		(384	)		69,326
Obligations of states and political subdivisions		10,153		582		—			10,735
Obligations of U.S. government-sponsored agencies		2,000		6		—			2,006
Corporate notes		762		1		—			763
U.S. Treasury securities		80		—		—			80
Total	$	179,270	$	2,403	$	(422	)	$	181,251

	Held-to-Maturity
	September 30 , 201 6
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	16,052	$	81	$	—		$	16,133
Obligations of U.S. government-sponsored agencies		10,121		59		(2	)		10,178
Obligations of states and political subdivisions		2,142		33		(3	)		2,172
Total	$	28,315	$	173	$	(5	)	$	28,483

	Available-for-Sale
	December 31, 201 5
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	135,104	$	998	$	(608	)	$	135,494
Commercial		45,961		164		(616	)		45,509
Obligations of states and political subdivisions		14,071		931		(4	)		14,998
Obligations of U.S. government-sponsored agencies		1,999		—		(17	)		1,982
Corporate notes		780		—		—			780
U.S. Treasury securities		80		—		—			80
Total	$	197,995	$	2,093	$	(1,245	)	$	198,843

	Held-to-Maturity
	December 31, 201 5
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	16,321	$	33	$	(170	)	$	16,184
Obligations of U.S. government-sponsored agencies		13,766		19		(71	)		13,714
Obligations of states and political subdivisions		2,272		18		(4	)		2,286
Total	$	32,359	$	70	$	(245	)	$	32,184

Investments Classified by Contractual Maturity Date [Table Text Block]

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	2,007	$	2,016	$	—	$	—
Maturing after one to five years		5,400		5,501		2,064		2,109
Maturing after five to ten years		75,845		77,084		7,215		7,247
Maturing after ten years		96,018		96,650		19,036		19,127
Total	$	179,270	$	181,251	$	28,315	$	28,483

Schedule of Unrealized Loss on Investments [Table Text Block]

	Available-for-Sale
	September 30 , 201 6
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	7,855	$	(15	)	$	1,954	$	(23	)
Commercial		28,829		(82	)		11,498		(302	)
U.S. Treasury securities		80		—			—		—
Total	$	36,764	$	(97	)	$	13,452	$	(325	)

	Held-to-Maturity
	September 30 , 201 6
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,948	$	—		$	—	$	—
Obligations of U.S. government-sponsored agencies		1,397		(2	)		—		—
Obligations of states and political subdivisions		563		(3	)		—		—
Total	$	3,908	$	(5	)	$	—	$	—

	Available-for-Sale
	December 31, 201 5
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	83,403	$	(458	)	$	9,061	$	(150	)
Commercial		24,337		(272	)		8,918		(344	)
Obligations of U.S. government-sponsored agencies		1,982		(17	)		—		—
Corporate notes		779		—			—		—
Obligations of states and political subdivisions		707		(4	)		—		—
Total	$	111,208	$	(751	)	$	17,979	$	(494	)

	Held-to-Maturity
	December 31, 201 5
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	14,143	$	(170	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		11,163		(44	)		1,560		(27	)
Obligations of states and political subdivisions		572		(4	)		—		—
Total	$	25,878	$	(218	)	$	1,560	$	(27	)

XML

Note 6 - Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	September 30 , 201 6
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	24,610	$	—	$	24,610
Secured by 1-4 family residential properties		32,559		14,462		47,021
Secured by multi-family residential properties		16,801		—		16,801
Secured by non-farm, non-residential properties		97,859		—		97,859
Other		185		—		185
Commercial and industrial loans		54,459		—		54,459
Consumer loans		6,289		80,915		87,204
Other loans		46		—		46
Total loans		232,808		95,377		328,185
Less: Unearned interest, fees and deferred cost		191		7,205		7,396
Allowance for loan losses		1,216		2,452		3,668
Net loans	$	231,401	$	85,720	$	317,121

	December 31, 201 5
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	11,827	$	—	$	11,827
Secured by 1-4 family residential properties		30,730		17,233		47,963
Secured by multi-family residential properties		11,845		—		11,845
Secured by non-farm, non-residential properties		83,883		—		83,883
Other		115		—		115
Commercial and industrial loans		29,377		—		29,377
Consumer loans		7,057		76,131		83,188
Other loans		379		—		379
Total loans		175,213		93,364		268,577
Less: Unearned interest, fees and deferred cost		149		9,215		9,364
Allowance for loan losses		1,329		2,452		3,781
Net loans	$	173,735	$	81,697	$	255,432

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	FUSB
	Nine M onths Ended September 30 , 201 6
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	133		$	1,118		$	27		$	37		$	14	$	1,329
Charge-offs		(1	)		(40	)		(30	)		(10	)		—		(81	)
Recoveries		28			234			40			16			—		318
Provision		(31	)		(378	)		(26	)		64			21		(350	)
Ending balance		129			934			11			107			35		1,216
Ending balance individually evaluated for impairment		—			413			—			5			—		418
Ending balance collectively evaluated for impairment	$	129		$	521		$	11		$	102		$	35	$	798
Loan receivables:
Ending balance		54,459			139,455			6,289			32,559			46		232,808
Ending balance individually evaluated for impairment		—			2,107			—			—			—		2,107
Ending balance collectively evaluated for impairment	$	54,459		$	137,348		$	6,289		$	32,559		$	46	$	230,701

	ALC
	Nine Months Ended September 30 , 201 6
	Commercial & Industrial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,201		$	251		$	—	$	2,452
Charge-offs		—		—		(2,218	)		(49	)		—		(2,267	)
Recoveries		—		—		500			34			—		534
Provision		—		—		1,808			(75	)		—		1,733
Ending balance		—		—		2,291			161			—		2,452
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,291		$	161		$	—	$	2,452
Loan receivables:
Ending balance		—		—		80,915			14,462			—		95,377
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	80,915		$	14,462		$	—	$	95,377

	FUSB and ALC
	Nine Months Ended September 30 , 201 6
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	133		$	1,118		$	2,228		$	288		$	14	$	3,781
Charge-offs		(1	)		(40	)		(2,248	)		(59	)		—		(2,348	)
Recoveries		28			234			540			50			—		852
Provision		(31	)		(378	)		1,782			(11	)		21		1,383
Ending balance		129			934			2,302			268			35		3,668
Ending balance individually evaluated for impairment		—			413			—			5			—		418
Ending balance collectively evaluated for impairment	$	129		$	521		$	2,302		$	263		$	35	$	3,250
Loan receivables:
Ending balance		54,459			139,455			87,204			47,021			46		328,185
Ending balance individually evaluated for impairment		—			2,107			—			—			—		2,107
Ending balance collectively evaluated for impairment	$	54,459		$	137,348		$	87,204		$	47,021		$	46	$	326,078

	FUSB
	Year Ended December 31, 201 5
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141		$	2,810		$	114		$	421		$	—	$	3,486
Charge-offs		—			(767	)		(17	)		(68	)		—		(852	)
Recoveries		61			12			70			111			—		254
Provision		(69	)		(937	)		(139	)		(428	)		14		(1,559	)
Ending balance		133			1,118			28			36			14		1,329
Ending balance individually evaluated for impairment		80			230			—			—			—		310
Ending balance collectively evaluated for impairment	$	53		$	888		$	28		$	36		$	14	$	1,019
Loan receivables:
Ending balance		29,377			107,670			7,057			30,730			379		175,213
Ending balance individually evaluated for impairment		444			2,018			—			252			—		2,714
Ending balance collectively evaluated for impairment	$	28,933		$	105,652		$	7,057		$	30,478		$	379	$	172,499

	ALC
	Year Ended December 31, 201 5
	Commercial & Industrial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,336		$	346		$	—	$	2,682
Charge-offs		—		—		(2,552	)		(187	)		—		(2,739	)
Recoveries		—		—		712			22			—		734
Provision		—		—		1,706			69			—		1,775
Ending balance		—		—		2,202			250			—		2,452
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,202		$	250		$	—	$	2,452
Loan receivables:
Ending balance		—		—		76,131			17,233			—		93,364
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	76,131		$	17,233		$	—	$	93,364

	FUSB and ALC
	Year Ended December 31, 201 5
	Commercial & Industrial			Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141		$	2,810		$	2,450		$	767		$	—	$	6,168
Charge-offs		—			(767	)		(2,569	)		(255	)		—		(3,591	)
Recoveries		61			12			782			133			—		988
Provision		(69	)		(937	)		1,567			(359	)		14		216
Ending balance		133			1,118			2,230			286			14		3,781
Ending balance individually evaluated for impairment		80			230			—			—			—		310
Ending balance collectively evaluated for impairment	$	53		$	888		$	2,230		$	286		$	14	$	3,471
Loan receivables:
Ending balance		29,377			107,670			83,188			47,963			379		268,577
Ending balance individually evaluated for impairment		444			2,018			—			252			—		2,714
Ending balance collectively evaluated for impairment	$	28,933		$	105,652		$	83,188		$	47,711		$	379	$	265,863

Financing Receivable Credit Quality Indicators [Table Text Block]

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	23,075	$	—	$	1,535	$	—	$	24,610
Secured by 1-4 family residential properties		31,450		217		892		—		32,559
Secured by multi-family residential properties		16,801		—		—		—		16,801
Secured by non-farm, non-residential properties		93,344		3,787		728		—		97,859
Other		185		—		—		—		185
Commercial and industrial loans		53,310		881		268		—		54,459
Consumer loans		6,173		—		116		—		6,289
Other loans		46		—		—		—		46
Total	$	224,384	$	4,885	$	3,539	$	—	$	232,808

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	14,213	$	249	$	14,462
Consumer loans		79,664		1,251		80,915
Total	$	93,877	$	1,500	$	95,377

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	9,862	$	—	$	1,965	$	—	$	11,827
Secured by 1-4 family residential properties		29,252		228		1,250		—		30,730
Secured by multi-family residential properties		11,845		—		—		—		11,845
Secured by non-farm, non-residential properties		78,647		4,315		921		—		83,883
Other		115		—		—		—		115
Commercial and industrial loans		28,170		482		725		—		29,377
Consumer loans		6,905		—		152		—		7,057
Other loans		379		—		—		—		379
Total	$	165,175	$	5,025	$	5,013	$	—	$	175,213

