6. LOANS

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

6. LOANS

NOTE 6 LOANS:

Loans receivable outstanding at December 31, are summarized as follows:

(Dollars are in thousands)	2015		2014
Real estate secured:
Commercial	$	98,569	$	108,062
Construction and land development		14,672		15,439
Residential 1-4 family		242,916		243,538
Multifamily		12,954		14,409
Farmland		22,174		25,252
Total real estate loans		391,285		406,700
Commercial		21,469		21,807
Agriculture		3,793		3,117
Consumer installment loans		24,568		25,828
All other loans		54		97
Total loans	$	441,169	$	457,549

Loans receivable on nonaccrual status at December 31, are summarized as follows:

(Dollars are in thousands)	2015		2014
Real estate secured:
Commercial	$	4,358	$	6,222
Construction and land development		436		332
Residential 1-4 family		8,338		8,589
Multifamily		430		118
Farmland		1,170		5,982
Total real estate loans		14,732		21,243
Commercial		65		554
Agriculture		9		18
Consumer installment loans		41		46
All other loans		—		—
Total loans receivable on nonaccrual status	$	14,847	$	21,861

Total interest income not recognized on nonaccrual loans for 2015 and 2014 was $697 thousand and $386 thousand, respectively. There were no nonperforming loans sold in 2015. In 2014, three nonperforming loans totaling $5.5 million were sold to further reduce the high level of nonaccrual loans. Charge offs of $1.0 million associated with the three sold nonperforming loans were realized and fully absorbed by the allowance for loan losses during 2014 with no additional provisions needed.

The following table presents information concerning the Company’s investment in loans considered impaired as of December 31, 2015 and December 31, 2014:

As of December 31, 2015 (Dollars are in thousands)	Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	4,534	$	163	$	4,212	$	5,173	$	—
Construction and land development		12		1		10		10		—
Residential 1-4 family		3,506		161		3,037		3,150		—
Multifamily		520		9		430		471		—
Farmland		5,073		213		3,983		4,620		—
Commercial		267		—		—		—		—
Agriculture		42		4		36		36		—
Consumer installment loans		31		1		11		11		—
All other loans		—		—		—		—		—
With an allowance recorded:
Real estate secured:
Commercial		2,935		37		2,503		2,849		288
Construction and land development		373		—		289		499		155
Residential 1-4 family		2,219		99		1,920		2,121		168
Multifamily		23		—		—		—		—
Farmland		906		38		761		778		328
Commercial		80		3		69		69		24
Agriculture		24		2		18		18		18
Consumer installment loans		19		4		45		45		2
All other loans		—		—		—		—		—
Total	$	20,564	$	735	$	17,324	$	19,850	$	983

As of December 31, 2014 (Dollars are in thousands)	Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	9,628	$	128	$	3,986	$	5,166	$	—
Construction and land development		248		1		15		15		—
Residential 1-4 family		2,959		177		3,245		3,471		—
Multifamily		370		26		438		479		—
Farmland		5,383		114		5,767		6,801		—
Commercial		421		—		548		674		—
Agriculture		62		4		52		52		—
Consumer installment loans		12		1		15		15		—
All other loans		—		—		—		—		—
With an allowance recorded:
Real estate secured:
Commercial		6,338		132		4,517		4,905		1,482
Construction and land development		505		14		303		355		88
Residential 1-4 family		4,248		126		2,573		2,852		347
Multifamily		268		7		113		113		15
Farmland		2,573		59		1,104		1,116		343
Commercial		407		4		74		74		26
Agriculture		39		2		30		30		30
Consumer installment loans		10		—		—		—		—
All other loans		—		—		—		—		—
Total	$	33,471	$	795	$	22,780	$	26,118	$	2,331

An age analysis of past due loans receivable was as follows:

As of December 31, 2015 (Dollars are in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
Real estate secured:
Commercial	$	311	$	105	$	2,534	$	2,950	$	95,619	$	98,569	$	—
Construction and land development		144		—		17		161		14,511		14,672		—
Residential 1-4 family		4,694		1,487		2,891		9,072		233,844		242,916		—
Multifamily		47		—		320		367		12,587		12,954		—
Farmland		363		—		251		614		21,560		22,174		—
Total real estate loans		5,559		1,592		6,013		13,164		378,121		391,285		—
Commercial		18		1		64		83		21,386		21,469		—
Agriculture		—		—		—		—		3,793		3,793		—
Consumer installment Loans		113		1		27		141		24,427		24,568		—
All other loans		6		—		—		6		48		54		—
Total loans	$	5,696	$	1,594	$	6,104	$	13,394	$	427,775	$	441,169	$	—

As of December 31, 2014 (Dollars are in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
Real estate secured:
Commercial	$	2,683	$	74	$	2,411	$	5,168	$	102,894	$	108,062	$	—
Construction and land development		94		335		12		441		14,998		15,439		—
Residential 1-4 family		7,885		1,728		2,346		11,959		231,579		243,538		—
Multifamily		320		—		—		320		14,089		14,409		—
Farmland		661		453		—		1,114		24,138		25,252		—
Total real estate loans		11,643		2,590		4,769		19,002		387,698		406,700		—
Commercial		64		15		162		241		21,566		21,807		—
Agriculture		—		4		—		4		3,113		3,117		—
Consumer installment Loans		153		19		21		193		25,635		25,828		—
All other loans		22		6		—		28		69		97		—
Total loans	$	11,882	$	2,634	$	4,952	$	19,468	$	438,081	$	457,549	$	—

The Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans receivable as to credit risk. The Company uses the following definitions for risk ratings:

Pass - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors.

Special Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

Based on the most recent analysis performed, the risk category of loans receivable was as follows:

As of December 31, 2015 (Dollars are in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Real estate secured:
Commercial	$	85,255	$	7,543	$	5,771	$	—	$	98,569
Construction and land development		12,262		1,974		436		—		14,672
Residential 1-4 family		229,182		3,572		10,162		—		242,916
Multifamily		12,264		187		503		—		12,954
Farmland		16,663		2,923		2,588		—		22,174
Total real estate loans		355,626		16,199		19,460		—		391,285
Commercial		20,641		724		104		—		21,469
Agriculture		3,767		—		26		—		3,793
Consumer installment loans		24,478		—		90		—		24,568
All other loans		54		—		—		—		54
Total	$	404,566	$	16,923		19,680	$	—	$	441,169

As of December 31, 2014 (Dollars are in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Real estate secured:
Commercial	$	92,515	$	7,925	$	7,622	$	—	$	108,062
Construction and land development		12,974		2,041		424		—		15,439
Residential 1-4 family		230,184		1,965		11,389		—		243,538
Multifamily		13,953		146		310		—		14,409
Farmland		18,159		270		6,823		—		25,252
Total real estate loans		367,785		12,347		26,568		—		406,700
Commercial		18,495		2,548		764		—		21,807
Agriculture		3,069		—		48		—		3,117
Consumer installment loans		25,719		—		109		—		25,828
All other loans		97		—		—		—		97
Total	$	415,165	$	14,895	$	27,489	$	—	$	457,549