10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2015

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-33126

CITIZENS FIRST CORPORATION

(Exact name of registrant as specified in its charter)

Kentucky	61-0912615
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1065 Ashley Street, Bowling Green, Kentucky	42103
(Address of principal executive offices)	(Zip Code)

(270) 393-0700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x  No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   o

Accelerated filer   o

Non-accelerated filer  o

Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  x

Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.

1,968,777 shares of Common Stock, no par value, were outstanding at November 12, 2015.

CITIZENS FIRST CORPORATION

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
ITEM 1	FINANCIAL STATEMENTS	3
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	51
ITEM 4	CONTROLS AND PROCEDURES	52
PART II — OTHER INFORMATION
ITEM 6	EXHIBITS	53
SIGNATURES		55

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Part 1. Financial Information

Item 1. Financial Statements

Citizens First Corporation

Consolidated Balance Sheets

	(In Thousands, Except Share Data)
	September 30, 2015		December 31, 2014
	Unaudited
Assets
Cash and due from financial institutions	$	9,501	$	7,962
Federal funds sold	1,705		3,360
Cash and cash equivalents	11,206		11,322
Interest-bearing deposits in other financial institutions	2,480		—
Available-for-sale securities	60,068		58,986
Loans held for sale	155		—
Loans, net of allowance for loan losses of $5,021 and $4,885 at September 30, 2015 and December 31, 2014, respectively	322,128		313,592
Premises and equipment, net	9,971		10,758
Bank owned life insurance (BOLI)	8,129		7,993
Federal Home Loan Bank (FHLB) stock, at cost	2,025		2,025
Accrued interest receivable	1,597		1,527
Deferred income taxes	1,517		1,479
Goodwill	4,097		4,097
Core deposit intangible	283		336
Other real estate owned	207		198
Other assets	418		501
Total Assets	$	424,281	$	412,814
Liabilities
Deposits
Noninterest bearing	$	46,081	$	41,975
Savings, NOW and money market	154,761		148,935
Time	161,649		150,874
Total deposits	362,491		341,784
FHLB advances and other borrowings	15,500		25,500
Subordinated debentures	5,000		5,000
Accrued interest payable	233		231
Other liabilities	2,322		1,851
Total Liabilities	385,546		374,366
Stockholders’ Equity
6.5% cumulative convertible preferred stock; no par value, authorized 250 shares, aggregate liquidation preference of $7,998; issued and outstanding 250 shares at September 30, 2015 and December 31, 2014, respectively	7,659		7,659
Common stock, no par value, authorized 5,000,000 shares; issued and outstanding 1,968,777 shares at September 30, 2015 and December 31, 2014, respectively	25,366		27,072
Retained earnings	5,440		3,373
Accumulated other comprehensive income	270		344
Total stockholders’ equity	38,735		38,448
Total liabilities and stockholders’ equity	$	424,281	$	412,814

See Notes to Unaudited Consolidated Financial Statements

3

Citizens First Corporation

Unaudited Consolidated Statements of Income

	Three months ended
	(In Thousands, Except Per Share Data)
	September 30, 2015		September 30, 2014
Interest and dividend income
Loans	$	4,050	$	4,006
Taxable securities	159		158
Non-taxable securities	170		161
Federal funds sold and other	36		29
Total interest and dividend income	4,415		4,354
Interest expense
Deposits	563		526
FHLB advances and other	74		125
Subordinated debentures	25		24
Total interest expense	662		675
Net interest income	3,753		3,679
Provision for loan losses	—		—
Net interest income after provision for loan losses	3,753		3,679
Non-interest income
Service charges on deposit accounts	386		300
Other service charges and fees	187		198
Gain on sale of mortgage loans	60		76
Non-deposit brokerage fees	103		67
Lease income	59		76
BOLI income	45		47
Total non-interest income	840		764
Non-interest expenses
Salaries and employee benefits	1,650		1,519
Net occupancy expense	495		501
Advertising and public relations	75		74
Professional fees	183		137
Data processing services	262		250
Franchise shares and deposit tax	146		146
FDIC insurance	61		73
Core deposit intangible amortization	18		82
Postage and office supplies	55		54
Other real estate owned expenses	6		10
Loss on branch disposal	262		—
Other	317		295
Total non-interest expenses	3,530		3,141
Income before income taxes	1,063		1,302
Income taxes	288		372
Net income	775		930
Dividends on preferred stock	131		131
Net income available for common stockholders	$	644	$	799
Basic earnings per common share	$	0.33	$	0.41
Diluted earnings per common share	$	0.31	$	0.38

See Notes to Unaudited Consolidated Financial Statements

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Citizens First Corporation

Unaudited Consolidated Statements of Income

	Nine months ended
	(In Thousands, Except Per Share Data)
	September 30, 2015		September 30, 2014
Interest and dividend income
Loans	$	12,107	$	11,728
Taxable securities	465		450
Non-taxable securities	519		493
Federal funds sold and other	99		94
Total interest and dividend income	13,190		12,765
Interest expense
Deposits	1,692		1,620
FHLB advances and other	219		368
Subordinated debentures	73		71
Total interest expense	1,984		2,059
Net interest income	11,206		10,706
Provision for loan losses	200		275
Net interest income after provision for loan losses	11,006		10,431
Non-interest income
Service charges on deposit accounts	1,061		857
Other service charges and fees	498		492
Gain on sale of mortgage loans	170		151
Non-deposit brokerage fees	282		211
Lease income	202		225
BOLI income	136		141
Gain on sale of securities available-for-sale (includes $10 in 2015 and $74 in 2014 accumulated other comprehensive income reclassifications for unrealized net gains on available-for-sale-securities)	10		74
Total non-interest income	2,359		2,151
Non-interest expenses
Salaries and employee benefits	4,887		4,532
Net occupancy expense	1,516		1,462
Advertising and public relations	250		250
Professional fees	534		439
Data processing services	739		731
Franchise shares and deposit tax	437		437
FDIC insurance	183		224
Core deposit intangible amortization	53		248
Postage and office supplies	147		164
Other real estate owned expenses	42		67
Loss on branch disposal	262		—
Other	929		782
Total non-interest expenses	9,979		9,336
Income before income taxes	3,386		3,246
Income taxes	930		892
Net income	2,456		2,354
Dividends and accretion on preferred stock	389		390
Net income available for common stockholders	$	2,067	$	1,964
Basic earnings per common share	$	1.05	$	1.00
Diluted earnings per common share	$	0.95	$	0.94

See Notes to Unaudited Consolidated Financial Statements

5

Citizens First Corporation

Unaudited Consolidated Statements of Comprehensive Income

In thousands, except share data

	Three months ended
	(In Thousands, Except Per Share Data)
	September 30, 2015		September 30,2014
Comprehensive income, net of tax
Net income	$	775	$	930
Other comprehensive income
Reclassification adjustment for gains included in net income, net of taxes	—		—
Change in unrealized gain on available for sale securities, net of taxes	55		34
Total other comprehensive income	55		34
Comprehensive income	$	830	$	964

	Nine months ended
	(In Thousands, Except Per Share Data)
	September 30, 2015			September 30, 2014
Comprehensive income, net of tax
Net income	$	2,456		$	2,354
Other comprehensive income (loss)
Reclassification adjustment for gains included in net income, net of taxes	(7		)	(49		)
Change in unrealized gain (loss) on available for sale securities, net of taxes	(67		)	638
Total other comprehensive income (loss)	(74		)	589
Comprehensive income	$	2,382		$	2,943

See Notes to Unaudited Consolidated Financial Statements

6

Citizens First Corporation

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

In thousands, except share data

	Preferred Stock		Common Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, January 1, 2015	$	7,659	$	27,072		$	3,373		$	344		$	38,448
Net income						2,456						2,456
Change in accumulated other comprehensive income									(74		)	(74		)
Dividend declared and paid on preferred stock						(389		)				(389		)
Repurchase of TARP Warrants			(1,706		)							(1,706		)
Balance, September 30, 2015	$	7,659	$	25,366		$	5,440		$	270		$	38,735

	Preferred Stock			Common Stock		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, January 1, 2014	$	10,925		$	27,072	$	653		$	(303	)	$	38,347
Net income						2,354						2,354
Redemption of Series A preferred stock	(3,266		)									(3,266		)
Change in accumulated other comprehensive income (loss)									589			589
Dividend declared and paid on preferred stock						(390		)				(390		)
Balance, September 30, 2014	$	7,659		$	27,072	$	2,617		$	286		$	37,634

See Notes to Unaudited Consolidated Financial Statements

7

Citizens First Corporation

Unaudited Consolidated Statements of Cash Flows

	Nine months ended
	(In Thousands)
	September 30, 2015			September 30, 2014
Operating Activities
Net income	$	2,456		$	2,354
Items not requiring (providing) cash:
Depreciation and amortization	414			410
Provision for loan losses	200			275
Amortization of premiums and discounts on securities	239			221
Amortization of core deposit intangible	53			248
BOLI income	(136		)	(141		)
Proceeds from sale of mortgage loans	7,556			5,273
Origination of mortgage loans held for sale	(7,540		)	(5,121		)
Gains on sales of available-for-sale securities	(10		)	(74		)
Gains on sales of mortgage loans	(170		)	(151		)
Write-downs and losses on sale of other real estate owned	39			34
Gain on sale of premises and equipment	(12		)	(15		)
Loss on branch disposal	262			—
Changes in:
Accrued interest receivable	(70		)	(84		)
Other assets	83			684
Accrued interest payable and other liabilities	473			321
Net cash provided by operating activities	3,837			4,234
Investing Activities
Loan originations and payments, net	(8,848		)	(16,064		)
Purchase of interest-bearing deposits in other financial institutions	(2,480		)	—
Purchase of premises and equipment	(260		)	(169		)
Proceeds from maturities of available-for-sale securities	5,601			4,706
Proceeds from sales of available-for-sale securities	1,010			5,888
Proceeds from sales of other real estate owned	62			440
Purchase of available-for-sale securities	(8,033		)	(20,463		)
Proceeds from sales of premises and equipment	383			28
Net cash used in investing activities	(12,565		)	(25,634		)
Financing Activities
Net change in demand deposits, money market, NOW and savings accounts	9,932			(2,776		)
Net change in time deposits	10,775			(2,990		)
Repayment of FHLB advances	(11,000		)	—
Repayment of TARP preferred stock	—			(3,266		)
Repurchase of TARP warrants	(1,706		)	—
Proceeds from other borrowings	1,000			7,000
Dividends paid on preferred stock	(389		)	(390		)
Net cash provided by (used in) financing activities	8,612			(2,422		)
Increase in Cash and Cash Equivalents	(116		)	(23,822		)
Cash and Cash Equivalents, Beginning of Year	11,322			37,062
Cash and Cash Equivalents, End of Quarter	$	11,206		$	13,240
Supplemental Cash Flows Information
Interest paid	$	1,982		$	2,071
Income taxes paid	$	890		$	225
Loans transferred to other real estate owned	$	111		$	230

See Notes to Unaudited Consolidated Financial Statements

8

Citizens First Corporation

Notes to Unaudited Consolidated Financial Statements

Note 1 — Nature of Operations and Summary of Significant Accounting Policies

The accounting and reporting policies of Citizens First Corporation (the “Company”) and its subsidiary, Citizens First Bank, Inc. (the “Bank”), conform to U.S. generally accepted accounting principles and general practices within the banking industry.  The consolidated financial statements include the accounts of the Company and the Bank.  All significant intercompany transactions and accounts have been eliminated in consolidation.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Estimates used in the preparation of the financial statements are based on various factors including the current interest rate environment and the general strength of the local economy.  Changes in the overall interest rate environment can significantly affect the Company’s net interest income and the value of its recorded assets and liabilities.  Actual results could differ from those estimates used in the preparation of the financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in the accompanying unaudited financial statements.  Those adjustments consist only of normal recurring adjustments. Results of interim periods are not necessarily indicative of results to be expected for the full year.  The consolidated balance sheet of the Company as of December 31, 2014 has been derived from the audited consolidated balance sheet of the Company as of that date.

Recent Accounting Pronouncements—In May 2014 the FASB amended existing guidance related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and

9

improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. The Bank is currently evaluating the impact of this new accounting standard on the consolidated financial statements.

Note 2 -  Reclassifications

Certain reclassifications have been made to the consolidated financial statements of prior periods to conform to the current period presentation.  These reclassifications do not affect net income or total stockholders’ equity as previously reported.

Note 3 - Available-For-Sale Securities

The following table summarizes the amortized cost and fair value of the available-for sale securities portfolio at September 30, 2015 and December 31, 2014 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

10

	(Dollars in Thousands)
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
September 30, 2015
U. S. government agencies and government sponsored entities	$	2,998	$	2	$	(6	)	$	2,994
Agency mortgage-backed securities: residential	27,938		464		(14		)	28,388
State and municipal	25,844		669		(70		)	26,443
Trust preferred security	1,879		—		(639		)	1,240
Corporate bonds	1,000		3		—			1,003
Total Available-for-Sale Securities	$	59,659	$	1,138	$	(729	)	$	60,068
December 31, 2014
U. S. government agencies and government sponsored entities	$	2,999	$	—	$	(51	)	$	2,948
Agency mortgage-backed securities: residential	27,241		309		(31		)	27,519
State and municipal	25,350		793		(104		)	26,039
Trust preferred security	1,876		—		(396		)	1,480
Corporate bonds	1,000		—		—			1,000
Total Available-for-Sale Securities	$	58,466	$	1,102	$	(582	)	$	58,986

The amortized cost and fair value of investment securities at September 30, 2015 by contractual maturity were as follows.  Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	September 30, 2015
	(Dollars in Thousands)
	Available-For-Sale
	Amortized Cost		Fair Value
Due in one year or less	$	340	$	346
Due from one to five years	14,386		14,570
Due from five to ten years	9,663		9,875
Due after ten years	7,332		6,889
Agency mortgage-backed: residential	27,938		28,388
Total	$	59,659	$	60,068

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The following table summarizes the investment securities with unrealized losses by portfolio segment at September 30, 2015 and December 31, 2014, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position:

	(Dollars in Thousands)
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2015:
U.S. government agencies and government sponsored entities	$	—	$	—		$	1,993	$	(6	)	$	1,993	$	(6	)
Agency mortgage-backed: residential	—		—			1,553		(14		)	1,553		(14		)
State and municipal	4,947		(33		)	595		(37		)	5,542		(70		)
Trust preferred security	—		—			1,240		(639		)	1,240		(639		)
Total temporarily impaired	$	4,947	$	(33	)	$	5,381	$	(696	)	$	10,328	$	(729	)

	(Dollars in Thousands)
	Less than 12 Months					12 Months or More					Total
Description of			Unrealized					Unrealized					Unrealized
Securities	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
December 31, 2014:
U.S. government agencies and government sponsored entities	$	992	$	(8	)	$	1,955	$	(43	)	$	2,947	$	(51	)
Agency mortgage-backed: residential	1,134		(2		)	1,678		(29		)	2,812		(31		)
State and municipal	4,891		(24		)	2,530		(80		)	7,421		(104		)
Trust preferred security	—		—			1,480		(396		)	1,480		(396		)
Total temporarily impaired	$	7,017	$	(34	)	$	7,643	$	(548	)	$	14,660	$	(582	)

Other-Than-Temporary-Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  Investment securities classified as available-for-sale are generally evaluated for OTTI under ASC Topic 320, “Investments - Debt and Equity Securities.”

In determining OTTI under the ASC Topic 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will

12

be required to sell the debt security before its anticipated recovery.  The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

All rated securities are investment grade.  For those that are not rated, the financial condition has been evaluated and no adverse conditions were identified related to repayment.  Declines in fair value are a function of rate differences in the market and market illiquidity.  The Company does not intend or is not expected to be required to sell these securities before recovery of their amortized cost basis.

Approximately 92% of the Company’s unrealized losses 12 months or more relate to its investment in a single trust preferred security.  The security is a single-issuer trust preferred that is not rated. No impairment charge is being taken as no loss of principal or interest is anticipated. All principal and interest payments are being received as scheduled.  On a quarterly basis, we evaluate the creditworthiness of the issuer, a bank holding company with operations in the state of Kentucky.  Based on the issuer’s continued profitability and well-capitalized position, we do not deem that there is credit loss.  The decline in fair value is primarily attributable to illiquidity affecting these markets and not the expected cash flows of the individual securities.  We have evaluated the financial condition and near term prospects of the issuer and expect to fully recover our cost basis.  This security continues to pay interest as agreed and future payments are expected to be made as agreed.  This security is not considered to be other-than-temporarily impaired.

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Note 4 - Loans and Allowance for Loan Losses

Categories of loans include:

	(Dollars in Thousands)
	September 30, 2015			December 31, 2014
Commercial	$	47,137		$	43,439
Commercial real estate:
Construction	24,444			18,064
Other	173,029			174,032
Residential real estate	78,326			78,270
Consumer:
Auto	1,486			1,820
Other	2,727			2,852
Total loans	327,149			318,477
Less allowance for loan losses	(5,021		)	(4,885		)
Net loans	$	322,128		$	313,592

The following table sets forth an analysis of our allowance for loan losses for the three months ending September 30, 2015 and 2014.

	(Dollars in Thousands)
September 30, 2015	Commercial		Commercial Real Estate			Residential Real Estate		Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	757	$	3,605		$	447	$	38		$	136	$	4,983
Provision for loan losses	12		(23		)	8		(2		)	5		—
Loans charged-off	—		—			—		(3		)	—		(3		)
Recoveries	35		—			3		3			—		41
Total ending allowance balance	$	804	$	3,582		$	458	$	36		$	141	$	5,021

	(Dollars in Thousands)
September 30, 2014	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	902		$	3,189		$	646		$	67		$	149	$	4,953
Provision for loan losses	(80		)	37			52			(10		)	1		—
Loans charged-off	—			(13		)	(83		)	(2		)	—		(98		)
Recoveries	34			11			3			—			—		48
Total ending allowance balance	$	856		$	3,224		$	618		$	55		$	150	$	4,903

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The following table sets forth an analysis of our allowance for loan losses for the nine months ending September 30, 2015 and 2014.

	(Dollars in Thousands)
September 30, 2015	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	1,029		$	3,088		$	582		$	45		$	141	$	4,885
Provision for loan losses	(236		)	510			(77		)	3			—		200
Loans charged-off	(75		)	(17		)	(57		)	(21		)	—		(170		)
Recoveries	86			1			10			9			—		106
Total ending allowance balance	$	804		$	3,582		$	458		$	36		$	141	$	5,021

	(Dollars in Thousands)
September 30, 2014	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,420		$	2,079		$	703		$	86		$	365		$	4,653
Provision for loan losses	(657		)	1,090			75			(18		)	(215		)	275
Loans charged-off	—			(14		)	(172		)	(15		)	—			(201		)
Recoveries	93			69			12			2			—			176
Total ending allowance balance	$	856		$	3,224		$	618		$	55		$	150		$	4,903

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of September 30, 2015 and December 31, 2014, which includes net deferred loan fees.  As of September 30, 2015 and December 31, 2014, accrued interest receivable of $1.3 million and $1.2 million, respectively, are not considered significant and therefore not included in the recorded investment in loans presented in the following tables.