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	16,964	$	269	$	17,233
Consumer loans		74,743		1,388		76,131
Total	$	91,707	$	1,657	$	93,364

Past Due Financing Receivables [Table Text Block]

	FUSB
	As of September 30 , 201 6
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	86	$	86	$	24,524	$	24,610	$	—
Secured by 1-4 family residential properties		61		15		208		284		32,275		32,559		—
Secured by multi-family residential properties		—		—		—		—		16,801		16,801		—
Secured by non-farm, non-residential properties		—		—		—		—		97,859		97,859		—
Other		—		—		—		—		185		185		—
Commercial and industrial loans		26		17		—		43		54,416		54,459		—
Consumer loans		30		—		9		39		6,250		6,289		—
Other loans		—		—		—		—		46		46		—
Total	$	117	$	32	$	303	$	452	$	232,356	$	232,808	$	—

	ALC
	As of September 30 , 201 6
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		55		20		244		319		14,143		14,462		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans		900		504		1,247		2,651		78,264		80,915		—
Other loans		—		—		—		—		—		—		—
Total	$	955	$	524	$	1,491	$	2,970	$	92,407	$	95,377	$	—

	FUSB
	As of December 31, 201 5
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	86	$	86	$	11,741	$	11,827	$	—
Secured by 1-4 family residential properties		118		206		360		684		30,046		30,730		—
Secured by multi-family residential properties		—		—		—		—		11,845		11,845		—
Secured by non-farm, non-residential properties		530		—		148		678		83,205		83,883		—
Other		—		—		—		—		115		115		—
Commercial and industrial loans		22		52		—		74		29,303		29,377		—
Consumer loans		49		4		83		136		6,921		7,057		—
Other loans		—		—		—		—		379		379		—
Total	$	719	$	262	$	677	$	1,658	$	173,555	$	175,213	$	—

	ALC
	As of December 31, 201 5
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		91		206		252		549		16,684		17,233		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans		965		567		1,377		2,909		73,222		76,131		—
Other loans		—		—		—		—		—		—		—
Total	$	1,056	$	773	$	1,629	$	3,458	$	89,906	$	93,364	$	—

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

	Loans on Non-Accrual Status
	September 30 , 201 6		December 31, 201 5
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	86	$	339
Secured by 1-4 family residential properties		731		968
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		61		213
Commercial and industrial loans		22		47
Consumer loans		1,366		1,535
Total loans	$	2,266	$	3,102

Impaired Financing Receivables [Table Text Block]

	September 30 , 201 6
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		—		—		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	—	$	—	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	1,361	$	1,361	$	305
Secured by 1-4 family residential properties		195		195		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		551		551		108
Commercial and industrial		—		—		—
Total loans with an allowance recorded	$	2,107	$	2,107	$	418
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	1,361	$	1,361	$	305
Secured by 1-4 family residential properties		195		195		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		551		551		108
Commercial and industrial		—		—		—
Total impaired loans	$	2,107	$	2,107	$	418

	December 31, 201 5
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		54		54		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	54	$	54	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	95
Secured by 1-4 family residential properties		198		198		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		573		573		130
Commercial and industrial		444		444		80
Total loans with an allowance recorded	$	2,660	$	2,660	$	310
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	95
Secured by 1-4 family residential properties		252		252		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		573		573		130
Commercial and industrial		444		444		80
Total impaired loans	$	2,714	$	2,714	$	310

Average Net Investment Impaired Loans and Interest Income Recognized and Received on Impaired Loans [Table Text Block]

	September 30 , 201 6
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,388	$	32	$	32
Secured by 1-4 family residential properties		245		10		11
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		559		25		24
Commercial and industrial		—		—		—
Total	$	2,192	$	67	$	67

	December 31, 201 5
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,493	$	44	$	46
Secured by 1-4 family residential properties		139		14		14
Secured by multi-family residential properties		1,892		—		—
Secured by non-farm, non-residential properties		3,329		35		36
Commercial and industrial		264		26		26
Total	$	7,117	$	119	$	122

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	September 30 , 201 6						December 31, 201 5
	Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance		Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		2	$	1,960	$	1,341		3	$	2,220	$	1,698
Secured by 1-4 family residential properties		4		335		257		4		200		103
Secured by non-farm, non-residential properties		2		113		44		2		113		52
Commercial loans		2		116		90		2		116		94
Total		10	$	2,524	$	1,732		11	$	2,649	$	1,947

XML

Note 7 - Other Real Estate Owned (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Other Real Estate Assets Acquired in Foreclosure Roll Forward [Table Text Block]

	September 30 , 201 6
	FUSB			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	5,327		$	711		$	6,038
Transfers from loans		255			149			404
Sales proceeds		(655	)		(259	)		(914	)
Gross gains		—			27			27
Gross losses		(40	)		(73	)		(113	)
Net gains (losses)		(40	)		(46	)		(86	)
Impairment		—			(51	)		(51	)
Ending balance	$	4,887		$	504		$	5,391

	September 30 , 201 5
	FUSB			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	6,997		$	738		$	7,735
Transfers from loans		1,439			263			1,702
Sales proceeds		(2,225	)		(144	)		(2,369	)
Gross gains		4			—			4
Gross losses		(210	)		(73	)		(283	)
Net gains (losses)		(206	)		(73	)		(279	)
Impairment		(44	)		(89	)		(133	)
Ending balance	$	5,961		$	695		$	6,656

XML

Note 13 - Stock Option Grants (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2016			2015
Risk-free interest rate		1.58	%		1.52	%
Expected term	7.5 years			7.5 years
Expected stock price volatility		25.25	%		54.04	%
Dividend yield		1.50	%		1.50	%

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Nine Months Ended
	September 30 , 201 6				September 30 , 201 5
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of period		175,550	$	8.17		83,400	$	8.09
Granted		97,000		8.30		96,150		8.23
Exercised		—		—		—		—
Expired		—		—		—		—
Forfeited		—		—		2,500		8.09
Options outstanding, end of period		272,550	$	8.21		177,050	$	8.16
Options exercisable, end of period		175,550	$	8.17		81,900	$	8.09

XML

Note 15 - Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

						All
	FUSB			ALC		Other			Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended September 30 , 201 6 :
Net interest income	$	3,917		$	3,253	$	3		$	—		$	7,173
Provision (reduction in reserve) for loan losses		100			580		—			—			680
Total non-interest income		1,159			316		973			(881	)		1,567
Total non-interest expense		4,636			2,403		474			(165	)		7,348
Income (loss) before income taxes		340			586		502			(716	)		712
Provision for income taxes		52			196		(86	)		—			162
Net income (loss)	$	288		$	390	$	588		$	(716	)	$	550
Other significant items:
Total assets	$	602,123		$	89,347	$	84,291		$	(175,454	)	$	600,307
Total investment securities		209,486			—		80			—			209,566
Total loans, net		308,423			85,720		—			(77,022	)		317,121
Investment in subsidiaries		5			—		78,737			(78,737	)		5
Fixed asset additions		960			16		—			—			976
Depreciation and amortization expense		193			54		—			—			247
Total interest income from external customers		3,415			4,345		—			—			7,760
Total interest income from affiliates		1,092			—		3			(1,095	)		—
For the nine months ended September 30, 2016:
Net interest income	$	11,199		$	9,544	$	8		$	—		$	20,751
Provision (reduction in reserve) for loan losses		(350	)		1,733		—			—			1,383
Total non-interest income		3,002			909		2,481			(2,356	)		4,036
Total non-interest expense		13,435			7,306		1,373			(445	)		21,669
Income (loss) before income taxes		1,116			1,414		1,116			(1,911	)		1,735
Provision for income taxes		224			484		(302	)		—			406
Net income (loss)	$	892		$	930	$	1,418		$	(1,911	)	$	1,329
Other significant items:
Fixed asset additions		4,521			33		—			—			4,554
Depreciation and amortization expense		564			162		—			—			726
Total interest income from external customers		9,750			12,684		—			—			22,434
Total interest income from affiliates		3,140			—		8			(3,148	)		—

						All
	FUSB			ALC		Other			Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended September 30 , 201 5 :
Net interest income	$	3,598		$	3,166	$	3		$	—		$	6,767
Provision (reduction in reserve) for loan losses		(400	)		322		—			—			(78	)
Total non-interest income		755			234		847			(840	)		996
Total non-interest expense		4,443			2,430		360			(143	)		7,090
Income before income taxes		310			648		490			(697	)		751
Provision for income taxes		43			236		(72	)		—			207
Net income	$	267		$	412	$	562		$	(697	)	$	544
Other significant items:
Total assets	$	550,341		$	85,066	$	82,167		$	(169,037	)	$	548,537
Total investment securities		238,929			—		80			—			239,009
Total loans, net		229,721			80,779		—			(72,785	)		237,715
Investment in subsidiaries		5			—		76,883			(76,883	)		5
Fixed asset additions		1,250			2		—			—			1,252
Depreciation and amortization expense		151			61		—			—			212
Total interest income from external customers		3,162			4,166		—			—			7,328
Total interest income from affiliates		1,000			—		3			(1,003	)		—
For the nine months ended September 30, 2015:
Net interest income	$	11,433		$	9,203	$	8		$	—		$	20,644
Provision (reduction in reserve) for loan losses		(1,370	)		1,171		—			—			(199	)
Total non-interest income		2,766			689		3,053			(3,153	)		3,355
Total non-interest expense		13,110			7,400		1,103			(439	)		21,174
Income before income taxes		2,459			1,321		1,958			(2,714	)		3,024
Provision for income taxes		678			475		(283	)		—			870
Net income	$	1,781		$	846	$	2,241		$	(2,714	)	$	2,154
Other significant items:
Fixed asset additions	$	2,860		$	251	$	—		$	—		$	3,111
Depreciation and amortization expense		459			181		—			—			640
Total interest income from external customers		10,379			12,004		1			—			22,384
Total interest income from affiliates		2,801			—		7			(2,808	)		—

