Note 2 - Discontinued Operations

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE

2

– DISCONTINUED OPERATIONS

On

May 9, 2019,

the Company entered into a purchase and assumption agreement to transfer its mortgage banking operations to another financial institution. Under the agreement, the other financial institution would offer employment to a majority of the Company’s mortgage operations employees. Assuming a majority of key employees at those locations agreed to transfer, the other financial institution would assume certain leases and fixed assets at those locations. Subsequent to that transaction, a majority of the mortgage operation employees made arrangements to transfer to different financial institutions, which similarly agreed to assume certain leases and fixed assets at those respective locations. Some sales and assumption agreements with these different financial institutions were consummated in the

second

quarter of

2019

and the remainder are expected to be consummated in the

third

quarter of

2019.

Subject to customary closing conditions, all related transactions are expected to be completed by

September 30, 2019.

The Company will

not

have continuing involvement with the mortgage banking operations once those transactions are complete. The Company discontinued issuing mortgage interest rate lock commitments (IRLC's) in its name in

May 2019

and originating mortgage loans held for sale in its name in

June 2019.

Income and expense related to mortgage banking operations are included in discontinued operations and prior period financial information has been retrospectively adjusted for the impact of discontinued operations.

The following table summarizes the net loss on disposal of discontinued operations:

	Three Months		Six Months
	Ended		Ended
	June 30, 2019		June 30, 2019
Severance benefits	$	147,948	$	147,948
Leases, software & other contractual obligations		360,613		360,613
Fixed asset losses		30,423		30,423
Other costs		212,998		212,998
Net Loss on Disposal	$	751,982	$	751,982

The following table presents results of discontinued operations for the

three

and

six

months ended

June 30, 2019,

and

2018:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net interest income	$	85,484		$	97,079		$	170,782		$	161,876
Gain on sale of loans		2,095,986			4,044,704			4,813,660			7,290,152
Other		190			-			190			-
Total noninterest income		2,096,176			4,044,704			4,813,850			7,290,152
Salaries and benefits		1,919,033			3,372,779			4,480,025			6,060,290
Occupancy		84,314			173,517			232,360			332,656
Data processing fees		282,503			367,471			584,369			689,877
Professional fees		51,993			43,481			107,972			75,672
Advertising		70,469			89,279			118,801			195,710
Net loss on disposal		751,982			-			751,982			-
Other		153,603			264,225			299,761			484,344
Total noninterest expense		3,313,897			4,310,752			6,575,270			7,838,549
Loss from discontinued operations		(1,132,237	)		(168,969	)		(1,590,638	)		(386,521	)
Benefit for income taxes		(279,727	)		(42,999	)		(392,193	)		(95,385	)
Net loss from discontinued operations	$	(852,510	)	$	(125,970	)	$	(1,198,445	)	$	(291,136	)

Net interest income from discontinued operations includes interest income on mortgage loans held for sale less interest expense allocated to mortgage banking operations equal to the average mortgage loans held for sale times the average rate on FHLB short-term borrowings.

Material assets and liabilities of mortgage banking operations are classified as Discontinued Operations in the consolidated balance sheet as of

June 30, 2019,

and prior year balances have been adjusted to conform with the current period presentation.

The following table summarizes the major categories of assets and liabilities classified as held for sale related to discontinued operations in the consolidated balance sheet as of:

	June 30, 2019		December 31, 2018
Loans held for sale - discontinued operations	$	2,980,149	$	26,884,014
Premises and equipment, net - discontinued operations		26,542		56,683
Accrued interest receivable - discontinued operations		11,665		11,527
Prepaid and other assets - discontinued operations		54,207		241,415
Total assets	$	3,072,563	$	27,193,639
Escrows - discontinued operations		44,011		149,776
Accrued interest and other liabilities - discontinued operations		939,732		717,407
Total liabilities	$	983,743	$	867,183
Net assets	$	2,088,820	$	26,326,456