LOANS HELD FOR INVESTMENT (Tables)

9 Months Ended

Sep. 30, 2016

LOANS HELD FOR INVESTMENT [Abstract]

Composition of Loans Held for Investment Loan Portfolio

The composition of the Company’s loans held for investment loan portfolio follows:

	September 30,			December 31,
	2016			2015
	(in thousands)
Manufactured housing	$	191,946		$	177,891
Commercial real estate		225,572			179,491
Commercial		85,711			77,349
SBA		11,427			13,744
HELOC		10,789			10,934
Single family real estate		14,334			19,073
Consumer		82			123
		539,861			478,605
Allowance for loan losses		(7,190	)		(6,916	)
Deferred (fees) costs, net		(160	)		560
Discount on SBA loans		(180	)		(191	)
Total loans held for investment, net	$	532,331		$	472,058

Contractual Aging of Recorded Investment in Past Due Held for Investment Loans by Class of Loans

The following table presents the contractual aging of the recorded investment in past due held for investment loans by class of loans:

	September 30, 2016
	Current		30-59 Days* Past Due		60-89 Days* Past Due		Over 90 Days* Past Due		Total Past Due		Total		Recorded Investment Over 90 Days and Accruing
	(in thousands)
Manufactured housing	$	191,837	$	109	$	-	$	-	$	109	$	191,946	$	-
Commercial real estate:
Commercial real estate		172,756		-		-		-		-		172,756		-
SBA 504 1st trust deed		21,651		-		-		-		-		21,651		-
Land		3,982		-		-		-		-		3,982		-
Construction		27,183		-		-		-		-		27,183		-
Commercial		85,711		-		-		-		-		85,711		-
SBA		11,126		301		-		-		301		11,427		-
HELOC		10,690		99		-		-		99		10,789		-
Single family real estate		14,334		-		-		-		-		14,334		-
Consumer		82		-		-		-		-		82		-
Total	$	539,352	$	509	$	-	$	-	$	509	$	539,861	$	-

* Table reports past dues based on Call Report definitions of number of payments past due.

	December 31, 2015
	Current		30-59 Days* Past Due		60-89 Days* Past Due		Over 90 Days* Past Due		Total Past Due		Total		Recorded Investment Over 90 Days and Accruing
	(in thousands)
Manufactured housing	$	177,480	$	-	$	372	$	39	$	411	$	177,891	$	-
Commercial real estate:
Commercial real estate		138,004		-		-		612		612		138,616		-
SBA 504 1st trust deed		25,099		-		-		463		463		25,562		-
Land		2,895		-		-		-		-		2,895		-
Construction		12,016		-		402		-		402		12,418		-
Commercial		77,305		-		-		44		44		77,349		-
SBA		13,743		1		-		-		1		13,744		-
HELOC		10,934		-		-		-		-		10,934		-
Single family real estate		19,073		-				-		-		19,073		-
Consumer		123		-		-		-		-		123		-
Total	$	476,672	$	1	$	774	$	1,158	$	1,933	$	478,605	$	-

* Table reports past dues based on Call Report definitions of number of payments past due.

Analysis of Allowance for Loan Losses for Loans Held for Investment

The following table summarizes the changes in the allowance for loan losses:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Beginning balance	$	7,028		$	7,243		$	6,916		$	7,877
Charge-offs		(100	)		(33	)		(162	)		(258	)
Recoveries		240			247			600			1,390
Net recoveries		140			214			438			1,132
Provision (credit)		22			(445	)		(164	)		(1,997	)
Ending balance	$	7,190		$	7,012		$	7,190		$	7,012

The following tables summarize allowance for loan losses by portfolio type:

	For the Three Months Ended September 30,
	Manufactured Housing			Commercial Real Estate		Commercial		SBA			HELOC			Single Family Real Estate			Consumer		Total
2016	(in thousands)
Beginning balance	$	2,188		$	3,078	$	1,251	$	322		$	62		$	126		$	1	$	7,028
Charge-offs		-			-		-		(100	)		-			-			-		(100	)
Recoveries		121			-		40		12			66			1			-		240
Net (charge-offs) recoveries		121			-		40		(88	)		66			1			-		140
Provision (credit)		(102	)		194		66		(142	)		(25	)		31			-		22
Ending balance	$	2,207		$	3,272	$	1,357	$	92		$	103		$	158		$	1	$	7,190
2015
Beginning balance	$	3,808		$	1,779	$	795	$	686		$	45		$	129		$	1	$	7,243
Charge-offs		(33	)		-		-		-			-			-			-		(33	)
Recoveries		38			13		40		153			3			-			-		247
Net (charge-offs) recoveries		5			13		40		153			3			-			-		214
Provision (credit)		(220	)		43		35		(284	)		(5	)		(15	)		1		(445	)
Ending balance	$	3,593		$	1,835	$	870	$	555		$	43		$	114		$	2	$	7,012

