Note 3 - Loans Held for Sale

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables, Excluding Allowance for Credit Losses [Text Block]

3.

LOANS HELD FOR SALE

The Bank originates residential mortgage loans for sale in the

secondary

market. Pursuant to ASC

825,

Financial Instruments

, at

December

31,

2016

and

2015,

the Bank marked these mortgage loans to market. Mortgage loans held for sale at

December

31,

2016

and

December

31,

2015,

had estimated fair market values of

$5.1

million and

$3.9

million, respectively. The Bank originates mortgage loans for sale that are approved by

secondary

investors. Their terms are set by

secondary

investors, and they are transferred within

120

days after the Bank funds the loans. The Bank issues rate lock commitments to borrowers, and depending on market conditions,

may

enter into forward contracts with

secondary

market investors to minimize interest rate risk related to mortgage loan forward sales commitments. The Bank uses forward contracts to minimize interest rate risk related to mortgage loan forward sales commitments to economically hedge a percentage of the locked-in pipeline. The Bank receives origination fees from borrowers and servicing release premiums from investors that are recognized in income when loans are sold. The following table summarizes forward contract positions of the Bank at

December

31,

2016

and

2015,

respectively:

Forward Contracts	December 31, 2016				December 31, 2015
	Fair		Notional		Fair		Notional
	Value		Value		Value		Value
	(In thousands)
Mortgage Loan Forward Sales Commitments	$	65	$	6,036	$	78	$	2,882