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	(Dollars in Thousands)
September 30, 2015	Commercial		Commercial Real Estate		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	146	$	378	$	3	$	—	$	—	$	527
Collectively evaluated	658		3,204		455		36		141		4,494
Total ending allowance balance	$	804	$	3,582	$	458	$	36	$	141	$	5,021
Loans:
Individually evaluated for impairment	$	995	$	2,074	$	1,003	$	9	$	—	$	4,081
Collectively evaluated	46,142		195,399		77,323		4,204		—		323,068
Total ending loans balance	$	47,137	$	197,473	$	78,326	$	4,213	$	—	$	327,149

	(Dollars in Thousands)
			Commercial		Residential
December 31, 2014	Commercial		Real Estate		Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	342	$	220	$	7	$	10	$	—	$	579
Collectively evaluated	687		2,868		575		35		141		4,306
Total ending allowance balance	$	1,029	$	3,088	$	582	$	45	$	141	$	4,885
Loans:
Individually evaluated for impairment	$	2,696	$	1,057	$	1,098	$	22	$	—	$	4,873
Collectively evaluated	40,743		191,039		77,172		4,650		—		313,604
Total ending loans balance	$	43,439	$	192,096	$	78,270	$	4,672	$	—	$	318,477

The following table presents information related to impaired loans by class of loans as of September 30, 2015 and December 31, 2014. In this table presentation the unpaid principal balance of the loans has not been reduced by partial net charge-offs and the recorded investment of the loans was reduced by partial net charge-offs.

16

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial	$	63	$	63	$	—	$	1,129	$	1,129	$	—
Commercial real estate:
Construction	—		—		—		—		—		—
Other	644		644		—		—		—		—
Residential real estate	936		936		—		1,026		1,026		—
Consumer:							—
Auto	—		—		—		—		—		—
Other	—		—		—		—		—		—
Subtotal	$	1,643	$	1,643	$	—	$	2,155	$	2,155	$	—
With an allowance recorded:
Commercial	$	932	$	932	$	146	$	1,567	$	1,567	$	342
Commercial real estate:
Construction	—		—		—		—		—		—
Other	1,430		1,430		378		1,057		1,057		220
Residential real estate	67		67		3		72		72		7
Consumer:
Auto	—		—		—		10		10		10
Other	9		9		—		12		12		—
Subtotal	$	2,438	$	2,438	$	527	$	2,718	$	2,718	$	579
Total	$	4,081	$	4,081	$	527	$	4,873	$	4,873	$	579

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Information on impaired loans for the three months ending September 30, 2015 and 2014 is as follows:

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
Commercial	$	1,003	$	16	$	15	$	2,743	$	36	$	24
Commercial real estate:
Construction	—		—		—		14		—		—
Other	2,077		18		13		1,482		20		14
Residential real estate	1,006		12		8		1,180		14		9
Consumer:
Auto	—		—		—		15		—		—
Other	10		—		—		13		—		—
Total	$	4,096	$	46	$	36	$	5,447	$	70	$	47

Information on impaired loans for the nine months ending September 30, 2015 and 2014 is as follows:

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
Commercial	$	1,032	$	37	$	36	$	2,977	$	103	$	77
Commercial real estate:											—
Construction	—		—		—		14		1		1
Other	1,765		46		44		1,712		57		42
Residential real estate	1,015		36		27		1,241		40		28
Consumer:
Auto	—		—		—		17		1		—
Other	11		1		1		14		1		1
Total	$	3,823	$	120	$	108	$	5,975	$	203	$	149

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The recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2015 and December 31, 2014 are summarized below:

	(Dollars in Thousands)				(Dollars in Thousands)
	September 30, 2015				December 31, 2014
	Loans Past Due Over 90 Days and Still Accruing		Nonaccrual		Loans Past Due Over 90 Days and Still Accruing		Nonaccrual
Commercial	$	—	$	79	$	—	$	748
Commercial real estate:
Construction	—		—		—		—
Other	—		439		—		45
Residential real estate	—		288		—		364
Consumer:
Auto	—		—		—		10
Other	—		—		—		—
Total	$	—	$	806	$	—	$	1,167

Nonaccrual loans and loans past due 90 days still on accrual include individually classified impaired loans.

The following tables present the aging of the recorded investment in past due loans as of September 30, 2015 and December 31, 2014 by class of loans.  Non-accrual loans are included and have been categorized based on their payment status:

	(Dollars in Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
September 30, 2015
Commercial	$	—	$	—	$	79	$	79	$	47,058	$	47,137
Commercial real estate:
Construction	—		—		—		—		24,444		24,444
Other	—		—		439		439		172,590		173,029
Residential real estate	132		—		288		420		77,906		78,326
Consumer:
Auto	—		—		—		—		1,486		1,486
Other	—		—		—		—		2,727		2,727
Subtotal	$	132	$	—	$	806	$	938	$	326,211	$	327,149

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	(Dollars in Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
December 31, 2014
Commercial	$	—	$	—	$	645	$	645	$	42,794	$	43,439
Commercial real estate:
Construction	—		—		—		—		18,064		18,064
Other	—		—		45		45		173,987		174,032
Residential real estate	31		—		362		393		77,877		78,270
Consumer:
Auto	—		—		—		—		1,820		1,820
Other	—		—		—		—		2,852		2,852
Subtotal	$	31	$	—	$	1,052	$	1,083	$	317,394	$	318,477

Troubled Debt Restructurings:

The Company reported total troubled debt restructurings of $3.3 million and $4.4 million as of September 30, 2015 and December 31, 2014, respectively.  The Company has no commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.  Troubled debt restructurings are included in impaired loans. The modifications of the terms of these loans included reducing the interest rate, granting an interest only payment period, or extending the terms of the debt for customers experiencing financial difficulties. Of the 13 troubled debt restructurings reported at quarter end, all loans were on accrual status.

The following table presents loans by class modified as troubled debt restructurings that occurred during the quarter ending September 30, 2015 and 2014:

		(Dollars in Thousands)					(Dollars in Thousands)
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	September 30, 2015					September 30, 2014
Troubled Debt Restructurings:
Commercial	—	$	—	$	—	1	$	666	$	666
Commercial real estate:
Other	—	—		—		—	—		—
Total	—	$	—	$	—	1	$	666	$	666

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The following table presents loans by class modified as trouble debt restructurings that occurred year to date as of September 30, 2015 and 2014.

		(Dollars in Thousands)					(Dollars in Thousands)
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	September 30, 2015					September 30, 2014
Troubled Debt Restructurings:
Commercial	—	$	—	$	—	1	$	666	$	666
Commercial real estate:
Other	2	1,547		1,547		1	$	924	$	924
Residential real estate	—	—		—		1	15		15
Total	2	$	1,547	$	1,547	3	$	1,605	$	1,605

Specific allocations of $267,000 and $547,000 were reported for troubled debt restructurings as of September 30, 2015 and December 31, 2014. Specific allocations of $424,000 were reported for the troubled debt restructurings as of September 30, 2014. No payment defaults were reported for troubled debt restructurings during the three and nine months ending September 30, 2015 or September 30, 2014. No charge offs were taken on troubled debt restructurings during the three and nine months ending September 30, 2015 or September 30, 2014.

The terms of certain other loans were modified during the nine months ending September 30, 2015 and 2014 that did not meet the definition of a troubled debt restructuring. These loans modified during the nine months ending September 30, 2015 have a total recorded investment of $19.2 million as of September 30, 2015. The loans modified during the nine months ending September 30, 2014 had a total recorded investment of $13.3 million as of September 30, 2014. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current

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economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes commercial and commercial real estate loans with an outstanding balance greater than $25 thousand and is reviewed on a monthly basis. For residential real estate and consumer loans the analysis primarily involves monitoring the past due status of these loans and at such time that these loans are past due, the Company evaluates the loans to determine if a change in risk category is warranted. The Company uses the following definitions for risk ratings:

Special Mention.  Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.  All loans in all loan categories are assigned risk ratings.  Based on the most recent analyses performed, the risk category of loans by class of loans is as follows:

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	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2015
Commercial	$	45,096	$	—	$	2,041	$	—	$	47,137
Commercial real estate:
Construction	24,444		—		—		—		24,444
Other	163,564		5,714		3,751		—		173,029
Residential real estate	77,656		—		670		—		78,326
Consumer:
Auto	1,486		—		—		—		1,486
Other	2,717		—		10		—		2,727
Total	$	314,963	$	5,714	$	6,472	$	—	$	327,149

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2014
Commercial	$	39,926	$	547	$	2,966	$	—	$	43,439
Commercial real estate:
Construction	18,064		—		—		—		18,064
Other	166,969		2,875		4,188		—		174,032
Residential real estate	76,756		772		742		—		78,270
Consumer:
Auto	1,820		—		—		—		1,820
Other	2,842		—		10		—		2,852
Total	$	306,377	$	4,194	$	7,906	$	—	$	318,477

Note 5 - Fair Value Measurements

Fair value is the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that are supported by little or no market activity, reflect a company’s own assumptions about market participant

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assumptions of fair value, and are significant to the fair value of the assets or liabilities.

In determining the appropriate levels, the Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment Securities: The fair value of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (level 1 inputs) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (level 2 inputs).  The Company does not have any Level 1 securities.  Level 2 securities include certain U.S. agency bonds, collateralized mortgage and debt obligations, and certain municipal securities. The Company also has one Level 3 security. The fair value of this security is obtained directly from the broker which originally handled the security issue. The value is determined based on trades of similar securities with similar coupons.

Impaired Loans: The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate Owned: Commercial and residential real estate properties classified as other real estate owned (OREO) are measured at fair value, less costs to sell.  Fair values are based on recent real estate appraisals.  These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for collateral-dependent impaired loans and real estate properties classified as other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by Bank management.  The appraisal values for collateral-dependent impaired loans are discounted to allow for selling expenses and fees, the limited use nature of various properties, the age of the most recent appraisal, and additional discretionary discounts for location, condition, etc. The Bank annually obtains an updated current appraisal

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value for each OREO property to certify that the fair value has not declined.  For each parcel of OREO that has declined in value, the Bank records the decline in value by a direct writedown of the asset.

Assets measured on a recurring basis:

	Fair Value Measurements at:
	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						December 31, 2014
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Securities available-for-sale
U.S. government agencies and government sponsored entities			$	2,994					$	2,948
Agency mortgage-backed securites-residential			28,388						27,519
State and municipal			26,443						26,039
Trust preferred security					1,240						1,480
Corporate bonds			1,003						1,000
Total investment securities	$	—	$	58,828	$	1,240	$	—	$	57,506	$	1,480

Assets measured on a non-recurring basis:

	Fair Value Measurement
	(Dollars in Thousands)
	September 30, 2015		December 31, 2014
	Significant Unobservable Inputs (Level 3)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	—	$	423
Commercial RE	260		29
Residential	60		59
Other real estate owned:
Commercial RE	$	135	$	198
Residential	72		—

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Impaired loans which are measured for impairment using the fair value of collateral for collateral dependent loans, had a principal balance of $580,000 at September 30, 2015 with a valuation allowance of $260,000.  Impaired loans which were measured for impairment using the fair value of collateral for collateral-dependent loans had a principal balance of $841,000 at December 31, 2014, with a valuation allowance of $330,000.  An increase in the provision for loan losses of $260,000 and a decrease of $256,000 was recognized for the nine months ended September 30, 2015 and 2014, respectively, as a result of net changes in fair values on collateral dependent loans and other factors affecting the provision for loan losses.

Other real estate owned, which is measured at fair value less costs to sell, had a net carrying value of $207,000 at September 30, 2015 and $198,000 at December 31, 2014.  Total writedowns of other real estate owned were $4,000 and $14,000 in the quarters ending September 30, 2015 and 2014, respectively. Total writedowns of other real estate owned were $27,000 and $47,000 in the nine months ending September 30, 2015 and 2014, respectively.

The following table presents quantitative and qualitative information about Level 3 fair value measurements for financial instruments measured on a non-recurring basis at September 30, 2015.

	September 30, 2015	Valuation Techniques	Unobservable Inputs (Dollars in thousands)	Range (Weighted Avg)
Impaired loans:
Commercial RE	260	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(50.00%)
Residential RE	60	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(20.00%)
Other real estate owned:
Commercial RE	135	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	8%-40% (33.13%)
Residential RE	72	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(38.46%)

The following table presents quantitative and qualitative information about Level 3 fair value measurements for financial instruments measured on a non-recurring basis at December 31, 2014.

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	December 31, 2014		Valuation Techniques	Unobservable Inputs (Dollars in thousands)	Range (Weighted Avg)
Impaired loans:
Commercial	$	423	Market Approach	Discounts to allow for market value of assets	50%-70% (67.35%)
Commercial RE	29		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(20.00%)
Residential	59		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(10.00%)
Other real estate owned:
Commercial RE	198		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	8%-55% (38.29%)

Carrying amount and estimated fair values of financial instruments, not previously presented, were as follows:

			Fair Value Measurements at
			September 30, 2015
	Carrying Amount		Level 1		Level 2	Level 3	Total
Financial Assets
Cash and cash equivalents	$	11,206	$	11,206			$	11,206
Interest-bearing deposits in other financial institutions	2,480		2,480				2,480
Loans, net of allowance	321,808					323,917	323,917
Loans held for sale	155				158		158
Accrued interest receivable	1,597				320	1,277	1,597
Federal Home Loan Bank stock	2,025						N/A
Financial Liabilities
Demand and savings deposits	$	200,842	$	200,842			$	200,842
Time deposits	161,649				161,938		161,938
FHLB advances	13,000				12,925		12,925
Other borrowings	2,500				2,500		2,500
Subordinate debentures	5,000					2,836	2,836
Accrued interest payable	233		9		199	25	233

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			Fair Value Measurements at
			December 31, 2014
	Carrying Amount		Level 1		Level 2	Level 3	Total
Financial Assets
Cash and cash equivalents	$	11,322	$	11,322			$	11,322
Loans, net of allowance	313,081					316,075	316,075
Accrued interest receivable	1,527				323	1,204	1,527
Federal Home Loan Bank stock	2,025						N/A
Financial Liabilities
Demand and savings deposits	$	190,910	$	156,790			$	156,790
Time deposits	150,874				151,504		151,504
FHLB advances	24,000				23,835		23,835
Other borrowings	1,500				1,500		1,500
Subordinate debentures	5,000					2,395	2,395
Accrued interest payable	231		9		222		231

The methods and assumptions used to estimate fair value are described as follows:

(a)Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

(b)Interest Bearing Deposits in Other Financial Institutions: Fair values are based on quoted market prices.

(c)FHLB Stock: It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(d)Loans: Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. The fair value of loans held for sale is estimated based upon binding contracts and quotes from first party investors resulting in a Level 2 classification.

(e)Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification.

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The carrying amounts of variable rate certificates of deposit approximate their fair values at the reporting date resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f)FHLB Advances and Other Borrowings/Subordinated Debentures: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(g)Accrued Interest Receivable/Payable: The carrying amounts of accrued interest approximate fair value resulting in a Level 1 or Level 2 classification consistent with the asset/liability they are associated with.

Note 6 - Earnings Per Share

Basic earnings per share have been computed by dividing net income available for common shareholders by the weighted-average number of common shares outstanding for the period.  Diluted earnings per share have been computed the same as basic earnings per share, and assumes the conversion of outstanding stock options, convertible preferred stock and warrants, if dilutive.  The following table reconciles the basic and diluted earnings per share computations for the quarters ending September 30, 2015 and 2014.

29

	Quarter ended September 30, 2015						Quarter ended September 30, 2014
				Weighted						Weighted
				Average	Per Share					Average	Per Share
	Income			Shares	Amount		Income			Shares	Amount
Basic earnings per share:
Net income	$	775					$	930
Less: Dividends on preferred stock during the quarter	(131		)				(131		)
Net income available to common shareholders	$	644		1,968,777	$	0.33	$	799		1,968,777	$	0.41
Effect of dilutive securities
Convertible preferred stock	131			568,890
Warrants				—						137,181
Diluted earnings per share
Net income available to common stockholders and assumed conversions	$	775		2,537,667	$	0.31	$	799		2,105,958	$	0.38

	Nine months ended September 30, 2015						Nine months ended September 30, 2014
				Weighted						Weighted
				Average	Per Share					Average	Per Share
	Income			Shares	Amount		Income			Shares	Amount
Basic earnings per share:
Net income	$	2,456					$	2,354
Less: Dividends on preferred stock during the quarter	(389		)				(390		)
Net income available to common shareholders	$	2,067		1,968,777	$	1.05	$	1,964		1,968,777	$	1.00
Effect of dilutive securities
Convertible preferred stock	389			568,890
Warrants				57,223						129,975
Diluted earnings per share
Net income available to common stockholders and assumed conversions	$	2,456		2,594,890	$	0.95	$	1,964		2,098,752	$	0.94

Stock options for 26,571 and 72,931 shares of common stock were not considered in computing diluted earnings per common share for September 30, 2015 and 2014, respectively, because they are anti-dilutive.  Convertible preferred shares assuming full conversion totaled 568,890 shares as of September 30, 2015. On April 15, 2015, the Company repurchased the 254,218 warrants issued in 2008 to the US Treasury as part of its participation in the US Treasury’s Capital Purchase Program.  The repurchase

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 price of the warrants was $1.7 million. Common stock warrants totaled 0 and 254,218 as of September 30, 2015 and 2014, respectively.

Note 7 — Regulatory Capital Matters

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action.  Management believes as of September 30, 2015 and December 31, 2014, the Company and Citizens First Bank, Inc. met all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications:  well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If adequately capitalized, regulatory approval is required to accept brokered deposits.  If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.  The most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the institution’s category.

Under quantitative measures established by regulation to ensure capital adequacy, we are required to maintain minimum amounts and ratios of total Tier 1 capital to risk-weighted assets and to total assets. For 2015, interim Final Basel III rules require the Bank to maintain minimum amounts and ratios of common equity Tier I capital to risk-weighted assets. Under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in computing regulatory capital. For December 31, 2014, regulatory capital ratios were calculated under Basel I rules.

The Company’s and Citizens First Bank, Inc.’s actual capital amounts and ratios are also presented in the following table.

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	(Dollars in Thousands)
									To Be Well Capitalized
					For Capital Adequacy				Under Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2015
Total Capital (to Risk-Weighted Assets)
Consolidated	$	43,737	12.53	%	$	27,922	8.0	%	N/A		N/A
Citizens First Bank, Inc.	45,723		13.10	%	27,922		8.0	%	$	34,903	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	39,365		11.28	%	20,942		6.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	20,942		6.0	%	27,922		8.0	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated	26,706		7.65	%	15,706		4.5	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	15,706		4.5	%	22,687		6.5	%
Tier I Leverage Capital to average assets
Consolidated	39,365		9.28	%	13,961		4.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		9.77	%	16,924		4.0	%	21,155		5.0	%

	(Dollars in Thousands)
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2014
Total Capital (to Risk-Weighted Assets)
Consolidated	$	42,879	12.74	%	$	26,929	8.0	%	N/A		N/A
Citizens First Bank, Inc.	44,056		13.09	%	26,929		8.0	%	$	33,661	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	38,671		11.49	%	13,465		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		11.83	%	13,465		4.0	%	20,197		6.0	%
Tier I Leverage Capital to average assets
Consolidated	38,671		9.42	%	16,415		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		9.78	%	16,294		4.0	%	20,368		5.0	%

Note 8 — Preferred Stock

In 2004, the Company issued 250 shares of Cumulative Convertible Preferred Stock, stated value $31,992 per share (Cumulative Preferred Stock), for an aggregate purchase price of $7,998,000. The Cumulative Preferred Stock was sold for $31,992 per

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share, is entitled to quarterly cumulative dividends at an annual fixed rate of 6.5% and is convertible into shares of common stock of the Company at an initial conversion price per share of $15.50 (currently $14.06, adjusted for stock dividends) on and after three years after the date of issuance.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of Citizens First Corporation (the “Company”) is included to provide the shareholders with an expanded narrative of our results of operations, changes in financial condition, liquidity and capital adequacy.  This narrative should be reviewed in conjunction with our consolidated financial statements and notes thereto included in our 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Forward-Looking Statements

We may from time to time make written or oral statements, including statements contained in this report, which may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).  The words “may”, “expect”, “anticipate”, “intend”, “consider”, “plan”, “believe”, “seek”, “should”, “estimate”, and similar expressions are intended to identify such forward-looking statements, but other statements may constitute forward-looking statements.  These statements should be considered subject to various risks and uncertainties.  Such forward-looking statements are made based upon management’s belief as well as assumptions made by, and information currently available to, management pursuant to “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  Our actual results may differ materially from the results anticipated in forward-looking statements due to a variety of factors.  Among the risks and uncertainties that could cause actual results to differ materially are current and future economic conditions generally and in our market areas, changes in the interest rate environment, overall loan demand, increased competition in the financial services industry which could negatively impact our ability to increase total earning assets, and retention of key personnel.  Actions by the Department of the Treasury and federal and state bank regulators in response to changing economic conditions, changes in interest rates, loan prepayments by and the financial health of our borrowers, and other factors described in the reports filed by us with the Securities and Exchange Commission could also impact current expectations.