	For The Nine Months Ended September 30,
	Manufactured Housing			Commercial Real Estate			Commercial			SBA			HELOC			Single Family Real Estate			Consumer			Total
2016	(in thousands)
Beginning balance	$	3,525		$	1,853		$	939		$	451		$	43		$	103		$	2		$	6,916
Charge-offs		(41	)		-			-			(121	)		-			-			-			(162	)
Recoveries		126			13			120			196			74			71			-			600
Net (charge-offs) recoveries		85			13			120			75			74			71			-			438
Provision (credit)		(1,403	)		1,406			298			(434	)		(14	)		(16	)		(1	)		(164	)
Ending balance	$	2,207		$	3,272		$	1,357		$	92		$	103		$	158		$	1		$	7,190
2015
Beginning balance	$	4,032		$	1,459		$	986		$	1,066		$	140		$	192		$	2		$	7,877
Charge-offs		(258	)		-			-			-			-			-			-			(258	)
Recoveries		103			533			383			361			8			2			-			1,390
Net (charge-offs) recoveries		(155	)		533			383			361			8			2			-			1,132
Provision (credit)		(284	)		(157	)		(499	)		(872	)		(105	)		(80	)		-			(1,997	)
Ending balance	$	3,593		$	1,835		$	870		$	555		$	43		$	114		$	2		$	7,012

Impairment Method Information Related to Loans and Allowance for Loan Losses by Loan Portfolio Segment

The following tables present impairment method information related to loans and allowance for loan losses by loan portfolio segment:

	Manufactured Housing		Commercial Real Estate		Commercial		SBA		HELOC		Single Family Real Estate		Consumer		Total Loans
Loans Held for Investment as of September 30, 2016:	(in thousands)
Recorded Investment:
Impaired loans with an allowance recorded	$	6,109	$	1,340	$	3,485	$	327	$	46	$	2,049	$	-	$	13,356
Impaired loans with no allowance recorded		2,771		76		-		2,041		490		195		-		5,573
Total loans individually evaluated for impairment		8,880		1,416		3,485		2,368		536		2,244		-		18,929
Loans collectively evaluated for impairment		183,066		224,156		82,226		9,059		10,253		12,090		82		520,932
Total loans held for investment	$	191,946	$	225,572	$	85,711	$	11,427	$	10,789	$	14,334	$	82	$	539,861
Unpaid Principal Balance
Impaired loans with an allowance recorded	$	6,203	$	1,514	$	3,485	$	420	$	58	$	2,049	$	-	$	13,729
Impaired loans with no allowance recorded		4,316		1,035		-		2,455		507		228		-		8,541
Total loans individually evaluated for impairment		10,519		2,549		3,485		2,875		565		2,277		-		22,270
Loans collectively evaluated for impairment		183,066		224,156		82,226		9,059		10,253		12,090		82		520,932
Total loans held for investment	$	193,585	$	226,705	$	85,711	$	11,934	$	10,818	$	14,367	$	82	$	543,202
Related Allowance for Credit Losses
Impaired loans with an allowance recorded	$	511	$	20	$	164	$	-	$	-	$	27	$	-	$	722
Impaired loans with no allowance recorded		-		-		-		-		-		-		-		-
Total loans individually evaluated for impairment		511		20		164		-		-		27		-		722
Loans collectively evaluated for impairment		1,696		3,252		1,193		92		103		131		1		6,468
Total loans held for investment	$	2,207	$	3,272	$	1,357	$	92	$	103	$	158	$	1	$	7,190