XML

Note 16 - Guarantees, Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

	September 30 , 201 6		December 31, 201 5
	(Dollars in Thousands)
Standby letters of credit	$	183	$	683
Commitments to extend credit	$	41,950	$	61,427

XML

Note 17 - Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Fair Value Measurements as of September 30 , 201 6 Using
	Totals At September 30 , 201 6			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	98,341		$	—	$	98,341		$	—
Commercial		69,326			—		69,326			—
Obligations of states and political subdivisions		10,735			—		10,735			—
Obligations of U.S. government-sponsored agencies		2,006			—		2,006			—
Corporate notes		763			—		763			—
U.S. Treasury securities		80			—		80			—
Other liabilities - derivatives		(130	)		—		(130	)		—

	Fair Value Measurements as of December 31, 201 5 Using
	Totals At December 31, 201 5		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	135,494	$	—	$	135,494	$	—
Commercial		45,509		—		45,509		—
Obligations of states and political subdivisions		14,998		—		14,998		—
Obligations of U.S. government-sponsored agencies		1,982		—		1,982		—
Corporate notes		780		—		780		—
U.S. Treasury securities		80		—		80		—
Other assets - derivatives		3		—		3		—

Fair Value Assets Measured On Nonrecurring Basis [Table Text Block]

	Fair Value Measurements as of September 30 , 201 6 Using
	Totals At September 30 , 201 6		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	1,690	$	—	$	—	$	1,690
OREO		5,391						5,391
Other assets		73		—		—		73

	Fair Value Measurements as of December 31, 201 5 Using
	Totals At December 31, 201 5		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	2,350	$	—	$	—	$	2,350
OREO		6,038		—		—		6,038

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

	Level 3 Significant Unobservable Input Assumptions
	Fair Value September 30 , 201 6		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Impaired loans	$	1,690	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9 % - 10% (9 .5%)
OREO	$	5,391	Discount to appraised  value of property based on recent market activity for sales of similar properties	Appraisal comparability  adjustment (discount)	9% - 10% (9.5%)
Other assets	$	73	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9 % - 10% (9.5 %)

Fair Value, by Balance Sheet Grouping [Table Text Block]

	September 30 , 201 6
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	26,093	$	26,093	$	26,093	$	—	$	—
Investment securities available-for-sale		181,251		181,251		—		181,251		—
Investment securities held-to-maturity		28,315		28,483		—		28,483		—
Federal Home Loan Bank stock		1,368		1,368		—		—		1,368
Loans, net of allowance for loan losses		317,121		312,042		—		—		312,042
Liabilities:
Deposits		493,828		493,871		—		493,871		—
Short-term borrowings		5,337		5,337		—		5,337		—
Long-term borrowings		15,000		14,992		—		14,992		—
Other liabilities - derivatives		130		130		—		130		—

	December 31, 201 5
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	44,072	$	44,072	$	44,072	$	—	$	—
Investment securities available-for-sale		198,843		198,843		—		198,843		—
Investment securities held-to-maturity		32,359		32,184		—		32,184		—
Federal Home Loan Bank stock		1,025		1,025		—		—		1,025
Loans, net of allowance for loan losses		255,432		256,392		—		—		256,392
Other assets – derivatives		3		3		—		3		—
Liabilities:
Deposits		479,258		478,833		—		478,833		—
Short-term borrowings		7,354		7,352		—		7,352		—
Long-term borrowings		5,000		4,977		—		4,977		—

XML

Note 1 - General (Details Textual) $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($)
December 31, 2015 [Member] | Reclassification from Other Liabilities to Surplus [Member]
Prior Period Reclassification Adjustment	$ 0.7

XML

Note 3 - Net Income Per Share - Summary of Basic and Diluted Net Income Per Share Calculations (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Basic shares (in shares)	6,151,701	6,139,148	6,147,325	6,137,207
Dilutive shares (in shares)	272,550	177,050	272,550	177,050
Diluted shares (in shares)	6,424,251	6,316,198	6,419,875	6,314,257
Net income	$ 550	$ 544	$ 1,329	$ 2,154
Basic net income per share (in dollars per share)	$ 0.09	$ 0.09	$ 0.22	$ 0.35
Diluted net income per share (in dollars per share)	$ 0.09	$ 0.09	$ 0.21	$ 0.34

XML

Note 5 - Investment Securities (Details Textual)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Available-for-sale Securities, Gross Realized Losses			$ 0		$ 0
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net			$ 0		$ 0
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	12		12		13
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	29		29		102
Available-for-sale Securities Pledged as Collateral	$ 83,300,000		$ 83,300,000		$ 61,300,000
Available-for-sale Securities, Gross Realized Gain (Loss)	$ 259,000	$ 6,000	$ 657,000	$ 367,000	$ 400,000

XML

Note 5 - Investment Securities - Available-for-sale and Held-to-maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Residential Mortgage Backed Securities [Member]
Available-for-Sale, Amortized Cost	$ 96,845	$ 135,104
Available-for-Sale, Gross Unrealized Gains	1,534	998
Available-for-Sale, Gross Unrealized Losses	(38)	(608)
Available-for-Sale, Estimated Fair Value	98,341	135,494
Commercial Mortgage Backed Securities [Member]
Available-for-Sale, Amortized Cost	69,430	45,961
Available-for-Sale, Gross Unrealized Gains	280	164
Available-for-Sale, Gross Unrealized Losses	(384)	(616)
Available-for-Sale, Estimated Fair Value	69,326	45,509
Held-to-Maturity, Amortized Cost	16,052	16,321
Held-to-Maturity, Gross Unrealized Gains	81	33
Held-to-Maturity, Gross Unrealized Losses		(170)
Held-to-Maturity, Estimated Fair Value	16,133	16,184
US Government Agencies Debt Securities [Member]
Available-for-Sale, Amortized Cost	2,000	1,999
Available-for-Sale, Gross Unrealized Gains	6
Available-for-Sale, Gross Unrealized Losses		(17)
Available-for-Sale, Estimated Fair Value	2,006	1,982
Held-to-Maturity, Amortized Cost	10,121	13,766
Held-to-Maturity, Gross Unrealized Gains	59	19
Held-to-Maturity, Gross Unrealized Losses	(2)	(71)
Held-to-Maturity, Estimated Fair Value	10,178	13,714
US States and Political Subdivisions Debt Securities [Member]
Available-for-Sale, Amortized Cost	10,153	14,071
Available-for-Sale, Gross Unrealized Gains	582	931
Available-for-Sale, Gross Unrealized Losses		(4)
Available-for-Sale, Estimated Fair Value	10,735	14,998
Held-to-Maturity, Amortized Cost	2,142	2,272
Held-to-Maturity, Gross Unrealized Gains	33	18
Held-to-Maturity, Gross Unrealized Losses	(3)	(4)
Held-to-Maturity, Estimated Fair Value	2,172	2,286
Corporate Debt Securities [Member]
Available-for-Sale, Amortized Cost	762	780
Available-for-Sale, Gross Unrealized Gains	1
Available-for-Sale, Gross Unrealized Losses
Available-for-Sale, Estimated Fair Value	763	780
US Treasury Securities [Member]
Available-for-Sale, Amortized Cost	80	80
Available-for-Sale, Gross Unrealized Gains
Available-for-Sale, Gross Unrealized Losses
Available-for-Sale, Estimated Fair Value	80	80
Available-for-Sale, Amortized Cost	179,270	197,995
Available-for-Sale, Gross Unrealized Gains	2,403	2,093
Available-for-Sale, Gross Unrealized Losses	(422)	(1,245)
Available-for-Sale, Estimated Fair Value	181,251	198,843
Held-to-Maturity, Amortized Cost	28,315	32,359
Held-to-Maturity, Gross Unrealized Gains	173	70
Held-to-Maturity, Gross Unrealized Losses	(5)	(245)
Held-to-Maturity, Estimated Fair Value	$ 28,483	$ 32,184

XML

Note 5 - Investment Securities - Scheduled Maturities of Investment Securities Available-for-sale and Held-to-maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Available-for-Sale, Maturing within one year, Amortized Cost	$ 2,007
Available-for-Sale, Maturing within one year, Estimated Fair Value	2,016
Held-to-Maturity, Maturing within one year, Amortized Cost
Held-to-Maturity, Maturing within one year, Estimated Fair Value
Available-for-Sale, Maturing after one to five years, Amortized Cost	5,400
Available-for-Sale, Maturing after one to five years, Estimated Fair Value	5,501
Held-to-Maturity, Maturing after one to five years, Amortized Cost	2,064
Held-to-Maturity, Maturing after one to five years, Estimated Fair Value	2,109
Available-for-Sale, Maturing after five to ten years, Amortized Cost	75,845
Available-for-Sale, Maturing after five to ten years, Estimated Fair Value	77,084
Held-to-Maturity, Maturing after five to ten years, Amortized Cost	7,215
Held-to-Maturity, Maturity after five to ten years, Estimated Fair Value	7,247
Available-for-Sale, Maturing after ten years, Amortized Cost	96,018
Available-for-Sale, Maturing after ten years, Estimated Fair Value	96,650
Held-to-Maturity, Maturing after ten years, Amortized Cost	19,036
Held-to-Maturity, Maturing after ten years, Estimated Fair Value	19,127
Available-for-Sale, Amortized Cost	179,270	$ 197,995
Available-for-Sale, Estimated Fair Value	181,251	198,843
Held-to-Maturity, Amortized Cost	28,315	32,359
Held-to-Maturity, Estimated Fair Value	$ 28,483	$ 32,184

