Note 11 - Related Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Note 11. Related Party Transactions

The Company has engaged in and intends to continue to engage in banking and financial transactions in the conduct of its business with directors and executive officers and their related parties. These transactions are executed on substantially the same terms and at rates prevailing at the time for comparable transactions with unrelated parties.

The Company has granted loans, letters of credit and lines of credit to directors, executive officers and their related parties. The following table summarizes the changes in the total amounts of such outstanding loans and advances under lines of credit, net of participations sold, as well as repayments during the three and six months ended June 30, 2015 and 2014:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(in thousands)	2015			2014			2015			2014
Balance, beginning of period	$	42,264		$	32,827		$	36,783		$	29,301
Additions, new loans and advances		7,513			13,108			31,401			22,857
Repayments		(9,291	)		(15,632	)		(27,698	)		(21,855	)
Balance, end of period	$	40,486		$	30,303		$	40,486		$	30,303

At June 30, 2015, there were no loan to directors, executive officers and their related parties which were not performing in accordance with the terms of the loan agreements.

Included in related party loans is a commercial line of credit with a company owned by a director with a net balance outstanding of $4.9 million at June 30, 2015. The Company has sold a participation interest in this line to the same director in the amount of $5.2 million, of which $3.2 million is outstanding at June 30, 2015. The Company receives a 25 basis point annual servicing fee from this director on the participation balance.

Deposits from directors, executive officers and their related parties held by the Company at June 30, 2015 and December 31, 2014 amounted to $173.4 million and $77.4 million, respectively. During the second quarter of 2015, the Company attained a significant deposit relationship with a customer that is a related party of a director. The aggregate balance of deposits for this relationship was $92.2 million at June 30, 2015. Interest paid on the deposits amounted to $94 thousand and $46 thousand for the six months ended June 30, 2015 and 2014, respectively.

In the course of its operations, the Company acquires goods and services from and transacts business with various companies of related parties. The Company believes these transactions were made on the same terms as those for comparable transactions with unrelated parties. The Company recorded payments for these services of $0.4 million and $0.8 million, respectively, for the three and six months ended June 30, 2015, and $0.5 million and $1.0 million for the respective periods of 2014.

Subordinated notes held by directors and/or their related parties totaled $8.6 million at June 30, 2015 and $9.0 million at December 31, 2014. On June 12, 2015, the Company solicited consent from all existing Noteholders to amend the Notes by reducing the interest rate payable on the notes from 9.00% to 4.50% effective July 1, 2015, and prepaying 44% of the principal amount outstanding on June 30, 2015. A group of Noteholders holding $14.0 million of the principal balance outstanding on the Notes at June 12, 2015, comprised of both related parties or their interests and non-related parties, offered to purchase the Notes of any Noteholder who did not wish to consent to the amendments. There were seven, non-related party Noteholders, who elected to have their Notes purchased by the group, for a total principal balance of $10.0 million. Of the $10.0 million, $6.4 million was purchased by related parties or their interests. On June 30, 2015, the Company made a principal reduction on the Notes. Total principal payments on Notes held by officers and directors and/or their related parties totaled $6.8 million, of which $6.4 million was used to purchase the Notes referenced above.

There was no interest paid to directors on these Notes for the six months ended June 30, 2015 and 2014. Interest expense recorded on the Notes to directors and/or their related interests amounted to $0.2 million and $0.4 million for the three and six months ended June 30, 2015, respectively, and $0.5 million and $1.1 million for the three and six months ended June 30, 2014, respectively. Interest accrued and unpaid on the Notes to directors and/or their related interests totaled $4.0 million at June 30, 2015.

	For the Six Months Ended
	June 30, 2015
(in thousands)	Related Party Subordinated Noteholders			Other Subordinated Noteholders			Total Subordinated Notes Outstanding
Balance, beginning of period	$	9,000		$	16,000		$	25,000
Assignments		6,429			(6,429	)		-
Principal reductions		(6,789	)		(4,211	)		(11,000	)
Balance, end of period	$	8,640		$	5,360		$	14,000