Loans and the Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 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:

	September 30, 2015			December 31, 2014
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	97,963		$	91,318
Commercial		277,984			287,531
Construction		18,186			9,082
Second mortgages		14,951			13,403
Equity lines of credit		47,861			43,662
Total mortgage loans on real estate		456,945			444,996
Commercial loans		42,022			37,698
Consumer loans		51,966			30,493
Other		19,524			22,807
Total loans		570,457			535,994
Less: Allowance for loan losses		(7,419	)		(7,075	)
Loans, net of allowance and deferred fees (1)	$	563,038		$	528,919

(1) Deferred loan fees totaled $418 thousand and $473 thousand at September 30, 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 September 30, 2015
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	96,280	$	0	$	1,683	$	97,963
Commercial		260,791		10,418		6,775		277,984
Construction		16,952		0		1,234		18,186
Second mortgages		14,668		0		283		14,951
Equity lines of credit		47,631		0		230		47,861
Total mortgage loans on real estate		436,322		10,418		10,205		456,945
Commercial loans		38,447		2,142		1,433		42,022
Consumer loans		51,881		0		85		51,966
Other		19,524		0		0		19,524
Total	$	546,174	$	12,560	$	11,723	$	570,457

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 September 30, 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 September 30, 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	$	385	$	252	$	441	$	1,078	$	96,885	$	97,963	$	0
Commercial		8		0		253		261		277,723		277,984		25
Construction		0		0		67		67		18,119		18,186		0
Second mortgages		45		0		130		175		14,776		14,951		0
Equity lines of credit		27		0		39		66		47,795		47,861		0
Total mortgage loans on real estate		465		252		930		1,647		455,298		456,945		25
Commercial loans		130		165		0		295		41,727		42,022		0
Consumer loans		1,212		1,176		3,043		5,431		46,535		51,966		3,043
Other		67		7		1		75		19,449		19,524		1
Total	$	1,874	$	1,600	$	3,974	$	7,448	$	563,009	$	570,457	$	3,069

(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 $5.4 million at September 30, 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.

Although the portion of the student loan portfolio that is 90 days or more past due would normally be considered impaired, the Company does not include these loans in its impairment analysis due to the government guarantee (which includes both principal and interest) and the small size of the individual loans.

Nonaccrual Loans

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

Nonaccrual Loans by Class
	September 30, 2015		December 31, 2014
	(in thousands)
Mortgage loans on real estate
Residential 1-4 family	$	534	$	924
Commercial		422		4,086
Construction		477		499
Second mortgages		191		61
Equity lines of credit		39		0
Total mortgage loans on real estate		1,663		5,570
Commercial loans		121		0
Total	$	1,784	$	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:

	Nine Months Ended September 30,
	2015			2014
	(in thousands)
Interest income that would have been recorded under original loan terms		$	90	$	385
Actual interest income recorded for the period			65		195
Reduction in interest income on nonaccrual loans		$	25	$	190

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 third quarter of 2014.

Troubled Debt Restructurings by Class For the Three Months Ended September 30, 2015
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on September 30, 2015
Mortgage loans on real estate:
Commercial		1		$	194		$	194		$	193
Construction		1			435			435			410
Second mortgages		1			61			61			61
Total		3		$	690		$	690		$	664

Troubled Debt Restructurings by Class For the Nine Months Ended September 30, 2015
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on September 30, 2015
Mortgage loans on real estate:
Residential 1-4 family		1		$	194		$	194		$	193
Construction		1			435			435			410
Second mortgages		1			61			61			61
Total		3		$	690		$	690		$	664

Troubled Debt Restructurings by Class For the Nine Months Ended September 30, 2014
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on September 30, 2014
Mortgage loans on real estate:
Residential 1-4 family		1		$	276		$	276		$	270
Construction		1			103			103			102
Second mortgages		1			89			89			87
Total		3		$	468		$	468		$	459

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 nine months of 2015 and the second and third quarters of 2014, there were no defaulting TDRs where the default occurred within twelve months of restructuring.

Restructurings that Subsequently Defaulted
For the Nine Months Ended September 30, 2014
(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	389

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 September 30, 2015											For the nine months ended September 30, 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	$	2,088		$	1,461		$	494		$	147		$	2,059		$	79
Commercial		9,944			7,894			1,219			84			9,424			360
Construction		577			477			100			57			587			15
Second mortgages		540			320			192			2			583			22
Total mortgage loans on real estate	$	13,149		$	10,152		$	2,005		$	290		$	12,653		$	476
Commercial loans		121			0			121			61			1,125			5
Consumer loans		12			12			0			0			13			1
Total	$	13,282		$	10,164		$	2,126		$	351		$	13,791		$	482

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 Nine Months Ended September 30, 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		(35	)		0		(137	)		(70	)		(133	)		(375	)
Recoveries		42			1		355			30			41			469
Provision for loan losses		170			149		(289	)		128			92			250
Ending balance	$	772		$	853	$	5,276		$	307		$	211		$	7,419
Ending balance individually evaluated for impairment	$	61		$	57	$	233		$	0		$	0		$	351
Ending balance collectively evaluated for impairment		711			796		5,043			307			211			7,068
Ending balance	$	772		$	853	$	5,276		$	307		$	211		$	7,419
Loan Balances:
Ending balance individually evaluated for impairment	$	121		$	577	$	11,580		$	12		$	0		$	12,290
Ending balance collectively evaluated for impairment		41,901			17,609		427,179			51,954			19,524			558,167
Ending balance	$	42,022		$	18,186	$	438,759		$	51,966		$	19,524		$	570,457

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