Note 3 - Loans Receivable

3 Months Ended

Mar. 31, 2015

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 March 31, 2015 and December 31, 2014 were as follows:

(Dollars In Thousands)	March 31, 2015			December 31, 2014
Construction loans:
Residential	$	10,353		$	10,019
Land acquisition, development & commercial		23,402			23,686
Real estate:
Residential		93,346			86,269
Commercial		133,956			135,070
Commercial, industrial & agricultural		44,722			44,807
Equity lines		26,275			24,330
Consumer		7,303			7,498
Total		339,357			331,679
Less allowance for loan losses		(3,329	)		(3,332	)
Loans, net	$	336,028		$	328,347

The past due and nonaccrual status of loans as of March 31, 2015 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	$	−	$	−	$	−	$	−	$	10,353	$	10,353	$	−
Land acquisition, development & commercial		−		−		−		−		23,402		23,402		−
Real estate:
Residential		−		788		167		955		92,391		93,346		379
Commercial		152		−		3		155		133,801		133,956		996
Commercial, industrial & agricultural		−		−		−		−		44,722		44,722		12
Equity lines		191		5		−		196		26,079		26,275		−
Consumer		1		35		−		36		7,267		7,303		19
Total	$	344	$	828	$	170	$	1,342	$	338,015	$	339,357	$	1,406

The past due and nonaccrual status of loans as of December 31, 2014 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	$	−	$	−	$	−	$	−	$	10,019	$	10,019	$	−
Land acquisition, development & commercial		−		−		−		−		23,686		23,686		−
Real estate:
Residential		−		381		261		642		85,627		86,269		475
Commercial		−		85		−		85		134,985		135,070		758
Commercial, industrial & agricultural		96		−		−		96		44,711		44,807		−
Equity lines		105		−		−		105		24,225		24,330		−
Consumer		10		36		−		46		7,452		7,498		21
Total	$	211	$	502	$	261	$	974	$	330,705	$	331,679	$	1,254

There was one loan of $2 thousand that was past due ninety days or more and still accruing interest as of March 31, 2015. There were no loans that were past due ninety days or more and still accruing interest at December 31, 2014.

Impaired loans, which include TDR’s of $6.9 million, and the related allowance at March 31, 2015, were as follows:

March 31, 2015 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		−		−		−		−		−
Real estate:
Residential		262		262		−		264		1
Commercial		7,702		7,878		−		7,705		64
Commercial, industrial & agricultural		12		12		−		11		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with no allowance	$	7,976	$	8,152	$	−	$	7,980	$	65

March 31, 2015 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		−		−		−		−		−
Commercial		138		138		138		140		−
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with an allowance	$	138	$	138	$	138	$	140	$	−

Impaired loans, which include TDR’s of $6.7 million, and the related allowance at December 31, 2014, were as follows:

December 31, 2014 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		−		−		−		−		−
Real estate:
Residential		525		700		−		605		12
Commercial		7,507		7,507		−		8,563		289
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with no allowance	$	8,032	$	8,207	$	−	$	9,168	$	301

December 31, 2014 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		−		−		−		−		−
Commercial		141		141		141		153		−
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with an allowance	$	141	$	141	$	141	$	153	$	−

Troubled Debt Restructurings

Troubled debt restructurings (“TDR’s”) were comprised of six loans totaling $6.9 million at March 31, 2015.  This compares with $6.7 million in total restructured loans at December 31, 2014.

The following table presents by class of loan, information related to the loan modified in a TDR during 2015:

	Loans modified as TDR's For the three months ended March 31, 2015
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		—		—		—
Commercial		1		260		255
Commercial, industrial, agricultural		—		—		12
Equity lines		—		—		—
Consumer		—		—		—
Total Loans		1	$	260	$	267

For the three months ended March 31, 2014, no loans were modified as TDR’s.

Two of the six loans totaling $6.0 million were not on nonaccrual status at March 31, 2015. The other four loans totaling $889 thousand were on nonaccrual status at the end of the first quarter of 2015.  The loan restructured into two TDR’s in the first quarter of 2015 was included in substandard nonaccrual loans and impaired loans at the end of 2014. All six TDR’s were current with their restructured terms at March 31, 2015.

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, if a specific reserve is associated with the loan it 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.