Results of Operations

For the quarter ended September 30, 2015, we reported net income of $775,000, or $0.31 per diluted common share, compared to net income of $930,000, or $0.38 per diluted common share in the third quarter of 2014, a decrease of $155,000.  The decrease in net income is primarily attributable to inclusion of a $262,000 pre-tax loss on the disposal of a former branch facility.

For the nine months ended September 30, 2015, the Company reported net income of $2.46 million, or $0.95 per diluted common share. This represents an increase of

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$102,000, or $0.01 per diluted common share, from the net income of $2.35 million in the previous year. The increase in net income is primarily attributable to an increase in net interest income of $500,000 and an increase in non-interest income of $208,000 partially offset by an increase in non-interest expense of $643,000.

Our annualized return on average assets, defined as net income divided by average assets, was 0.76% for the nine months ended September 30, 2015, compared to 0.76% in September 30, 2014.  Our annualized return on average equity, defined as net income divided by average equity, was 8.51% for the nine months ending September 30, 2015, compared to 8.58% for the nine months ending September 30, 2014.

Net Interest Income

Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets, such as loans and securities, and the total interest cost of the deposits and borrowings obtained to fund these assets.  Factors that influence the level of net interest income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, the level of non-performing loans and non-earning assets, and the amount of non-interest bearing deposits supporting earning assets.

Net interest income for the quarter ended September 30, 2015 increased $74,000, or 2.0%, compared to September 30, 2014. The increase in net interest income was a result of an increase in the volume of average earning assets over the previous year.

For the nine months ended September 30, 2015, net interest income was $11.2 million, an increase of $500,000, or 9.3%, from net interest income of $10.7 million for the comparable period in 2014.  Net interest income increased as a result of an increase in interest income of $425,000 plus lower interest expense on deposits and borrowings of $75,000.

The net interest margin for the nine months ended September 30, 2015 was 3.84%, compared to 3.82% in 2014.  The increase of 2 basis points is attributable primarily to the decrease in the cost of average interest-bearing liabilities.

The following tables set forth for the quarter and nine months ended September 30, 2015 and 2014, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities and average yields and costs.  Such yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

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Average Consolidated Balance Sheets and Net Interest Analysis (Dollars in thousands) Quarter ended September 30,

	2015						2014
	Average Balance		Income/ Expense		Average Rate		Average Balance		Income/ Expense		Average Rate
Earning assets:
Federal funds sold	$	15,122	$	9	0.24	%	$	14,430	$	9	0.25	%
Interest-bearing deposits in other financial institutions	1,609		6		1.48	%	—		—		0.00	%
Available-for-sale securities (1)
Taxable	35,146		159		1.79	%	35,763		158		1.75	%
Nontaxable	23,951		258		4.27	%	21,166		244		4.57	%
Federal Home Loan Bank stock	2,025		20		3.92	%	2,025		20		3.92	%
Loans receivable (2)	319,053		4,050		5.04	%	308,087		4,006		5.16	%
Total interest earning assets	396,906		4,502		4.50	%	381,471		4,437		4.61	%
Non-interest earning assets	31,425						31,290
Total Assets	$	428,331					$	412,761
Interest-bearing liabilities:
NOW accounts	$	111,703	$	104	0.37	%	$	103,622	$	96	0.37	%
Money market accounts	25,887		24		0.37	%	21,125		19		0.36	%
Savings accounts	20,703		10		0.19	%	18,237		11		0.24	%
Time deposits	163,350		425		1.03	%	158,394		400		1.00	%
Total interest-bearing deposits	321,643		563		0.69	%	301,378		526		0.69	%
Borrowings	15,696		74		1.87	%	25,096		125		1.98	%
Subordinated debentures	5,000		25		1.98	%	5,000		24		1.90	%
Total interest-bearing liabilities	342,339		662		0.77	%	331,474		675		0.81	%
Non-interest bearing deposits	44,984						41,909
Other liabilities	2,492						2,050
Total liabilities	389,815						375,433
Stockholders’ equity	38,516						37,328
Total Liabilities and Stockholders’ Equity	$	428,331					$	412,761
Net interest income			$	3,840					$	3,762
Net interest spread (1)					3.73	%					3.81	%
Net interest margin (1) (3)					3.84	%					3.91	%
Return on average assets ratio					0.72	%					0.89	%
Return on average equity ratio					7.98	%					9.88	%
Average equity to assets ratio					8.99	%					9.04	%

(1)  Income and yield stated at a tax equivalent basis for nontaxable securities using the marginal corporate Federal tax rate of 34.0%

(2)  Average loans include non-performing loans.  Interest income includes interest and fees on loans, but does not include interest on loans on non-accrual.

(3)  Net interest income as a percentage of average interest-earning assets.

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Average Consolidated Balance Sheets and Net Interest Analysis (Dollars in thousands) Nine months ended September 30,

	2015						2014
	Average Balance		Income/ Expense		Average Rate		Average Balance		Income/ Expense		Average Rate
Earning assets:
Federal funds sold	$	18,308	$	30	0.22	%	$	21,623	$	34	0.21	%
Interest-bearing deposits in other financial institutions	596		7		1.57	%	—		—		0.00	%
Available-for-sale securities (1)
Taxable	34,675		465		1.79	%	34,352		450		1.75	%
Nontaxable	24,000		784		4.37	%	20,449		744		4.86	%
Federal Home Loan Bank stock	2,025		61		4.03	%	2,025		60		3.96	%
Loans receivable (2)	319,939		12,107		5.06	%	305,021		11,728		5.14	%
Total interest earning assets	399,543		13,454		4.50	%	383,470		13,016		4.54	%
Non-interest earning assets	30,639						32,017
Total Assets	$	430,182					$	415,487
Interest-bearing liabilities:
NOW accounts	$	111,813	$	302	0.36	%	$	104,727	$	314	0.40	%
Money market accounts	25,894		74		0.38	%	22,739		59		0.35	%
Savings accounts	20,207		29		0.19	%	17,642		31		0.23	%
Time deposits	163,841		1,287		1.05	%	160,357		1,216		1.01	%
Total interest-bearing deposits	321,755		1,692		0.70	%	305,465		1,620		0.71	%
Borrowings	18,538		219		1.58	%	25,062		368		1.96	%
Subordinated debentures	5,000		73		1.95	%	5,000		71		1.90	%
Total interest-bearing liabilities	345,293		1,984		0.77	%	335,527		2,059		0.82	%
Non-interest bearing deposits	44,163						41,298
Other liabilities	2,153						1,977
Total liabilities	391,609						378,802
Stockholders’ equity	38,573						36,685
Total Liabilities and Stockholders’ Equity	$	430,182					$	415,487
Net interest income			$	11,470					$	10,957
Net interest spread (1)					3.73	%					3.72	%
Net interest margin (1) (3)					3.84	%					3.82	%
Return on average assets ratio					0.76	%					0.76	%
Return on average equity ratio					8.51	%					8.58	%
Average equity to assets ratio					8.97	%					8.83	%

(1)  Income and yield stated at a tax equivalent basis for nontaxable securities using the marginal corporate Federal tax rate of 34.0%

(2)  Average loans include non-performing loans.  Interest income includes interest and fees on loans, but does not include interest on loans on non-accrual.

(3)  Net interest income as a percentage of average interest-earning assets.

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Rate/Volume Analysis

The following table sets forth the effects of changing rates and volumes on our net interest income for the nine months ended September 30, 2015 and 2014.  Information is provided with respect to (1) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (2) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume).  Changes attributable to the combined input of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

	(Dollars in Thousands)
	Nine Months Ended September 30, 2015 Vs. 2014
	Increase (Decrease) Due to
	Rate		Volume		Net
Interest-earning assets:
Federal funds sold	1		(5	)	(4	)
Interest-bearing deposits in other financial institutions	7		—		7
Available-for-sale securities
Taxable	11		4		15
Nontaxable (1)	(89	)	129		40
Federal Home Loan Bank stock	1		—		1
Loans, net	(195	)	574		379
Total Net Change in income on interest-earning assets	(264	)	702		438
Interest-bearing liabilities:
NOW accounts	(33	)	21		(12	)
Money market accounts	7		8		15
Savings accounts	(7	)	5		(2	)
Time deposits	45		26		71
FHLB and other borrowings	(53	)	(96	)	(149	)
Subordinated debentures	2		—		2
Total Net Change in expense on interest-earning liabilities	(39	)	(36	)	(75	)
Net change in net interest income	(225	)	738		513
Percentage change	-43.86	%	143.86	%	100.0	%

(1) Income stated at a fully tax equivalent basis using the marginal corporate Federal tax rate of 34.0%.

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Provision for Loan Losses

No provision for loan losses was recorded for the third quarter of 2015 or the third quarter of 2014. The allowance for loan losses to total loans was 1.53% of total loans at September 30, 2015 compared to 1.58% at September 30, 2014. Net charge-offs (recoveries) were ($38,000) for the third quarter of 2015 compared to $50,000 in the third quarter of 2014.

Provision expense for the nine months ended September 30, 2015 decreased $75,000, from $275,000 to $200,000. Net charge-offs were $64,000 for the nine months ended September 30, 2015 compared to $25,000 for the nine months ended September 30, 2014.

Non-Interest Income

Non-interest income for the three months ended September 30, 2015 increased $76,000, or 9.9%, compared to the three months ended September 30, 2014, primarily due to an increase in service charges on deposit accounts due to the introduction of a new consumer deposit transaction account.

Non-interest income for the nine months ended September 30, 2015 increased $208,000, or 9.7%, compared to the nine months ended September 30, 2014, primarily due to an increase in service charges on deposit accounts, gain on sale of mortgage loans and non-deposit brokerage fees.

Non-Interest Expense

Non-interest expense for the three months ended September 30, 2015 increased $389,000, or 12.4%, compared to the three months ended September 30, 2014, due to the $262,000 loss on disposal of a former branch facility, and an increase in personnel expenses of $131,000, primarily as a result of normal salary adjustments.

Non-interest expense for the nine months ended September 30, 2015 increased $643,000, or 6.9%, compared to the nine months ended September 30, 2014, primarily due to an increase in personnel expenses, occupancy expense and other operating expenses, and the loss on disposal of a former branch facility.

Income Taxes

Income tax expense was calculated using our expected effective rate for 2015 and 2014.  We have recognized deferred tax liabilities and assets to show the tax effects of differences between the financial statement and tax bases of assets and liabilities.  Our statutory federal tax rate was 34.0% in both 2015 and 2014. The effective tax rate for the third

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quarter of 2015 was 27.1% compared to a 28.6% effective tax rate for the third quarter of 2014. The effective tax rate year-to-date was 27.5% for both 2015 and 2014. The difference between the statutory and effective rates are impacted by such factors as income from tax-exempt loans, tax-exempt income on state and municipal securities, and income on bank owned life insurance.

Balance Sheet Review

Overview

Total assets at September 30, 2015 were $424.3 million, an increase of $11.5 million, or 2.8%, from $412.8 million at December 31, 2014.  Average assets during the third quarter were $428.3 million, an increase of 3.8%, or $15.5 million, from $412.8 million in the third quarter of 2014.  Average interest earning assets increased 4.0%, or $15.4 million, from $381.5 million in the third quarter of 2014 to $396.9 million in the third quarter of 2015.

Loans

Loans increased $8.6 million, or 2.7%, from $318.5 million at December 31, 2014 to $327.1 million at September 30, 2015.  Total loans averaged $319.1 million the third quarter of 2015, compared to $308.1 million the third quarter of 2014, an increase of $11.0 million, or 3.6%.  We experienced increases in all portfolios except consumer loans during the first nine months of the year compared to December 31, 2014. The following table presents a summary of the loan portfolio by category:

	(Dollars in Thousands)
	September 30, 2015				December 31, 2014
			% of Total Loans				% of Total Loans
Commercial and agricultural	$	47,137	14.41	%	$	43,439	13.64	%
Commercial real estate	197,473		60.36	%	192,096		60.32	%
Residential real estate	78,326		23.94	%	78,270		24.57	%
Consumer	4,213		1.29	%	4,672		1.47	%
	$	327,149	100	%	$	318,477	100	%

The majority of our loans are to customers located in south central Kentucky and central Tennessee.  As of September 30, 2015, our twenty largest credit relationships consisted of loans and loan commitments ranging from $3.8 million to $7.7 million.  The aggregate amount of these credit relationships was $97.3 million. As of December 31, 2014, our twenty largest credit relationships consisted of loans and loan commitments ranging from $3.9 million to $7.8 million.  The aggregate amount of these credit relationships was $95.4 million.

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Our lending activities are subject to a variety of lending limits imposed by state and federal law.  Citizens First Bank’s secured legal lending limit to a single borrower was approximately $12.5 million at September 30, 2015 and December 31, 2014.

As of September 30, 2015, we had $23.9 million of participations in loans purchased from, and $23.8 million of participations in loans sold to, other banks. As of December 31, 2014, we had $18.1 million of participations in loans purchased from, and $19.9 million of participations in loans sold to, other banks.

The following table sets forth the maturity distribution of the loan portfolio as of September 30, 2015.  Maturities are based on contractual terms.  Our policy is to specifically review and approve all loans renewed; loans are not automatically rolled over.

	(Dollars in Thousands)
Loan Maturities as of September 30, 2015	Within One Year		After One but Within Five Years		After Five Years		Total
Commercial and agricultural	$	17,282	$	18,879	$	10,976	$	47,137
Commercial real estate	33,251		118,363		45,859		197,473
Residential real estate	7,366		39,254		31,706		78,326
Consumer	834		3,339		40		4,213
Total	$	58,733	$	179,835	$	88,581	$	327,149

Credit Quality and the Allowance for Loan Losses

The allowance for loan losses represents management’s estimate of probable credit losses incurred in the loan portfolio. Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on loans based on historical loss experience, and consideration of current economic trends and conditions, all of which may be susceptible to significant change.

The following table sets forth the breakdown of the allowance for loan losses by loan category at the dates indicated.  This allocation is not intended to suggest how actual losses may occur.

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	(Dollars in Thousands)
	September 30, 2015				December 31, 2014
	Amount		% of Loans in Each Category to Toal Loans		Amount		% of Loans in Each Category to Toal Loans
Residential real estate loans	$	458	23.94	%	$	582	24.57	%
Consumer and other loans	36		1.29	%	45		1.47	%
Commercial and agricultural	804		14.41	%	1,029		13.64	%
Commercial real estate	3,582		60.36	%	3,088		60.32	%
Unallocated	141		0.00	%	141		0.00	%
Total allowance for loan losses	$	5,021	100.00	%	$	4,885	100.00	%

We maintain a modest unallocated amount in the allowance to assist in mitigating inherent risk that cannot be quantitatively or qualitatively determined, including, but not limited to, new loan products and new markets for which insufficient history exists for a robust analysis.  Allocations on individual loans and historical loss rates are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience. The unallocated portion of the allowance was at $141,000 at December 31, 2014 and September 30, 2015.

The following table sets forth selected asset quality measurements and ratios for the periods indicated:

	(Dollars in Thousands)
	September 30,			December 31,
	2015			2014
Non-accrual loans	$	806		$	446
Loans 90+ days past due/accruing	—			—
Restructured loans on non-accrual	—			721
Total non-performing loans	806			1,167
Other real estate owned	207			198
Total non-performing assets	$	1,013		$	1,365
Non-performing loans to total loans	0.25		%	0.37		%
Non-performing assets to total assets	0.24		%	0.33		%
Net-charge-offs YTD	$	64		$	43
Net charge-offs YTD to average YTD total loans, annualized	0.03		%	0.01		%
Allowance for loan losses to non-performing loans	622.95		%	418.60		%
Allowance for loan losses to total loans	1.53		%	1.53		%

Non-performing assets totaled $1.0 million at September 30 2015, compared to $1.4 million at December 31, 2014, a decrease of $352,000. Payoffs and paydowns of $967,000 included the charge off of $70,000 in principal, with decreases offset by the addition of $79,000 in commercial loans, $439,000 in commercial real estate loans, and $98,000 in residential real estate loans.

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Non-performing loans consist of non-accrual loans and loans 90 days or more past due and still accruing interest. Non-performing assets are defined as non-performing loans, other real estate owned, and repossessed assets. Management classifies commercial and commercial real estate loans as non-accrual when principal or interest is past due 90 days or more and the loan is not adequately collateralized, or earlier when, in the opinion of management, principal or interest is not likely to be paid in accordance with the terms of the obligation. We charge off consumer loans after 120 days of delinquency unless they are adequately secured and in the process of collection. Non-accrual loans are not reclassified as accruing until principal and interest payments are brought current and future payments appear reasonably certain.

Troubled debt restructurings (TDRs) are modified loans in which a concession is provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concession provided is not available to the borrower through either normal channels or other sources. However, not all loan modifications are TDRs. Our standards relating to loan modifications consider, among other factors, minimum verified income requirements, cash flow analysis, and collateral valuations. However, each potential loan modification is reviewed individually and the terms of the loan are modified to meet a borrower’s specific circumstances at a point in time. TDRs can be classified as either accrual or nonaccrual loans. Non-accrual TDRs are included in non-accrual loans whereas accruing TDRs are excluded because the borrower remains contractually current.

Loans that exhibit probable or observed credit weaknesses are subject to individual review. Where appropriate, allocations for individual loans are included in the allowance calculation based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flow and legal options available to us.  Included in the review of individual loans are those that are impaired as provided in ASC Topic 310 “Receivables”. We evaluate the collectability of both principal and interest when assessing the need for a loss accrual.  Historical loss rates are applied to other loans not subject to individual allocations.  These historical loss rates may be adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition.  Factors which management considers in the analysis include the effects of the national and local economies, trends in the nature and volume of loans (delinquencies, charge-offs and non-accrual loans), changes in mix, asset quality trends, risk management and loan administration, changes in internal lending policies and credit standards, and examination results from bank regulatory agencies and our internal credit examiners.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status and the

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probability of collecting scheduled principal and interest payments when due.  Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis for all loan classes by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.

The following table presents impaired loans and the related allowance for loan losses attributable to loans evaluated for impairment by portfolio segment for the periods indicated:

	(Dollars in Thousands)
	September 30, 2015				December 31, 2014
	Loans		Allowance for Loan Losses		Loans		Allowance for Loan Losses
Residential real estate loans	$	1,003	$	3	$	1,098	$	7
Consumer and other loans	9		—		22		10
Commercial and agricultural	995		146		2,696		342
Commercial real estate	2,074		378		1,057		220
Impaired loans	4,081		527		4,873		579
Loans collectively evaluated for impairment	323,068		4,494		313,604		4,306
Total	$	327,149	$	5,021	$	318,477	$	4,885

The $792,000 decrease in impaired loans during the nine months ending September 30, 2015 is primarily attributed to two commercial loans totaling $1.06 million that were refinanced or are no longer evaluated for impairment, the transfer of $80,000 from a residential real estate loan  to OREO and the subsequent charge off of a $15,000 deficiency balance on the loan, that were offset by two commercial real estate loans totaling $439,000, two residential real estate loans totaling $98,000, and a $79,000 commercial loan that were evaluated for impairment as of September 30, 2015, as well as paydowns, payoffs, and charge-offs through the regular collection and resolution of loans previously evaluated for impairment. The allowance for loan losses was impacted by the changes in the composition of the loans individually evaluated for impairment, the changes in the underlying collateral values and current values of future cash flows used in the evaluation of these loans. Changes in the composition and balances of the various segments of the loan portfolio, as well as the assessment of the qualitative factors inherent in the loan portfolio resulted in a $188,000 increase in the allowance

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attributable to loans collectively evaluated for impairment from December 31, 2014 to September 30, 2015.

