Note 3 - Loans Receivable

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

 Note 3. Loans Receivable

The major classifications of loans in the consolidated balance sheets at September 30, 2013 and December 31, 2012 were as follows:

(Dollars In Thousands)	September 30, 2013			December 31, 2012
Construction loans:
Residential	$	6,804		$	5,036
Land acquisition, development & commercial		20,120			20,198
Real estate:
Residential		68,733			69,691
Commercial		124,585			109,302
Commercial, industrial & agricultural		38,656			42,382
Equity lines		19,409			20,504
Consumer		9,017			7,824
Total		287,324			274,937
Less allowance for loan losses		(3,684	)		(3,790	)
Loans, net	$	283,640		$	271,147

The past due and nonaccrual status of loans as of September 30, 2013 was as follows:

(Dollars In Thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Nonaccrual Loans
Construction loans:
Residential	$	-	$	-	$	-	$	-	$	6,804	$	6,804	$	-
Land acquisition, development & commercial		-		-		-		-		20,120		20,120		-
Real estate:
Residential		173		-		520		693		68,040		68,733		520
Commercial		862		-		-		862		123,723		124,585		-
Commercial, industrial & agricultural		99		46		27		172		38,484		38,656		183
Equity lines		98		-		-		98		19,311		19,409		59
Consumer		39		-		-		39		8,978		9,017		39
Total	$	1,271	$	46	$	547	$	1,864	$	285,460	$	287,324	$	801

The past due and nonaccrual status of loans as of December 31, 2012 was as follows:

(Dollars In Thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Nonaccrual Loans
Construction loans:
Residential	$	-	$	-	$	-	$	-	$	5,036	$	5,036	$	-
Land acquisition, development & commercial		-		723		1,034		1,757		18,441		20,198		1,756
Real estate:
Residential		-		562		184		746		68,945		69,691		582
Commercial		-		-		236		236		109,066		109,302		236
Commercial, industrial & agricultural		-		157		-		157		42,225		42,382		-
Equity lines		60		-		115		175		20,329		20,504		115
Consumer		-		-		-		-		7,824		7,824		-
Total	$	60	$	1,442	$	1,569	$	3,071	$	271,866	$	274,937	$	2,689

There were no loans past due ninety days or more and still accruing at September 30, 2013 or December 31, 2012.

 Impaired loans and the related allowance at September 30, 2013, were as follows:

September 30, 2013 With no related allowance: (Dollars In Thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance Total Loans		Interest Income Recognized
Construction loans:
Residential	$	-	$	-	$	-	$	-	$	-
Land acquisition, development & commercial		1,550		1,550		-		1,550		56
Real estate:
Residential		225		225		-		226		7
Commercial		9,341		9,341		-		9,383		353
Commercial, industrial & agricultural		283		283		-		885		43
Equity lines		-		-		-		-		-
Consumer		-		-		-		-		-
Total loans with no allowance	$	11,399	$	11,399	$	-	$	12,044	$	459

September 30, 2013 With an allowance recorded: (Dollars In Thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance Total Loans		Interest Income Recognized
Construction loans:
Residential	$	-	$	-	$	-	$	-	$	-
Land acquisition, development & commercial		-		-		-		-		-
Real estate:
Residential		439		439		163		440		14
Commercial		-		-		-		-		-
Commercial, industrial & agricultural		43		43		10		32		1
Equity lines		-		-		-		-		-
Consumer		-		-		-		-		-
Total loans with an allowance	$	482	$	482	$	173	$	472	$	15

Impaired loans and the related allowance at December 31, 2012 were as follows:

December 31, 2012 With no related allowance: (Dollars In Thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance Total Loans		Interest Income Recognized
Construction loans:
Residential	$	-	$	-	$	-	$	-	$	-
Land acquisition, development & commercial		3,632		3,692		-		3,647		187
Real estate:
Residential		611		611		-		611		23
Commercial		9,018		9,018		-		9,018		440
Commercial, industrial & agricultural		916		916		-		916		33
Equity lines		115		439		-		115		-
Consumer		-		-		-		-		-
Total loans with no allowance	$	14,292	$	14,676	$	-	$	14,307	$	683

December 31, 2012 With an allowance recorded: (Dollars In Thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance Total Loans		Interest Income Recognized
Construction loans:
Residential	$	-	$	-	$	-	$	-	$	-
Land acquisition, development & commercial		-		-		-		-		-
Real estate:
Residential		199		199		137		199		13
Commercial		1,139		1,139		71		1,139		74
Commercial, industrial & agricultural		-		-		-		-		-
Equity lines		-		-		-		-		-
Consumer		-		-		-		-		-
Total loans with an allowance	$	1,338	$	1,338	$	208	$	1,338	$	87

Troubled Debt Restructurings

Included in certain loan categories are troubled debt restructurings (“TDRs”). At September 30, 2013 and at December 31, 2012, there were 3 loans classified as TDRs totaling $6.3 million and $6.5 million, respectively. One TDR was classified as a substandard non-accruing loan at September 30, 2013 and at the end of 2012. This loan was restructured in the twelve months ended September 30, 2012, and became past due in the second quarter of 2013. As a result of this default, a partial charge off of $145 thousand was recorded in the second quarter of 2013. The outstanding balance of this loan was $39 thousand, $42 thousand, and $199 thousand at September 30, 2013, June 30, 2013 and December 31, 2012, respectively. There was no valuation allowance related to total TDR’s at September 30, 2013. The valuation allowance related to total TDRs was $137 thousand at December 31, 2012.

For the nine months ended September 30, 2013, no loans were modified as a TDR.

The following table presents by class of loan, information related to loans modified during the year ended December 31, 2012.

	Loans modified as TDR's For the year ended December 31, 2012
Class of Loan	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
			(In thousands)
Construction loans:
Residential		-	$	-	$	-
Land acquisition, development & commercial		-		-		-
Real estate:		-		-		-
Residential		1		202		202
Commercial		-		-		-
Commercial, industrial & agricultural		-		-		-
Equity lines		-		-		-
Consumer		-		-		-
Total Loans		1	$	202	$	202

Management considers troubled debt restructurings and subsequent defaults in restructured loans in the determination of the adequacy of the Company’s allowance for loan losses. When identified as a TDR, a loan is evaluated for potential loss based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs if the loan is collateral dependent. Loans identified as TDRs frequently are on non-accrual status at the time of the restructuring and, in some cases, partial charge-offs may have already been taken against the loan and a specific allowance may have already been established for the loan. As a result of any modification as a TDR, the specific reserve associated with the loan may be increased. Additionally, loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future defaults. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment. As a result, any specific allowance may be increased, adjustments may be made in the allocation of the total allowance balance, or partial charge-offs may be taken to further write-down the carrying value of the loan. Management exercises significant judgment in developing estimates for potential losses associated with TDRs.