XML

Note 5 - Investment Securities - Investments' Gross Unrealized Losses and Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Residential Mortgage Backed Securities [Member]
Available-for-Sale, Less than 12 Months, Fair Value	$ 7,855	$ 83,403
Available-for-Sale, Less than 12 Months, Unrealized Losses	(15)	(458)
Available-for-Sale, 12 Months or More, Fair Value	1,954	9,061
Available-for-Sale, 12 Months or More, Unrealized Losses	(23)	(150)
Commercial Mortgage Backed Securities [Member]
Available-for-Sale, Less than 12 Months, Fair Value	28,829	24,337
Available-for-Sale, Less than 12 Months, Unrealized Losses	(82)	(272)
Available-for-Sale, 12 Months or More, Fair Value	11,498	8,918
Available-for-Sale, 12 Months or More, Unrealized Losses	(302)	(344)
Held-to-Maturity, Less than 12 Months, Fair Value	1,948	14,143
Held-to-Maturity, Less than 12 Months, Unrealized Losses		(170)
Held-to-Maturity, 12 Months or More, Fair Value
Held-to-Maturity, 12 Months or More, Unrealized Losses
US Government Agencies Debt Securities [Member]
Available-for-Sale, Less than 12 Months, Fair Value		1,982
Available-for-Sale, Less than 12 Months, Unrealized Losses		(17)
Available-for-Sale, 12 Months or More, Fair Value
Available-for-Sale, 12 Months or More, Unrealized Losses
Held-to-Maturity, Less than 12 Months, Fair Value	1,397	11,163
Held-to-Maturity, Less than 12 Months, Unrealized Losses	(2)	(44)
Held-to-Maturity, 12 Months or More, Fair Value		1,560
Held-to-Maturity, 12 Months or More, Unrealized Losses		(27)
US Treasury Securities [Member]
Available-for-Sale, Less than 12 Months, Fair Value	80
Available-for-Sale, Less than 12 Months, Unrealized Losses
Available-for-Sale, 12 Months or More, Fair Value
Available-for-Sale, 12 Months or More, Unrealized Losses
US States and Political Subdivisions Debt Securities [Member]
Available-for-Sale, Less than 12 Months, Fair Value		707
Available-for-Sale, Less than 12 Months, Unrealized Losses		(4)
Available-for-Sale, 12 Months or More, Fair Value
Available-for-Sale, 12 Months or More, Unrealized Losses
Held-to-Maturity, Less than 12 Months, Fair Value	563	572
Held-to-Maturity, Less than 12 Months, Unrealized Losses	(3)	(4)
Held-to-Maturity, 12 Months or More, Fair Value
Held-to-Maturity, 12 Months or More, Unrealized Losses
Corporate Debt Securities [Member]
Available-for-Sale, Less than 12 Months, Fair Value		779
Available-for-Sale, Less than 12 Months, Unrealized Losses
Available-for-Sale, 12 Months or More, Fair Value
Available-for-Sale, 12 Months or More, Unrealized Losses
Available-for-Sale, Less than 12 Months, Fair Value	36,764	111,208
Available-for-Sale, Less than 12 Months, Unrealized Losses	(97)	(751)
Available-for-Sale, 12 Months or More, Fair Value	13,452	17,979
Available-for-Sale, 12 Months or More, Unrealized Losses	(325)	(494)
Held-to-Maturity, Less than 12 Months, Fair Value	3,908	25,878
Held-to-Maturity, Less than 12 Months, Unrealized Losses	(5)	(218)
Held-to-Maturity, 12 Months or More, Fair Value		1,560
Held-to-Maturity, 12 Months or More, Unrealized Losses		$ (27)

XML

Note 6 - Loans and Allowance for Loan Losses (Details Textual)	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Real Estate [Member]
Percentage of Loan Portfolio	56.80%	58.00%
Related Party Loan [Member]
Loans and Leases Receivable, Related Parties	$ 2,800,000	$ 2,900,000
Loans and Leases Receivable, Related Parties, Proceeds	100,000	$ 200,000
Minimum [Member]
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 500,000
Number of Portfolio Segments	8
Number of Loans, Related Party	1	0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0
Minimum Modified Loan Term Period		0 years
Financing Receivable, Restructuring, Recorded Investment Restored to Accrual Status	$ 287,000	$ 0
Loans Receivable with Variable Rates of Interest	89,100,000	55,300,000
Loans Receivable with Fixed Rates of Interest	143,700,000	119,600,000
Financing Receivable, Recorded Investment, Nonaccrual Status	2,266,000	3,102,000
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	30,000	100,000
Interest Income Recorded	$ 4,000	300,000
Troubled Debt Restructuring, Modified Period Term	180 days
Financing Receivable, Restructuring Recorded Investment With Nonaccrual Status	$ 200,000	1,500,000
Loans Modified in a Troubled Debt Restructuring, Individually Evaluated for Impairment, Principal Balance, Threshold	500,000
Allowance for Credit Losses, Change in Method of Calculating Impairment	$ 5,000	$ 1,000

XML

Note 6 - Loans and Allowance for Loan Losses - Loan Portfolio By Reporting Segment and Portfolio Segment (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | FUSB [Member]
Total loans	$ 24,610	$ 11,827
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | ALC [Member]
Total loans
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Total loans	24,610	11,827
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | FUSB [Member]
Total loans	32,559	30,730
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | ALC [Member]
Total loans	14,462	17,233
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Total loans	47,021	47,963
Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | FUSB [Member]
Total loans	16,801	11,845
Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | ALC [Member]
Total loans
Real Estate [Member] | Secured by Multi-family Residential Properties [Member]
Total loans	16,801	11,845
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | FUSB [Member]
Total loans	97,859	83,883
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | ALC [Member]
Total loans
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Total loans	97,859	83,883
Real Estate [Member] | Other Real Estate Loans [Member] | FUSB [Member]
Total loans	185	115
Real Estate [Member] | Other Real Estate Loans [Member] | ALC [Member]
Total loans
Real Estate [Member] | Other Real Estate Loans [Member]
Total loans	185	115
Commercial and Industrial Loans [Member] | FUSB [Member]
Total loans	54,459	29,377
Commercial and Industrial Loans [Member] | ALC [Member]
Total loans
Commercial and Industrial Loans [Member]
Total loans	54,459	29,377
Consumer Portfolio Segment [Member] | FUSB [Member]
Total loans	6,289	7,057
Allowance for loan losses	11	27		$ 114
Consumer Portfolio Segment [Member] | ALC [Member]
Total loans	80,915	76,131
Allowance for loan losses	2,291	2,201		2,336
Consumer Portfolio Segment [Member]
Total loans	87,204	83,188
Other Loans [Member] | FUSB [Member]
Total loans	46	379
Allowance for loan losses	35	14
Other Loans [Member] | ALC [Member]
Total loans
Allowance for loan losses
Other Loans [Member]
Total loans	46	379
FUSB [Member]
Total loans	232,808	175,213
Less: Unearned interest, fees and deferred cost	191	149
Allowance for loan losses	1,216	1,329		3,486
Net loans	231,401	173,735
ALC [Member]
Total loans	95,377	93,364
Less: Unearned interest, fees and deferred cost	7,205	9,215
Allowance for loan losses	2,452	2,452		$ 2,682
Net loans	85,720	81,697
Total loans	328,185	268,577
Less: Unearned interest, fees and deferred cost	7,396	9,364
Allowance for loan losses	3,668	3,781
Net loans	$ 317,121	$ 255,432	$ 237,715

