Note 3 - Loans Receivable

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

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,

2017

and

December

31,

2016

were as follows:

(Dollars In Thousands)	March 31, 201 7			December 31, 201 6
Construction loans:
Residential	$	10,429		$	10,204
Land acquisition, development & commercial		29,662			27,480
Real estate:
Residential		111,988			111,626
Commercial		175,654			172,248
Commercial, industrial & agricultural		61,591			59,702
Equity lines		30,823			29,956
Consumer		7,843			7,668
Overdrafts		53			107
Total		428,043			418,991
Less allowance for loan losses		(3,726	)		(3,636	)
L oans, net	$	424,317		$	415,355

The past due and nonaccrual status of loans as of

March

31,

2017

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:
Resi dential	$	−	$	−	$	−	$	−	$	10,429	$	10,429	$	−
Land acquisition, development & commercial		−		−		−		−		29,662		29,662		−
Real estate:
Residential		785		−		577		1,362		110,626		111,988		577
Commercial		21		−		−		21		175,633		175,654		330
Commercial, industrial & agricultural		292		−		207		499		61,145		61,644		29
Equity lines		105		-		−		105		30,718		30,823		−
Consumer		6		-		8		14		7,829		7,843		−
Total	$	1,209	$	-	$	792	$	2,001	$	426,042	$	428,043	$	936

The past-due and nonaccrual status of loans as of

December

31,

201

6

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	$	−	$	−	$	−	$	−	$	10,204	$	10,204	$	−
Land acquisition, development & commercial		−		−		−		−		27,480		27,480		−
Real Estate:
Residential		672		193		577		1,442		110,184		111,626		577
Commercial		115		−		−		115		172,133		172,248		336
Commercial, industrial & agricultural		60		33		−		93		59,716		59,809		11
Equity lines		258		−		−		258		29,698		29,956		−
Consumer		8		6		4		18		7,650		7,668		−
Total	$	1,113	$	232	$	581	$	1,926	$	417,065	$	418,991	$	924

There

were

six

loans, totaling

$215

thousand, which were past due

ninety

days or more and still accruing interest as of

March

31,

2017.

Two of those

six

loans comprised

$207

thousand of the

$215

thousand balance. There were

two

loans, totaling

$4

thousand, which were past due

ninety

days or more and still accruing interest at

December

31,

2016.

Impaired loans

, which include TDR’s of

$4.2

million, and the related allowance at

March

31,

2017,

were as follows:

March 3 1 , 201 7 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		769		769		−		769		3
Commercial		4,198		4,374		−		4,213		40
Commercial, industrial & agricultural		29		29		−		29		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with no allowance	$	4,996	$	5,172	$	−	$	5,011	$	43

March 3 1 , 201 7 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		111		111		17		114		−
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with an allowance	$	111	$	111	$	17	$	114	$	−

Impaired loans, which include TDRs of

$6.

4

million, and the related allowance at

December

31,

2016,

were as follows:

December 31, 201 6 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		−		−		–		−		−
Real Estate:
Residential		770		770		–		629		(11	)
Commercial		6,380		6,556		–		6,521		255
Commercial, industrial & agricultural		11		11		–		11		−
Equity lines		−		−		–		−		−
Consumer		−		−		–		−		−
Total loans with no allowance	$	7,161	$	7,337	$	–	$	7,161	$	244

December 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:
Residential	$	−	$	−	$	−	$	−	$	−
Land acquisition, development & commercial		−		−		−		−		−
Real Estate:
Residential		−		−		−		−		−
Commercial		115		115		17		122		−
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with an allowance	$	115	$	115	$	17	$	122	$	−

Troubled Debt Restructurings

Troubled debt restructurings (“TDR

’s”) were comprised of

five

loans totaling

$4.2

million at

March

31,

2017.

  This compares with

$6.4

million in total restructured loans at

December

31,

2016.

 Two of the

five

loans totaling

$4.0

million were accruing at

March

31,

2017.

The other

three

loans totaling

$247

thousand were on nonaccrual status at the end of the

first

quarter of

2017.

  One TDR in the amount of

$18

thousand was past due with its restructured terms at

March

31,

2017.

The following table presents by class of loan, information related to

the loan modified in a TDR during

2017:

(Dollars in Thousands)	Loans modified as TDR's For the three months ended March 3 1 , 201 7
Class of Loan	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Construction loans:
Residential		—	$	—	$	—
Land acquisition, development & commercial		—		—		—
Real estate loans:
Residential		—		—		—
Commercial		1		218		218
Commercial, industrial, agricultural		—		11		29
Equity lines		—		—		—
Consumer		—		—		—
Total Loans		1	$	229	$	247

The loan

relationship identified above in the table was originally restructured into

two

TDR’s during

2015

and was included in substandard nonaccrual loans and impaired loans at the end of

2016.

There was an additional

$18

thousand added to the TDR relationship during the

first

quarter of

2017.

No

loans were modified in a TDR during the

first

three

months of

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.