Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2016

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, 2016			December 31, 2015
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	96,473		$	96,997
Commercial		276,394			277,758
Construction		22,631			19,685
Second mortgages		15,944			15,148
Equity lines of credit		46,526			47,256
Total mortgage loans on real estate		457,968			456,844
Commercial loans		45,700			43,197
Consumer loans		48,454			50,427
Other		21,353			18,007
Total loans, net of deferred fees (1)		573,475			568,475
Less: Allowance for loan losses		(7,802	)		(7,738	)
Loans, net of allowance and deferred fees (1)	$	565,673		$	560,737

(1) Deferred loan fees totaled $414 thousand and $407 thousand at March 31, 2016 and December 31, 2015, 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, 2016
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	94,015	$	0	$	2,458	$	96,473
Commercial		258,317		9,457		8,620		276,394
Construction		21,718		0		913		22,631
Second mortgages		15,607		0		337		15,944
Equity lines of credit		46,426		0		100		46,526
Total mortgage loans on real estate		436,083		9,457		12,428		457,968
Commercial loans		42,303		1,251		2,146		45,700
Consumer loans		48,371		0		83		48,454
Other		21,353		0		0		21,353
Total	$	548,110	$	10,708	$	14,657	$	573,475

Credit Quality Information As of December 31, 2015
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	94,576	$	0	$	2,421	$	96,997
Commercial		261,749		7,394		8,615		277,758
Construction		18,931		0		754		19,685
Second mortgages		14,835		0		313		15,148
Equity lines of credit		47,161		0		95		47,256
Total mortgage loans on real estate		437,252		7,394		12,198		456,844
Commercial loans		40,268		467		2,462		43,197
Consumer loans		50,327		0		100		50,427
Other		18,007		0		0		18,007
Total	$	545,854	$	7,861	$	14,760	$	568,475

As of March 31, 2016 and December 31, 2015, 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, 2016
	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	$	912	$	267	$	207	$	1,386	$	95,087	$	96,473	$	0
Commercial		1,712		30		2,334		4,076		272,318		276,394		20
Construction		0		0		162		162		22,469		22,631		162
Second mortgages		57		0		156		213		15,731		15,944		0
Equity lines of credit		25		0		0		25		46,501		46,526		0
Total mortgage loans on real estate		2,706		297		2,859		5,862		452,106		457,968		182
Commercial loans		455		43		142		640		45,060		45,700		0
Consumer loans		1,359		688		2,903		4,950		43,504		48,454		2,903
Other		38		3		7		48		21,305		21,353		7
Total	$	4,558	$	1,031	$	5,911	$	11,500	$	561,975	$	573,475	$	3,092

(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 and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $4.7 million at March 31, 2016.

Age Analysis of Past Due Loans as of December 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	$	309	$	1,042	$	275	$	1,626	$	95,371	$	96,997	$	0
Commercial		1,266		31		23		1,320		276,438		277,758		23
Construction		161		0		0		161		19,524		19,685		0
Second mortgages		21		39		165		225		14,923		15,148		0
Equity lines of credit		170		0		0		170		47,086		47,256		0
Total mortgage loans on real estate		1,927		1,112		463		3,502		453,342		456,844		23
Commercial loans		500		88		232		820		42,377		43,197		164
Consumer loans		1,673		1,350		3,163		6,186		44,241		50,427		3,163
Other		64		3		6		73		17,934		18,007		6
Total	$	4,164	$	2,553	$	3,864	$	10,581	$	557,894	$	568,475	$	3,356

(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
	March 31, 2016		December 31, 2015
	(in thousands)
Mortgage loans on real estate
Residential 1-4 family	$	1,343	$	1,457
Commercial		4,701		2,623
Second mortgages		156		226
Total mortgage loans on real estate		6,200		4,306
Commercial loans		257		276
Total	$	6,457	$	4,582

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,
	2016			2015
	(in thousands)
Interest income that would have been recorded under original loan terms		$	85	$	73
Actual interest income recorded for the period			38		63
Reduction in interest income on nonaccrual loans		$	47	$	10

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 first quarter of 2015.

