Note 3 - Loans Receivable

9 Months Ended

Sep. 30, 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

September 30, 2017

and

December 31, 2016

were as follows:

(Dollars In Thousands)	September 30, 2017			December 31, 2016
Construction loans:
Residential	$	12,278		$	10,204
Land acquisition, development & commercial		33,915			27,480
Real estate:
Residential		117,114			111,626
Commercial		173,713			172,248
Commercial, industrial & agricultural		61,070			59,702
Equity lines		28,914			29,956
Consumer		7,724			7,668
Overdrafts		82			107
Total		434,810			418,991
Less allowance for loan losses		(3,706	)		(3,636	)
Loans, net	$	431,104		$	415,355

The past due and nonaccrual status of loans as of

September 30, 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:
Residential	$	173	$	−	$	−	$	173	$	12,105	$	12,278	$	−
Land acquisition, development & commercial		172		95		32		299		33,616		33,915		−
Real estate:
Residential		578		648		144		1,370		115,744		117,114		459
Commercial		364		−		530		894		172,819		173,713		211
Commercial, industrial & agricultural		496		23		100		619		60,533		61,152		27
Equity lines		93		−		204		297		28,617		28,914		−
Consumer		7		40		14		61		7,663		7,724		3
Total	$	1,883	$	806	$	1,024	$	3,713	$	431,097	$	434,810	$	700

The past-due and nonaccrual status of loans as of

December 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:
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

eight

credits and

three

credit card accounts totaling

$1.0

million, which were past due

ninety

days or more as of

September 30, 2017.

Of that total,

two

credits totaling

$19

thousand were on nonaccrual status. 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

September 30, 2017,

were as follows:

September 30, 2017 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		648		648		−		652		14
Commercial		4,141		4,317		−		4,172		121
Commercial, industrial & agricultural		27		27		−		28		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with no allowance	$	4,816	$	4,992	$	−	$	4,852	$	135

September 30, 2017 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		−		−		−		−		−
Commercial, industrial & agricultural		−		−		−		−		−
Equity lines		−		−		−		−		−
Consumer		−		−		−		−		−
Total loans with an allowance	$	−	$	−	$	−	$	−	$	−

 

 Impaired loans, which include TDRs of

$6.4

million, and the related allowance at

December 31, 2016,

were as follows:

December 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:
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

September 30, 2017.  

This compares with

$6.4

million in total restructured loans at

December 31, 2016. 

Two

of the

five

loans totaling

$3.9

million were accruing at

September 30, 2017.

The other

three

loans totaling

$238

thousand were on nonaccrual status at the end of the

third

quarter of

2017.

  Three TDRs totaling

$757

thousand were past due with their restructured terms at

September 30, 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 nine months ended September 30, 2017
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

nine

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.