XML

Note 6 - Loans and Allowance for Loan Losses - Changes in Allowance for Loan Losses and Recorded Investment in Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Commercial Portfolio Segment [Member] | FUSB [Member]
Beginning balance			$ 133	$ 141	$ 141
Charge-offs			(1)
Recoveries			28		61
Provision (reduction in reserve) for loan losses			(31)		(69)
Ending balance	$ 129		129		133
Ending balance, individually evaluated for impairment					80
Ending balance, collectively evaluated for impairment	129		129		53
Total loans	54,459		54,459		29,377
Ending balance, individually evaluated for impairment					444
Ending balance, collectively evaluated for impairment	54,459		54,459		28,933
Commercial Portfolio Segment [Member] | ALC [Member]
Beginning balance
Charge-offs
Recoveries
Provision (reduction in reserve) for loan losses
Ending balance
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment
Total loans
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment
Commercial Portfolio Segment [Member] | FUSB and ALC [Member]
Beginning balance			133	141	141
Charge-offs			(1)
Recoveries			28		61
Provision (reduction in reserve) for loan losses			(31)		(69)
Ending balance	129		129		133
Ending balance, individually evaluated for impairment					80
Ending balance, collectively evaluated for impairment	129		129		53
Total loans	54,459		54,459		29,377
Ending balance, individually evaluated for impairment					444
Ending balance, collectively evaluated for impairment	54,459		54,459		28,933
Commercial Real Estate Portfolio Segment [Member] | FUSB [Member]
Beginning balance			1,118	2,810	2,810
Charge-offs			(40)		(767)
Recoveries			234		12
Provision (reduction in reserve) for loan losses			(378)		(937)
Ending balance	934		934		1,118
Ending balance, individually evaluated for impairment	413		413		230
Ending balance, collectively evaluated for impairment	521		521		888
Total loans	139,455		139,455		107,670
Ending balance, individually evaluated for impairment	2,107		2,107		2,018
Ending balance, collectively evaluated for impairment	137,348		137,348		105,652
Commercial Real Estate Portfolio Segment [Member] | ALC [Member]
Beginning balance
Charge-offs
Recoveries
Provision (reduction in reserve) for loan losses
Ending balance
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment
Total loans
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment
Commercial Real Estate Portfolio Segment [Member] | FUSB and ALC [Member]
Beginning balance			1,118	2,810	2,810
Charge-offs			(40)		(767)
Recoveries			234		12
Provision (reduction in reserve) for loan losses			(378)		(937)
Ending balance	934		934		1,118
Ending balance, individually evaluated for impairment	413		413		230
Ending balance, collectively evaluated for impairment	521		521		888
Total loans	139,455		139,455		107,670
Ending balance, individually evaluated for impairment	2,107		2,107		2,018
Ending balance, collectively evaluated for impairment	137,348		137,348		105,652
Consumer Portfolio Segment [Member] | FUSB [Member]
Beginning balance			27	114	114
Charge-offs			(30)		(17)
Recoveries			40		70
Provision (reduction in reserve) for loan losses			(26)		(139)
Ending balance	11		11		27
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	11		11		28
Total loans	6,289		6,289		7,057
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	6,289		6,289		7,057
Consumer Portfolio Segment [Member] | ALC [Member]
Beginning balance			2,201	2,336	2,336
Charge-offs			(2,218)		(2,552)
Recoveries			500		712
Provision (reduction in reserve) for loan losses			1,808		1,706
Ending balance	2,291		2,291		2,201
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	2,291		2,291		2,202
Total loans	80,915		80,915		76,131
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	80,915		80,915		76,131
Consumer Portfolio Segment [Member] | FUSB and ALC [Member]
Beginning balance			2,228	2,450	2,450
Charge-offs			(2,248)		(2,569)
Recoveries			540		782
Provision (reduction in reserve) for loan losses			1,782		1,567
Ending balance	2,302		2,302		2,228
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	2,302		2,302		2,230
Total loans	87,204		87,204		83,188
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	87,204		87,204		83,188
Consumer Portfolio Segment [Member]
Total loans	87,204		87,204		83,188
Residential Real Estate [Member | FUSB [Member]
Beginning balance			37	421	421
Charge-offs			(10)		(68)
Recoveries			16		111
Provision (reduction in reserve) for loan losses			64		(428)
Ending balance	107		107		37
Ending balance, individually evaluated for impairment	5		5
Ending balance, collectively evaluated for impairment	102		102		36
Total loans	32,559		32,559		30,730
Ending balance, individually evaluated for impairment					252
Ending balance, collectively evaluated for impairment	32,559		32,559		30,478
Residential Real Estate [Member | ALC [Member]
Beginning balance			251	346	346
Charge-offs			(49)		(187)
Recoveries			34		22
Provision (reduction in reserve) for loan losses			(75)		69
Ending balance	161		161		251
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	161		161		250
Total loans	14,462		14,462		17,233
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	14,462		14,462		17,233
Residential Real Estate [Member | FUSB and ALC [Member]
Beginning balance			288	767	767
Charge-offs			(59)		(255)
Recoveries			50		133
Provision (reduction in reserve) for loan losses			(11)		(359)
Ending balance	268		268		288
Ending balance, individually evaluated for impairment	5		5
Ending balance, collectively evaluated for impairment	263		263		286
Total loans	47,021		47,021		47,963
Ending balance, individually evaluated for impairment					252
Ending balance, collectively evaluated for impairment	47,021		47,021		47,711
Other Loans [Member] | FUSB [Member]
Beginning balance			14
Charge-offs
Recoveries
Provision (reduction in reserve) for loan losses			21		14
Ending balance	35		35		14
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	35		35		14
Total loans	46		46		379
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	46		46		379
Other Loans [Member] | ALC [Member]
Beginning balance
Charge-offs
Recoveries
Provision (reduction in reserve) for loan losses
Ending balance
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment
Total loans
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment
Other Loans [Member] | FUSB and ALC [Member]
Beginning balance			14
Charge-offs
Recoveries
Provision (reduction in reserve) for loan losses			21		14
Ending balance	35		35		14
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	35		35		14
Total loans	46		46		379
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	46		46		379
Other Loans [Member]
Total loans	46		46		379
FUSB [Member]
Beginning balance			1,329	3,486	3,486
Charge-offs			(81)		(852)
Recoveries			318		254
Provision (reduction in reserve) for loan losses			(350)		(1,559)
Ending balance	1,216		1,216		1,329
Ending balance, individually evaluated for impairment	418		418		310
Ending balance, collectively evaluated for impairment	798		798		1,019
Total loans	232,808		232,808		175,213
Ending balance, individually evaluated for impairment	2,107		2,107		2,714
Ending balance, collectively evaluated for impairment	230,701		230,701		172,499
ALC [Member]
Beginning balance			2,452	2,682	2,682
Charge-offs			(2,267)		(2,739)
Recoveries			534		734
Provision (reduction in reserve) for loan losses			1,733		1,775
Ending balance	2,452		2,452		2,452
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	2,452		2,452		2,452
Total loans	95,377		95,377		93,364
Ending balance, individually evaluated for impairment
Ending balance, collectively evaluated for impairment	95,377		95,377		93,364
FUSB and ALC [Member]
Beginning balance			3,781	6,168	6,168
Charge-offs			(2,348)		(3,591)
Recoveries			852		988
Provision (reduction in reserve) for loan losses			1,383		216
Ending balance	3,668		3,668		3,781
Ending balance, individually evaluated for impairment	418		418		310
Ending balance, collectively evaluated for impairment	3,250		3,250		3,471
Total loans	328,185		328,185		268,577
Ending balance, individually evaluated for impairment	2,107		2,107		2,714
Ending balance, collectively evaluated for impairment	326,078		326,078		265,863
Beginning balance			3,781
Provision (reduction in reserve) for loan losses	680	$ (78)	1,383	$ (199)
Ending balance	3,668		3,668		3,781
Total loans	$ 328,185		$ 328,185		$ 268,577

XML

Note 6 - Loans and Allowance for Loan Losses - Carrying Amount of Loans By Credit Quality Indicator (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Construction, Land Development and Other Land Loans [Member] | Real Estate [Member] | FUSB [Member] | Pass [Member]
Total loans	$ 23,075	$ 9,862
Construction, Land Development and Other Land Loans [Member] | Real Estate [Member] | FUSB [Member] | Special Mention [Member]
Total loans
Construction, Land Development and Other Land Loans [Member] | Real Estate [Member] | FUSB [Member] | Substandard [Member]
Total loans	1,535	1,965
Construction, Land Development and Other Land Loans [Member] | Real Estate [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Construction, Land Development and Other Land Loans [Member] | Real Estate [Member] | FUSB [Member]
Total loans	24,610	11,827
Construction, Land Development and Other Land Loans [Member] | Real Estate [Member] | ALC [Member]
Total loans
Construction, Land Development and Other Land Loans [Member] | Real Estate [Member]
Total loans	24,610	11,827
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Pass [Member]
Total loans	31,450	29,252
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Special Mention [Member]
Total loans	217	228
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Substandard [Member]
Total loans	892	1,250
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | FUSB [Member]
Total loans	32,559	30,730
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | ALC [Member] | Performing Financial Instruments [Member]
Total loans	14,213
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | ALC [Member] | Nonperforming Financial Instruments [Member]
Total loans	249
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member] | ALC [Member]
Total loans	14,462	17,233
Secured by 1-4 Family Residential Properties [Member] | Real Estate [Member]
Total loans	47,021	47,963
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | ALC [Member] | Performing Financial Instruments [Member]
Total loans		16,964
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | ALC [Member] | Nonperforming Financial Instruments [Member]
Total loans		269
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | ALC [Member]
Total loans		17,233
Secured by Multi-family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Pass [Member]
Total loans	16,801	11,845
Secured by Multi-family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Special Mention [Member]
Total loans
Secured by Multi-family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Substandard [Member]
Total loans
Secured by Multi-family Residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Secured by Multi-family Residential Properties [Member] | Real Estate [Member] | FUSB [Member]
Total loans	16,801	11,845
Secured by Multi-family Residential Properties [Member] | Real Estate [Member] | ALC [Member]
Total loans
Secured by Multi-family Residential Properties [Member] | Real Estate [Member]
Total loans	16,801	11,845
Secured by Non-farm, Non-residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Pass [Member]
Total loans	93,344	78,647
Secured by Non-farm, Non-residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Special Mention [Member]
Total loans	3,787	4,315
Secured by Non-farm, Non-residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Substandard [Member]
Total loans	728	921
Secured by Non-farm, Non-residential Properties [Member] | Real Estate [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Secured by Non-farm, Non-residential Properties [Member] | Real Estate [Member] | FUSB [Member]
Total loans	97,859	83,883
Secured by Non-farm, Non-residential Properties [Member] | Real Estate [Member] | ALC [Member]
Total loans
Secured by Non-farm, Non-residential Properties [Member] | Real Estate [Member]
Total loans	97,859	83,883
Other Real Estate Loans [Member] | Real Estate [Member] | FUSB [Member] | Pass [Member]
Total loans	185	115
Other Real Estate Loans [Member] | Real Estate [Member] | FUSB [Member] | Special Mention [Member]
Total loans
Other Real Estate Loans [Member] | Real Estate [Member] | FUSB [Member] | Substandard [Member]
Total loans
Other Real Estate Loans [Member] | Real Estate [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Other Real Estate Loans [Member] | Real Estate [Member] | FUSB [Member]
Total loans	185	115
Other Real Estate Loans [Member] | Real Estate [Member] | ALC [Member]
Total loans
Other Real Estate Loans [Member] | Real Estate [Member]
Total loans	185	115
Consumer Portfolio Segment [Member] | FUSB [Member] | Pass [Member]
Total loans	6,173	6,905
Consumer Portfolio Segment [Member] | FUSB [Member] | Special Mention [Member]
Total loans
Consumer Portfolio Segment [Member] | FUSB [Member] | Substandard [Member]
Total loans	116	152
Consumer Portfolio Segment [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Consumer Portfolio Segment [Member] | FUSB [Member]
Total loans	6,289	7,057
Consumer Portfolio Segment [Member] | ALC [Member] | Performing Financial Instruments [Member]
Total loans	79,664	74,743
Consumer Portfolio Segment [Member] | ALC [Member] | Nonperforming Financial Instruments [Member]
Total loans	1,251	1,388
Consumer Portfolio Segment [Member] | ALC [Member]
Total loans	80,915	76,131
Consumer Portfolio Segment [Member]
Total loans	87,204	83,188
Commercial and Industrial Loans [Member] | FUSB [Member] | Pass [Member]
Total loans	53,310	28,170
Commercial and Industrial Loans [Member] | FUSB [Member] | Special Mention [Member]
Total loans	881	482
Commercial and Industrial Loans [Member] | FUSB [Member] | Substandard [Member]
Total loans	268	725
Commercial and Industrial Loans [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Commercial and Industrial Loans [Member] | FUSB [Member]
Total loans	54,459	29,377
Commercial and Industrial Loans [Member] | ALC [Member]
Total loans
Commercial and Industrial Loans [Member]
Total loans	54,459	29,377
Other Loans [Member] | FUSB [Member] | Pass [Member]
Total loans	46	379
Other Loans [Member] | FUSB [Member] | Special Mention [Member]
Total loans
Other Loans [Member] | FUSB [Member] | Substandard [Member]
Total loans
Other Loans [Member] | FUSB [Member] | Doubtful [Member]
Total loans
Other Loans [Member] | FUSB [Member]
Total loans	46	379
Other Loans [Member] | ALC [Member]
Total loans
Other Loans [Member]
Total loans	46	379
FUSB [Member] | Pass [Member]
Total loans	224,384	165,175
FUSB [Member] | Special Mention [Member]
Total loans	4,885	5,025
FUSB [Member] | Substandard [Member]
Total loans	3,539	5,013
FUSB [Member] | Doubtful [Member]
Total loans
FUSB [Member]
Total loans	232,808	175,213
ALC [Member] | Performing Financial Instruments [Member]
Total loans	93,877	91,707
ALC [Member] | Nonperforming Financial Instruments [Member]
Total loans	1,500	1,657
ALC [Member]
Total loans	95,377	93,364
Total loans	$ 328,185	$ 268,577