Securities

The investment securities portfolio is comprised of U.S. Government agency and government sponsored entity securities, agency mortgage-backed securities, tax-exempt securities of states and political subdivisions, a taxable municipal security, a corporate bond, and a trust preferred security. The purchase of nontaxable obligations of states and political subdivisions is a part of managing our effective tax rate.  Securities are all classified as available-for-sale, and averaged $58.7 million for the first nine months of 2015, compared to $54.8 million for 2014.

The tables below present the maturities and yield characteristics of securities as of September 30, 2015 and December 31, 2014.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	(Dollars in Thousands)
September 30, 2015	One Year or Less			Over One Year Through Five Years			Over Five Years Through Ten Years			Over Ten Years			Total Maturities			Fair Value
U.S. Government agencies	$	—		$	2,998		—			$	—		$	2,998		$	2,994
Agency mortgage-backed securities: (1)	248			22,937			4,753			—			27,938			28,388
Municipal securities	340			11,388			8,663			5,453			25,844			26,443
Trust preferred security	—			—			—			1,879			1,879			1,240
Corporate bond	—			—			1,000			—			1,000			1,003
Total available-for-sale securities	$	588		$	37,323		$	14,416		$	7,332		$	59,659		$	60,068
Percent of total	0.99		%	62.56		%	24.16		%	12.29		%	100.00		%
Weighted average yield(2)	4.82		%	2.47		%	3.34		%	4.24		%	2.92		%

(1)Agency mortgage-backed securities (residential) are grouped into average lives based on September 2015 prepayment projections.

(2)The weighted average yields are based on amortized cost and municipal securities are calculated on a full tax- equivalent basis.

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	(Dollars in Thousands)
December 31, 2014	One Year or Less			Over One Year Through Five Years			Over Five Years Through Ten Years			Over Ten Years			Total Maturities			Fair Value
U.S. Government agencies	$	—		$	1,999		$	1,000		$	—		$	2,999		$	2,948
Agency mortgage-backed securities: (1)	4			24,231			3,006			—			27,241			27,519
Municipal securities	535			7,802			11,466			5,547			25,350			26,039
Trust preferred security	—			—			—			1,876			1,876			1,480
Corporate bond	—			—			1,000			—			1,000			1,000
Total available-for-sale securities	$	539		$	34,032		$	16,472		$	7,423		$	58,466		$	58,986
Percent of total	0.92		%	58.21		%	28.17		%	12.70		%	100.00		%
Weighted average yield(2)	5.27		%	2.40		%	3.44		%	4.31		%	2.96		%

The trust preferred security category consists of one single issue trust preferred security which has experienced a decline in fair value due to inactivity in the market. No impairment charge is being taken as no loss of principal is anticipated and all principal and interest payments are being received as scheduled. The Company does not intend to sell this security and does not believe it will be required to sell this security before recovery. All rated securities are investment grade. For those that are not rated, the financial condition has been evaluated and no adverse conditions were identified related to repayment. Declines in fair value are a function of rate changes in the market and market illiquidity.

Deposits

Our primary funding source for lending and investment activities results from customer deposits and a deposit listing service.  Deposits at September 30, 2015 were $362.5 million, an increase of $20.7 million, or 6.1%, compared to $341.8 million at December 31, 2014.  Total deposits averaged $366.6 million the third quarter of 2015, an increase of $23.3 million, or 6.8%, compared to $343.3 million during the third quarter of 2014.  Average deposits increased during the year, but the cost of funds declined as higher cost deposits matured and were renewed at lower rates.

Time deposits that meet or exceed the FDIC insurance limit of $250,000 were $11.5 million and $8.1 million at September 30, 2015 and December 31, 2014, respectively. Time deposits of $100,000 or more totaled $77.9 million at September 30, 2015, compared to $63.4 million at December 31, 2014.  Interest expense on time deposits of $100,000 or more was $615,000 for the nine months ended September 30, 2015, compared to $498,000 for the nine months ended September 30, 2014.  Our cost has decreased as these certificates of deposit matured and were renewed at lower current market rates.  The following table shows the maturities of time deposits as of September 30, 2015.

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	(Dollars in Thousands)
	September 30, 2015
Three months or less	$	29,148
Over three through six months	38,178
Over six through twelve months	29,966
Over one year through three years	55,429
Over three years through five years	8,924
Over five years	4
Total	$	161,649

Borrowings

FHLB Advances. We obtain advances from the Federal Home Bank of Cincinnati (FHLB) for funding and liability management.  These advances are collateralized by a blanket agreement of eligible 1-4 family residential mortgage loans and eligible commercial real estate. Total advances as of September 30, 2015 were $13.0 million compared to $24.0 million at December 31, 2014. Rates vary based on the term to repayment, and are summarized below as of September 30, 2015:

				(Dollars in Thousands)
Type	Maturity	Rate		Amount
Fixed	December 2, 2015	1.14	%	5,000
Fixed	May 25, 2016	0.99	%	3,000
Fixed	June 3, 2016	0.68	%	2,000
Fixed	May 24, 2019	1.72	%	3,000
				$	13,000

At September 30, 2015, we had available collateral to borrow an additional $63.5 million from the FHLB compared to $40.6 million at December 31, 2014.

Other Borrowings.  In 2014, we renewed a credit agreement with a community bank to be used for operating capital and general corporate purposes.  The line has a total availability of $3.0 million, matures November 1, 2015, and bears interest at the prime rate as published in the Money Rates section of The Wall Street Journal, plus 0.25%, with interest payable monthly. The line has a floor rate of 4.5%. The line is secured by the Bank’s common stock.  As of September 30, 2015 the line had a balance of $2.5 million compared to a balance of $1.5 million at December 31, 2014.

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At September 30, 2015, we had established Federal Funds lines of credit totaling $18.8 million with three correspondent banks.  No amounts were drawn as of September 30, 2015 or December 31, 2014.

We issued $5.0 million in subordinated debentures in October, 2006.  These trust preferred securities bear an interest rate, which reprices each calendar quarter, of 165 basis points over 3-month LIBOR (London Inter Bank Offering Rate).  Our rate as of September 30, 2015 was 1.93%.  The subordinated debentures may be included with tier 1 capital (with certain limitations) under current regulatory guidelines.

Liquidity

Our objective for liquidity management is to ensure that we have funds available to meet deposit withdrawals and credit demands without unduly penalizing profitability.  In order to maintain a proper level of liquidity, the Bank has several sources of funds available on a daily basis that can be used for liquidity purposes. Those sources of funds include the Bank’s core deposits, cash flow generated by repayment of principal and interest on loans and investment securities; FHLB borrowings; and federal funds purchased. While maturities and scheduled amortization of loans and investment securities are generally a predictable source of funds, deposit outflows and mortgage prepayments are influenced significantly by general interest rates, economic conditions, and competition in our local markets.

Our asset and liability management committee meets monthly and monitors the composition of the balance sheet to ensure comprehensive management of interest rate risk and liquidity.  We prepare a monthly cash flow report which forecasts funding needs and availability for the coming months, based on forecasts of loan closings and payoffs, potentially callable securities, and other factors.

Capital

Stockholders’ equity increased $287,000, or 0.7%, from December 31, 2014 to September 30, 2015.  On April 15, 2015, the Company repurchased the 254,218 warrants issued in 2008 to the US Treasury as part of its participation in the US Treasury’s Capital Purchase Program.  The repurchase price of the warrants was $1.7 million, which offset the increase in stockholders’ equity due to net income less preferred dividends of $1.4 million.  The book value per common share has increased to $15.78 as of September 30, 2015 compared to $15.64 at December 31, 2014.  No common dividends have been paid during 2015.

We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could have a material effect on our financial statements. Under capital

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adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under the regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

In July 2013, the Federal Reserve Board and the FDIC approved final rules that substantially amend the regulatory capital rules applicable to the Company and the Bank. The final rules implement the regulatory capital reforms of the Basel Committee on Banking Supervision, commonly called Basel III, and changes required by the Dodd-Frank Act.

Under these rules, the leverage and risk-based capital ratios of bank holding companies may not be lower than the leverage and risk-based capital ratios for insured depository institutions. The final rules implementing the Basel III regulatory capital reforms became effective as to the Company and the Bank on January 1, 2015, and include new minimum risk-based capital and leverage ratios. Moreover, these rules refine the definition of what constitutes “capital” for purposes of calculating those ratios, including the definitions of Tier 1 capital and Tier 2 capital. The new minimum capital level requirements applicable to bank holding companies and banks subject to the rules are: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 risk-based capital ratio of 6% (increased from 4%); (iii) a total risk-based capital ratio of 8% (unchanged from current rules); (iv) a Tier 1 leverage ratio of 4% for all institutions. The rules also establish a “capital conservation buffer” of 2.5% (to be phased in over three years) above the new regulatory minimum risk-based capital ratios, and result in the following minimum ratios once the capital conservation buffer is fully phased in: (i) a common equity Tier 1 risk-based capital ratio of 7%, (ii) a Tier 1 risk-based capital ratio of 8.5%, and (iii) a total risk-based capital ratio of 10.5%. The capital conservation buffer requirement is to be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if capital levels fall below minimum plus the buffer amounts.

As a component of new BASEL III capital regulations, Citizens First Bank chose to “opt-out” of including accumulated other comprehensive income (AOCI) in regulatory capital with the filing of the March 31, 2015 Call Report.

Our capital ratios, calculated in accordance with regulatory guidelines, were as follows:

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September 30, 2015

	(Dollars in Thousands)
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk-Weighted Assets)
Consolidated	$	43,737	12.53	%	$	27,922	8.0	%	N/A		N/A
Citizens First Bank, Inc.	45,723		13.10	%	27,922		8.0	%	$	34,903	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	39,365		11.28	%	20,942		6.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	20,942		6.0	%	27,922		8.0	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated	26,706		7.65	%	15,706		4.5	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	15,706		4.5	%	22,687		6.5	%
Tier I Leverage Capital to average assets
Consolidated	39,365		9.28	%	13,961		4.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		9.77	%	16,924		4.0	%	21,155		5.0	%

December 31, 2014

	(Dollars in Thousands)
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk-Weighted Assets)
Consolidated	$	42,879	12.74	%	$	26,929	8.0	%	N/A		N/A
Citizens First Bank, Inc.	44,056		13.09	%	26,929		8.0	%	$	33,661	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	38,671		11.49	%	13,465		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		11.83	%	13,465		4.0	%	20,197		6.0	%
Tier I Leverage Capital to average assets
Consolidated	38,671		9.42	%	16,415		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		9.78	%	16,294		4.0	%	20,368		5.0	%

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ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

We use a simulation model as a tool to monitor and evaluate interest rate risk exposure.  The model is designed to measure the sensitivity of net interest income and net income to changing interest rates over future time periods.  Forecasting net interest income and its sensitivity to changes in interest rates requires us to make assumptions about the volume and characteristics of many attributes, including assumptions relating to the replacement of maturing earning assets and liabilities.  Other assumptions include, but are not limited to, projected prepayments, projected new volume, and the predicted relationship between changes in market interest rates and changes in customer account balances.  These effects are combined with our estimate of the most likely rate environment to produce a forecast of net interest income and net income.  The forecasted results are then adjusted for the effect of a gradual increase and decrease in market interest rates on our net interest income and net income.  Because assumptions are inherently uncertain, the model cannot precisely estimate net interest income or net income or the effect of interest rate changes on net interest income and net income.  Actual results could differ significantly from simulated results.

At September 30, 2015, the model indicated that if rates were to increase by 200 basis points during the remainder of the calendar year, then net interest income would increase 5.41% over the next twelve months.  The model indicated that if rates were to decrease by 200 basis points over the same period, then net interest income would decrease 1.49%.  The table below notes the projected changes in net interest income as indicated by the model for increases in rates up to 400 basis points and decreases in rates to 200 basis points.

Projections for: Oct 2015 - Sept 2016

Projected Interest Rate Change	Estimated Value	Net Interest Income $ Change From Base	% Change From Base
+400	17,535,249	2,108,284	13.67	%
+300	16,896,889	1,469,923	9.53	%
+200	16,261,474	834,508	5,41	%
Base	15,426,965	0	0.00	%
-200	15,197,275	-229,690	-1.49	%

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Item 4.  Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and have concluded that our disclosure controls and procedures were adequate and effective in all material respects to ensure that all material information required to be disclosed in this report has been made known to them in a timely fashion.

There was no change in our internal controls over financial reporting that occurred during the relevant period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, subsequent to the date of the Chief Executive Officer’s and Chief Financial Officer’s evaluation, nor were there any material weaknesses in the controls which required corrective action.

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PART II-OTHER INFORMATION

Item 6. Exhibits

EXHIBIT INDEX

3.1Restated Articles of Incorporation of Citizens First Corporation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form SB-2 (No. 333-103238)).

3.2Articles of Amendment to Amended and Restated Articles of Incorporation of Citizens First Corporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated June 5, 2007).

3.3Articles of Amendment to Amended and Restated Articles of Incorporation of Citizens First Corporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed December 23, 2008).

3.4Amended and Restated Bylaws of Citizens First Corporation (incorporated by reference to Exhibit 3 of the Registrant’s Current Report on Form 8-K filed April 17, 2014).

4.1Restated Articles of Incorporation of Citizens First Corporation, as amended (see Exhibit 3.1).

4.2Articles of Amendment to Amended and Restated Articles of Incorporation of Citizens First Corporation (see Exhibits 3.2 and 3.3).

4.3Amended and Restated Bylaws of Citizens First Corporation (see Exhibit 3.4).

4.4Copy of Registrants’ Agreement Pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K dated March 30, 2007 with respect to certain debt instruments (incorporated by reference to Exhibit 4.4 of the Registrant’s Form 10K-SB dated March 31, 2007).

4.5Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed December 23, 2008).

31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.

31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.

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32.1Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

101Interactive data files: (i) Consolidated Balance Sheets at September 30, 2015 and December 31, 2014, (ii) the Consolidated Statements of Income for the nine months ended September 30, 2015 and September 30, 2014, (iii) the Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2015 and September 30, 2014, (iv) Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2015 and 2014, and (v) Notes to Consolidated Financial Statements.**

**Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CITIZENS FIRST CORPORATION
Date: November 12, 2015	/s/M. Todd Kanipe
	M. Todd Kanipe
	President and Chief Executive Officer
Date: November 12, 2015	/s/ J. Steven Marcum
	J. Steven Marcum
	Executive Vice President and Chief Financial Officer

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EX-31.1

Exhibit 31.1

Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

I, M Todd Kanipe certify that:

1.I have reviewed this Form 10-Q of Citizens First Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and

1

procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015

/s/M. Todd Kanipe

M. Todd Kanipe

President and Chief Executive Officer

2

EX-31.2

Exhibit 31.2

Exhibit 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

I, J. Steven Marcum certify that:

1.        I have reviewed this Form 10-Q of Citizens First Corporation;

2.        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the

1

small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015

/s/J. Steven Marcum

J. Steven Marcum

Executive Vice President and Chief
Financial Officer

2

EX-32.1

Exhibit 32.1

Exhibit 32.1 Section 1350 Certification

In connection with the Quarterly Report of Citizens First Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, M. Todd Kanipe, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/M. Todd Kanipe
	M. Todd Kanipe
	President and Chief Executive Officer (Principal Executive Officer)

Date: November 12, 2015

This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed ‘filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act or otherwise subject to the liability of that section.

EX-32.2

Exhibit 32.2

Exhibit 32.2   Section 1350 Certification

In connection with the Quarterly Report of Citizens First Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, J. Steven Marcum, Executive Vice President, Finance and Chief Financial Officer, of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ J. Steven Marcum
	J. Steven Marcum
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: November 12, 2015

This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed ‘filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act or otherwise subject to the liability of that section.

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Fair Value Measurements (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Assets:
Securities available-for-sale	$ 60,068,000		$ 60,068,000		$ 58,986,000
Impaired loans	4,081,000		4,081,000		4,873,000
Other real estate owned	207,000		207,000		198,000
Principal balance of impaired loans	580,000		580,000		841,000
Valuation allowance	260,000		260,000		330,000
Increase (decrease) in the provision for loan losses			260,000	$ (256,000)
Write-downs of other real estate owned	4,000	$ 14,000	27,000	$ 47,000
U. S. government agencies and government sponsored entities
Assets:
Securities available-for-sale	2,994,000		2,994,000		2,948,000
Agency mortgage-backed securities: residential
Assets:
Securities available-for-sale	28,388,000		28,388,000		27,519,000
State and municipal
Assets:
Securities available-for-sale	26,443,000		26,443,000		26,039,000
Trust preferred security
Assets:
Securities available-for-sale	1,240,000		1,240,000		1,480,000
Corporate bonds
Assets:
Securities available-for-sale	1,003,000		1,003,000		1,000,000
Recurring basis | Level 2
Assets:
Securities available-for-sale	58,828,000		58,828,000		57,506,000
Recurring basis | Level 2 | U. S. government agencies and government sponsored entities
Assets:
Securities available-for-sale	2,994,000		2,994,000		2,948,000
Recurring basis | Level 2 | Agency mortgage-backed securities: residential
Assets:
Securities available-for-sale	28,388,000		28,388,000		27,519,000
Recurring basis | Level 2 | State and municipal
Assets:
Securities available-for-sale	26,443,000		26,443,000		26,039,000
Recurring basis | Level 2 | Corporate bonds
Assets:
Securities available-for-sale	1,003,000		1,003,000		1,000,000
Recurring basis | Level 3
Assets:
Securities available-for-sale	1,240,000		1,240,000		1,480,000
Recurring basis | Level 3 | Trust preferred security
Assets:
Securities available-for-sale	1,240,000		1,240,000		1,480,000
Non-recurring basis | Level 3 | Commercial Loan
Assets:
Impaired loans					423,000
Non-recurring basis | Level 3 | Commercial RE
Assets:
Impaired loans	260,000		260,000		29,000
Other real estate owned	135,000		135,000		198,000
Non-recurring basis | Level 3 | Residential real estate properties
Assets:
Impaired loans	60,000		60,000		$ 59,000
Other real estate owned	$ 72,000		$ 72,000

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Available-For-Sale Securities (Details 3) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) item	Dec. 31, 2014 USD ($)
Investment securities with unrealized losses
Fair Value, Less than 12 Months	$ 4,947	$ 7,017
Unrealized Losses, Less than 12 Months	(33)	(34)
Fair Value, 12 Months or More	5,381	7,643
Unrealized Losses, 12 Months or More	(696)	(548)
Fair Value, Total	10,328	14,660
Unrealized Losses, Total	$ (729)	(582)
Number of adverse conditions identified, related to repayment of securities that are not rated | item	0
Percentage of unrealized losess	92.00%
Impairment charge on available for sale securities	$ 0
Loss of principal anticipated	0
Loss of interest anticipated	0
U. S. government agencies and government sponsored entities
Investment securities with unrealized losses
Fair Value, Less than 12 Months		992
Unrealized Losses, Less than 12 Months		(8)
Fair Value, 12 Months or More	1,993	1,955
Unrealized Losses, 12 Months or More	(6)	(43)
Fair Value, Total	1,993	2,947
Unrealized Losses, Total	(6)	(51)
Agency mortgage-backed securities: residential
Investment securities with unrealized losses
Fair Value, Less than 12 Months		1,134
Unrealized Losses, Less than 12 Months		(2)
Fair Value, 12 Months or More	1,553	1,678
Unrealized Losses, 12 Months or More	(14)	(29)
Fair Value, Total	1,553	2,812
Unrealized Losses, Total	(14)	(31)
State and municipal
Investment securities with unrealized losses
Fair Value, Less than 12 Months	4,947	4,891
Unrealized Losses, Less than 12 Months	(33)	(24)
Fair Value, 12 Months or More	595	2,530
Unrealized Losses, 12 Months or More	(37)	(80)
Fair Value, Total	5,542	7,421
Unrealized Losses, Total	(70)	(104)
Trust preferred security
Investment securities with unrealized losses
Fair Value, 12 Months or More	1,240	1,480
Unrealized Losses, 12 Months or More	(639)	(396)
Fair Value, Total	1,240	1,480
Unrealized Losses, Total	$ (639)	$ (396)

