LOANS (Tables)

12 Months Ended

Dec. 31, 2016

LOANS

Schedule of loans

	12/31/2016		12/31/2015
Commercial	$	77,436	$	55,929
Real estate construction		29,169		29,320
Real estate mortgage:
1-4 family residential		244,638		230,721
Multi-family residential		47,199		38,281
Non-farm & non-residential		176,024		183,692
Agricultural		62,491		66,782
Consumer		18,867		18,880
Other		183		516
Total	$	656,007	$	624,121

Schedule of activity in the allowance for loan losses

The following table presents the activity in the allowance for loan losses by portfolio segment for the years ending December 31, 2016, 2015 and 2014 (in thousands):

	Beginning								Ending
December 31, 2016	Balance		Charge-offs		Recoveries		Provision		Balance
Commercial	$	486	$	(5)	$	39	$	269	$	789
Real estate Construction		411		—		15		138		564
Real estate mortgage:
1-4 family residential		2,081		(126)		19		327		2,301
Multi-family residential		458		—		12		111		581
Non-farm & non-residential		1,213		—		454		(464)		1,203
Agricultural		678		(193)		50		321		856
Consumer		525		(298)		80		240		547
Other		60		(908)		731		177		60
Unallocated		609		—		—		31		640
	$	6,521	$	(1,530)	$	1,400	$	1,150	$	7,541

	Beginning								Ending
December 31, 2015	Balance		Charge-offs		Recoveries		Provision		Balance
Commercial	$	339	$	(30)	$	—	$	177	$	486
Real estate Construction		446		—		11		(46)		411
Real estate mortgage:
1-4 family residential		1,829		(284)		33		503		2,081
Multi-family residential		495		(94)		30		27		458
Non-farm & non-residential		813		—		86		314		1,213
Agricultural		998		(242)		23		(101)		678
Consumer		520		(283)		66		222		525
Other		32		(1,017)		760		285		60
Unallocated		540		—		—		69		609
	$	6,012	$	(1,950)	$	1,009	$	1,450	$	6,521

	Beginning								Ending
December 31, 2014	Balance		Charge-offs		Recoveries		Provision		Balance
Commercial	$	230	$	(258)	$	—	$	367	$	339
Real estate Construction		358		—		14		74		446
Real estate mortgage:
1-4 family residential		2,169		(274)		59		(125)		1,829
Multi-family residential		427		(42)		57		53		495
Non-farm & non-residential		564		—		368		(119)		813
Agricultural		578		(8)		27		401		998
Consumer		548		(239)		67		144		520
Other		51		(519)		369		131		32
Unallocated		516		—		—		24		540
	$	5,441	$	(1,340)	$	961	$	950	$	6,012

Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method

The following tables present the balance in the allowance for loan losses and the recorded investment (excluding accrued interest receivable amounting to $2.4 million and $2.3 million) in loans by portfolio segment and based on impairment method as of December 31, 2016 and December 31, 2015 (in thousands):

	Individually		Collectively		Purchased
	Evaluated for		Evaluated for		Credit
As of December 31, 2016	Impairment		Impairment		Impaired		Total
Allowance for Loan Losses:
Commercial	$	—	$	789	$	—	$	789
Real estate construction		—		564		—		564
Real estate mortgage:
1-4 family residential		99		2,202		—		2,301
Multi-family residential		—		581		—		581
Non-farm & non-residential		15		1,188		—		1,203
Agricultural		427		429		—		856
Consumer		—		547		—		547
Other		—		60		—		60
Unallocated		—		640		—		640
	$	541	$	7,000	$	—	$	7,541
Loans:
Commercial	$	97	$	77,339	$	—	$	77,436
Real estate construction		153		29,016		—		29,169
Real estate mortgage:
1-4 family residential		2,704		240,906		1,028		244,638
Multi-family residential		—		46,637		562		47,199
Non-farm & non-residential		1,725		174,154		145		176,024
Agricultural		3,315		58,998		178		62,491
Consumer		—		18,867		—		18,867
Other		—		183		—		183
	$	7,994	$	646,100	$	1,913	$	656,007

	Individually		Collectively		Purchased
	Evaluated for		Evaluated for		Credit
As of December 31, 2015	Impairment		Impairment		Impaired		Total
Allowance for Loan Losses:
Commercial	$	—	$	486	$	—	$	486
Real estate construction		—		411		—		411
Real estate mortgage:
1-4 family residential		128		1,953		—		2,081
Multi-family residential		—		458		—		458
Non-farm & non-residential		181		1,032		—		1,213
Agricultural		339		339		—		678
Consumer		—		525		—		525
Other		—		60		—		60
Unallocated		—		609		—		609
	$	648	$	5,873	$	—	$	6,521
Loans:
Commercial	$	—	$	55,924	$	5		55,929
Real estate construction		835		28,474		11		29,320
Real estate mortgage:
1-4 family residential		1,454		226,523		2,744		230,721
Multi-family residential		—		38,281		—		38,281
Non-farm & non-residential		2,882		179,913		897		183,692
Agricultural		4,298		61,921		563		66,782
Consumer		—		18,880		—		18,880
Other		—		516		—		516
Total	$	9,469	$	610,432	$	4,220	$	624,121