XML

Note 6 - Loans and Allowance for Loan Losses - Schedule of Aging Analysis of Past Due Loans (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
FUSB [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		$ 0
FUSB [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	86,000	86,000
FUSB [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Total past due	86,000	86,000
Current	24,524,000	11,741,000
Total loans	24,610,000	11,827,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	61,000	118,000
FUSB [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	15,000	206,000
FUSB [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	208,000	360,000
FUSB [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Total past due	284,000	684,000
Current	32,275,000	30,046,000
Total loans	32,559,000	30,730,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member]
Total past due		0
Current	16,801,000	11,845,000
Total loans	16,801,000	11,845,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		530,000
FUSB [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		148,000
FUSB [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Total past due		678,000
Current	97,859,000	83,205,000
Total loans	97,859,000	83,883,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Real Estate [Member] | Other Real Estate Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Other Real Estate Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Other Real Estate Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
FUSB [Member] | Real Estate [Member] | Other Real Estate Loans [Member]
Total past due		0
Current	185,000	115,000
Total loans	185,000	115,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Commercial and Industrial Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	26,000	22,000
FUSB [Member] | Commercial and Industrial Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	17,000	52,000
FUSB [Member] | Commercial and Industrial Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
FUSB [Member] | Commercial and Industrial Loans [Member]
Total past due	43,000	74,000
Current	54,416,000	29,303,000
Total loans	54,459,000	29,377,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	30,000	49,000
FUSB [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		4,000
FUSB [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	9,000	83,000
FUSB [Member] | Consumer Portfolio Segment [Member]
Total past due	39,000	136,000
Current	6,250,000	6,921,000
Total loans	6,289,000	7,057,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Other Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
FUSB [Member] | Other Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
FUSB [Member] | Other Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
FUSB [Member] | Other Loans [Member]
Total past due		0
Current	46,000	379,000
Total loans	46,000	379,000
Accruing loans past due 90 days or more amounted		0
FUSB [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	117,000	719,000
FUSB [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	32,000	262,000
FUSB [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	303,000	677,000
FUSB [Member]
Total past due	452,000	1,658,000
Current	232,356,000	173,555,000
Total loans	232,808,000	175,213,000
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Total past due		0
Current		0
Total loans
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	55,000	91,000
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	20,000	206,000
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	244,000	252,000
ALC [Member] | Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Total past due	319,000	549,000
Current	14,143,000	16,684,000
Total loans	14,462,000	17,233,000
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Secured by Multi-family Residential Properties [Member]
Total past due		0
Current		0
Total loans
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Total past due		0
Current		0
Total loans
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Real Estate [Member] | Other Real Estate Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Other Real Estate Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Other Real Estate Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
ALC [Member] | Real Estate [Member] | Other Real Estate Loans [Member]
Total past due		0
Current		0
Total loans
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Commercial and Industrial Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
ALC [Member] | Commercial and Industrial Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
ALC [Member] | Commercial and Industrial Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
ALC [Member] | Commercial and Industrial Loans [Member]
Total past due		0
Current		0
Total loans
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	900,000	965,000
ALC [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	504,000	567,000
ALC [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	1,247,000	1,377,000
ALC [Member] | Consumer Portfolio Segment [Member]
Total past due	2,651,000	2,909,000
Current	78,264,000	73,222,000
Total loans	80,915,000	76,131,000
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Other Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		0
ALC [Member] | Other Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		0
ALC [Member] | Other Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		0
ALC [Member] | Other Loans [Member]
Total past due		0
Current		0
Total loans
Accruing loans past due 90 days or more amounted		0
ALC [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	955,000	1,056,000
ALC [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	524,000	773,000
ALC [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	1,491,000	1,629,000
ALC [Member]
Total past due	2,970,000	3,458,000
Current	92,407,000	89,906,000
Total loans	95,377,000	93,364,000
Accruing loans past due 90 days or more amounted		0
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Total loans	24,610,000	11,827,000
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Total loans	47,021,000	47,963,000
Real Estate [Member] | Secured by Multi-family Residential Properties [Member]
Total loans	16,801,000	11,845,000
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Total loans	97,859,000	83,883,000
Real Estate [Member] | Other Real Estate Loans [Member]
Total loans	185,000	115,000
Commercial and Industrial Loans [Member]
Total loans	54,459,000	29,377,000
Consumer Portfolio Segment [Member]
Total loans	87,204,000	83,188,000
Other Loans [Member]
Total loans	46,000	379,000
Total loans	$ 328,185,000	$ 268,577,000

XML

Note 6 - Loans and Allowance for Loan Losses - Analysis of Non-accruing Loans (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Total loans	$ 86,000	$ 339,000
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Total loans	731,000	968,000
Real Estate [Member] | Secured by Multi-family Residential Properties [Member]
Total loans		0
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Total loans	61,000	213,000
Commercial and Industrial Loans [Member]
Total loans	22,000	47,000
Consumer Portfolio Segment [Member]
Total loans	1,366,000	1,535,000
Total loans	$ 2,266,000	$ 3,102,000

XML

Note 6 - Loans and Allowance for Loan Losses - Carrying Amount of Impaired Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Impaired loans with no related allowance recorded, Carrying Amount
Impaired loans with no related allowance recorded, Unpaid Principal Balance
Impaired loans with an allowance recorded, Carrying Amount	1,361	1,445
Impaired loans with an allowance recorded, Unpaid Principal Balance	1,361	1,445
Impaired loans with an allowance recorded, Related Allowances	305	95
Total impaired loans, Carrying Amount	1,361	1,445
Total impaired loans, Unpaid Principal Balance	1,361	1,445
Total impaired loans, Related Allowance	305	95
Total impaired loans, Carrying Amount	1,361	1,445
Total impaired loans, Unpaid Principal Balance	1,361	1,445
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Impaired loans with no related allowance recorded, Carrying Amount		54
Impaired loans with no related allowance recorded, Unpaid Principal Balance		54
Impaired loans with an allowance recorded, Carrying Amount	195	198
Impaired loans with an allowance recorded, Unpaid Principal Balance	195	198
Impaired loans with an allowance recorded, Related Allowances	5	5
Total impaired loans, Carrying Amount	195	252
Total impaired loans, Unpaid Principal Balance	195	252
Total impaired loans, Related Allowance	5	5
Total impaired loans, Carrying Amount	195	252
Total impaired loans, Unpaid Principal Balance	195	252
Real Estate [Member] | Secured by Multi-family Residential Properties [Member]
Impaired loans with no related allowance recorded, Carrying Amount
Impaired loans with no related allowance recorded, Unpaid Principal Balance
Impaired loans with an allowance recorded, Carrying Amount
Impaired loans with an allowance recorded, Unpaid Principal Balance
Impaired loans with an allowance recorded, Related Allowances
Total impaired loans, Carrying Amount
Total impaired loans, Unpaid Principal Balance
Total impaired loans, Related Allowance
Total impaired loans, Carrying Amount
Total impaired loans, Unpaid Principal Balance
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Impaired loans with no related allowance recorded, Carrying Amount
Impaired loans with no related allowance recorded, Unpaid Principal Balance
Impaired loans with an allowance recorded, Carrying Amount	551	573
Impaired loans with an allowance recorded, Unpaid Principal Balance	551	573
Impaired loans with an allowance recorded, Related Allowances	108	130
Total impaired loans, Carrying Amount	551	573
Total impaired loans, Unpaid Principal Balance	551	573
Total impaired loans, Related Allowance	108	130
Total impaired loans, Carrying Amount	551	573
Total impaired loans, Unpaid Principal Balance	551	573
Commercial and Industrial Loans [Member]
Impaired loans with no related allowance recorded, Carrying Amount
Impaired loans with no related allowance recorded, Unpaid Principal Balance
Impaired loans with an allowance recorded, Carrying Amount		444
Impaired loans with an allowance recorded, Unpaid Principal Balance		444
Impaired loans with an allowance recorded, Related Allowances		80
Total impaired loans, Carrying Amount		444
Total impaired loans, Unpaid Principal Balance		444
Total impaired loans, Related Allowance		80
Total impaired loans, Carrying Amount		444
Total impaired loans, Unpaid Principal Balance		444
Impaired loans with no related allowance recorded, Carrying Amount		54
Impaired loans with no related allowance recorded, Unpaid Principal Balance		54
Impaired loans with an allowance recorded, Carrying Amount	2,107	2,660
Impaired loans with an allowance recorded, Unpaid Principal Balance	2,107	2,660
Impaired loans with an allowance recorded, Related Allowances	418	310
Total impaired loans, Carrying Amount	2,107	2,714
Total impaired loans, Unpaid Principal Balance	2,107	2,714
Total impaired loans, Related Allowance	418	310
Total impaired loans, Carrying Amount	2,107	2,714
Total impaired loans, Unpaid Principal Balance	$ 2,107	$ 2,714

