Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2015

Loans and the Allowance for Loan Losses [Abstract]

The following is a summary of the balances in each class of the Company's loan portfolio as of the dates indicated:

	March 31, 2015			December 31, 2014
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	94,275		$	91,318
Commercial		280,445			287,531
Construction		14,023			9,082
Second mortgages		14,591			13,403
Equity lines of credit		45,426			43,662
Total mortgage loans on real estate		448,760			444,996
Commercial loans		41,600			37,698
Consumer loans		35,522			30,493
Other		29,353			22,807
Total loans		555,235			535,994
Less: Allowance for loan losses		(7,411	)		(7,075	)
Loans, net of allowance and deferred fees (1)	$	547,824		$	528,919

(1) Deferred loan fees totaled $476 thousand and $473 thousand at March 31, 2015 and December 31, 2014, respectively.

Credit Quality Information

The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of March 31, 2015
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	92,599	$	0	$	1,676	$	94,275
Commercial		265,125		10,505		4,815		280,445
Construction		12,976		0		1,047		14,023
Second mortgages		14,234		0		357		14,591
Equity lines of credit		44,615		0		811		45,426
Total mortgage loans on real estate		429,549		10,505		8,706		448,760
Commercial loans		38,340		1,669		1,591		41,600
Consumer loans		35,494		0		28		35,522
Other		29,353		0		0		29,353
Total	$	532,736	$	12,174	$	10,325	$	555,235

Credit Quality Information As of December 31, 2014
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	89,480	$	0	$	1,838	$	91,318
Commercial		272,654		10,602		4,275		287,531
Construction		8,026		0		1,056		9,082
Second mortgages		13,306		0		97		13,403
Equity lines of credit		42,976		0		686		43,662
Total mortgage loans on real estate		426,442		10,602		7,952		444,996
Commercial loans		36,007		1,669		22		37,698
Consumer loans		30,463		0		30		30,493
Other		22,807		0		0		22,807
Total	$	515,719	$	12,271	$	8,004	$	535,994

As of March 31, 2015 and December 31, 2014 the Company did not have any loans internally classified as Loss or Doubtful.

Past Due Loans

All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. Loans in nonaccrual status that are also past due are included in the aging categories in the table below.

Age Analysis of Past Due Loans as of March 31, 2015
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment >90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	595	$	100	$	219	$	914	$	93,361	$	94,275	$	0
Commercial		266		0		0		266		280,179		280,445		0
Construction		181		0		494		675		13,348		14,023		0
Second mortgages		0		0		247		247		14,344		14,591		0
Equity lines of credit		93		0		0		93		45,333		45,426		0
Total mortgage loans on real estate		1,135		100		960		2,195		446,565		448,760		0
Commercial loans		330		0		0		330		41,270		41,600		0
Consumer loans		385		451		1,386		2,222		33,300		35,522		1,386
Other		48		10		6		64		29,289		29,353		6
Total	$	1,898	$	561	$	2,352	$	4,811	$	550,424	$	555,235	$	1,392

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the consumer category includes student loans with principal amounts that are 97 - 98% guaranteed by the federal government. The past due portion of these guaranteed loans totaled $2.2 million at March 31, 2015.

Age Analysis of Past Due Loans as of December 31, 2014
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment >90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	1,043	$	55	$	792	$	1,890	$	89,428	$	91,318	$	0
Commercial		31		0		432		463		287,068		287,531		0
Construction		0		0		499		499		8,583		9,082		0
Second mortgages		81		32		168		281		13,122		13,403		107
Equity lines of credit		49		0		0		49		43,613		43,662		0
Total mortgage loans on real estate		1,204		87		1,891		3,182		441,814		444,996		107
Commercial loans		195		0		10		205		37,493		37,698		10
Consumer loans		1,099		323		1,019		2,441		28,052		30,493		1,019
Other		51		3		5		59		22,748		22,807		5
Total	$	2,549	$	413	$	2,925	$	5,887	$	530,107	$	535,994	$	1,141

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

Nonaccrual Loans

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class
	March 31, 2015		December 31, 2014
	(in thousands)
Mortgage loans on real estate
Residential 1-4 family	$	397	$	924
Commercial		3,640		4,086
Construction		494		499
Second mortgages		247		61
Total mortgage loans on real estate		4,778		5,570
Commercial loans		0		0
Total	$	4,778	$	5,570

Interest income that would have been recorded under original loan terms

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Interest income that would have been recorded under original loan terms		$	73	$	213
Actual interest income recorded for the period			63		112
Reduction in interest income on nonaccrual loans		$	10	$	101

Troubled Debt Restructurings by Class

The following table presents TDRs during the period indicated, by class of loan. There were no troubled debts restructured in the three months ended March 31, 2015.