	Manufactured Housing		Commercial Real Estate		Commercial		SBA		HELOC		Single Family Real Estate		Consumer		Total Loans
Loans Held for Investment as of December 31, 2015:	(in thousands)
Recorded Investment:
Impaired loans with an allowance recorded	$	4,914	$	376	$	2,966	$	1,695	$	19	$	1,970	$	-	$	11,940
Impaired loans with no allowance recorded		3,672		2,247		44		1,052		294		282		-		7,591
Total loans individually evaluated for impairment		8,586		2,623		3,010		2,747		313		2,252		-		19,531
Loans collectively evaluated for impairment		169,305		176,868		74,339		10,997		10,621		16,821		123		459,074
Total loans held for investment	$	177,891	$	179,491	$	77,349	$	13,744	$	10,934	$	19,073	$	123	$	478,605
Unpaid Principal Balance
Impaired loans with an allowance recorded	$	4,964	$	439	$	2,966	$	1,909	$	19	$	1,970	$	-	$	12,267
Impaired loans with no allowance recorded		3,975		2,734		50		1,553		309		352		-		8,973
Total loans individually evaluated for impairment		8,939		3,173		3,016		3,462		328		2,322		-		21,240
Loans collectively evaluated for impairment		169,305		176,868		74,339		10,997		10,621		16,821		123		459,074
Total loans held for investment	$	178,244	$	180,041	$	77,355	$	14,459	$	10,949	$	19,143	$	123	$	480,314
Related Allowance for Credit Losses
Impaired loans with an allowance recorded	$	483	$	3	$	45	$	25	$	-	$	17	$	-	$	573
Impaired loans with no allowance recorded		-		-		-		-		-		-		-		-
Total loans individually evaluated for impairment		483		3		45		25		-		17		-		573
Loans collectively evaluated for impairment		3,042		1,850		894		426		43		86		2		6,343
Total loans held for investment	$	3,525	$	1,853	$	939	$	451	$	43	$	103	$	2	$	6,916

Recorded Investment in Loans Classified as Impaired

The table below reflects recorded investment in loans classified as impaired:

	September 30,		December 31,
	2016		2015
	(in thousands)
Impaired loans with a specific valuation allowance under ASC 310	$	13,356	$	11,940
Impaired loans without a specific valuation allowance under ASC 310		5,573		7,591
Total impaired loans	$	18,929	$	19,531
Valuation allowance related to impaired loans	$	722	$	573

Summary of Impaired Loans by Class of Loans

The following table summarizes impaired loans by class of loans:

	September 30,		December 31,
	2016		2015
	(in thousands)
Manufactured housing	$	8,880	$	8,586
Commercial real estate		223		875
SBA 504 1st trust deed		1,193		1,748
Commercial		3,485		3,010
SBA		2,368		2,747
HELOC		536		313
Single family real estate		2,244		2,252
Total	$	18,929	$	19,531

Summary of Average Investment in Impaired Loans by Class and Related Interest Income Recognized

The following tables summarize average investment in impaired loans by class of loans and the related interest income recognized:

	Three Months Ended September 30,
	2016				2015
	Average Investment in Impaired Loans		Interest Income		Average Investment in Impaired Loans		Interest Income
	(in thousands)
Manufactured housing	$	8,306	$	174	$	7,490	$	197
Commercial real estate:
Commercial real estate		510		-		860		-
SBA 504 1st trust deed		1,148		5		1,712		31
Land		-		-		-		-
Construction		-		-		-		-
Commercial		3,346		49		2,825		-
SBA		1,266		41		663		17
HELOC		510		-		190		8
Single family real estate		2,134		26		2,284		24
Consumer		-		-		-		-
Total	$	17,220	$	295	$	16,024	$	277

	Nine Months Ended September 30,
	2016				2015
	Average Investment in Impaired Loans		Interest Income		Average Investment in Impaired Loans		Interest Income
	(in thousands)
Manufactured housing	$	8,482	$	499	$	7,346	$	448
Commercial real estate:
Commercial real estate		682		3		1,548		-
SBA 504 1st		1,625		33		1,417		65
Land		-		-		-		-
Construction		-		-		-		-
Commercial		3,190		148		2,895		-
SBA		891		97		1,226		53
HELOC		410		7		137		8
Single family real estate		2,173		83		1,441		57
Consumer		-		-		-		-
Total	$	17,453	$	870	$	16,010	$	631

Schedule of Recorded Investment in Certain Types of Loans

The following table reflects the recorded investment in certain types of loans at the periods indicated:

	September 30,			December 31,
	2016			2015
	(in thousands)
Nonaccrual loans	$	4,187		$	6,956
Government guaranteed portion of loans included above	$	1,161		$	1,943
Troubled debt restructured loans, gross	$	14,425		$	13,741
Loans 30 through 89 days past due with interest accruing	$	-		$	-
Allowance for loan losses to gross loans held for investment		1.33	%		1.44	%