XML

Note 6 - Loans and Allowance for Loan Losses - Average Net Investment Impaired Loans and Interest Income Recognized and Received on Impaired Loans (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Average Recorded Investment	$ 1,388	$ 1,493
Interest Income Recognized	32	44
Interest Income Received	32	46
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Average Recorded Investment	245	139
Interest Income Recognized	10	14
Interest Income Received	11	14
Real Estate [Member] | Secured by Multi-family Residential Properties [Member]
Average Recorded Investment		1,892
Interest Income Recognized
Interest Income Received
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Average Recorded Investment	559	3,329
Interest Income Recognized	25	35
Interest Income Received	24	36
Real Estate [Member]
Average Recorded Investment		264
Interest Income Recognized		26
Interest Income Received		26
Commercial and Industrial Loans [Member]
Average Recorded Investment
Interest Income Recognized
Interest Income Received
Average Recorded Investment	2,192	7,117
Interest Income Recognized	67	119
Interest Income Received	$ 67	$ 122

XML

Note 6 - Loans and Allowance for Loan Losses - Number of Loans Modified Troubled Debt Restructuring by Loan Portfolio (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Number of Loans | Security Loan	2	3
Pre-Modification Oustanding Principal Balance	$ 1,960	$ 2,220
Post-Modification Principal Balance	$ 1,341	$ 1,698
Real Estate [Member] | Secured by 1-4 Family Residential Properties [Member]
Number of Loans | Security Loan	4	4
Pre-Modification Oustanding Principal Balance	$ 335	$ 200
Post-Modification Principal Balance	$ 257	$ 103
Real Estate [Member] | Secured by Non-farm, Non-residential Properties [Member]
Number of Loans | Security Loan	2	2
Pre-Modification Oustanding Principal Balance	$ 113	$ 113
Post-Modification Principal Balance	$ 44	$ 52
Commercial and Industrial Loans [Member]
Number of Loans | Security Loan	2	2
Pre-Modification Oustanding Principal Balance	$ 116	$ 116
Post-Modification Principal Balance	$ 90	$ 94
Number of Loans | Security Loan	10	11
Pre-Modification Oustanding Principal Balance	$ 2,524	$ 2,649
Post-Modification Principal Balance	$ 1,732	$ 1,947

XML

Note 7 - Other Real Estate Owned (Details Textual) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Foreclosed Real Estate Owned, Fair Value Less Disposal Costs	$ 1.1		$ 1.5
Mortgage Loans in Process of Foreclosure, Amount	$ 0.1	$ 0.2

XML

Note 7 - Other Real Estate Owned - Foreclosed Property Activity (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
FUSB [Member]
Beginning balance	$ 5,327	$ 6,997
Transfers from loans	255	1,439
Sales proceeds	(655)	(2,225)
Gross gains		4
Gross losses	(40)	(210)
Net gains (losses)	(40)	(206)
Impairment		(44)
Ending balance	4,887	5,961
ALC [Member]
Beginning balance	711	738
Transfers from loans	149	263
Sales proceeds	(259)	(144)
Gross gains	27
Gross losses	(73)	(73)
Net gains (losses)	(46)	(73)
Impairment	(51)	(89)
Ending balance	504	695
Beginning balance	6,038	7,735
Transfers from loans	404	1,702
Sales proceeds	(914)	(2,369)
Gross gains	27	4
Gross losses	(113)	(283)
Net gains (losses)	(86)	(279)
Impairment	(51)	(133)
Ending balance	$ 5,391	$ 6,656

XML

Note 8 - Investment in Limited Partnership (Details Textual) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Partnership Interest [Member]
Noncontrolling Interest, Ownership Percentage by Parent	99.90%
Maximum [Member]
Variable Interest Entity, Consolidated, Carrying Amount, Assets	$ 0.1	$ 0.1

XML

Note 9 - Short-term Borrowings (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Minimum [Member]
Maturity Period of Federal Funds	1 day
Maximum [Member]
Maturity Period of Federal Funds	4 days
Federal Funds Purchased	$ 0	$ 0
Available Fund Lines From Correspondent Banks	18,800,000	18,800,000
Short-term Debt	5,337,000	7,354,000
Securities Sold under Agreements to Repurchase	300,000	400,000
Federal Home Loan Bank, Advances, Maturities Summary, Due in Next Twelve Months	$ 5,000,000	$ 7,000,000

XML

Note 10 - Long-term Debt (Details Textual) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Long-term Federal Home Loan Bank Advances, Current	$ 5,000,000	$ 0
Long-term Federal Home Loan Bank Advances	15,000,000	5,000,000
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	21,100,000	14,000,000
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	$ 160,400,000	$ 152,500,000

XML

Note 11 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Income Tax Expense (Benefit)	$ 162	$ 207	$ 406	$ 870
Effective Income Tax Rate Reconciliation, Percent			23.40%	28.80%
Deferred Tax Assets, Net	$ 7,100		$ 7,100		$ 7,800

XML

Note 12 - Deferred Compensation Plans (Details Textual) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
The Deferral Plan [Member]
Deferred Compensation Cash-based Arrangements, Liability, Current and Noncurrent	$ 0.1	$ 0.1
Deferred Compensation Arrangement with Individual, Common Stock Reserved for Future Issuance	111,195	103,571
Other Liabilities [Member]
Deferred Compensation Liability, Current and Noncurrent	$ 3.5	$ 3.6

XML

Note 13 - Stock Option Grants (Details Textual) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Employee Stock Option [Member] | Omnibus Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Employee Stock Option [Member] | Omnibus Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Employee Stock Option [Member] | Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	10 years
Allocated Share-based Compensation Expense	$ 0.1	$ 0.2
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 0.4	$ 0.1

XML

Note 13 - Stock Option Grants - Fair Value Assumptions (Details)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Risk-free interest rate	1.58%	1.52%
Expected term	7 years 182 days	7 years 182 days
Expected stock price volatility	25.25%	54.04%
Dividend yield	1.50%	1.50%

XML

Note 13 - Stock Option Grants - Stock Option Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Stock Options Outstanding, Number of Shares, Beginning Balance (in shares)	175,550	83,400
Stock Options Outstanding, Average Exercise Price, Beginning Balance (in dollars per share)	$ 8.17	$ 8.09
Stock Options Granted, Number of Shares (in shares)	97,000	96,150
Stock Options Granted, Average Exercise Price (in dollars per share)	$ 8.30	$ 8.23
Stock Options Exercised, Number of Shares (in shares)	0	0
Stock Options Exercised, Average Exercise Price (in dollars per share)	$ 0	$ 0
Stock Options Expired, Number of Shares (in shares)	0	0
Stock Options Expired, Average Exercise Price (in dollars per share)	$ 0	$ 0
Stock Options Forfeited, Number of Shares (in shares)	0	2,500
Stock Options Forfeited, Average Exercise Price (in dollars per share)	$ 0	$ 8.09
Stock Options Outstanding, Number of Shares, Ending (in shares)	272,550	177,050
Stock Options Outstanding, Average Exercise Price, Ending Balance (in dollars per share)	$ 8.21	$ 8.16
Options exercisable, end of period (in shares)	175,550	81,900
Options exercisable, end of period (in dollars per share)	$ 8.17	$ 8.09

XML

Note 14 - Derivative Financial Instruments (Details Textual) - USD ($)		3 Months Ended	6 Months Ended	9 Months Ended	12 Months Ended
	Apr. 05, 2016	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2016	Dec. 31, 2014	Dec. 31, 2015
FUSB [Member] | Operating Segments [Member] | Interest Rate Swap [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net		$ 0		$ 0
Derivative, Notional Amount	$ 10,000,000
Derivative, Term of Contract	7 years
Derivative, Fixed Interest Rate	1.46%
FUSB [Member] | Operating Segments [Member] | Interest Rate Cap [Member] | Not Designated as Hedging Instrument [Member]
Derivative, Notional Amount					$ 40,000,000
Payments of Derivative Issuance Costs					$ 126,000
Derivative, Fair Value, Net			$ 0
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net			$ 3,000
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax		82,000		82,000
Accumulated Other Comprehensive Income (Loss), Net of Tax		$ 1,169,000		$ 1,169,000		$ 536,000

XML

Note 15 - Segment Reporting (Details Textual)	9 Months Ended
	Sep. 30, 2016
Number of Reportable Segments	2

