LOANS (Tables)

3 Months Ended

Mar. 31, 2016

The composition of loans is as follows (dollars in thousands):


	March 31,		December 31,		March 31,
	2016		2015		2015

Commercial real estate	$	317,081	$	312,805	$	310,924
Commercial, financial, and agricultural		124,005		122,140		99,496
One to four family residential real estate		135,641		140,502		142,283
Construction :
Consumer		11,959		11,770		9,733
Commercial		14,489		15,330		18,019
Consumer		15,450		15,847		17,276

Total loans	$	618,625	$	618,394	$	597,731

Schedule of acquired portfolio at acquisition date

The table below details the outstanding balances of the acquired portfolio and the remaining balance of the acquisition fair value adjustments at acquisition date (dollars in thousands):


	Acquired		Acquired		Acquired
	Impaired		Non-impaired		Total
Loans acquired - contractual payments	$	13,290	$	53,849	$	67,139
Nonaccretable difference		(2,234)		—		(2,234)
Expected cash flows		11,056		53,849		64,905
Accretable yield		(744)		(2,100)		(2,844)
Carrying balance at acquisition date	$	10,312	$	51,749	$	62,061

Schedule of the accretable yield by acquisition

The table below presents a rollforward of the accretable yield on acquired loans for the three months ended March 31, 2016 (dollars in thousands):


	Acquired		Acquired		Acquired
	Impaired		Non-impaired		Total

Balance, December 31, 2015	$	426	$	1,342	$	1,768
Accretion		—		(175)		(175)
Reclassification from nonaccretable difference		(17)		—		(17)
Balance, March 31, 2016	$	409	$	1,167	$	1,576

The table below presents a rollforward of the accretable yield on acquired loans for the three months ended March 31, 2015 (dollars in thousands):


	Acquired		Acquired		Acquired
	Impaired		Non-impaired		Total

Balance, December 31, 2014	$	744	$	2,042	$	2,786
Accretion		(429)		(175)		(604)
Reclassification from nonaccretable difference		304		—		304
Balance, March 31, 2015	$	619	$	1,867	$	2,486

Schedule of the allowance for loan losses

An analysis of the allowance for loan losses for three months ended March 31, 2016, the year ended December 31, 2015 and the three months ended March 31, 2015 is as follows (dollars in thousands):


	March 31,		December 31,		March 31,
	2016		2015		2015

Balance, January 1	$	5,004	$	5,140	$	5,140
Recoveries on loans previously charged off		56		690		93
Loans charged off		(236)		(2,030)		(11)
Provision		—		1,204		305

Balance, March 31	$	4,824	$	5,004	$	5,527

Schedule of breakdown of the allowance for loan losses and recorded balances in loans

A breakdown of the allowance for loan losses and recorded balances in loans at March 31, 2016 is as follows (dollars in thousands):


			Commercial,				One to four
	Commercial		financial and		Commercial		family residential		Consumer
	real estate		agricultural		construction		real estate		construction		Consumer		Unallocated		Total
Allowance for loan loss reserve:
Beginning balance ALLR	$	1,611	$	645	$	79	$	274	$	7	$	64	$	2,324	$	5,004
Charge-offs		—		(185)		—		(39)		—		(12)		—		(236)
Recoveries		7		31		7		1		—		10		—		56
Provision		(3)		89		(12)		21		—		(22)		(73)		—
Ending balance ALLR	$	1,615	$	580	$	74	$	257	$	7	$	40	$	2,251	$	4,824

Loans:
Ending balance	$	317,081	$	124,005	$	14,489	$	135,641	$	11,959	$	15,450	$	—	$	618,625
Ending balance ALLR		(1,615)		(580)		(74)		(257)		(7)		(40)		(2,251)		(4,824)
Net loans	$	315,466	$	123,425	$	14,415	$	135,384	$	11,952	$	15,410	$	(2,251)	$	613,801

Ending balance ALLR:
Individually evaluated	$	533	$	185	$	—	$	45	$	—	$	31	$	—	$	794
Collectively evaluated		1,082		395		74		212		7		9		2,251		4,030
Acquired with deteriorated credit quality		—		—		—		—		—		—		—		—
Total	$	1,615	$	580	$	74	$	257	$	7	$	40	$	2,251	$	4,824

Ending balance Loans:
Individually evaluated	$	2,001	$	392	$	—	$	750	$	—	$	36	$	—	$	3,179
Collectively evaluated		310,709		123,436		14,489		132,242		11,957		15,413		—		608,246
Acquired with deteriorated credit quality		4,371		177		—		2,649		2		1		—		7,200
Total	$	317,081	$	124,005	$	14,489	$	135,641	$	11,959	$	15,450	$	—	$	618,625

Impaired loans, by definition, are individually evaluated.

