Note 3 - Loans Receivable

3 Months Ended

Mar. 31, 2016

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, 2016 and December 31, 2015 were as follows:

(Dollars In Thousands)	March 31, 2016			December 31, 2015
Construction loans:
Residential	$	10,983		$	11,779
Land acquisition, development & commercial		30,167			27,440
Real estate:
Residential		105,055			100,268
Commercial		147,561			140,952
Commercial, industrial & agricultural		52,913			53,012
Equity lines		26,954			26,376
Consumer		7,430			7,531
Total		381,063			367,358
Less allowance for loan losses		(3,347	)		(3,298	)
Loans, net	$	377,716		$	364,060

The past due and nonaccrual status of loans as of March 31, 2016 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	$	−	$	−	$	−	$	−	$	10,983	$	10,983	$	−
Land acquisition, development & commercial		−		−		10		10		30,157		30,167		10
Real estate:
Residential		495		815		−		1,310		103,745		105,055		−
Commercial		−		−		−		−		147,561		147,561		360
Commercial, industrial & agricultural		167		−		34		201		52,712		52,913		45
Equity lines		−		98		305		403		26,551		26,954		−
Consumer		2		−		−		2		7,428		7,430		−
Total	$	664	$	913	$	349	$	1,926	$	379,137	$	381,063	$	415

The past-due and nonaccrual status of loans as of December 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:
Residential	$	−	$	−	$	−	$	−	$	11,779	$	11,779	$	−
Land acquisition, development & commercial		−		−		11		11		27,429		27,440		11
Real Estate:
Residential		297		−		50		347		99,921		100,268		−
Commercial		44		−		792		836		140,116		140,952		368
Commercial, industrial & agricultural		52		84		35		171		52,841		53,012		47
Equity lines		105		−		−		105		26,271		26,376		−
Consumer		−		−		−		−		7,531		7,531		−
Total	$	498	$	84	$	888	$	1,470	$	365,888	$	367,358	$	426

There was one loan of $305 thousand that was past due ninety days or more and still accruing interest as of March 31, 2016. There were two loans, totaling $842 thousand, which were past due ninety days or more and still accruing interest at December 31, 2015.

Impaired loans, which include TDR’s of $6.6 million, and the related allowance at March 31, 2016, were as follows:

March 31, 2016 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		195		195		−		213		5
Commercial		7,476		7,652		−		7,481		74
Commercial, industrial & agricultural		12		12		−		12		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with no allowance	$	7,683	$	7,859	$	−	$	7,706	$	79

March 31, 2016 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		124		124		17		127		−
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with an allowance	$	124	$	124	$	17	$	127	$	−

Impaired loans, which include TDRs of $6.7 million, and the related allowance at December 31, 2015, were as follows:

December 31, 2015	Recorded		Unpaid				Average		Interest
With no related allowance:	Investment		Principal		Related		Balance		Income
(Dollars In Thousands)	in Loans		Balance		Allowance		Total Loans		Recognized
Construction:
Residential	$	−	$	−	$	–	$	−	$	−
Land acquisition, development & commercial		−		−		–		−		−
Real Estate:
Residential		247		247		–		255		13
Commercial		7,451		7,627		–		7,623		291
Commercial, industrial & agricultural		12		12		–		12		−
Equity lines		−		−		–		−		−
Consumer		−		−		–		−		−
Total loans with no allowance	$	7,710	$	7,886	$	–	$	7,890	$	304

December 31, 2015	Recorded		Unpaid				Average		Interest
With an allowance recorded:	Investment		Principal		Related		Balance		Income
(Dollars In Thousands)	in Loans		Balance		Allowance		Total Loans		Recognized
Construction:
Residential	$	−	$	−	$	−	$	−	$	−
Land acquisition, development & commercial		−		−		−		−		−
Real Estate:
Residential		−		−		−		−		−
Commercial		127		127		17		135		−
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with an allowance	$	127	$	127	$	17	$	135	$	−

Troubled Debt Restructurings

Troubled debt restructurings (“TDR’s”) were comprised of six loans totaling $6.6 million at March 31, 2016.  This compares with $6.7 million in total restructured loans at December 31, 2015.

No loans were modified in a TDR during the first quarter of 2016.

The following table presents by class of loan, information related to the loan modified in a TDR during the three months ended March 31, 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

Four of the six loans totaling $6.4 million were not on nonaccrual status at March 31, 2016. The other two loans totaling $247 thousand were on nonaccrual status at the end of the first quarter of 2016.  The loan identified above in the table restructured into two TDR’s during the three months ended March 31, 2015. It 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, 2016.

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.