Troubled Debt Restructurings by Class For the Three Months Ended March 31, 2016
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on March 31, 2016
Commercial loans		1		$	152		$	152		$	115

Defaulting Troubled Debt Restructurings

The following table presents TDRs during the period indicated, by class of loan. There were no troubled debts restructured in the first quarter of 2015.

Troubled Debt Restructurings by Class For the Three Months Ended March 31, 2016
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on March 31, 2016
Commercial loans		1		$	152		$	152		$	115

In the first quarters of 2016 and 2015, there were no defaulting TDRs 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.

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, 2016											For the three months ended March 31, 2016
			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	$	2,812		$	1,853		$	816		$	96		$	2,702		$	32
Commercial		10,155			6,139			3,187			588			9,307			66
Construction		98			0			98			35			98			1
Second mortgages		531			486			0			0			524			10
Total mortgage loans on real estate	$	13,596		$	8,478		$	4,101		$	719		$	12,631		$	109
Commercial loans		435			257			0			0			266			2
Consumer loans		11			11			0			0			12			0
Total	$	14,042		$	8,746		$	4,101		$	719		$	12,909		$	111

Impaired Loans by Class (in thousands)
	As of December 31, 2015											For the Year Ended December 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	$	2,994		$	1,530		$	1,261		$	146		$	2,267		$	132
Commercial		10,203			6,166			3,208			608			9,305			473
Construction		99			0			99			36			465			5
Second mortgages		535			499			0			0			571			21
Total mortgage loans on real estate	$	13,831		$	8,195		$	4,568		$	790		$	12,608		$	631
Commercial loans		330			207			68			8			952			28
Consumer loans		12			12			0			0			13			1
Total	$	14,173		$	8,414		$	4,636		$	798		$	13,573		$	660

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, 2016	Commercial		Real Estate - Construction		Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	633	$	985	$	5,628		$	279		$	213		$	7,738
Charge-offs		0		0		(16	)		(73	)		(34	)		(123	)
Recoveries		7		3		7			8			12			37
Provision for loan losses		11		145		(89	)		57			26			150
Ending balance	$	651	$	1,133	$	5,530		$	271		$	217		$	7,802
Ending balance individually evaluated for impairment	$	0	$	35	$	684		$	0		$	0		$	719
Ending balance collectively evaluated for impairment		651		1,098		4,846			271			217			7,083
Ending balance	$	651	$	1,133	$	5,530		$	271		$	217		$	7,802
Loan Balances:
Ending balance individually evaluated for impairment	$	257	$	98	$	12,481		$	11		$	0		$	12,847
Ending balance collectively evaluated for impairment		45,443		22,533		422,856			48,443			21,353			560,628
Ending balance	$	45,700	$	22,631	$	435,337		$	48,454		$	21,353		$	573,475

For the Year Ended December 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		(293	)		0		(321	)		(92	)		(191	)		(897	)
Recoveries		50			1		393			39			52			535
Provision for loan losses		281			281		209			113			141			1,025
Ending balance	$	633		$	985	$	5,628		$	279		$	213		$	7,738
Ending balance individually evaluated for impairment	$	8		$	36	$	754		$	0		$	0		$	798
Ending balance collectively evaluated for impairment		625			949		4,874			279			213			6,940
Ending balance	$	633		$	985	$	5,628		$	279		$	213		$	7,738
Loan Balances:
Ending balance individually evaluated for impairment	$	275		$	99	$	12,664		$	12		$	0		$	13,050
Ending balance collectively evaluated for impairment		42,922			19,586		424,495			50,415			18,007			555,425
Ending balance	$	43,197		$	19,685	$	437,159		$	50,427		$	18,007		$	568,475