A breakdown of the allowance for loan losses and recorded balances in loans as of and for the twelve months ended December 31, 2015 is as follows (dollars in thousands):


			Commercial,				One to four
	Commercial		financial and		Commercial		family residential		Consumer
	real estate		agricultural		construction		real estate		construction		Consumer		Unallocated		Total
Allowance for loan loss reserve:
Beginning balance ALLR	$	2,813	$	1,539	$	142	$	285	$	6	$	13	$	342	$	5,140
Charge-offs		(52)		(1,749)		—		(142)		—		(87)		—		(2,030)
Recoveries		588		22		52		2		—		26		—		690
Provision		(1,738)		833		(115)		129		1		112		1,982		1,204
Ending balance ALLR	$	1,611	$	645	$	79	$	274	$	7	$	64	$	2,324	$	5,004

Loans:
Ending balance	$	312,805	$	122,140	$	15,330	$	140,502	$	11,770	$	15,847	$	—	$	618,394
Ending balance ALLR		(1,611)		(645)		(79)		(274)		(7)		(64)		(2,324)		(5,004)
Net loans	$	311,194	$	121,495	$	15,251	$	140,228	$	11,763	$	15,783	$	(2,324)	$	613,390

Ending balance ALLR:
Individually evaluated	$	420	$	192	$	—	$	60	$	—	$	55	$	—	$	727
Collectively evaluated		1,191		453		79		214		7		9		2,324		4,277
Acquired with deteriorated credit quality		—		—		—		—		—		—		—		—
Total	$	1,611	$	645	$	79	$	274	$	7	$	64	$	2,324	$	5,004

Ending balance Loans:
Individually evaluated	$	1,086	$	617	$	—	$	325	$	83	$	—	$	—	$	2,111
Collectively evaluated		307,336		121,345		15,330		136,940		11,686		15,845		—		608,482
Acquired with deteriorated credit quality		4,383		178		—		3,237		1		2		—		7,801
Total	$	312,805	$	122,140	$	15,330	$	140,502	$	11,770	$	15,847	$	—	$	618,394

Impaired loans, by definition, are individually evaluated.

A breakdown of the allowance for loan losses and recorded balances in loans at March 31, 2015 is as follows (dollars in thousands):


			Commercial,				One to four
	Commercial		financial and		Commercial		family residential		Consumer
	real estate		agricultural		construction		real estate		construction		Consumer		Unallocated		Total
Allowance for loan loss reserve:
Beginning balance ALLR	$	2,813	$	1,539	$	142	$	285	$	6	$	13	$	342	$	5,140
Charge-offs		—		—		—		—		—		(11)		—		(11)
Recoveries		81		—		—		—		1		11		—		93
Provision		(124)		814		2		(41)		(1)		6		(351)		305
Ending balance ALLR	$	2,770	$	2,353	$	144	$	244	$	6	$	19	$	(9)	$	5,527

Loans:
Ending balance	$	310,924	$	99,496	$	18,019	$	142,283	$	9,733	$	17,276	$	—	$	597,731
Ending balance ALLR		(2,770)		(2,353)		(144)		(244)		(6)		(19)		9		(5,527)
Net loans	$	308,154	$	97,143	$	17,875	$	142,039	$	9,727	$	17,257	$	9	$	592,204

Ending balance ALLR:
Individually evaluated	$	792	$	1,380	$	—	$	21	$	—	$	10	$	—	$	2,203
Collectively evaluated		1,978		973		144		223		6		9		(9)		3,324
Total	$	2,770	$	2,353	$	144	$	244	$	6	$	19	$	(9)	$	5,527

Ending balance Loans:
Individually evaluated	$	2,334	$	6,793	$	—	$	271	$	—	$	37	$	—	$	9,435
Collectively evaluated		303,256		92,342		17,613		137,883		9,733		17,234		—		578,061
Acquired with deteriorated credit quality		5,334		361		406		4,129		—		5		—		10,235
Total	$	310,924	$	99,496	$	18,019	$	142,283	$	9,733	$	17,276	$	—	$	597,731

Impaired loans, by definition, are individually evaluated.