Composition of Net Nonaccrual Loans

The following table presents the composition of nonaccrual loans by class of loans:

	September 30,		December 31,
	2016		2015
	(in thousands)
Manufactured housing	$	1,006	$	1,615
Commercial real estate		223		875
SBA 504 1st trust deed		933		1,481
Commercial		-		44
SBA		1,294		2,346
HELOC		536		313
Single family real estate		195		282
Consumer		-		-
Total	$	4,187	$	6,956

Schedule of Gross Loans by Risk Rating

The following tables present gross loans by risk rating:

	September 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Manufactured housing	$	188,821	$	-	$	3,125	$	-	$	191,946
Commercial real estate:
Commercial real estate		170,521		2,012		223		-		172,756
SBA 504 1st trust deed		20,458		-		1,193		-		21,651
Land		3,982		-		-		-		3,982
Construction		27,183		-		-		-		27,183
Commercial		75,775		7,038		2,898		-		85,711
SBA		8,580		109		430		-		9,119
HELOC		10,005		-		784		-		10,789
Single family real estate		14,133		-		201		-		14,334
Consumer		82		-		-		-		82
Total, net		519,540		9,159		8,854		-		537,553
SBA guarantee		-		-		2,308		-		2,308
Total	$	519,540	$	9,159	$	11,162	$	-	$	539,861

	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Manufactured housing	$	173,971	$	-	$	3,920	$	-	$	177,891
Commercial real estate:
Commercial real estate		131,857		2,481		4,278		-		138,616
SBA 504 1st trust deed		23,231		583		1,748		-		25,562
Land		2,895		-		-		-		2,895
Construction		12,418		-		-		-		12,418
Commercial		66,788		6,805		3,756		-		77,349
SBA		10,733		158		547		64		11,502
HELOC		10,115		-		819		-		10,934
Single family real estate		18,678		-		395		-		19,073
Consumer		123		-		-		-		123
Total, net		450,809		10,027		15,463		64		476,363
SBA guarantee		-		-		2,242		-		2,242
Total	$	450,809	$	10,027	$	17,705	$	64	$	478,605

Troubled Debt Restructurings

The following tables summarize the financial effects of TDR loans by loan class for the periods presented:

	For the Three Months Ended September 30, 2016
	Number of Loans		Pre- Modification Recorded Investment		Post Modification Recorded Investment		Balance of Loans with Rate Reduction		Balance of Loans with Term Extension		Effect on Allowance for Loan Losses
	(dollars in thousands)
Manufactured housing		10	$	735	$	735	$	735	$	735	$	40
Total		10	$	735	$	735	$	735	$	735	$	40

	For the Nine Months Ended September 30, 2016
	Number of Loans		Pre- Modification Recorded Investment		Post Modification Recorded Investment		Balance of Loans with Rate Reduction		Balance of Loans with Term Extension		Effect on Allowance for Loan Losses
	(dollars in thousands)
Manufactured housing		20	$	1,619	$	1,619	$	1,619	$	1,619	$	98
SBA		1		92		92		-		92		-
HELOC		1		257		257		-		257		-
Single family real estate		1		105		105		105		105		7
Commercial		3		718		718		-		718		7
Total		26	$	2,791	$	2,791	$	1,724	$	2,791	$	112

	For the Three Months Ended September 30, 2015
	Number of Loans		Pre- Modification Recorded Investment		Post Modification Recorded Investment		Balance of Loans with Rate Reduction		Balance of Loans with Term Extension		Effect on Allowance for Loan Losses
	(dollars in thousands)
Manufactured housing		11	$	1,292	$	1,292	$	1,292	$	1,292	$	58
Total		11	$	1,292	$	1,292	$	1,292	$	1,292	$	58

	For the Nine Months Ended September 30, 2015
	Number of Loans		Pre- Modification Recorded Investment		Post Modification Recorded Investment		Balance of Loans with Rate Reduction		Balance of Loans with Term Extension		Effect on Allowance for Loan Losses
	(dollars in thousands)
Manufactured housing		19	$	1,756	$	1,746	$	1,443	$	1,599	$	73
SBA		1		297		297		-		297		5
HELOC		1		54		54		54		54		-
Single family real estate		1		1,917		1,917		1,917		1,917		35
Total		22	$	4,024	$	4,014	$	3,414	$	3,867	$	113