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Regulatory Capital Matters (Details) $ in Thousands	Sep. 30, 2015 USD ($) item	Dec. 31, 2014 USD ($)
Regulatory capital matters
Number of classifications for prompt corrective action regulations | item	5
Total Capital (to Risk-Weighted Assets)
Actual, Amount	$ 43,737	$ 42,879
For Capital Adequacy Purposes, Amount	$ 27,922	$ 26,929
Total Capital (to Risk-Weighted Assets)
Actual, Ratio (as a percent)	12.53%	12.74%
For Capital Adequacy Purposes, Ratio (as a percent)	8.00%	8.00%
Tier I Capital (to Risk-Weighted Assets)
Actual, Amount	$ 39,365	$ 38,671
For Capital Adequacy Purposes, Amount	$ 20,942	$ 13,465
Tier I Capital (to Risk-Weighted Assets)
Actual, Ratio (as a percent)	11.28%	11.49%
For Capital Adequacy Purposes, Ratio (as a percent)	6.00%	4.00%
Common equity Tier 1 capital (to risk weighted assets)
Actual Amount	$ 26,706
For Capital Adequacy Purposes, Amount	$ 15,706
Common Equity Tier 1 capital (to risk-weighted assets)
Actual, Ratio (as a percent)	7.65%
For Capital Adequacy Purposes, Ratio (as a percent)	4.50%
Tier I Leverage Capital to Average Assets
Actual, Amount	$ 39,365	$ 38,671
For Capital Adequacy Purposes, Amount	$ 13,961	$ 16,415
Tier I Capital (to Average Assets)
Actual, Ratio (as a percent)	9.28%	9.42%
For Capital Adequacy Purposes, Ratio (as a percent)	4.00%	4.00%
Citizens First Bank, Inc.
Total Capital (to Risk-Weighted Assets)
Actual, Amount	$ 45,723	$ 44,056
For Capital Adequacy Purposes, Amount	27,922	26,929
To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 34,903	$ 33,661
Total Capital (to Risk-Weighted Assets)
Actual, Ratio (as a percent)	13.10%	13.09%
For Capital Adequacy Purposes, Ratio (as a percent)	8.00%	8.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	10.00%	10.00%
Tier I Capital (to Risk-Weighted Assets)
Actual, Amount	$ 41,351	$ 39,837
For Capital Adequacy Purposes, Amount	20,942	13,465
To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 27,922	$ 20,197
Tier I Capital (to Risk-Weighted Assets)
Actual, Ratio (as a percent)	11.85%	11.83%
For Capital Adequacy Purposes, Ratio (as a percent)	6.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	8.00%	6.00%
Common equity Tier 1 capital (to risk weighted assets)
Actual Amount	$ 41,351
For Capital Adequacy Purposes, Amount	15,706
To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 22,687
Common Equity Tier 1 capital (to risk-weighted assets)
Actual, Ratio (as a percent)	11.85%
For Capital Adequacy Purposes, Ratio (as a percent)	4.50%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	6.50%
Tier I Leverage Capital to Average Assets
Actual, Amount	$ 41,351	$ 39,837
For Capital Adequacy Purposes, Amount	16,924	16,294
To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 21,155	$ 20,368
Tier I Capital (to Average Assets)
Actual, Ratio (as a percent)	9.77%	9.78%
For Capital Adequacy Purposes, Ratio (as a percent)	4.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	5.00%	5.00%

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Nature of Operations and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Summary of Significant Accounting Policies

Note 1 — Nature of Operations and Summary of Significant Accounting Policies

The accounting and reporting policies of Citizens First Corporation (the “Company”) and its subsidiary, Citizens First Bank, Inc. (the “Bank”), conform to U.S. generally accepted accounting principles and general practices within the banking industry.  The consolidated financial statements include the accounts of the Company and the Bank.  All significant intercompany transactions and accounts have been eliminated in consolidation.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Estimates used in the preparation of the financial statements are based on various factors including the current interest rate environment and the general strength of the local economy.  Changes in the overall interest rate environment can significantly affect the Company’s net interest income and the value of its recorded assets and liabilities.  Actual results could differ from those estimates used in the preparation of the financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in the accompanying unaudited financial statements.  Those adjustments consist only of normal recurring adjustments. Results of interim periods are not necessarily indicative of results to be expected for the full year.  The consolidated balance sheet of the Company as of December 31, 2014 has been derived from the audited consolidated balance sheet of the Company as of that date.

Recent Accounting Pronouncements—In May 2014 the FASB amended existing guidance related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. The Bank is currently evaluating the impact of this new accounting standard on the consolidated financial statements.

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Loans and Allowance for Loan Losses (Details 4) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	$ 806	$ 1,167
Commercial Loan
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	79	748
Commercial Real Estate - Other
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	439	45
Residential Real Estate
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	$ 288	364
Auto
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual		$ 10

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Loans and Allowance for Loan Losses (Details 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Unpaid Principal Balance
With no related allowance recorded	$ 1,643		$ 1,643		$ 2,155
With an allowance recorded	2,438		2,438		2,718
Total	4,081		4,081		4,873
Recorded Investment
With no related allowance recorded	1,643		1,643		2,155
With an allowance recorded	2,438		2,438		2,718
Total	4,081		4,081		4,873
Allowance for Loan Losses Allocated
Total	527		527		579
Average Recorded Investment
Total	4,096	$ 5,447	3,823	$ 5,975
Interest Income Recognized
Total	46	70	120	203
Cash Basis Interest Recognized
Total	36	47	108	149
Commercial Loan
Unpaid Principal Balance
With no related allowance recorded	63		63		1,129
With an allowance recorded	932		932		1,567
Recorded Investment
With no related allowance recorded	63		63		1,129
With an allowance recorded	932		932		1,567
Allowance for Loan Losses Allocated
Total	146		146		342
Average Recorded Investment
Total	1,003	2,743	1,032	2,977
Interest Income Recognized
Total	16	36	37	103
Cash Basis Interest Recognized
Total	15	24	36	77
Construction
Average Recorded Investment
Total		14		14
Interest Income Recognized
Total				1
Cash Basis Interest Recognized
Total				1
Commercial Real Estate - Other
Unpaid Principal Balance
With no related allowance recorded	644		644
With an allowance recorded	1,430		1,430		1,057
Recorded Investment
With no related allowance recorded	644		644
With an allowance recorded	1,430		1,430		1,057
Allowance for Loan Losses Allocated
Total	378		378		220
Average Recorded Investment
Total	2,077	1,482	1,765	1,712
Interest Income Recognized
Total	18	20	46	57
Cash Basis Interest Recognized
Total	13	14	44	42
Residential Real Estate
Unpaid Principal Balance
With no related allowance recorded	936		936		1,026
With an allowance recorded	67		67		72
Recorded Investment
With no related allowance recorded	936		936		1,026
With an allowance recorded	67		67		72
Allowance for Loan Losses Allocated
Total	3		3		7
Average Recorded Investment
Total	1,006	1,180	1,015	1,241
Interest Income Recognized
Total	12	14	36	40
Cash Basis Interest Recognized
Total	8	9	27	28
Auto
Recorded Investment
With an allowance recorded					10
Allowance for Loan Losses Allocated
Total					10
Average Recorded Investment
Total		15		17
Interest Income Recognized
Total				1
Consumer - Other
Unpaid Principal Balance
With an allowance recorded	9		9
Recorded Investment
With an allowance recorded	9		9		$ 12
Average Recorded Investment
Total	$ 10	$ 13	11	14
Interest Income Recognized
Total			1	1
Cash Basis Interest Recognized
Total			$ 1	$ 1

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Loans and Allowance for Loan Losses (Details 5) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Aging of the recorded investment in past due loans
30-59 Days Past Due	$ 132	$ 31
Over 90 Days Past Due	806	1,052
Total Past Due	938	1,083
Current	326,211	317,394
Loans and Leases Receivable, Gross, Total	327,149	318,477
Commercial Loan
Aging of the recorded investment in past due loans
Over 90 Days Past Due	79	645
Total Past Due	79	645
Current	47,058	42,794
Loans and Leases Receivable, Gross, Total	47,137	43,439
Construction
Aging of the recorded investment in past due loans
Current	24,444	18,064
Loans and Leases Receivable, Gross, Total	24,444	18,064
Commercial Real Estate - Other
Aging of the recorded investment in past due loans
Over 90 Days Past Due	439	45
Total Past Due	439	45
Current	172,590	173,987
Loans and Leases Receivable, Gross, Total	173,029	174,032
Residential Real Estate
Aging of the recorded investment in past due loans
30-59 Days Past Due	132	31
Over 90 Days Past Due	288	362
Total Past Due	420	393
Current	77,906	77,877
Loans and Leases Receivable, Gross, Total	78,326	78,270
Auto
Aging of the recorded investment in past due loans
Current	1,486	1,820
Loans and Leases Receivable, Gross, Total	1,486	1,820
Consumer - Other
Aging of the recorded investment in past due loans
Current	2,727	2,852
Loans and Leases Receivable, Gross, Total	$ 2,727	$ 2,852

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Loans and Allowance for Loan Losses (Details 6)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($) item	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($) item	Dec. 31, 2014 USD ($)
Troubled Debt Restructurings
Total troubled debt restructurings	$ 3,300,000		$ 3,300,000		$ 4,400,000
Commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings	$ 0		$ 0
Number of Loans | item	13		13
Number of Loans | item		1	2	3
Pre-Modification Outstanding Recorded Investment		$ 666,000		$ 666,000
Post-Modification Outstanding Recorded Investment		666,000		666,000
Pre-Modification Outstanding Recorded Investment			$ 1,547,000	1,605,000
Post-Modification Outstanding Recorded Investment			1,547,000	1,605,000
Specific allocations reported for the troubled debt restructurings	$ 267,000	$ 424,000	$ 267,000	$ 424,000	$ 547,000
Number of payment defaults reported for troubled debt restructurings | item	0	0	0	0
Troubled debt restructurings charged off	$ 0	$ 0	$ 0	$ 0
Total recorded investment for loans modified (other than through troubled debt restructuring)	$ 19,200,000	$ 13,300,000	$ 19,200,000	$ 13,300,000
Commercial Loan
Troubled Debt Restructurings
Number of Loans | item		1		1
Pre-Modification Outstanding Recorded Investment		$ 666,000		$ 666,000
Post-Modification Outstanding Recorded Investment		$ 666,000		666,000
Pre-Modification Outstanding Recorded Investment				666,000
Post-Modification Outstanding Recorded Investment				$ 666,000
Commercial Real Estate - Other
Troubled Debt Restructurings
Number of Loans | item			2	1
Pre-Modification Outstanding Recorded Investment			$ 1,547,000	$ 924,000
Post-Modification Outstanding Recorded Investment			$ 1,547,000	$ 924,000
Residential Real Estate
Troubled Debt Restructurings
Number of Loans | item				1
Pre-Modification Outstanding Recorded Investment				$ 15,000
Post-Modification Outstanding Recorded Investment				$ 15,000

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating Activities
Net income	$ 2,456	$ 2,354
Items not requiring (providing) cash:
Depreciation and amortization	414	410
Provision for loan losses	200	275
Amortization of premiums and discounts on securities	239	221
Amortization of core deposit intangible	53	248
BOLI income	(136)	(141)
Proceeds from sale of mortgage loans	7,556	5,273
Origination of mortgage loans held for sale	(7,540)	(5,121)
Gains on sales of available-for-sale securities	(10)	(74)
Gains on sale of mortgage loans	(170)	(151)
Write-downs and losses on sale of other real estate owned	39	34
Gain on sale of premises and equipment	(12)	(15)
Loss on branch disposal	(262)
Changes in:
Accrued interest receivable	(70)	(84)
Other assets	83	684
Accrued interest payable and other liabilities	473	321
Net cash provided by operating activities	3,837	4,234
Investing Activities
Loan originations and payments, net	(8,848)	(16,064)
Purchase of interest-bearing deposits in other financial institutions	(2,480)
Purchase of premises and equipment	(260)	(169)
Proceeds from maturities of available-for-sale securities	5,601	4,706
Proceeds from sales of available-for-sale securities	1,010	5,888
Proceeds from sales of other real estate owned	62	440
Purchase of available-for-sale securities	(8,033)	(20,463)
Proceeds from sales of premises and equipment	383	28
Net cash provided by (used in) investing activities	(12,565)	(25,634)
Financing Activities
Net change in demand deposits, money market, NOW and savings accounts	9,932	(2,776)
Net change in time deposits	10,775	(2,990)
Repayment of FHLB advances	(11,000)
Repayment of TARP preferred stock		(3,266)
Repurchase of TARP warrants	(1,706)
Proceeds from other borrowings	1,000	7,000
Dividends paid on preferred stock	(389)	(390)
Net cash provided by financing activities	8,612	(2,422)
Increase in Cash and Cash Equivalents	(116)	(23,822)
Cash and Cash Equivalents, Beginning of Year	11,322	37,062
Cash and Cash Equivalents, End of Quarter	11,206	13,240
Supplemental Cash Flows Information
Interest paid	1,982	2,071
Income taxes paid	890	225
Loans transferred to other real estate owned	$ 111	$ 230

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Loans and Allowance for Loan Losses (Details 7) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Credit Quality Indicators
Minimum outstanding balance of loans to be reviewed on a monthly basis	$ 25
Total loans	327,149	$ 318,477
Commercial Loan
Credit Quality Indicators
Total loans	47,137	43,439
Construction
Credit Quality Indicators
Total loans	24,444	18,064
Commercial Real Estate - Other
Credit Quality Indicators
Total loans	173,029	174,032
Residential Real Estate
Credit Quality Indicators
Total loans	78,326	78,270
Auto
Credit Quality Indicators
Total loans	1,486	1,820
Consumer - Other
Credit Quality Indicators
Total loans	2,727	2,852
Pass
Credit Quality Indicators
Total loans	314,963	306,377
Pass | Commercial Loan
Credit Quality Indicators
Total loans	45,096	39,926
Pass | Construction
Credit Quality Indicators
Total loans	24,444	18,064
Pass | Commercial Real Estate - Other
Credit Quality Indicators
Total loans	163,564	166,969
Pass | Residential Real Estate
Credit Quality Indicators
Total loans	77,656	76,756
Pass | Auto
Credit Quality Indicators
Total loans	1,486	1,820
Pass | Consumer - Other
Credit Quality Indicators
Total loans	2,717	2,842
Special Mention
Credit Quality Indicators
Total loans	5,714	4,194
Special Mention | Commercial Loan
Credit Quality Indicators
Total loans		547
Special Mention | Commercial Real Estate - Other
Credit Quality Indicators
Total loans	5,714	2,875
Special Mention | Residential Real Estate
Credit Quality Indicators
Total loans		772
Substandard
Credit Quality Indicators
Total loans	6,472	7,906
Substandard | Commercial Loan
Credit Quality Indicators
Total loans	2,041	2,966
Substandard | Commercial Real Estate - Other
Credit Quality Indicators
Total loans	3,751	4,188
Substandard | Residential Real Estate
Credit Quality Indicators
Total loans	670	742
Substandard | Consumer - Other
Credit Quality Indicators
Total loans	$ 10	$ 10

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets
Cash and due from financial institutions	$ 9,501	$ 7,962
Federal funds sold	1,705	3,360
Cash and cash equivalents	11,206	11,322
Interest-bearing deposits in other financial institutions	2,480
Available-for-sale securities	60,068	58,986
Loans held for sale	155
Loans, net of allowance for loan losses of $5,021 and $4,885 at September 30, 2015 and December 31, 2014, respectively	322,128	313,592
Premises and equipment, net	9,971	10,758
Bank owned life insurance (BOLI)	8,129	7,993
Federal Home Loan Bank (FHLB) stock, at cost	2,025	2,025
Accrued interest receivable	1,597	1,527
Deferred income taxes	1,517	1,479
Goodwill	4,097	4,097
Core deposit intangible	283	336
Other real estate owned	207	198
Other assets	418	501
Total Assets	424,281	412,814
Deposits
Noninterest bearing	46,081	41,975
Savings, NOW and money market	154,761	148,935
Time	161,649	150,874
Total deposits	362,491	341,784
FHLB advances and other borrowings	15,500	25,500
Subordinated debentures	5,000	5,000
Accrued interest payable	233	231
Other liabilities	2,322	1,851
Total Liabilities	385,546	374,366
Stockholders' Equity
6.5% cumulative convertible preferred stock; no par value, authorized 250 shares, aggregate liquidation preference of $7,998; issued and outstanding 250 shares at September 30, 2015 and December 31, 2014, respectively	7,659	7,659
Common stock, no par value, authorized 5,000,000 shares; issued and outstanding 1,968,777 shares at September 30, 2015 and December 31, 2014, respectively	25,366	27,072
Retained earnings	5,440	3,373
Accumulated other comprehensive income	270	344
Total stockholders' equity	38,735	38,448
Total liabilities and stockholders' equity	$ 424,281	$ 412,814

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Comprehensive income (loss), net of tax
Net income	$ 775	$ 930	$ 2,456	$ 2,354
Other comprehensive income (loss)
Reclassification adjustment for gains included in net income, net of taxes			(7)	(49)
Change in unrealized gain (loss) on available for sale securities, net of taxes	55	34	(67)	638
Total other comprehensive income (loss)	55	34	(74)	589
Comprehensive income	$ 830	$ 964	$ 2,382	$ 2,943

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Fair Value Measurements (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financial Assets
Loans, net of allowance	$ 322,128	$ 313,592
Interest-bearing deposits in other financial institutions	2,480
Accrued interest receivable	1,597	1,527
Federal Home Loan Bank stock	2,025	2,025
Financial Liabilities
Subordinated debentures	5,000	5,000
Accrued interest payable	233	231
Level 1
Financial Assets
Cash and cash equivalents	11,206	11,322
Interest-bearing deposits in other financial institutions	2,480
Financial Liabilities
Demand and savings deposits	200,842	156,790
Accrued interest payable	9	9
Level 2
Financial Assets
Loans held for sale	158
Accrued interest receivable	320	323
Financial Liabilities
Time deposits	161,938	151,504
FHLB advances	12,925	23,835
Other borrowings	2,500	1,500
Accrued interest payable	199	222
Level 3
Financial Assets
Loans, net of allowance	323,917	316,075
Accrued interest receivable	1,277	1,204
Financial Liabilities
Subordinated debentures	2,836	2,395
Accrued interest payable	25
Carrying Amount
Financial Assets
Cash and cash equivalents	11,206	11,322
Loans, net of allowance	321,808	313,081
Interest-bearing deposits in other financial institutions	2,480
Loans held for sale	155
Accrued interest receivable	1,597	1,527
Federal Home Loan Bank stock	2,025	2,025
Financial Liabilities
Demand and savings deposits	200,842	190,910
Time deposits	161,649	150,874
FHLB advances	13,000	24,000
Other borrowings	2,500	1,500
Subordinated debentures	5,000	5,000
Accrued interest payable	233	231
Total
Financial Assets
Cash and cash equivalents	11,206	11,322
Loans, net of allowance	323,917	316,075
Interest-bearing deposits in other financial institutions	2,480
Loans held for sale	158
Accrued interest receivable	1,597	1,527
Financial Liabilities
Demand and savings deposits	200,842	156,790
Time deposits	161,938	151,504
FHLB advances	12,925	23,835
Other borrowings	2,500	1,500
Subordinated debentures	2,836	2,395
Accrued interest payable	$ 233	$ 231