Troubled Debt Restructurings by Class For the Three Months Ended March 31, 2014
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on March 31, 2014
Mortgage loans on real estate:
Residential 1-4 family		1		$	276		$	276		$	275
Construction		1			103			103			103
Second mortgages		1			89			89			89
Total		3		$	468		$	468		$	467

Defaulting Troubled Debt Restructurings

The following table presents TDRs for the periods indicated for which there was a payment default where the default occurred within twelve months of restructuring. The Company considers a TDR in default when any of the following occurs: the loan, as restructured, becomes 90 days or more past due; the loan is moved to nonaccrual status following the restructure; the loan is restructured again under terms that would qualify it as a TDR if it were not already so classified; or any portion of the loan is charged off. In the first quarter of 2015, there were no defaulting TDRs where the default occurred within twelve months of restructuring.

Restructurings that Subsequently Defaulted
For the Three Months Ended March 31, 2014
(in thousands)
	Recorded Investment in Defaulting Loans
Mortgage loans on real estate:
Residential 1-4 family	$94

Impaired Loans by Class

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class (in thousands)
	As of March 31, 2015											For the three months ended March 31, 2015
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	2,224		$	1,831		$	360		$	89		$	2,203		$	26
Commercial		11,269			4,291			5,291			137			9,653			121
Construction		596			66			528			265			598			1
Second mortgages		603			379			195			7			605			3
Total mortgage loans on real estate	$	14,692		$	6,567		$	6,374		$	498		$	13,059		$	151
Commercial loans		1,500			1,369			132			3			1,637			23
Consumer loans		13			13			0			0			13			0
Total	$	16,205		$	7,949		$	6,506		$	501		$	14,709		$	174

Impaired Loans by Class (in thousands)
	As of December 31, 2014											For the year ended December 31, 2014
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	2,898		$	2,083		$	646		$	91		$	4,099		$	126
Commercial		11,766			4,729			5,322			163			10,669			449
Construction		1,157			623			534			270			2,431			55
Second mortgages		506			195			282			178			470			25
Total mortgage loans on real estate	$	16,327		$	7,630		$	6,784		$	702		$	17,669		$	655
Commercial loans		0			0			0			0			37			0
Consumer loans		14			14			0			0			26			1
Total	$	16,341		$	7,644		$	6,784		$	702		$	17,732		$	656

Allowance for loan losses by segment

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
(in thousands)
For the three months ended March 31, 2015	Commercial		Real Estate - Construction		Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	595	$	703	$	5,347		$	219		$	211		$	7,075
Charge-offs		0		0		(14	)		(28	)		(38	)		(80	)
Recoveries		9		0		107			10			15			141
Provision for loan losses		82		193		(158	)		109			49			275
Ending balance	$	686	$	896	$	5,282		$	310		$	237		$	7,411
Ending balance individually evaluated for impairment	$	3	$	265	$	233		$	0		$	0		$	501
Ending balance collectively evaluated for impairment		683		631		5,049			310			237			6,910
Ending balance	$	686	$	896	$	5,282		$	310		$	237		$	7,411
Loan Balances:
Ending balance individually evaluated for impairment	$	1,501	$	594	$	12,347		$	13		$	0		$	14,455
Ending balance collectively evaluated for impairment		40,099		13,429		422,390			35,509			29,353			540,780
Ending balance	$	41,600	$	14,023	$	434,737		$	35,522		$	29,353		$	555,235

For the year ended December 31, 2014	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	350		$	662		$	5,357		$	294		$	168		$	6,831
Charge-offs		(286	)		(51	)		(563	)		(163	)		(175	)		(1,238	)
Recoveries		55			173			524			64			66			882
Provision for loan losses		476			(81	)		29			24			152			600
Ending balance	$	595		$	703		$	5,347		$	219		$	211		$	7,075
Ending balance individually evaluated for impairment	$	0		$	270		$	432		$	0		$	0		$	702
Ending balance collectively evaluated for impairment		595			433			4,915			219			211			6,373
Ending balance	$	595		$	703		$	5,347		$	219		$	211		$	7,075
Loan Balances:
Ending balance individually evaluated for impairment	$	0		$	1,157		$	13,257		$	14		$	0		$	14,428
Ending balance collectively evaluated for impairment		37,698			7,925			422,657			30,479			22,807			521,566
Ending balance	$	37,698		$	9,082		$	435,914		$	30,493		$	22,807		$	535,994