Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2015

Allowance for Loan Losses by Portfolio Segment

A disaggregation of and an analysis of the change in the allowance for loan losses by segment is shown below.


	Mortgage			Commercial			Consumer
	Loans on			and			and other
(Dollars in thousands)	Real Estate			Industrial			Loans			Total
For the Twelve Months Ended December 31, 2015
Beginning Balance	$	2,778		$	323		$	104		$	3,205
(Charge-offs)		(521	)		(9	)		(128	)		(658	)
Recoveries		27			—			52			79
Provision		1,218			285			94			1,597

Ending Balance	$	3,502		$	599		$	122		$	4,223

Individually evaluated for impairment	$	1,256		$	278		$	—		$	1,534
Collectively evaluated for impairment		2,246			321			122			2,689

	Mortgage			Commercial			Consumer
	Loans on			and			and Other
(Dollars in thousands)	Real Estate			Industrial			Loans			Total
For the Twelve Months Ended December 31, 2014
Beginning Balance	$	2,465		$	256		$	204		$	2,925
(Charge-offs)		(313	)		—			(79	)		(392	)
Recoveries		36			—			25			61
Provision		590			67			(46	)		611

Ending Balance	$	2,778		$	323		$	104		$	3,205

Individually evaluated for impairment	$	665		$	—		$	11		$	676
Collectively evaluated for impairment		2,113			323			93			2,529

Loan Receivables Evaluated for Impairment Individually and Collectively by Segment

Loan receivables evaluated for impairment individually and collectively by segment as of December 31, 2015 and 2014 are as follows:


	Mortgage		Commercial		Consumer
(Dollars in thousands)	Loans		and		and Other
	on Real Estate		Industrial		Loans		Total
As of December 31, 2015
Individually evaluated for impairment	$	10,542	$	284	$	—	$	10,826
Collectively evaluated for impairment		296,561		34,820		5,015		336,396

Total Gross Loans	$	307,103	$	35,104	$	5,015	$	347,222

As of December 31, 2014
Individually evaluated for impairment	$	6,842	$	—	$	16	$	6,858
Collectively evaluated for impairment		251,861		34,002		5,333		291,196

Total Gross Loans	$	258,703	$	34,002	$	5,349	$	298,054

Internal Risk Rating Grades

Internal risk rating grades are shown in the following table.


	Construction,				Commercial		Commercial
	Land and				Mortgages		Mortgages		Commercial
(Dollars in thousands)	Land				(Non-Owner		(Owner		and
As of December 31, 2015	Development		Farmland		Occupied)		Occupied)		Industrial		Total
Grade:
Pass	$	34,692	$	1,030	$	24,258	$	33,023	$	29,383	$	122,386
Watch		5,337		—		4,564		4,968		5,202		20,071
Special mention		1,119		—		—		2,687		148		3,954
Substandard		981		—		264		3,278		371		4,894
Doubtful		—		—		—		—		—		—

Total	$	42,129	$	1,030	$	29,086	$	43,956	$	35,104	$	151,305


	Construction,				Commercial		Commercial
	Land and				Mortgages		Mortgages		Commercial
	Land				(Non-Owner		(Owner		and
As of December 31, 2014	Development		Farmland		Occupied)		Occupied)		Industrial		Total
Grade:
Pass	$	34,913	$	1,128	$	16,426	$	23,967	$	31,041	$	107,475
Watch		5,649		—		3,770		4,430		2,492		16,341
Special mention		1,403		—		—		2,789		154		4,346
Substandard		1,083		—		338		2,140		315		3,876
Doubtful		—		—		—		—		—		—

Total	$	43,048	$	1,128	$	20,534	$	33,326	$	34,002	$	132,038

Performing and Non Performing Loans

Loans are considered to be nonperforming when they are delinquent by 90 days or more or non-accruing and credit risk is primarily evaluated by delinquency status, as shown in the table below.


			Residential
(Dollars in thousands)	Residential		Revolving
As of December 31, 2015	First		and Junior		Consumer
PAYMENT ACTIVITY STATUS	Mortgages (1)		Mortgages (2)		Loans (3)		Total
Performing	$	161,564	$	26,220	$	4,996	$	192,780
Nonperforming		2,841		277		19		3,137

Total	$	164,405	$	26,497	$	5,015	$	195,917


			Residential
	Residential		Revolving
As of December 31, 2014	First		and Junior		Consumer
PAYMENT ACTIVITY STATUS	Mortgages (4)		Mortgages (5)		Loans (6)		Total
Performing	$	134,908	$	25,369	$	5,234	$	165,511
Nonperforming		359		31		115		505

Total	$	135,267	$	25,400	$	5,349	$	166,016

Notes:

(1)	Residential First Mortgages which have been assigned a risk rating grade of Substandard totaled $3.9 million as of December 31, 2015.

(2)	Residential Revolving and Junior Mortgages which have been assigned a risk rating grade of Substandard totaled $372 thousand as of December 31, 2015.

(3)	No Consumer Loans have been assigned a risk rating grade of Substandard as of December 31, 2015.

(4)	Residential First Mortgages which have been assigned a risk rating grade of Substandard totaled $2.1 million as of December 31, 2014.

(5)	Residential Revolving and Junior Mortgages which have been assigned a risk rating grade of Substandard totaled $219 thousand as of December 31, 2014.