Schedule of breakdown of loans by risk category

Below is a breakdown of loans by risk category as of March 31, 2016 (dollars in thousands):


							(4)
	(1)		(2)		(3)		Acceptable/		(5)		(6)		(7)		Rating
	Strong		Good		Average		Acceptable Watch		Sp. Mention		Substandard		Doubtful		Unassigned		Total

Commercial real estate	$	2,070	$	24,072	$	108,638	$	176,186	$	—	$	6,115	$	—	$	—	$	317,081
Commercial, financial and agricultural		7,842		6,468		47,606		60,312		—		1,777		—		—		124,005
Commercial construction		—		383		3,638		7,844		—		393		—		2,231		14,489
One-to-four family residential real estate		588		1,215		3,115		3,996		—		3,512		—		123,215		135,641
Consumer construction		29		—		—		—		—		24		—		11,906		11,959
Consumer		22		—		18		—		—		65		—		15,345		15,450

Total loans	$	10,551	$	32,138	$	163,015	$	248,338	$	—	$	11,886	$	—	$	152,697	$	618,625

Below is a breakdown of loans by risk category as of December 31, 2015 (dollars in thousands):


							(4)
	(1)		(2)		(3)		Acceptable/		(5)		(6)		(7)		Rating
	Strong		Good		Average		Acceptable Watch		Sp. Mention		Substandard		Doubtful		Unassigned		Total

Commercial real estate	$	2,072	$	26,197	$	113,868	$	164,954	$	—	$	5,714	$	—	$	—	$	312,805
Commercial, financial and agricultural		13,067		5,954		47,194		53,791		—		2,134		—		—		122,140
Commercial construction		—		400		3,869		8,257		—		395		—		2,409		15,330
One-to-four family residential real estate		591		1,222		3,172		4,078		—		4,093		—		127,346		140,502
Consumer construction		—		—		—		—		—		—		—		11,770		11,770
Consumer		24		—		19		—		—		61		—		15,743		15,847

Total loans	$	15,754	$	33,773	$	168,122	$	231,080	$	—	$	12,397	$	—	$	157,268	$	618,394

Below is a breakdown of loans by risk category as of March 31, 2015 (dollars in thousands):


							(4)
	(1)		(2)		(3)		Acceptable/		(5)		(6)		(7)		Rating
	Excellent		Good		Average		Acceptable Watch		Sp. Mention		Substandard		Doubtful		Unassigned		Total

Commercial real estate	$	2,610	$	27,471	$	128,172	$	144,634	$	—	$	8,037	$	—	$	—	$	310,924
Commercial, financial and agricultural		4,711		4,047		34,255		53,492		—		2,991		—		—		99,496
Commercial construction		110		425		2,618		11,212		—		893		—		2,761		18,019
One to four family residential real estate		415		1,049		3,983		4,078		—		5,449		—		127,309		142,283
Consumer construction		—		—		—		—		—		—		—		9,733		9,733
Consumer		45		23		—		6		—		5		—		17,197		17,276

Total loans	$	7,891	$	33,015	$	169,028	$	213,422	$	—	$	17,375	$	—	$	157,000	$	597,731

Summary of impaired loans and their effect on interest income

The following is a summary of impaired loans and their effect on interest income (dollars in thousands):


									Three Months Ended
					YTD				Interest Income		Interest Income
	Nonaccrual		Accrual		Average		Related		Recognized		on
	Basis		Basis		Investment		Valuation Reserve		During Impairment		Accrual Basis
March 31, 2016

With no valuation reserve:
Commercial real estate	$	406	$	4,042	$	4,388	$	—	$	224	$	231
Commercial, financial and agricultural		—		123		380		—		6		10
Commercial construction		—		—		—		—		—		—
One to four family residential real estate		743		2,352		3,315		—		127		141
Consumer construction		19		2		20		—		—		—
Consumer		50		1		50		—		—		1

With a valuation reserve:
Commercial real estate	$	144	$	—	$	146	$	113	$	—	$	—
Commercial, financial and agricultural		21		—		10		21		—		—
Commercial construction		—		—		—		—		—		—
One to four family residential real estate		276		—		197		30		—		—
Consumer construction		—		—		—		—		—		—
Consumer		14		—		13		9		—		—

Total:
Commercial real estate	$	550	$	4,042	$	4,534	$	113	$	224	$	231
Commercial, financial and agricultural		21		123		390		21		6		10
Commercial construction		—		—		—		—		—		—
One to four family residential real estate		1,019		2,352		3,512		30		127		141
Consumer construction		19		2		20		—		—		—
Consumer		64		1		63		9		—		1
Total	$	1,673	$	6,520	$	8,519	$	173	$	357	$	383


									Interest Income		Interest Income
	Nonaccrual		Accrual		Average		Related		Recognized		on
	Basis		Basis		Investment		Valuation Reserve		During Impairment		Accrual Basis
December 31, 2015