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Regulatory Capital Matters (Tables)

9 Months Ended

Sep. 30, 2015

Regulatory Capital Matters

Schedule of the Company's and the Bank's actual capital amounts and ratios

	(Dollars in Thousands)
									To Be Well Capitalized
					For Capital Adequacy				Under Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2015
Total Capital (to Risk-Weighted Assets)
Consolidated	$	43,737	12.53	%	$	27,922	8.0	%	N/A		N/A
Citizens First Bank, Inc.	45,723		13.10	%	27,922		8.0	%	$	34,903	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	39,365		11.28	%	20,942		6.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	20,942		6.0	%	27,922		8.0	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated	26,706		7.65	%	15,706		4.5	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	15,706		4.5	%	22,687		6.5	%
Tier I Leverage Capital to average assets
Consolidated	39,365		9.28	%	13,961		4.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		9.77	%	16,924		4.0	%	21,155		5.0	%

	(Dollars in Thousands)
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2014
Total Capital (to Risk-Weighted Assets)
Consolidated	$	42,879	12.74	%	$	26,929	8.0	%	N/A		N/A
Citizens First Bank, Inc.	44,056		13.09	%	26,929		8.0	%	$	33,661	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	38,671		11.49	%	13,465		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		11.83	%	13,465		4.0	%	20,197		6.0	%
Tier I Leverage Capital to average assets
Consolidated	38,671		9.42	%	16,415		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		9.78	%	16,294		4.0	%	20,368		5.0	%

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Apr. 15, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic earnings per share:
Net income		$ 775	$ 930	$ 2,456	$ 2,354
Less: Dividends on preferred stock during the quarter		(131)	(131)	(389)	(390)
Net income available for common stockholders		644	799	2,067	1,964
Net income available to common stockholders and assumed conversions		$ 775	$ 799	$ 2,456	$ 1,964
Weighted Average Shares, basic
Weighted Average Shares, basic		1,968,777	1,968,777	1,968,777	1,968,777
Effect of dilutive securities
Convertible preferred stock (in shares)		568,890		568,890
Income		$ 131		$ 389
Warrants (in shares)			137,181	57,223	129,975
Weighted Average Shares, diluted
Weighted Average Shares, diluted		2,537,667	2,105,958	2,594,890	2,098,752
Per Share Amount
Basic earnings per common share (in dollars per share)		$ 0.33	$ 0.41	$ 1.05	$ 1.00
Diluted earnings per common share (in dollars per share)		$ 0.31	$ 0.38	$ 0.95	$ 0.94
Stock options not considered in computing diluted earnings per common share (in shares)				26,571	72,931
Repurchase of warrants (in shares)	254,218
Repurchase of warrants	$ 1,700			$ 1,706
Common stock warrants outstanding		0	254,218	0	254,218

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Available-For-Sale Securities (Details 2) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Amortized Cost
Due in one year or less	$ 340
Due from one to five years	14,386
Due from five to ten years	9,663
Due after ten years	7,332
Agency mortgage-backed: residential	27,938
Total	59,659
Fair Value
Due in one year or less	346
Due from one to five years	14,570
Due from five to ten years	9,875
Due after ten years	6,889
Agency mortgage-backed: residential	28,388
Fair Value	$ 60,068	$ 58,986

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Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Preferred Stock	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2013	$ 10,925	$ 27,072	$ 653	$ (303)	$ 38,347
Increase (Decrease) in Stockholders' Equity
Net income			2,354		2,354
Redemption of Series A preferred stock	(3,266)				(3,266)
Change in accumulated other comprehensive income (loss)				589	589
Dividend declared and paid on preferred stock			(390)		(390)
Balance at Sep. 30, 2014	7,659	27,072	2,617	286	37,634
Balance at Dec. 31, 2014	7,659	27,072	3,373	344	38,448
Increase (Decrease) in Stockholders' Equity
Net income			2,456		2,456
Change in accumulated other comprehensive income (loss)				(74)	(74)
Dividend declared and paid on preferred stock			(389)		(389)
Repurchase of TARP warrants		(1,706)			(1,706)
Balance at Sep. 30, 2015	$ 7,659	$ 25,366	$ 5,440	$ 270	$ 38,735

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets
Loans, allowance for loan losses (in dollars)	$ 5,021	$ 4,885
Preferred stock, dividend rate (as a percent)	6.50%	6.50%
Preferred stock no par value	$ 0	$ 0
Preferred stock, authorized shares	250	250
Preferred stock, outstanding shares	250	250
Common stock no par value	$ 0	$ 0
Common stock, authorized shares	5,000,000	5,000,000
Common stock, issued shares	1,968,777	1,968,777
Common stock, outstanding shares	1,968,777	1,968,777

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Nature of Operations and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Principles of Consolidation

Nature of Operations and Summary of Significant Accounting Policies

The accounting and reporting policies of Citizens First Corporation (the “Company”) and its subsidiary, Citizens First Bank, Inc. (the “Bank”), conform to U.S. generally accepted accounting principles and general practices within the banking industry.  The consolidated financial statements include the accounts of the Company and the Bank.  All significant intercompany transactions and accounts have been eliminated in consolidation.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Estimates used in the preparation of the financial statements are based on various factors including the current interest rate environment and the general strength of the local economy.  Changes in the overall interest rate environment can significantly affect the Company’s net interest income and the value of its recorded assets and liabilities.  Actual results could differ from those estimates used in the preparation of the financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in the accompanying unaudited financial statements.  Those adjustments consist only of normal recurring adjustments. Results of interim periods are not necessarily indicative of results to be expected for the full year.  The consolidated balance sheet of the Company as of December 31, 2014 has been derived from the audited consolidated balance sheet of the Company as of that date.

Recent Accounting Pronouncements

Recent Accounting Pronouncements—In May 2014 the FASB amended existing guidance related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. The Bank is currently evaluating the impact of this new accounting standard on the consolidated financial statements.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 12, 2015
Document and Entity Information
Entity Registrant Name	CITIZENS FIRST CORP
Entity Central Index Key	0001073475
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,968,777
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

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Available-For-Sale Securities (Tables)

9 Months Ended

Sep. 30, 2015

Available-For-Sale Securities

Summary of the amortized cost and fair value of the available for sale investment securities portfolio

	(Dollars in Thousands)
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
September 30, 2015
U. S. government agencies and government sponsored entities	$	2,998	$	2	$	(6	)	$	2,994
Agency mortgage-backed securities: residential	27,938		464		(14		)	28,388
State and municipal	25,844		669		(70		)	26,443
Trust preferred security	1,879		—		(639		)	1,240
Corporate bonds	1,000		3		—			1,003
Total Available-for-Sale Securities	$	59,659	$	1,138	$	(729	)	$	60,068
December 31, 2014
U. S. government agencies and government sponsored entities	$	2,999	$	—	$	(51	)	$	2,948
Agency mortgage-backed securities: residential	27,241		309		(31		)	27,519
State and municipal	25,350		793		(104		)	26,039
Trust preferred security	1,876		—		(396		)	1,480
Corporate bonds	1,000		—		—			1,000
Total Available-for-Sale Securities	$	58,466	$	1,102	$	(582	)	$	58,986

Summary of the amortized cost and fair value of investment securities by contractual maturity

	September 30, 2015
	(Dollars in Thousands)
	Available-For-Sale
	Amortized Cost		Fair Value
Due in one year or less	$	340	$	346
Due from one to five years	14,386		14,570
Due from five to ten years	9,663		9,875
Due after ten years	7,332		6,889
Agency mortgage-backed: residential	27,938		28,388
Total	$	59,659	$	60,068

Summary of the investment securities with unrealized losses aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position

	(Dollars in Thousands)
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2015:
U.S. government agencies and government sponsored entities	$	—	$	—		$	1,993	$	(6	)	$	1,993	$	(6	)
Agency mortgage-backed: residential	—		—			1,553		(14		)	1,553		(14		)
State and municipal	4,947		(33		)	595		(37		)	5,542		(70		)
Trust preferred security	—		—			1,240		(639		)	1,240		(639		)
Total temporarily impaired	$	4,947	$	(33	)	$	5,381	$	(696	)	$	10,328	$	(729	)

	(Dollars in Thousands)
	Less than 12 Months					12 Months or More					Total
Description of			Unrealized					Unrealized					Unrealized
Securities	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
December 31, 2014:
U.S. government agencies and government sponsored entities	$	992	$	(8	)	$	1,955	$	(43	)	$	2,947	$	(51	)
Agency mortgage-backed: residential	1,134		(2		)	1,678		(29		)	2,812		(31		)
State and municipal	4,891		(24		)	2,530		(80		)	7,421		(104		)
Trust preferred security	—		—			1,480		(396		)	1,480		(396		)
Total temporarily impaired	$	7,017	$	(34	)	$	7,643	$	(548	)	$	14,660	$	(582	)

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest and dividend income
Loans	$ 4,050	$ 4,006	$ 12,107	$ 11,728
Taxable securities	159	158	465	450
Non-taxable securities	170	161	519	493
Federal funds sold and other	36	29	99	94
Total interest and dividend income	4,415	4,354	13,190	12,765
Interest expense
Deposits	563	526	1,692	1,620
FHLB advances and other	74	125	219	368
Subordinated debentures	25	24	73	71
Total interest expense	662	675	1,984	2,059
Net interest income	3,753	3,679	11,206	10,706
Provision for loan losses			200	275
Net interest income after provision for loan losses	3,753	3,679	11,006	10,431
Non-interest income
Service charges on deposit accounts	386	300	1,061	857
Other service charges and fees	187	198	498	492
Gains on sale of mortgage loans	60	76	170	151
Non-deposit brokerage fees	103	67	282	211
Lease income	59	76	202	225
BOLI income	45	47	136	141
Gain on sale of securities available-for-sale (includes $10 in 2015 and $74 in 2014 comprehensive income reclassifications for unrealized net gains on available-for-sale securities)			10	74
Total non-interest income	840	764	2,359	2,151
Non-interest expenses
Salaries and employee benefits	1,650	1,519	4,887	4,532
Net occupancy expense	495	501	1,516	1,462
Advertising and public relations	75	74	250	250
Professional fees	183	137	534	439
Data processing services	262	250	739	731
Franchise shares and deposit tax	146	146	437	437
FDIC insurance	61	73	183	224
Core deposit intangible amortization	18	82	53	248
Postage and office supplies	55	54	147	164
Other real estate owned expenses	6	10	42	67
Loss on branch disposal	262		262
Other	317	295	929	782
Total non-interest expenses	3,530	3,141	9,979	9,336
Income before income taxes	1,063	1,302	3,386	3,246
Income taxes	288	372	930	892
Net income	775	930	2,456	2,354
Dividends on preferred stock	131	131	389	390
Net income available for common stockholders	$ 644	$ 799	$ 2,067	$ 1,964
Basic earnings per common share (in dollars per share)	$ 0.33	$ 0.41	$ 1.05	$ 1.00
Diluted earnings per common share (in dollars per share)	$ 0.31	$ 0.38	$ 0.95	$ 0.94

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Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2015

Loans and Allowance for Loan Losses

Loans and Allowance for Loan Losses

Note 4 - Loans and Allowance for Loan Losses

Categories of loans include:

	(Dollars in Thousands)
	September 30, 2015			December 31, 2014
Commercial	$	47,137		$	43,439
Commercial real estate:
Construction	24,444			18,064
Other	173,029			174,032
Residential real estate	78,326			78,270
Consumer:
Auto	1,486			1,820
Other	2,727			2,852
Total loans	327,149			318,477
Less allowance for loan losses	(5,021		)	(4,885		)
Net loans	$	322,128		$	313,592

The following table sets forth an analysis of our allowance for loan losses for the three months ending September 30, 2015 and 2014.

	(Dollars in Thousands)
September 30, 2015	Commercial		Commercial Real Estate			Residential Real Estate		Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	757	$	3,605		$	447	$	38		$	136	$	4,983
Provision for loan losses	12		(23		)	8		(2		)	5		—
Loans charged-off	—		—			—		(3		)	—		(3		)
Recoveries	35		—			3		3			—		41
Total ending allowance balance	$	804	$	3,582		$	458	$	36		$	141	$	5,021

	(Dollars in Thousands)
September 30, 2014	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	902		$	3,189		$	646		$	67		$	149	$	4,953
Provision for loan losses	(80		)	37			52			(10		)	1		—
Loans charged-off	—			(13		)	(83		)	(2		)	—		(98		)
Recoveries	34			11			3			—			—		48
Total ending allowance balance	$	856		$	3,224		$	618		$	55		$	150	$	4,903

The following table sets forth an analysis of our allowance for loan losses for the nine months ending September 30, 2015 and 2014.

	(Dollars in Thousands)
September 30, 2015	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	1,029		$	3,088		$	582		$	45		$	141	$	4,885
Provision for loan losses	(236		)	510			(77		)	3			—		200
Loans charged-off	(75		)	(17		)	(57		)	(21		)	—		(170		)
Recoveries	86			1			10			9			—		106
Total ending allowance balance	$	804		$	3,582		$	458		$	36		$	141	$	5,021

	(Dollars in Thousands)
September 30, 2014	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,420		$	2,079		$	703		$	86		$	365		$	4,653
Provision for loan losses	(657		)	1,090			75			(18		)	(215		)	275
Loans charged-off	—			(14		)	(172		)	(15		)	—			(201		)
Recoveries	93			69			12			2			—			176
Total ending allowance balance	$	856		$	3,224		$	618		$	55		$	150		$	4,903

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of September 30, 2015 and December 31, 2014, which includes net deferred loan fees.  As of September 30, 2015 and December 31, 2014, accrued interest receivable of $1.3 million and $1.2 million, respectively, are not considered significant and therefore not included in the recorded investment in loans presented in the following tables.

	(Dollars in Thousands)
September 30, 2015	Commercial		Commercial Real Estate		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	146	$	378	$	3	$	—	$	—	$	527
Collectively evaluated	658		3,204		455		36		141		4,494
Total ending allowance balance	$	804	$	3,582	$	458	$	36	$	141	$	5,021
Loans:
Individually evaluated for impairment	$	995	$	2,074	$	1,003	$	9	$	—	$	4,081
Collectively evaluated	46,142		195,399		77,323		4,204		—		323,068
Total ending loans balance	$	47,137	$	197,473	$	78,326	$	4,213	$	—	$	327,149

	(Dollars in Thousands)
			Commercial		Residential
December 31, 2014	Commercial		Real Estate		Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	342	$	220	$	7	$	10	$	—	$	579
Collectively evaluated	687		2,868		575		35		141		4,306
Total ending allowance balance	$	1,029	$	3,088	$	582	$	45	$	141	$	4,885
Loans:
Individually evaluated for impairment	$	2,696	$	1,057	$	1,098	$	22	$	—	$	4,873
Collectively evaluated	40,743		191,039		77,172		4,650		—		313,604
Total ending loans balance	$	43,439	$	192,096	$	78,270	$	4,672	$	—	$	318,477

The following table presents information related to impaired loans by class of loans as of September 30, 2015 and December 31, 2014. In this table presentation the unpaid principal balance of the loans has not been reduced by partial net charge-offs and the recorded investment of the loans was reduced by partial net charge-offs.

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial	$	63	$	63	$	—	$	1,129	$	1,129	$	—
Commercial real estate:
Construction	—		—		—		—		—		—
Other	644		644		—		—		—		—
Residential real estate	936		936		—		1,026		1,026		—
Consumer:							—
Auto	—		—		—		—		—		—
Other	—		—		—		—		—		—
Subtotal	$	1,643	$	1,643	$	—	$	2,155	$	2,155	$	—
With an allowance recorded:
Commercial	$	932	$	932	$	146	$	1,567	$	1,567	$	342
Commercial real estate:
Construction	—		—		—		—		—		—
Other	1,430		1,430		378		1,057		1,057		220
Residential real estate	67		67		3		72		72		7
Consumer:
Auto	—		—		—		10		10		10
Other	9		9		—		12		12		—
Subtotal	$	2,438	$	2,438	$	527	$	2,718	$	2,718	$	579
Total	$	4,081	$	4,081	$	527	$	4,873	$	4,873	$	579

Information on impaired loans for the three months ending September 30, 2015 and 2014 is as follows:

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
Commercial	$	1,003	$	16	$	15	$	2,743	$	36	$	24
Commercial real estate:
Construction	—		—		—		14		—		—
Other	2,077		18		13		1,482		20		14
Residential real estate	1,006		12		8		1,180		14		9
Consumer:
Auto	—		—		—		15		—		—
Other	10		—		—		13		—		—
Total	$	4,096	$	46	$	36	$	5,447	$	70	$	47

Information on impaired loans for the nine months ending September 30, 2015 and 2014 is as follows:

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
Commercial	$	1,032	$	37	$	36	$	2,977	$	103	$	77
Commercial real estate:											—
Construction	—		—		—		14		1		1
Other	1,765		46		44		1,712		57		42
Residential real estate	1,015		36		27		1,241		40		28
Consumer:
Auto	—		—		—		17		1		—
Other	11		1		1		14		1		1
Total	$	3,823	$	120	$	108	$	5,975	$	203	$	149

The recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2015 and December 31, 2014 are summarized below:

	(Dollars in Thousands)				(Dollars in Thousands)
	September 30, 2015				December 31, 2014
	Loans Past Due Over 90 Days and Still Accruing		Nonaccrual		Loans Past Due Over 90 Days and Still Accruing		Nonaccrual
Commercial	$	—	$	79	$	—	$	748
Commercial real estate:
Construction	—		—		—		—
Other	—		439		—		45
Residential real estate	—		288		—		364
Consumer:
Auto	—		—		—		10
Other	—		—		—		—
Total	$	—	$	806	$	—	$	1,167

Nonaccrual loans and loans past due 90 days still on accrual include individually classified impaired loans.

The following tables present the aging of the recorded investment in past due loans as of September 30, 2015 and December 31, 2014 by class of loans.  Non-accrual loans are included and have been categorized based on their payment status:

	(Dollars in Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
September 30, 2015
Commercial	$	—	$	—	$	79	$	79	$	47,058	$	47,137
Commercial real estate:
Construction	—		—		—		—		24,444		24,444
Other	—		—		439		439		172,590		173,029
Residential real estate	132		—		288		420		77,906		78,326
Consumer:
Auto	—		—		—		—		1,486		1,486
Other	—		—		—		—		2,727		2,727
Subtotal	$	132	$	—	$	806	$	938	$	326,211	$	327,149

	(Dollars in Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
December 31, 2014
Commercial	$	—	$	—	$	645	$	645	$	42,794	$	43,439
Commercial real estate:
Construction	—		—		—		—		18,064		18,064
Other	—		—		45		45		173,987		174,032
Residential real estate	31		—		362		393		77,877		78,270
Consumer:
Auto	—		—		—		—		1,820		1,820
Other	—		—		—		—		2,852		2,852
Subtotal	$	31	$	—	$	1,052	$	1,083	$	317,394	$	318,477

Troubled Debt Restructurings:

The Company reported total troubled debt restructurings of $3.3 million and $4.4 million as of September 30, 2015 and December 31, 2014, respectively.  The Company has no commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.  Troubled debt restructurings are included in impaired loans. The modifications of the terms of these loans included reducing the interest rate, granting an interest only payment period, or extending the terms of the debt for customers experiencing financial difficulties. Of the 13 troubled debt restructurings reported at quarter end, all loans were on accrual status.

