Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2017

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, 2017			December 31, 2016
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	95,392		$	94,827
Commercial		287,463			285,429
Construction		23,169			23,116
Second mortgages		17,496			17,128
Equity lines of credit		51,267			51,024
Total mortgage loans on real estate		474,787			471,524
Commercial loans		56,964			54,434
Consumer loans		87,111			58,907
Other		15,448			19,017
Total loans, net of deferred fees (1)		634,310			603,882
Less: Allowance for loan losses		(8,523	)		(8,245	)
Loans, net of allowance and deferred fees (1)	$	625,787		$	595,637

(1) Net deferred loan fees totaled $649 thousand and $522 thousand at March 31, 2017 and December 31, 2016, respectively.

Overdrawn deposit accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts totaled $585 thousand and $536 thousand at March 31, 2017 and December 31, 2016, 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, 2017
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	92,812	$	1,125	$	1,455	$	95,392
Commercial		262,707		9,633		15,123		287,463
Construction		22,280		157		732		23,169
Second mortgages		16,815		467		214		17,496
Equity lines of credit		50,745		386		136		51,267
Total mortgage loans on real estate		445,359		11,768		17,660		474,787
Commercial loans		52,775		2,154		2,035		56,964
Consumer loans		86,974		0		137		87,111
Other		15,448		0		0		15,448
Total	$	600,556	$	13,922	$	19,832	$	634,310

Credit Quality Information As of December 31, 2016
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	92,458	$	1,138	$	1,231	$	94,827
Commercial		260,948		10,014		14,467		285,429
Construction		22,219		162		735		23,116
Second mortgages		16,445		475		208		17,128
Equity lines of credit		50,387		500		137		51,024
Total mortgage loans on real estate		442,457		12,289		16,778		471,524
Commercial loans		49,979		2,278		2,177		54,434
Consumer loans		58,741		0		166		58,907
Other		19,017		0		0		19,017
Total	$	570,194	$	14,567	$	19,121	$	603,882

As of March 31, 2017 and December 31, 2016, 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, 2017
	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	$	618	$	123	$	391	$	1,132	$	94,260	$	95,392	$	0
Commercial		725		3,838		305		4,868		282,595		287,463		184
Construction		0		0		51		51		23,118		23,169		51
Second mortgages		83		0		53		136		17,360		17,496		0
Equity lines of credit		346		109		86		541		50,726		51,267		0
Total mortgage loans on real estate		1,772		4,070		886		6,728		468,059		474,787		235
Commercial loans		362		9		0		371		56,593		56,964		0
Consumer loans		1,382		509		2,789		4,680		82,431		87,111		2,708
Other		53		6		14		73		15,375		15,448		14
Total	$	3,569	$	4,594	$	3,689	$	11,852	$	622,458	$	634,310	$	2,957

⁽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 $4.3 million at March 31, 2017.

Age Analysis of Past Due Loans as of December 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	$	564	$	0	$	496	$	1,060	$	93,767	$	94,827	$	218
Commercial		2,280		1,625		227		4,132		281,297		285,429		0
Construction		162		0		0		162		22,954		23,116		0
Second mortgages		0		200		188		388		16,740		17,128		58
Equity lines of credit		394		9		86		489		50,535		51,024		0
Total mortgage loans on real estate		3,400		1,834		997		6,231		465,293		471,524		276
Commercial loans		5		0		86		91		54,343		54,434		0
Consumer loans		1,876		713		2,684		5,273		53,634		58,907		2,603
Other		41		12		5		58		18,959		19,017		5
Total	$	5,322	$	2,559	$	3,772	$	11,653	$	592,229	$	603,882	$	2,884

⁽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. Because the federal government has provided guarantees of repayment of these student loans in an amount ranging from 97% to 98% of the total principal and interest of the loans, management does not expect significant increases in past due student loans to have a material effect on the Company.

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, 2017		December 31, 2016
	(in thousands)
Mortgage loans on real estate
Residential 1-4 family	$	707	$	598
Commercial		10,000		6,033
Second mortgages		53		129
Equity lines of credit		86		87
Total mortgage loans on real estate		10,846		6,847
Commercial loans		105		231
Consumer loans		81		81
Total	$	11,032	$	7,159

Interest Income 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,
	2017			2016
	(in thousands)
Interest income that would have been recorded under original loan terms		$	117	$	85
Actual interest income recorded for the period			87		38
Reduction in interest income on nonaccrual loans		$	30	$	47

Troubled Debt Restructurings by Class

The following table presents TDRs during the period indicated, by class of loan.