Schedule of loans individually evaluated for impairment by class of loans

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2016

	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest
(in thousands):	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	97	$	97	$	—	$	48	$	30	$	30
Real estate construction		153		153		—		494		9		9
Real estate mortgage:
1-4 family residential		606		606		—		488		—		—
Multi-family residential		—		—		—		—		—		—
Non-farm & non-residential		—		—		—		—		—		—
Agricultural		654		654		—		561		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—		—
Real estate construction		—		—		—		—		—		—
Real estate mortgage
1-4 family residential		2,098		2,098		99		1,590		56		56
Multi-family residential		—		—		—		—		—		—
Non-farm & non-residential		1,725		1,725		15		2,303		71		71
Agricultural		2,661		2,661		427		3,309		25		25
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	7,994	$	7,994	$	541	$	8,795	$	191	$	191

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality.

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2015.

	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest
(in thousands):	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Real estate construction		835		835		—		820		29		29
Real estate mortgage:
1-4 family residential		370		370		—		1,493		15		15
Multi-family residential		—		—		—		—		—		—
Non-farm & non-residential		—		—		—		68		—		—
Agricultural		469		469		—		335		14		14
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—		—
Real estate construction		—		—		—		—		—		—
Real estate mortgage
1-4 family residential		1,083		1,083		128		1,916		6		6
Multi-family residential		—		—		—		24		—		—
Non-farm & non-residential		2,882		2,882		181		2,885		29		29
Agricultural		3,830		3,830		339		4,379		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	9,469	$	9,469	$	648	$	11,920	$	93	$	93

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality.

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2014

	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest
(in thousands):	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Real estate construction		—		—		—		—		—		—
Real estate mortgage:
1-4 family residential		1,618		1,618		—		1,147		25		25
Multi-family residential		—		—		—		—		—		—
Non-farm & non-residential		—		—		—		552		—		—
Agricultural		442		442		—		2,696		29		29
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—		—
Real estate construction		—		—		—		—		—		—
Real estate mortgage
1-4 family residential		480		480		56		990		18		18
Multi-family residential		264		264		94		284		5		5
Non-farm & non-residential		2,958		2,958		136		3,173		115		115
Agricultural		8,037		8,037		712		5,341		116		116
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	13,799	$	13,799	$	998	$	14,183	$	308	$	308

Schedule of recorded investment in nonaccrual, loans past due over 90 days still on accrual and accruing troubled debt restructurings by class of loans

The following tables present the recorded investment in nonaccrual loans, loans past due over 90 days still on accrual, and troubled debt restructurings, excluding purchase credit impaired loans, by class of loans as of December 31, 2016 and 2015 (in thousands):

			Loans Past Due
			Over 90 Days
			Still		Troubled Debt
As of December 31, 2016	Nonaccrual		Accruing		Restructurings
Commercial	$	3	$	11	$	—
Real estate construction		—		153		—
Real estate mortgage:
1-4 family residential		2,725		31		338
Multi-family residential		25		—		—
Non-farm & non-residential		272		—		1,725
Agricultural		1,541		724		—
Consumer		—		8		—
Total	$	4,566	$	927	$	2,063
Loans included in totals above acquired from Madison Financial Corporation	$	578	$	22	$	—

			Loans Past Due
			Over 90 Days
			Still		Troubled Debt
As of December 31, 2015	Nonaccrual		Accruing		Restructurings
Commercial	$	6	$	—	$	—
Real estate construction		145		365		—
Real estate mortgage:
1-4 family residential		1,531		471		468
Multi-family residential		—		—		—
Non-farm & non-residential		481		137		1,777
Agricultural		4,171		—		—
Consumer		17		27		—
Other		—		—		—
Total	$	6,351	$	1,000	$	2,245
Loans included in totals above acquired from Madison Financial Corporation	$	1,107	$	446	$	—

Schedule of aging of the recorded investment in past due and non-accrual loans

The following tables present the aging of the recorded investment in past due and non-accrual loans as of December 31, 2016 and 2015 by class of loans (in thousands):