The following table presents loans by class modified as troubled debt restructurings that occurred during the quarter ending September 30, 2015 and 2014:

		(Dollars in Thousands)					(Dollars in Thousands)
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	September 30, 2015					September 30, 2014
Troubled Debt Restructurings:
Commercial	—	$	—	$	—	1	$	666	$	666
Commercial real estate:
Other	—	—		—		—	—		—
Total	—	$	—	$	—	1	$	666	$	666

The following table presents loans by class modified as trouble debt restructurings that occurred year to date as of September 30, 2015 and 2014.

		(Dollars in Thousands)					(Dollars in Thousands)
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	September 30, 2015					September 30, 2014
Troubled Debt Restructurings:
Commercial	—	$	—	$	—	1	$	666	$	666
Commercial real estate:
Other	2	1,547		1,547		1	$	924	$	924
Residential real estate	—	—		—		1	15		15
Total	2	$	1,547	$	1,547	3	$	1,605	$	1,605

Specific allocations of $267,000 and $547,000 were reported for troubled debt restructurings as of September 30, 2015 and December 31, 2014. Specific allocations of $424,000 were reported for the troubled debt restructurings as of September 30, 2014. No payment defaults were reported for troubled debt restructurings during the three and nine months ending September 30, 2015 or September 30, 2014. No charge offs were taken on troubled debt restructurings during the three and nine months ending September 30, 2015 or September 30, 2014.

The terms of certain other loans were modified during the nine months ending September 30, 2015 and 2014 that did not meet the definition of a troubled debt restructuring. These loans modified during the nine months ending September 30, 2015 have a total recorded investment of $19.2 million as of September 30, 2015. The loans modified during the nine months ending September 30, 2014 had a total recorded investment of $13.3 million as of September 30, 2014. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes commercial and commercial real estate loans with an outstanding balance greater than $25 thousand and is reviewed on a monthly basis. For residential real estate and consumer loans the analysis primarily involves monitoring the past due status of these loans and at such time that these loans are past due, the Company evaluates the loans to determine if a change in risk category is warranted. The Company uses the following definitions for risk ratings:

Special Mention.  Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.  All loans in all loan categories are assigned risk ratings.  Based on the most recent analyses performed, the risk category of loans by class of loans is as follows:

	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2015
Commercial	$	45,096	$	—	$	2,041	$	—	$	47,137
Commercial real estate:
Construction	24,444		—		—		—		24,444
Other	163,564		5,714		3,751		—		173,029
Residential real estate	77,656		—		670		—		78,326
Consumer:
Auto	1,486		—		—		—		1,486
Other	2,717		—		10		—		2,727
Total	$	314,963	$	5,714	$	6,472	$	—	$	327,149

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2014
Commercial	$	39,926	$	547	$	2,966	$	—	$	43,439
Commercial real estate:
Construction	18,064		—		—		—		18,064
Other	166,969		2,875		4,188		—		174,032
Residential real estate	76,756		772		742		—		78,270
Consumer:
Auto	1,820		—		—		—		1,820
Other	2,842		—		10		—		2,852
Total	$	306,377	$	4,194	$	7,906	$	—	$	318,477

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Available-For-Sale Securities

9 Months Ended

Sep. 30, 2015

Available-For-Sale Securities

Available-For-Sale Securities

Note 3 - Available-For-Sale Securities

The following table summarizes the amortized cost and fair value of the available-for sale securities portfolio at September 30, 2015 and December 31, 2014 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

	(Dollars in Thousands)
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
September 30, 2015
U. S. government agencies and government sponsored entities	$	2,998	$	2	$	(6	)	$	2,994
Agency mortgage-backed securities: residential	27,938		464		(14		)	28,388
State and municipal	25,844		669		(70		)	26,443
Trust preferred security	1,879		—		(639		)	1,240
Corporate bonds	1,000		3		—			1,003
Total Available-for-Sale Securities	$	59,659	$	1,138	$	(729	)	$	60,068
December 31, 2014
U. S. government agencies and government sponsored entities	$	2,999	$	—	$	(51	)	$	2,948
Agency mortgage-backed securities: residential	27,241		309		(31		)	27,519
State and municipal	25,350		793		(104		)	26,039
Trust preferred security	1,876		—		(396		)	1,480
Corporate bonds	1,000		—		—			1,000
Total Available-for-Sale Securities	$	58,466	$	1,102	$	(582	)	$	58,986

The amortized cost and fair value of investment securities at September 30, 2015 by contractual maturity were as follows.  Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	September 30, 2015
	(Dollars in Thousands)
	Available-For-Sale
	Amortized Cost		Fair Value
Due in one year or less	$	340	$	346
Due from one to five years	14,386		14,570
Due from five to ten years	9,663		9,875
Due after ten years	7,332		6,889
Agency mortgage-backed: residential	27,938		28,388
Total	$	59,659	$	60,068

The following table summarizes the investment securities with unrealized losses by portfolio segment at September 30, 2015 and December 31, 2014, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position:

	(Dollars in Thousands)
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2015:
U.S. government agencies and government sponsored entities	$	—	$	—		$	1,993	$	(6	)	$	1,993	$	(6	)
Agency mortgage-backed: residential	—		—			1,553		(14		)	1,553		(14		)
State and municipal	4,947		(33		)	595		(37		)	5,542		(70		)
Trust preferred security	—		—			1,240		(639		)	1,240		(639		)
Total temporarily impaired	$	4,947	$	(33	)	$	5,381	$	(696	)	$	10,328	$	(729	)

	(Dollars in Thousands)
	Less than 12 Months					12 Months or More					Total
Description of			Unrealized					Unrealized					Unrealized
Securities	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
December 31, 2014:
U.S. government agencies and government sponsored entities	$	992	$	(8	)	$	1,955	$	(43	)	$	2,947	$	(51	)
Agency mortgage-backed: residential	1,134		(2		)	1,678		(29		)	2,812		(31		)
State and municipal	4,891		(24		)	2,530		(80		)	7,421		(104		)
Trust preferred security	—		—			1,480		(396		)	1,480		(396		)
Total temporarily impaired	$	7,017	$	(34	)	$	7,643	$	(548	)	$	14,660	$	(582	)

Other-Than-Temporary-Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  Investment securities classified as available-for-sale are generally evaluated for OTTI under ASC Topic 320, “Investments - Debt and Equity Securities.”

In determining OTTI under the ASC Topic 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

All rated securities are investment grade.  For those that are not rated, the financial condition has been evaluated and no adverse conditions were identified related to repayment.  Declines in fair value are a function of rate differences in the market and market illiquidity.  The Company does not intend or is not expected to be required to sell these securities before recovery of their amortized cost basis.

Approximately 92% of the Company’s unrealized losses 12 months or more relate to its investment in a single trust preferred security.  The security is a single-issuer trust preferred that is not rated. No impairment charge is being taken as no loss of principal or interest is anticipated. All principal and interest payments are being received as scheduled.  On a quarterly basis, we evaluate the creditworthiness of the issuer, a bank holding company with operations in the state of Kentucky.  Based on the issuer’s continued profitability and well-capitalized position, we do not deem that there is credit loss.  The decline in fair value is primarily attributable to illiquidity affecting these markets and not the expected cash flows of the individual securities.  We have evaluated the financial condition and near term prospects of the issuer and expect to fully recover our cost basis.  This security continues to pay interest as agreed and future payments are expected to be made as agreed.  This security is not considered to be other-than-temporarily impaired.

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Available-For-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Amortized cost and fair value of the available for sale investment securities portfolio
Amortized Cost	$ 59,659	$ 58,466
Gross Unrealized Gains	1,138	1,102
Gross Unrealized Losses	(729)	(582)
Fair Value	60,068	58,986
U. S. government agencies and government sponsored entities
Amortized cost and fair value of the available for sale investment securities portfolio
Amortized Cost	2,998	2,999
Gross Unrealized Gains	2
Gross Unrealized Losses	(6)	(51)
Fair Value	2,994	2,948
Agency mortgage-backed securities: residential
Amortized cost and fair value of the available for sale investment securities portfolio
Amortized Cost	27,938	27,241
Gross Unrealized Gains	464	309
Gross Unrealized Losses	(14)	(31)
Fair Value	28,388	27,519
State and municipal
Amortized cost and fair value of the available for sale investment securities portfolio
Amortized Cost	25,844	25,350
Gross Unrealized Gains	669	793
Gross Unrealized Losses	(70)	(104)
Fair Value	26,443	26,039
Trust preferred security
Amortized cost and fair value of the available for sale investment securities portfolio
Amortized Cost	1,879	1,876
Gross Unrealized Losses	(639)	(396)
Fair Value	1,240	1,480
Corporate bonds
Amortized cost and fair value of the available for sale investment securities portfolio
Amortized Cost	1,000	1,000
Gross Unrealized Gains	3
Fair Value	$ 1,003	$ 1,000

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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2015

Loans and Allowance for Loan Losses

Schedule of categories of loans

	(Dollars in Thousands)
	September 30, 2015			December 31, 2014
Commercial	$	47,137		$	43,439
Commercial real estate:
Construction	24,444			18,064
Other	173,029			174,032
Residential real estate	78,326			78,270
Consumer:
Auto	1,486			1,820
Other	2,727			2,852
Total loans	327,149			318,477
Less allowance for loan losses	(5,021		)	(4,885		)
Net loans	$	322,128		$	313,592

Schedule of activity in the allowance for loan losses

The following table sets forth an analysis of our allowance for loan losses for the three months ending September 30, 2015 and 2014.

	(Dollars in Thousands)
September 30, 2015	Commercial		Commercial Real Estate			Residential Real Estate		Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	757	$	3,605		$	447	$	38		$	136	$	4,983
Provision for loan losses	12		(23		)	8		(2		)	5		—
Loans charged-off	—		—			—		(3		)	—		(3		)
Recoveries	35		—			3		3			—		41
Total ending allowance balance	$	804	$	3,582		$	458	$	36		$	141	$	5,021

	(Dollars in Thousands)
September 30, 2014	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	902		$	3,189		$	646		$	67		$	149	$	4,953
Provision for loan losses	(80		)	37			52			(10		)	1		—
Loans charged-off	—			(13		)	(83		)	(2		)	—		(98		)
Recoveries	34			11			3			—			—		48
Total ending allowance balance	$	856		$	3,224		$	618		$	55		$	150	$	4,903

The following table sets forth an analysis of our allowance for loan losses for the nine months ending September 30, 2015 and 2014.

	(Dollars in Thousands)
September 30, 2015	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	1,029		$	3,088		$	582		$	45		$	141	$	4,885
Provision for loan losses	(236		)	510			(77		)	3			—		200
Loans charged-off	(75		)	(17		)	(57		)	(21		)	—		(170		)
Recoveries	86			1			10			9			—		106
Total ending allowance balance	$	804		$	3,582		$	458		$	36		$	141	$	5,021

	(Dollars in Thousands)
September 30, 2014	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,420		$	2,079		$	703		$	86		$	365		$	4,653
Provision for loan losses	(657		)	1,090			75			(18		)	(215		)	275
Loans charged-off	—			(14		)	(172		)	(15		)	—			(201		)
Recoveries	93			69			12			2			—			176
Total ending allowance balance	$	856		$	3,224		$	618		$	55		$	150		$	4,903

Schedule of balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method

	(Dollars in Thousands)
September 30, 2015	Commercial		Commercial Real Estate		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	146	$	378	$	3	$	—	$	—	$	527
Collectively evaluated	658		3,204		455		36		141		4,494
Total ending allowance balance	$	804	$	3,582	$	458	$	36	$	141	$	5,021
Loans:
Individually evaluated for impairment	$	995	$	2,074	$	1,003	$	9	$	—	$	4,081
Collectively evaluated	46,142		195,399		77,323		4,204		—		323,068
Total ending loans balance	$	47,137	$	197,473	$	78,326	$	4,213	$	—	$	327,149

	(Dollars in Thousands)
			Commercial		Residential
December 31, 2014	Commercial		Real Estate		Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	342	$	220	$	7	$	10	$	—	$	579
Collectively evaluated	687		2,868		575		35		141		4,306
Total ending allowance balance	$	1,029	$	3,088	$	582	$	45	$	141	$	4,885
Loans:
Individually evaluated for impairment	$	2,696	$	1,057	$	1,098	$	22	$	—	$	4,873
Collectively evaluated	40,743		191,039		77,172		4,650		—		313,604
Total ending loans balance	$	43,439	$	192,096	$	78,270	$	4,672	$	—	$	318,477

Schedule of impaired loans by class of loans

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial	$	63	$	63	$	—	$	1,129	$	1,129	$	—
Commercial real estate:
Construction	—		—		—		—		—		—
Other	644		644		—		—		—		—
Residential real estate	936		936		—		1,026		1,026		—
Consumer:							—
Auto	—		—		—		—		—		—
Other	—		—		—		—		—		—
Subtotal	$	1,643	$	1,643	$	—	$	2,155	$	2,155	$	—
With an allowance recorded:
Commercial	$	932	$	932	$	146	$	1,567	$	1,567	$	342
Commercial real estate:
Construction	—		—		—		—		—		—
Other	1,430		1,430		378		1,057		1,057		220
Residential real estate	67		67		3		72		72		7
Consumer:
Auto	—		—		—		10		10		10
Other	9		9		—		12		12		—
Subtotal	$	2,438	$	2,438	$	527	$	2,718	$	2,718	$	579
Total	$	4,081	$	4,081	$	527	$	4,873	$	4,873	$	579

Information on impaired loans for the three months ending September 30, 2015 and 2014 is as follows:

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
Commercial	$	1,003	$	16	$	15	$	2,743	$	36	$	24
Commercial real estate:
Construction	—		—		—		14		—		—
Other	2,077		18		13		1,482		20		14
Residential real estate	1,006		12		8		1,180		14		9
Consumer:
Auto	—		—		—		15		—		—
Other	10		—		—		13		—		—
Total	$	4,096	$	46	$	36	$	5,447	$	70	$	47

Information on impaired loans for the nine months ending September 30, 2015 and 2014 is as follows:

	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
Commercial	$	1,032	$	37	$	36	$	2,977	$	103	$	77
Commercial real estate:											—
Construction	—		—		—		14		1		1
Other	1,765		46		44		1,712		57		42
Residential real estate	1,015		36		27		1,241		40		28
Consumer:
Auto	—		—		—		17		1		—
Other	11		1		1		14		1		1
Total	$	3,823	$	120	$	108	$	5,975	$	203	$	149

Schedule of recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans

	(Dollars in Thousands)				(Dollars in Thousands)
	September 30, 2015				December 31, 2014
	Loans Past Due Over 90 Days and Still Accruing		Nonaccrual		Loans Past Due Over 90 Days and Still Accruing		Nonaccrual
Commercial	$	—	$	79	$	—	$	748
Commercial real estate:
Construction	—		—		—		—
Other	—		439		—		45
Residential real estate	—		288		—		364
Consumer:
Auto	—		—		—		10
Other	—		—		—		—
Total	$	—	$	806	$	—	$	1,167

Schedule of aging of the recorded investment in past due loans by class of loans

	(Dollars in Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
September 30, 2015
Commercial	$	—	$	—	$	79	$	79	$	47,058	$	47,137
Commercial real estate:
Construction	—		—		—		—		24,444		24,444
Other	—		—		439		439		172,590		173,029
Residential real estate	132		—		288		420		77,906		78,326
Consumer:
Auto	—		—		—		—		1,486		1,486
Other	—		—		—		—		2,727		2,727
Subtotal	$	132	$	—	$	806	$	938	$	326,211	$	327,149

	(Dollars in Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
December 31, 2014
Commercial	$	—	$	—	$	645	$	645	$	42,794	$	43,439
Commercial real estate:
Construction	—		—		—		—		18,064		18,064
Other	—		—		45		45		173,987		174,032
Residential real estate	31		—		362		393		77,877		78,270
Consumer:
Auto	—		—		—		—		1,820		1,820
Other	—		—		—		—		2,852		2,852
Subtotal	$	31	$	—	$	1,052	$	1,083	$	317,394	$	318,477

Schedule of loans by class modified as troubled debt restructurings

The following table presents loans by class modified as troubled debt restructurings that occurred during the quarter ending September 30, 2015 and 2014:

		(Dollars in Thousands)					(Dollars in Thousands)
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	September 30, 2015					September 30, 2014
Troubled Debt Restructurings:
Commercial	—	$	—	$	—	1	$	666	$	666
Commercial real estate:
Other	—	—		—		—	—		—
Total	—	$	—	$	—	1	$	666	$	666

The following table presents loans by class modified as trouble debt restructurings that occurred year to date as of September 30, 2015 and 2014.

		(Dollars in Thousands)					(Dollars in Thousands)
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	September 30, 2015					September 30, 2014
Troubled Debt Restructurings:
Commercial	—	$	—	$	—	1	$	666	$	666
Commercial real estate:
Other	2	1,547		1,547		1	$	924	$	924
Residential real estate	—	—		—		1	15		15
Total	2	$	1,547	$	1,547	3	$	1,605	$	1,605

Schedule of risk category of loans by class of loans based on the most recent analyses performed

	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2015
Commercial	$	45,096	$	—	$	2,041	$	—	$	47,137
Commercial real estate:
Construction	24,444		—		—		—		24,444
Other	163,564		5,714		3,751		—		173,029
Residential real estate	77,656		—		670		—		78,326
Consumer:
Auto	1,486		—		—		—		1,486
Other	2,717		—		10		—		2,727
Total	$	314,963	$	5,714	$	6,472	$	—	$	327,149

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2014
Commercial	$	39,926	$	547	$	2,966	$	—	$	43,439
Commercial real estate:
Construction	18,064		—		—		—		18,064
Other	166,969		2,875		4,188		—		174,032
Residential real estate	76,756		772		742		—		78,270
Consumer:
Auto	1,820		—		—		—		1,820
Other	2,842		—		10		—		2,852
Total	$	306,377	$	4,194	$	7,906	$	—	$	318,477

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Regulatory Capital Matters

9 Months Ended

Sep. 30, 2015

Regulatory Capital Matters

Regulatory Capital Matters

Note 7 — Regulatory Capital Matters

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action.  Management believes as of September 30, 2015 and December 31, 2014, the Company and Citizens First Bank, Inc. met all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications:  well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If adequately capitalized, regulatory approval is required to accept brokered deposits.  If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.  The most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the institution’s category.

Under quantitative measures established by regulation to ensure capital adequacy, we are required to maintain minimum amounts and ratios of total Tier 1 capital to risk-weighted assets and to total assets. For 2015, interim Final Basel III rules require the Bank to maintain minimum amounts and ratios of common equity Tier I capital to risk-weighted assets. Under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in computing regulatory capital. For December 31, 2014, regulatory capital ratios were calculated under Basel I rules.

The Company’s and Citizens First Bank, Inc.’s actual capital amounts and ratios are also presented in the following table.