Troubled Debt Restructurings by Class
For the Three Months Ended March 31, 2017
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on March 31, 2017
Mortgage loans on real estate:
Residential 1-4 family		1	$	142	$	142	$	142

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 2017 and 2016, 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
	As of March 31, 2017												For the three months ended March 31, 2017
				Recorded Investment
	Unpaid Principal Balance			Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family		$	2,451		$	1,937		$	459		$	59		$	2,407		$	27
Commercial			16,892			11,728			4,288			674			16,232			201
Construction			619			527			95			20			620			13
Second mortgages			541			255			257			16			539			6
Equity lines of credit			87			86			0			0			87			0
Total mortgage loans on real estate		$	20,590		$	14,533		$	5,099		$	769		$	19,885		$	247
Commercial loans			1,987			507			1,392			359			1,928			31
Consumer loans			81			81			0			0			81			0
Total		$	22,658		$	15,121		$	6,491		$	1,128		$	21,894		$	278

Impaired Loans by Class
	As of December 31, 2016											For the Year Ended December 31, 2016
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	2,496		$	1,835		$	622		$	75		$	2,741		$	119
Commercial		16,193			11,095			4,274			415			11,885			727
Construction		619			528			96			22			496			43
Second mortgages		526			309			141			17			511			25
Equity lines of credit		87			86			0			0			46			3
Total mortgage loans on real estate	$	19,921		$	13,853		$	5,133		$	529		$	15,679		$	917
Commercial loans		1,077			0			989			271			827			74
Consumer loans		81			81			0			0			68			1
Total	$	21,079		$	13,934		$	6,122		$	800		$	16,574		$	992

Allowance for Loan Losses by Segment

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
(in thousands)
For the Three Months Ended March 31, 2017	Commercial			Real Estate - Construction			Real Estate - Mortgage ⁽¹⁾			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	1,493		$	846		$	5,267		$	455		$	184		$	8,245
Charge-offs		(138	)		0			(204	)		(33	)		(31	)		(406	)
Recoveries		8			0			4			4			18			34
Provision for loan losses		105			(259	)		463			342			(1	)		650
Ending balance	$	1,468		$	587		$	5,530		$	768		$	170		$	8,523
Ending balance individually evaluated for impairment	$	359		$	20		$	749		$	0		$	0		$	1,128
Ending balance collectively evaluated for impairment		1,109			567			4,781			768			170			7,395
Ending balance	$	1,468		$	587		$	5,530		$	768		$	170		$	8,523
Loan Balances:
Ending balance individually evaluated for impairment	$	1,899		$	622		$	19,010		$	81		$	0		$	21,612
Ending balance collectively evaluated for impairment		55,065			22,547			432,608			87,030			15,448			612,698
Ending balance	$	56,964		$	23,169		$	451,618		$	87,111		$	15,448		$	634,310

For the Year Ended December 31, 2016	Commercial			Real Estate - Construction			Real Estate - Mortgage ⁽¹⁾			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	633		$	985		$	5,628		$	279		$	213		$	7,738
Charge-offs		(915	)		0			(504	)		(204	)		(147	)		(1,770	)
Recoveries		79			3			197			28			40			347
Provision for loan losses		1,696			(142	)		(54	)		352			78			1,930
Ending balance	$	1,493		$	846		$	5,267		$	455		$	184		$	8,245
Ending balance individually evaluated for impairment	$	271		$	22		$	507		$	0		$	0		$	800
Ending balance collectively evaluated for impairment		1,222			824			4,760			455			184			7,445
Ending balance	$	1,493		$	846		$	5,267		$	455		$	184		$	8,245
Loan Balances:
Ending balance individually evaluated for impairment	$	989		$	624		$	18,362		$	81		$	0		$	20,056
Ending balance collectively evaluated for impairment		53,445			22,492			430,046			58,826			19,017			583,826
Ending balance	$	54,434		$	23,116		$	448,408		$	58,907		$	19,017		$	603,882

⁽¹⁾ The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit.

Financing Receivable, Allowance for Credit Losses, Policy or Methodology Change [Policy Text Block]

There were no changes in the Company's accounting methodology for the allowance for loan losses in the first three months of 2017.