Note 2 - Discontinued Operations

6 Months Ended

Jun. 30, 2020

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 were consummated in the

second

half of

2019.

All related transactions were completed by

December 31, 2019.

The Company does

not

have continuing involvement with the mortgage banking operations. 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.

Liabilities for costs associated with discontinued operations were recognized and measured initially at their fair values during the quarter ended

June 30, 2019.

Those costs include, but are

not

limited to, involuntary employee termination benefits, cost to terminate contracts, and other associated costs. The liability itself consists of future cash flows expected to be incurred in the exit and disposal activity, which are discounted at a credit-adjusted risk-free interest rate.

 The following table summarizes the

one

-time charge on 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, 2020,

and

2019:

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
Net interest income	$	-	$	85,484		$	-	$	170,782
Gain on sale of loans		-		2,095,986			-		4,813,660
Other		-		190			-		190
Total noninterest income		-		2,096,176			-		4,813,850
Salaries and benefits		-		1,919,033			-		4,480,025
Occupancy		-		84,314			-		232,360
Data processing fees		-		282,503			-		584,369
Professional fees		-		51,993			-		107,972
Advertising		-		70,469			-		118,801
Net loss on disposal		-		751,982			-		751,982
Other		-		153,603			-		299,761
Total noninterest expense		-		3,313,897			-		6,575,270
Loss from discontinued operations		-		(1,132,237	)		-		(1,590,638	)
Benefit for income taxes		-		(279,727	)		-		(392,193	)
Net loss from discontinued operations	$	-	$	(852,510	)	$	-	$	(1,198,445	)

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 sheets as of

June 30, 2020,

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 related to discontinued operations in the consolidated balance sheets as of:

	June 30, 2020			December 31, 2019
Accrued interest and other liabilities - discontinued operations		169,380			233,427
Total liabilities	$	169,380		$	233,427
Net (liabilities) assets	$	(169,380	)	$	(233,427	)