(6)	Consumer Loans which have been assigned a risk rating grade of Substandard totaled $1 thousand as of December 31, 2014.

Company's Recorded Investment and Customers Unpaid Principal Balances for Impaired Loans, with Associated Allowance Amount

The following tables show the Company’s recorded investment and the customers’ unpaid principal balances for impaired loans, with the associated allowance amount, if applicable, as of December 31, 2015 and 2014, along with the average recorded investment and interest income recognized for the years ended December 31, 2015 and 2014.


(Dollars in thousands)	As of December 31, 2015						As of December 31, 2014
IMPAIRED LOANS
	Recorded		Customers’ Unpaid		Related		Recorded		Customers’ Unpaid		Related
	Investment		Principal Balance		Allowance		Investment		Principal Balance		Allowance
With no related allowance:
Construction, Land and Land Development	$	445	$	451	$	—	$	450	$	452	$	—
Residential First Mortgages		3,130		3,166		—		1,568		1,584		—
Residential Revolving and Junior Mortgages (1)		233		233		—		50		50		—
Commercial Mortgages (Non-owner occupied)		264		264		—		264		264		—
Commercial Mortgages (Owner occupied)		1,352		1,390		—		1,887		1,916		—
Commercial and Industrial		—		—		—		—		—		—
Consumer (2)		—		—		—		5		5		—

		5,424		5,504		—		4,224		4,271		—

With an allowance recorded:
Construction, Land and Land Development		262		290		120		277		292		144
Residential First Mortgages		2,507		2,507		308		2,173		2,173		437
Residential Revolving and Junior Mortgages (1)		258		259		150		173		173		84
Commercial Mortgages (Non-owner occupied)		—		—		—		—		—		—
Commercial Mortgages (Owner occupied)		2,091		2,348		678		—		—		—
Commercial and Industrial		284		285		278		—		—		—
Consumer (2)		—		—		—		11		11		11

		5,402		5,689		1,534		2,634		2,649		676

Total Impaired Loans:
Construction, Land and Land Development		707		741		120		727		744		144
Residential First Mortgages		5,637		5,673		308		3,741		3,757		437
Residential Revolving and Junior Mortgages (1)		491		492		150		223		223		84
Commercial Mortgages (Non-owner occupied)		264		264		—		264		264		—
Commercial Mortgages (Owner occupied)		3,443		3,738		678		1,887		1,916		—
Commercial and Industrial		284		285		278		—		—		—
Consumer (2)		—		—		—		16		16		11

	$	10,826	$	11,193	$	1,534	$	6,858	$	6,920	$	676

Notes:

(1)	Junior mortgages include equity lines.

(2)	Includes credit cards.


	For the Year Ended				For the Year Ended
	December 31, 2015				December 31, 2014
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance:
Construction, Land and Land Development	$	448	$	—	$	451	$	3
Residential First Mortgages		2,077		74		1,148		49
Residential Revolving and Junior Mortgages (1)		87		5		10		—
Commercial Mortgages (Non-owner occupied)		264		16		264		16
Commercial Mortgages (Owner occupied)		1,099		28		1,911		79
Commercial and Industrial		—		—		—		—
Consumer (2)		—		—		6		—

		3,975		123		3,790		147

With an allowance recorded:
Construction, Land and Land Development		270		5		168		4
Residential First Mortgages		1,900		90		2,184		100
Residential Revolving and Junior Mortgages (1)		204		11		174		9
Commercial Mortgages (Non-owner occupied)		—		—		—		—
Commercial Mortgages (Owner occupied)		1,343		39		—		—
Commercial and Industrial		130		2		—		—
Consumer (2)		—		—		24		2

		3,847		147		2,550		115

Total
Construction, Land and Land Development		718		5		619		7
Residential First Mortgages		3,977		164		3,332		149
Residential Revolving and Junior Mortgages (1)		291		16		184		9
Commercial Mortgages (Non-owner occupied)		264		16		264		16
Commercial Mortgages (Owner occupied)		2,442		67		1,911		79
Commercial and Industrial		130		2		—		—
Consumer (2)		—		—		30		2

	$	7,822	$	270	$	6,340	$	262

Notes:

(1)	Junior mortgages include equity lines.

(2)	Includes credit cards.

Summary of Troubled Debt Restructurings

The following table presents, by segments of loans, information related to loans modified as TDRs during the years ended December 31, 2015 and 2014.


	For the Year Ended						For the Year Ended
	December 31, 2015						December 31, 2014
			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
(Dollars in thousands)			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
TROUBLED DEBT RESTRUCTURINGS	Loans		Investment		Investment		Loans		Investment		Investment
Construction, land and land development ⁽¹⁾		—	$	—	$	—		2	$	282	$	277
Residenital first mortages ⁽¹⁾		2		988		986		—		—		—
Residential revolving and junior mortgages ⁽¹⁾		—		—		—		1		50		50
Commercial mortgages (Owner occupied) ⁽²⁾		1		105		124		—		—		—

Notes:

(1)	Modifications were an extention of the loan terms.

(2)	Modifications were capitalization of the interest.

For the Year Ended

December 31, 2015

December 31, 2014

TROUBLED DEBT RESTRUCTURINGS

Number of

Recorded

Number of

Recorded

THAT SUBSEQUENTLY DEFAULTED

Loans

Investment

Loans

Investment

Residential revolving and junior mortgages

—

Commerical mortgages (Owner occupied)

124

255