Note 3 - Loans Receivable

12 Months Ended

Dec. 31, 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 December 31, 2013 and 2012 were as follows:

(Dollars In Thousands)	December 31,
	2013			2012
Construction:
Residential	$	6,768		$	5,036
Land acquisition, development & commercial		20,904			20,198
Real Estate:
Residential		72,934			69,691
Commercial		126,100			109,302
Commercial, industrial & agricultural		42,155			42,382
Equity lines		20,374			20,504
Consumer		8,698			7,824
Total loans	$	297,933		$	274,937
Less allowance for loan losses		(3,721	)		(3,790	)
Loans, net	$	294,212		$	271,147

The past due and nonaccrual status of loans as of December 31, 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:
Residential	$	-	$	-	$	-	$	-	$	6,768	$	6,768	$	-
Land acquisition, development & commercial		-		-		-		-		20,904		20,904		-
Real Estate:
Residential		-		-		931		931		72,003		72,934		707
Commercial		-		-		-		-		126,100		126,100		-
Commercial, industrial & agricultural		270		44		36		350		41,805		42,155		193
Equity lines		203		-		59		262		20,112		20,374		59
Consumer		16		-		30		46		8,652		8,698		30
Total	$	489	$	44	$	1,056	$	1,589	$	296,344	$	297,933	$	989

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:
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 was one loan for $223 thousand that was past due ninety days or more and still accruing interest at December 31, 2013. There were no loans past due ninety days or more and still accruing interest at December 31, 2012.

Impaired loans, which include TDRs of $6.3 million and the related allowance at December 31, 2013, were as follows:

December 31, 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:
Residential	$	-	$	-	$	-	$	-	$	-
Land acquisition, development & commercial		1,550		1,550		-		1,550		67
Real Estate:
Residential		412		412		-		415		18
Commercial		9,266		9,266		-		9,365		442
Commercial, industrial & agricultural		283		283		-		733		46
Equity lines		-		-		-		-		-
Consumer		-		-		-		-		-
Total loans with no allowance	$	11,511	$	11,511	$	-	$	12,063	$	573

December 31, 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:
Residential	$	-	$	-	$	-	$	-	$	-
Land acquisition, development & commercial		-		-		-		-		-
Real Estate:
Residential		438		438		163		439		16
Commercial		-		-		-		-		-
Commercial, industrial & agricultural		41		41		10		34		1
Equity lines		-		-		-		-		-
Consumer		-		-		-		-		-
Total loans with an allowance	$	479	$	479	$	173	$	473	$	17

Impaired loans, which include TDRs of $6.5 million 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:
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:
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

Troubled debt restructurings (“TDR’s”) were comprised of three loans totaling $6.3 million at December 31, 2013.  Two of the three loans totaling $6.3 million at year end 2013 are included in impaired loans, but are performing in accordance with their restructured terms and are not on nonaccrual status.  The remaining $30 thousand loan is past due and included in loans 60-89 days past due and nonaccrual loans at year end 2013.  This compares with $6.5 million in total restructured loans at December 31, 2012.  One of the loans classified as a TDR at the end of the 2012 deteriorated further in 2013, resulting in a partial charge-off of $154 thousand.  There was no valuation allowance related to total TDR’s at December 31, 2013, compared to $137 thousand of the valuation allowance related to total TDR’s as of December 31, 2012.

For the year ended December 31, 2013, there were no loans modified in a TDR.

The following table presents by class of loan, information related to loans modified in a TDR during 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
			(Dollars in Thousands)
Construction loans:
Residential		—	$	—	$	—
Land acquisition, development & commercial		—		—		—
Real estate loans:		—		—		—
Residential		1		202		202
Commercial		—		—		—
Commercial, industrial, agricultural		—		—		—
Equity lines		—		—		—
Consumer		—		—		—
Total Loans		1	$	202	$	202

During 2012, the Company modified one loan considered to be a TDR.  The terms were modified changing the loan from a home equity line of credit to a non-real estate secured term loan.  

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 TDR’s 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.