2016	30–59		60–89		Greater than				Total
	Days		Days		90 Days				Past Due &		Loans Not
(in thousands)	Past Due		Past Due		Past Due		Non-accrual		Non-accrual		Past Due
Commercial	$	54	$	45	$	11	$	3	$	113	$	77,323
Real estate construction		—		—		153		—		153		29,016
Real estate mortgage:
1-4 family residential		2,310		228		31		2,725		5,294		239,344
Multi-family residential		391		3		—		25		419		46,780
Non-farm & non-residential		159		61		—		272		492		175,532
Agricultural		647		61		724		1,541		2,973		59,518
Consumer		97		37		8		—		142		18,725
Other		—		—		—		—		—		183
Total	$	3,658	$	435	$	927	$	4,566	$	9,586	$	646,421
Loans included in totals above acquired from Madison Financial Corp.	$	155	$	—	$	22	$	578	$	755	$	32,332

2015	30–59		60–89		Greater than				Total
	Days		Days		90 Days				Past Due &		Loans Not
(in thousands)	Past Due		Past Due		Past Due		Non-accrual		Non-accrual		Past Due
Commercial	$	2,323	$	99	$	—	$	6	$	2,428	$	53,501
Real estate construction		—		—		365		145		510		28,810
Real estate mortgage:
1-4 family residential		1,508		264		471		1,531		3,774		226,947
Multi-family residential		—		—		—		—		—		38,281
Non-farm & non-residential		37		121		137		481		776		182,916
Agricultural		229		251		—		4,171		4,651		62,131
Consumer		50		45		27		17		139		18,741
Other		—		—		—		—		—		516
Total	$	4,147	$	780	$	1,000	$	6,351	$	12,278	$	611,843
Loans included in totals above acquired from Madison Financial Corp.	$	5	$	84	$	446	$	1,107	$	1,642	$	55,109

Schedule of risk category of loans by class of loans

The following tables present the risk category of loans by class of loans, based on the most recent analysis performed, as of December 31, 2016 and 2015 (in thousands):

			Special
(in thousands)	Pass		Mention		Substandard		Doubtful
Commercial	$	76,346	$	1,078	$	12	$	—
Real estate construction		28,577		—		592		—
Real estate mortgage:
1-4 family residential		232,969		4,031		7,627		11
Multi-family residential		43,681		2,617		901		—
Non-farm & non-residential		167,451		8,185		388		—
Agricultural		58,155		1,367		2,969		—
Total	$	607,179	$	17,278	$	12,489	$	11
Loans included in totals above acquired from Madison Financial Corporation	$	30,359	$	480	$	2,248	$	—

			Special
(in thousands)	Pass		Mention		Substandard		Doubtful
Commercial	$	54,392	$	1,323	$	215	$	—
Real estate construction		26,835		1,402		1,083		—
Real estate mortgage:
1-4 family residential		216,661		6,155		7,903		—
Multi-family residential		35,221		2,916		143		—
Non-farm & non-residential		178,289		4,448		955		—
Agricultural		60,177		1,198		5,407		—
Total	$	571,575	$	17,442	$	15,706	$	—
Loans included in totals above acquired from Madison Financial Corporation	$	44,367	$	2,533	$	3,189	$	—

Schedule of analysis of the activity with respect to all director and executive officer loans

An analysis of the activity with respect to all director and executive officer loans is as follows (in thousands):

	2016		2015
Balance, beginning of year	$	1,673	$	1,706
New loans		74		—
Effect of changes in composition of related parties		(590)		—
Repayments		(9)		(33)
Balance, end of year	$	1,148	$	1,673

Schedule of activity for mortgage servicing rights and the related valuation allowance

Activity for mortgage servicing rights and the related valuation allowance follows (in thousands):

	2016		2015		2014
Servicing Rights, net:
Beginning balance	$	1,277	$	1,209	$	1,344
Additions		483		348		270
Amortization		(334)		(339)		(385)
Change in valuation allowance		(105)		59		(20)
Ending balance	$	1,321	$	1,277	$	1,209
Valuation Allowance:
Beginning balance	$	20	$	79	$	59
Additions expensed		109		—		34
Reductions credited to operations		4		59		14
Ending balance	$	125	$	20	$	79

Schedule of estimated amortization expense for each of the next five years

Estimated amortization expense for each of the next five years is (in thousands):

2017	$	212
2018		162
2019		125
2020		101
2021		82

Madison Financial Corp

LOANS

Schedule of loans

	12/31/2016		12/31/2015
Commercial	$	1,113	$	1,505
Real estate construction		398		1,616
Real estate mortgage:
1-4 family residential		11,462		16,376
Multi-family residential		5,043		5,652
Non-farm & non-residential		13,024		29,029
Agricultural		1,940		2,194
Consumer		107		379
Total	$	33,087	$	56,751

Schedule of accretable yield or income expected to be collected

Accretable yield, or income expected to be collected, is as follows (in thousands):

	Year Ended		Year Ended
	12/31/2016		12/31/2015
Balance, beginning of period	$	408	$	—
New loans purchased		—		505
Accretion of income		168		97
Balance, end of period	$	240	$	408