XML

Note 15 - Segment Reporting - Results for Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
FUSB [Member] | Operating Segments [Member]
Net interest income	$ 3,917	$ 3,598	$ 11,199	$ 11,433
Provision (reduction in reserve) for loan losses	100	(400)	(350)	(1,370)
Total non-interest income	1,159	755	3,002	2,766
Total non-interest expense	4,636	4,443	13,435	13,110
Income (loss) before income taxes	340	310	1,116	2,459
Provision for income taxes	52	43	224	678
Net income (loss)	288	267	892	1,781
Total assets	602,123	550,341	602,123	550,341
Total investment securities	209,486	238,929	209,486	238,929
Total loans, net	308,423	229,721	308,423	229,721
Investment in subsidiaries	5	5	5	5
Fixed asset additions	960	1,250	4,521	2,860
Depreciation and amortization expense	193	151	564	459
Total interest income from external customers	3,415	3,162	9,750	10,379
Total interest income from affiliates	1,092	1,000	3,140	2,801
FUSB [Member]
Provision (reduction in reserve) for loan losses			(350)		$ (1,559)
Total loans, net	231,401		231,401		173,735
ALC [Member] | Operating Segments [Member]
Net interest income	3,253	3,166	9,544	9,203
Provision (reduction in reserve) for loan losses	580	322	1,733	1,171
Total non-interest income	316	234	909	689
Total non-interest expense	2,403	2,430	7,306	7,400
Income (loss) before income taxes	586	648	1,414	1,321
Provision for income taxes	196	236	484	475
Net income (loss)	390	412	930	846
Total assets	89,347	85,066	89,347	85,066
Total investment securities
Total loans, net	85,720	80,779	85,720	80,779
Investment in subsidiaries
Fixed asset additions	16	2	33	251
Depreciation and amortization expense	54	61	162	181
Total interest income from external customers	4,345	4,166	12,684	12,004
Total interest income from affiliates
ALC [Member]
Provision (reduction in reserve) for loan losses			1,733		1,775
Total loans, net	85,720		85,720		81,697
Other Segments [Member] | Operating Segments [Member]
Net interest income	3	3	8	8
Provision (reduction in reserve) for loan losses
Total non-interest income	973	847	2,481	3,053
Total non-interest expense	474	360	1,373	1,103
Income (loss) before income taxes	502	490	1,116	1,958
Provision for income taxes	(86)	(72)	(302)	(283)
Net income (loss)	588	562	1,418	2,241
Total assets	84,291	82,167	84,291	82,167
Total investment securities	80	80	80	80
Total loans, net
Investment in subsidiaries	78,737	76,883	78,737	76,883
Fixed asset additions
Depreciation and amortization expense
Total interest income from external customers				1
Total interest income from affiliates	3	3	8	7
Intersegment Eliminations [Member]
Net interest income
Provision (reduction in reserve) for loan losses
Total non-interest income	(881)	(840)	(2,356)	(3,153)
Total non-interest expense	(165)	(143)	(445)	(439)
Income (loss) before income taxes	(716)	(697)	(1,911)	(2,714)
Provision for income taxes
Net income (loss)	(716)	(697)	(1,911)	(2,714)
Total assets	(175,454)	(169,037)	(175,454)	(169,037)
Total investment securities
Total loans, net	(77,022)	(72,785)	(77,022)	(72,785)
Investment in subsidiaries	(78,737)	(76,883)	(78,737)	(76,883)
Fixed asset additions
Depreciation and amortization expense
Total interest income from external customers
Total interest income from affiliates	(1,095)	(1,003)	(3,148)	(2,808)
Net interest income	7,173	6,767	20,751	20,644
Provision (reduction in reserve) for loan losses	680	(78)	1,383	(199)
Total non-interest income	1,567	996	4,036	3,355
Total non-interest expense	7,348	7,090	21,669	21,174
Income (loss) before income taxes	712	751	1,735	3,024
Provision for income taxes	162	207	406	870
Net income (loss)	550	544	1,329	2,154
Total assets	600,307	548,537	600,307	548,537	575,782
Total investment securities	209,566	239,009	209,566	239,009
Total loans, net	317,121	237,715	317,121	237,715	$ 255,432
Investment in subsidiaries	5	5	5	5
Fixed asset additions	976	1,252	4,554	3,111
Depreciation and amortization expense	247	212	726	640
Total interest income from external customers	7,760	7,328	22,434	22,384
Total interest income from affiliates

XML

Note 16 - Guarantees, Commitments and Contingencies (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Construction Management Agreement [Member]
Construction and Development Costs	$ 500,000
Guarantor Obligations, Maximum Exposure, Undiscounted	8,600,000
Development in Process, Estimated Additional Expenditures	4,000,000
Estimated Depreciation	400,000
Securities Committed to Purchase Amount	0		$ 0
Credit Losses Associated With Derivative Contracts	0	$ 0
Securities Committed to Sell Amount	$ 0		$ 0

XML

Note 16 - Guarantees, Commitments and Contingencies - Summary of Commitents and Contingent Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Standby Letters of Credit [Member]
Commitments and contingent liabilities	$ 183	$ 683
Commitments to Extend Credit [Member]
Commitments and contingent liabilities	$ 41,950	$ 61,427

XML

Note 17 - Fair Value of Financial Instruments - Schedule of Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available-for-sale, at fair value
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available-for-sale, at fair value	98,341	135,494
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available-for-sale, at fair value
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available-for-sale, at fair value	98,341	135,494
Residential Mortgage Backed Securities [Member]
Investment securities available-for-sale, at fair value	98,341	135,494
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available-for-sale, at fair value
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available-for-sale, at fair value	69,326	45,509
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available-for-sale, at fair value
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available-for-sale, at fair value	69,326	45,509
Commercial Mortgage Backed Securities [Member]
Investment securities available-for-sale, at fair value	69,326	45,509
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available-for-sale, at fair value
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available-for-sale, at fair value	10,735	14,998
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available-for-sale, at fair value
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available-for-sale, at fair value	10,735	14,998
US States and Political Subdivisions Debt Securities [Member]
Investment securities available-for-sale, at fair value	10,735	14,998
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available-for-sale, at fair value
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available-for-sale, at fair value	2,006	1,982
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available-for-sale, at fair value
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available-for-sale, at fair value	2,006	1,982
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available-for-sale, at fair value
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available-for-sale, at fair value	763	780
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available-for-sale, at fair value
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available-for-sale, at fair value	763	780
Corporate Debt Securities [Member]
Investment securities available-for-sale, at fair value	763	780
US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available-for-sale, at fair value
US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available-for-sale, at fair value	80	80
US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available-for-sale, at fair value
US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available-for-sale, at fair value	80	80
US Treasury Securities [Member]
Investment securities available-for-sale, at fair value	80	80
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Other Liabilities [Member]
Other liabilities - derivatives
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Other Assets [Member]
Other assets - derivatives, fair value
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Other Liabilities [Member]
Other liabilities - derivatives	(130)
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Other Assets [Member]
Other assets - derivatives, fair value		3
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Other Liabilities [Member]
Other liabilities - derivatives
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Other Assets [Member]
Other assets - derivatives, fair value
Fair Value, Measurements, Recurring [Member] | Other Liabilities [Member]
Other liabilities - derivatives	(130)
Fair Value, Measurements, Recurring [Member] | Other Assets [Member]
Other assets - derivatives, fair value		3
Investment securities available-for-sale, at fair value	$ 181,251	$ 198,843

XML

Note 17 - Fair Value of Financial Instruments - Balances of Impaired Loans and OREO Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Financial assets measured at fair value
Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Financial assets measured at fair value
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Financial assets measured at fair value	1,690	2,350
Impaired Loans [Member]
Financial assets measured at fair value	1,690	2,350
OREO [Member] | Fair Value, Inputs, Level 1 [Member]
Financial assets measured at fair value
OREO [Member] | Fair Value, Inputs, Level 2 [Member]
Financial assets measured at fair value
OREO [Member] | Fair Value, Inputs, Level 3 [Member]
Financial assets measured at fair value	5,391	6,038
OREO [Member]
Financial assets measured at fair value	5,391	$ 6,038
Fair Value, Inputs, Level 1 [Member] | Other Assets [Member]
Financial assets measured at fair value
Fair Value, Inputs, Level 2 [Member] | Other Assets [Member]
Financial assets measured at fair value
Fair Value, Inputs, Level 3 [Member] | Other Assets [Member]
Financial assets measured at fair value	73
Other Assets [Member]
Financial assets measured at fair value	$ 73

XML

Note 17 - Fair Value of Financial Instruments - Summary of Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) (Details) - Fair Value, Inputs, Level 3 [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Impaired Loans [Member] | Minimum [Member]
Quantitative range of unobservable inputs	9.00%
Impaired Loans [Member] | Maximum [Member]
Quantitative range of unobservable inputs	10.00%
Impaired Loans [Member] | Weighted Average [Member]
Quantitative range of unobservable inputs	9.50%
Impaired Loans [Member]
Fair value	$ 1,690
OREO [Member] | Minimum [Member]
Quantitative range of unobservable inputs	9.00%
OREO [Member] | Maximum [Member]
Quantitative range of unobservable inputs	10.00%
OREO [Member] | Weighted Average [Member]
Quantitative range of unobservable inputs	9.50%
OREO [Member]
Fair value	$ 5,391
Minimum [Member] | Other Assets [Member]
Quantitative range of unobservable inputs	9.00%
Maximum [Member] | Other Assets [Member]
Quantitative range of unobservable inputs	10.00%
Weighted Average [Member] | Other Assets [Member]
Quantitative range of unobservable inputs	9.50%
Other Assets [Member]
Fair value	$ 73

XML

Note 17 - Fair Value of Financial Instruments - Schedule of Estimated Fair Value and Related Carrying or Notional Amounts of Company's Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Reported Value Measurement [Member]
Cash and cash equivalents	$ 26,093	$ 44,072
Investment securities available-for-sale, at fair value	181,251	198,843
Investment securities held-to-maturity	28,315	32,359
Federal Home Loan Bank stock	1,368	1,025
Loans, net of allowance for loan losses	317,121	255,432
Deposits	493,828	479,258
Short-term borrowings	5,337	7,354
Long-term borrowings	15,000	5,000
Other liabilities - derivatives	130
Other assets – derivatives		3
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents	26,093	44,072
Investment securities available-for-sale, at fair value
Investment securities held-to-maturity
Federal Home Loan Bank stock
Loans, net of allowance for loan losses
Deposits
Short-term borrowings
Long-term borrowings
Other liabilities - derivatives
Other assets – derivatives
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and cash equivalents
Investment securities available-for-sale, at fair value	181,251	198,843
Investment securities held-to-maturity	28,483	32,184
Federal Home Loan Bank stock
Loans, net of allowance for loan losses
Deposits	493,871	478,833
Short-term borrowings	5,337	7,352
Long-term borrowings	14,992	4,977
Other liabilities - derivatives	130
Other assets – derivatives		3
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and cash equivalents
Investment securities available-for-sale, at fair value
Investment securities held-to-maturity
Federal Home Loan Bank stock	1,368	1,025
Loans, net of allowance for loan losses	312,042	256,392
Deposits
Short-term borrowings
Long-term borrowings
Other liabilities - derivatives
Other assets – derivatives
Estimate of Fair Value Measurement [Member]
Cash and cash equivalents	26,093	44,072
Investment securities available-for-sale, at fair value	181,251	198,843
Investment securities held-to-maturity	28,483	32,184
Federal Home Loan Bank stock	1,368	1,025
Loans, net of allowance for loan losses	312,042	256,392
Deposits	493,871	478,833
Short-term borrowings	5,337	7,352
Long-term borrowings	14,992	4,977
Other liabilities - derivatives	130
Other assets – derivatives		3
Investment securities available-for-sale, at fair value	181,251	198,843
Investment securities held-to-maturity	$ 28,483	$ 32,184