With no valuation reserve:
Commercial real estate	$	471	$	4,051	$	7,205	$	—	$	576	$	655
Commercial, financial and agricultural		—		1,778		4,849		—		78		214
Commercial construction		—		—		260		—		3		6
One to four family residential real estate		1,267		2,385		5,413		—		137		205
Consumer construction		20		2		99		—		—		1
Consumer		50		1		102		1		1		2

With a valuation reserve:
Commercial real estate	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, financial and agricultural		460		—		699		192		—		36
Commercial construction		—		—		—		—		—		—
One to four family residential real estate		229		—		232		58		—		6
Consumer construction		—		—		—		—		—		—
Consumer		10		0		10		1		0		0

Total:
Commercial real estate	$	471	$	4,051	$	7,205	$	—	$	576	$	655
Commercial, financial and agricultural		460		1,778		5,548		192		78		250
Commercial construction		—		—		260		—		3		6
One to four family residential real estate		1,496		2,385		5,645		58		137		211
Consumer construction		20		2		99		—		—		1
Consumer		60		1		112		1		1		2
Total	$	2,507	$	8,217	$	18,869	$	251	$	795	$	1,125


									Three Months Ended
					QTD				Interest Income		Interest Income
	Nonaccrual		Accrual		Average		Related		Recognized		on
	Basis		Basis		Investment		Valuation Reserve		During Impairment		Accrual Basis
March 31, 2015

With no valuation reserve:
Commercial real estate	$	2,248	$	3,537	$	4,888	$	—	$	—	$	16
Commercial, financial and agricultural		72		128		200		—		—		1
Commercial construction		266		110		367		—		—		4
One to four family residential real estate		1,950		2,727		4,635		—		—		25
Consumer construction		23		—		24		—		—		—
Consumer		29		5		—		—		—		—

With a valuation reserve:
Commercial real estate	$	170	$	—	$	379	$	570	$	—	$	5
Commercial, financial and agricultural		6,926		—		2,327		1,517		—		19
Commercial construction		—		—		—		—		—		—
One to four family residential real estate		117		—		15		11		—		2
Consumer construction		—		—		—		—		—		—
Consumer		—		—		—		9		—		—

Total:
Commercial real estate	$	2,418	$	3,537	$	5,267	$	570	$	—	$	21
Commercial, financial and agricultural		6,998		128		2,527		1,517		—		20
Commercial construction		266		110		367		—		—		4
One to four family residential real estate		2,067		2,727		4,650		11		—		27
Consumer construction		23		—		24		—		—		—
Consumer		29		5		—		9		—		—
Total	$	11,801	$	6,507	$	12,835	$	—	$	—	$	72

Summary of past due loans

A summary of past due loans at March 31, 2016, December 31, 2015 and March 31, 2015 is as follows (dollars in thousands):


	March 31,						December 31,						March 31,
	2016						2015						2015
	30-89 days		90+ days				30-89 days		90+ days				30-89 days		90+ days
	Past Due		Past Due/				Past Due		Past Due/				Past Due		Past Due/
	(accruing)		Nonaccrual		Total		(accruing)		Nonaccrual		Total		(accruing)		Nonaccrual		Total

Commercial real estate	$	1,189	$	550	$	1,739	$	521	$	471	$	992	$	746	$	2,418	$	3,164
Commercial, financial and agricultural		550		21		571		222		460		682		25		6,998		7,023
Commercial construction		24		—		24		270		—		270		—		266		266
One to four family residential real estate		374		1,063		1,437		807		1,528		2,335		1,075		2,116		3,191
Consumer construction		—		19		19		—		20		20		273		23		296
Consumer		985		64		1,049		130		60		190		29		29		58

Total past due loans	$	3,122	$	1,717	$	4,839	$	1,950	$	2,539	$	4,489	$	2,148	$	11,850	$	13,998

Schedule of activity in insider loans granted to the entity's executive officers and directors, including their families and firms

The Bank, in the ordinary course of business, grants loans to the Corporation’s executive officers and directors, including their families and firms in which they are principal owners. Activity in such loans is summarized below (dollars in thousands):


	Three Months Ended		Year ended		Three Months Ended
	March 31,		December 31,		March 31,
	2016		2015		2015
Loans outstanding, January 1	$	6,887	$	8,789	$	8,789
New loans		—		—		—
Net activity on revolving lines of credit		510		778		117
Repayment		(2,034)		(2,680)		(2,412)

Loans outstanding, March 31,	$	5,363	$	6,887	$	6,494