	(Dollars in Thousands)
									To Be Well Capitalized
					For Capital Adequacy				Under Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2015
Total Capital (to Risk-Weighted Assets)
Consolidated	$	43,737	12.53	%	$	27,922	8.0	%	N/A		N/A
Citizens First Bank, Inc.	45,723		13.10	%	27,922		8.0	%	$	34,903	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	39,365		11.28	%	20,942		6.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	20,942		6.0	%	27,922		8.0	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated	26,706		7.65	%	15,706		4.5	%	N/A		N/A
Citizens First Bank, Inc.	41,351		11.85	%	15,706		4.5	%	22,687		6.5	%
Tier I Leverage Capital to average assets
Consolidated	39,365		9.28	%	13,961		4.0	%	N/A		N/A
Citizens First Bank, Inc.	41,351		9.77	%	16,924		4.0	%	21,155		5.0	%

	(Dollars in Thousands)
	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2014
Total Capital (to Risk-Weighted Assets)
Consolidated	$	42,879	12.74	%	$	26,929	8.0	%	N/A		N/A
Citizens First Bank, Inc.	44,056		13.09	%	26,929		8.0	%	$	33,661	10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	38,671		11.49	%	13,465		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		11.83	%	13,465		4.0	%	20,197		6.0	%
Tier I Leverage Capital to average assets
Consolidated	38,671		9.42	%	16,415		4.0	%	N/A		N/A
Citizens First Bank, Inc.	39,837		9.78	%	16,294		4.0	%	20,368		5.0	%

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Measurements

Fair Value Measurements

Note 5 - Fair Value Measurements

Fair value is the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that are supported by little or no market activity, reflect a company’s own assumptions about market participant assumptions of fair value, and are significant to the fair value of the assets or liabilities.

In determining the appropriate levels, the Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment Securities: The fair value of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (level 1 inputs) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (level 2 inputs).  The Company does not have any Level 1 securities.  Level 2 securities include certain U.S. agency bonds, collateralized mortgage and debt obligations, and certain municipal securities. The Company also has one Level 3 security. The fair value of this security is obtained directly from the broker which originally handled the security issue. The value is determined based on trades of similar securities with similar coupons.

Impaired Loans: The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate Owned: Commercial and residential real estate properties classified as other real estate owned (OREO) are measured at fair value, less costs to sell.  Fair values are based on recent real estate appraisals.  These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for collateral-dependent impaired loans and real estate properties classified as other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by Bank management.  The appraisal values for collateral-dependent impaired loans are discounted to allow for selling expenses and fees, the limited use nature of various properties, the age of the most recent appraisal, and additional discretionary discounts for location, condition, etc. The Bank annually obtains an updated current appraisal value for each OREO property to certify that the fair value has not declined.  For each parcel of OREO that has declined in value, the Bank records the decline in value by a direct writedown of the asset.

Assets measured on a recurring basis:

	Fair Value Measurements at:
	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						December 31, 2014
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Securities available-for-sale
U.S. government agencies and government sponsored entities			$	2,994					$	2,948
Agency mortgage-backed securites-residential			28,388						27,519
State and municipal			26,443						26,039
Trust preferred security					1,240						1,480
Corporate bonds			1,003						1,000
Total investment securities	$	—	$	58,828	$	1,240	$	—	$	57,506	$	1,480

Assets measured on a non-recurring basis:

	Fair Value Measurement
	(Dollars in Thousands)
	September 30, 2015		December 31, 2014
	Significant Unobservable Inputs (Level 3)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	—	$	423
Commercial RE	260		29
Residential	60		59
Other real estate owned:
Commercial RE	$	135	$	198
Residential	72		—

Impaired loans which are measured for impairment using the fair value of collateral for collateral dependent loans, had a principal balance of $580,000 at September 30, 2015 with a valuation allowance of $260,000.  Impaired loans which were measured for impairment using the fair value of collateral for collateral-dependent loans had a principal balance of $841,000 at December 31, 2014, with a valuation allowance of $330,000.  An increase in the provision for loan losses of $260,000 and a decrease of $256,000 was recognized for the nine months ended September 30, 2015 and 2014, respectively, as a result of net changes in fair values on collateral dependent loans and other factors affecting the provision for loan losses.

Other real estate owned, which is measured at fair value less costs to sell, had a net carrying value of $207,000 at September 30, 2015 and $198,000 at December 31, 2014.  Total writedowns of other real estate owned were $4,000 and $14,000 in the quarters ending September 30, 2015 and 2014, respectively. Total writedowns of other real estate owned were $27,000 and $47,000 in the nine months ending September 30, 2015 and 2014, respectively.

The following table presents quantitative and qualitative information about Level 3 fair value measurements for financial instruments measured on a non-recurring basis at September 30, 2015.

	September 30, 2015	Valuation Techniques	Unobservable Inputs (Dollars in thousands)	Range (Weighted Avg)
Impaired loans:
Commercial RE	260	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(50.00%)
Residential RE	60	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(20.00%)
Other real estate owned:
Commercial RE	135	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	8%-40% (33.13%)
Residential RE	72	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(38.46%)

The following table presents quantitative and qualitative information about Level 3 fair value measurements for financial instruments measured on a non-recurring basis at December 31, 2014.

	December 31, 2014		Valuation Techniques	Unobservable Inputs (Dollars in thousands)	Range (Weighted Avg)
Impaired loans:
Commercial	$	423	Market Approach	Discounts to allow for market value of assets	50%-70% (67.35%)
Commercial RE	29		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(20.00%)
Residential	59		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(10.00%)
Other real estate owned:
Commercial RE	198		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	8%-55% (38.29%)

Carrying amount and estimated fair values of financial instruments, not previously presented, were as follows:

			Fair Value Measurements at
			September 30, 2015
	Carrying Amount		Level 1		Level 2	Level 3	Total
Financial Assets
Cash and cash equivalents	$	11,206	$	11,206			$	11,206
Interest-bearing deposits in other financial institutions	2,480		2,480				2,480
Loans, net of allowance	321,808					323,917	323,917
Loans held for sale	155				158		158
Accrued interest receivable	1,597				320	1,277	1,597
Federal Home Loan Bank stock	2,025						N/A
Financial Liabilities
Demand and savings deposits	$	200,842	$	200,842			$	200,842
Time deposits	161,649				161,938		161,938
FHLB advances	13,000				12,925		12,925
Other borrowings	2,500				2,500		2,500
Subordinate debentures	5,000					2,836	2,836
Accrued interest payable	233		9		199	25	233

			Fair Value Measurements at
			December 31, 2014
	Carrying Amount		Level 1		Level 2	Level 3	Total
Financial Assets
Cash and cash equivalents	$	11,322	$	11,322			$	11,322
Loans, net of allowance	313,081					316,075	316,075
Accrued interest receivable	1,527				323	1,204	1,527
Federal Home Loan Bank stock	2,025						N/A
Financial Liabilities
Demand and savings deposits	$	190,910	$	156,790			$	156,790
Time deposits	150,874				151,504		151,504
FHLB advances	24,000				23,835		23,835
Other borrowings	1,500				1,500		1,500
Subordinate debentures	5,000					2,395	2,395
Accrued interest payable	231		9		222		231

The methods and assumptions used to estimate fair value are described as follows:

(a) Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

(b) Interest Bearing Deposits in Other Financial Institutions: Fair values are based on quoted market prices.

(c) FHLB Stock: It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(d) Loans: Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. The fair value of loans held for sale is estimated based upon binding contracts and quotes from first party investors resulting in a Level 2 classification.

(e) Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate certificates of deposit approximate their fair values at the reporting date resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f) FHLB Advances and Other Borrowings/Subordinated Debentures: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(g) Accrued Interest Receivable/Payable: The carrying amounts of accrued interest approximate fair value resulting in a Level 1 or Level 2 classification consistent with the asset/liability they are associated with.

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Earnings Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share

Earnings Per Share

Note 6 - Earnings Per Share

Basic earnings per share have been computed by dividing net income available for common shareholders by the weighted-average number of common shares outstanding for the period.  Diluted earnings per share have been computed the same as basic earnings per share, and assumes the conversion of outstanding stock options, convertible preferred stock and warrants, if dilutive.  The following table reconciles the basic and diluted earnings per share computations for the quarters ending September 30, 2015 and 2014.

	Quarter ended September 30, 2015						Quarter ended September 30, 2014
				Weighted						Weighted
				Average	Per Share					Average	Per Share
	Income			Shares	Amount		Income			Shares	Amount
Basic earnings per share:
Net income	$	775					$	930
Less: Dividends on preferred stock during the quarter	(131		)				(131		)
Net income available to common shareholders	$	644		1,968,777	$	0.33	$	799		1,968,777	$	0.41
Effect of dilutive securities
Convertible preferred stock	131			568,890
Warrants				—						137,181
Diluted earnings per share
Net income available to common stockholders and assumed conversions	$	775		2,537,667	$	0.31	$	799		2,105,958	$	0.38

	Nine months ended September 30, 2015						Nine months ended September 30, 2014
				Weighted						Weighted
				Average	Per Share					Average	Per Share
	Income			Shares	Amount		Income			Shares	Amount
Basic earnings per share:
Net income	$	2,456					$	2,354
Less: Dividends on preferred stock during the quarter	(389		)				(390		)
Net income available to common shareholders	$	2,067		1,968,777	$	1.05	$	1,964		1,968,777	$	1.00
Effect of dilutive securities
Convertible preferred stock	389			568,890
Warrants				57,223						129,975
Diluted earnings per share
Net income available to common stockholders and assumed conversions	$	2,456		2,594,890	$	0.95	$	1,964		2,098,752	$	0.94

Stock options for 26,571 and 72,931 shares of common stock were not considered in computing diluted earnings per common share for September 30, 2015 and 2014, respectively, because they are anti-dilutive.  Convertible preferred shares assuming full conversion totaled 568,890 shares as of September 30, 2015. On April 15, 2015, the Company repurchased the 254,218 warrants issued in 2008 to the US Treasury as part of its participation in the US Treasury’s Capital Purchase Program.  The repurchase price of the warrants was $1.7 million. Common stock warrants totaled 0 and 254,218 as of September 30, 2015 and 2014, respectively.

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Preferred Stock

9 Months Ended

Sep. 30, 2015

Preferred Stock.

Preferred Stock

Note 8 — Preferred Stock

In 2004, the Company issued 250 shares of Cumulative Convertible Preferred Stock, stated value $31,992 per share (Cumulative Preferred Stock), for an aggregate purchase price of $7,998,000. The Cumulative Preferred Stock was sold for $31,992 per share, is entitled to quarterly cumulative dividends at an annual fixed rate of 6.5% and is convertible into shares of common stock of the Company at an initial conversion price per share of $15.50 (currently $14.06, adjusted for stock dividends) on and after three years after the date of issuance.

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Fair Value Measurements (Details 2) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Valuation techniques
Impaired loans	$ 4,081	$ 4,873
Other real estate owned	207	198
Market Approach | Commercial Loan
Valuation techniques
Impaired loans		$ 423
Market Approach | Commercial Loan | Minimum
Valuation techniques
Range (as a percent)		50.00%
Market Approach | Commercial Loan | Maximum
Valuation techniques
Range (as a percent)		70.00%
Market Approach | Commercial Loan | Weighted Average
Valuation techniques
Range (as a percent)		67.35%
Sales Comparison | Commercial RE
Valuation techniques
Impaired loans	$ 260	$ 29
Sales Comparison | Commercial RE | Weighted Average
Valuation techniques
Range (as a percent)	50.00%	20.00%
Sales Comparison | Residential Real Estate
Valuation techniques
Impaired loans		$ 59
Sales Comparison | Residential Real Estate | Weighted Average
Valuation techniques
Range (as a percent)		10.00%
Sales Comparison | Residential real estate properties
Valuation techniques
Impaired loans	$ 60
Sales Comparison | Residential real estate properties | Weighted Average
Valuation techniques
Range (as a percent)	20.00%
Sales Comparison | Other real estate owned: Commercial RE
Valuation techniques
Other real estate owned	$ 135	$ 198
Sales Comparison | Other real estate owned: Commercial RE | Minimum
Valuation techniques
Range (as a percent)	8.00%	8.00%
Sales Comparison | Other real estate owned: Commercial RE | Maximum
Valuation techniques
Range (as a percent)	40.00%	55.00%
Sales Comparison | Other real estate owned: Commercial RE | Weighted Average
Valuation techniques
Range (as a percent)	33.13%	38.29%
Sales Comparison | Other real estate owned: Residential RE
Valuation techniques
Other real estate owned	$ 72
Sales Comparison | Other real estate owned: Residential RE | Weighted Average
Valuation techniques
Range (as a percent)	38.46%

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share

Schedule of reconciliation of basic and diluted earnings per share computations

	Quarter ended September 30, 2015						Quarter ended September 30, 2014
				Weighted						Weighted
				Average	Per Share					Average	Per Share
	Income			Shares	Amount		Income			Shares	Amount
Basic earnings per share:
Net income	$	775					$	930
Less: Dividends on preferred stock during the quarter	(131		)				(131		)
Net income available to common shareholders	$	644		1,968,777	$	0.33	$	799		1,968,777	$	0.41
Effect of dilutive securities
Convertible preferred stock	131			568,890
Warrants				—						137,181
Diluted earnings per share
Net income available to common stockholders and assumed conversions	$	775		2,537,667	$	0.31	$	799		2,105,958	$	0.38

	Nine months ended September 30, 2015						Nine months ended September 30, 2014
				Weighted						Weighted
				Average	Per Share					Average	Per Share
	Income			Shares	Amount		Income			Shares	Amount
Basic earnings per share:
Net income	$	2,456					$	2,354
Less: Dividends on preferred stock during the quarter	(389		)				(390		)
Net income available to common shareholders	$	2,067		1,968,777	$	1.05	$	1,964		1,968,777	$	1.00
Effect of dilutive securities
Convertible preferred stock	389			568,890
Warrants				57,223						129,975
Diluted earnings per share
Net income available to common stockholders and assumed conversions	$	2,456		2,594,890	$	0.95	$	1,964		2,098,752	$	0.94

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Loans and Allowance for Loan Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Categories of loans
Total loans	$ 327,149		$ 318,477
Less allowance for loan losses	(5,021)	$ (4,983)	(4,885)	$ (4,903)	$ (4,953)	$ (4,653)
Net Loans	322,128		313,592
Commercial Loan
Categories of loans
Total loans	47,137		43,439
Less allowance for loan losses	(804)	(757)	(1,029)	(856)	(902)	(1,420)
Construction
Categories of loans
Total loans	24,444		18,064
Commercial Real Estate - Other
Categories of loans
Total loans	173,029		174,032
Residential Real Estate
Categories of loans
Total loans	78,326		78,270
Less allowance for loan losses	(458)	$ (447)	(582)	$ (618)	$ (646)	$ (703)
Auto
Categories of loans
Total loans	1,486		1,820
Consumer - Other
Categories of loans
Total loans	$ 2,727		$ 2,852

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Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Consolidated Statements of Income
Accumulated other comprehensive income reclassifications for unrealized net gains on available-for sale-securities	$ 10	$ 74

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Reclassifications

9 Months Ended

Sep. 30, 2015

Reclassifications

Reclassifications

Note 2 -  Reclassifications

Certain reclassifications have been made to the consolidated financial statements of prior periods to conform to the current period presentation.  These reclassifications do not affect net income or total stockholders’ equity as previously reported.

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Loans and Allowance for Loan Losses (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Dec. 31, 2014
Allowance for loan losses:
Beginning Balance	$ 4,983	$ 4,953	$ 4,885	$ 4,653
Provision for loan losses			200	275
Loans charged-off	(3)	(98)	(170)	(201)
Recoveries	41	48	106	176
Total ending allowance balance	5,021	4,903	5,021	4,903
Accrued interest receivable					$ 1,597	$ 1,527
Allowance for loan losses, Ending allowance balance attributable to loans:
Individually evaluated for impairment					527	579
Collectively evaluated					4,494	4,306
Total ending allowance balance	4,983	4,953	4,885	4,653	5,021	4,885
Loans:
Individually evaluated for impairment					4,081	4,873
Collectively evaluated					323,068	313,604
Loans and Leases Receivable, Gross, Total					327,149	318,477
Commercial Loan
Allowance for loan losses:
Beginning Balance	757	902	1,029	1,420
Provision for loan losses	12	(80)	(236)	(657)
Loans charged-off			(75)
Recoveries	35	34	86	93
Total ending allowance balance	804	856	804	856
Allowance for loan losses, Ending allowance balance attributable to loans:
Individually evaluated for impairment					146	342
Collectively evaluated					658	687
Total ending allowance balance	757	902	1,029	1,420	804	1,029
Loans:
Individually evaluated for impairment					995	2,696
Collectively evaluated					46,142	40,743
Loans and Leases Receivable, Gross, Total					47,137	43,439
Commercial Real Estate
Allowance for loan losses:
Beginning Balance	3,605	3,189	3,088	2,079
Provision for loan losses	(23)	37	510	1,090
Loans charged-off		(13)	(17)	(14)
Recoveries		11	1	69
Total ending allowance balance	3,582	3,224	3,582	3,224
Allowance for loan losses, Ending allowance balance attributable to loans:
Individually evaluated for impairment					378	220
Collectively evaluated					3,204	2,868
Total ending allowance balance	3,605	3,189	3,088	2,079	3,582	3,088
Loans:
Individually evaluated for impairment					2,074	1,057
Collectively evaluated					195,399	191,039
Loans and Leases Receivable, Gross, Total					197,473	192,096
Residential Real Estate
Allowance for loan losses:
Beginning Balance	447	646	582	703
Provision for loan losses	8	52	(77)	75
Loans charged-off		(83)	(57)	(172)
Recoveries	3	3	10	12
Total ending allowance balance	458	618	458	618
Allowance for loan losses, Ending allowance balance attributable to loans:
Individually evaluated for impairment					3	7
Collectively evaluated					455	575
Total ending allowance balance	447	646	582	703	458	582
Loans:
Individually evaluated for impairment					1,003	1,098
Collectively evaluated					77,323	77,172
Loans and Leases Receivable, Gross, Total					78,326	78,270
Consumer Loan
Allowance for loan losses:
Beginning Balance	38	67	45	86
Provision for loan losses	(2)	(10)	3	(18)
Loans charged-off	(3)	(2)	(21)	(15)
Recoveries	3		9	2
Total ending allowance balance	36	55	36	55
Allowance for loan losses, Ending allowance balance attributable to loans:
Individually evaluated for impairment						10
Collectively evaluated					36	35
Total ending allowance balance	38	67	45	86	36	45
Loans:
Individually evaluated for impairment					9	22
Collectively evaluated					4,204	4,650
Loans and Leases Receivable, Gross, Total					4,213	4,672
Unallocated
Allowance for loan losses:
Beginning Balance	136	149	141	365
Provision for loan losses	5	1		(215)
Total ending allowance balance	141	150	141	150
Allowance for loan losses, Ending allowance balance attributable to loans:
Collectively evaluated					141	141
Total ending allowance balance	$ 136	$ 149	$ 141	$ 365	141	141
Loans Receivable
Allowance for loan losses:
Accrued interest receivable					$ 1,300	$ 1,200

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Preferred Stock (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014	Dec. 31, 2004
Preferred stock
Cumulative dividends (as a percent)	6.50%	6.50%
6.5% Cumulative convertible preferred stock
Preferred stock
Stock issued (in shares)			250
Stated value (in dollars per share)			$ 31,992
Purchase price of stock issued			$ 7,998,000
Sales price of stock issued			$ 31,992
Cumulative dividends (as a percent)			6.50%
Conversion price (in dollars per share)	$ 14.06		$ 15.50
Period after the date of issuance preferred stock can be converted			3 years

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Measurements

Schedule of assets measured at fair value on a recurring basis

	Fair Value Measurements at:
	(Dollars in Thousands)						(Dollars in Thousands)
	September 30, 2015						December 31, 2014
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Securities available-for-sale
U.S. government agencies and government sponsored entities			$	2,994					$	2,948
Agency mortgage-backed securites-residential			28,388						27,519
State and municipal			26,443						26,039
Trust preferred security					1,240						1,480
Corporate bonds			1,003						1,000
Total investment securities	$	—	$	58,828	$	1,240	$	—	$	57,506	$	1,480

Schedule of financial assets measured at fair value on a non-recurring basis

	Fair Value Measurement
	(Dollars in Thousands)
	September 30, 2015		December 31, 2014
	Significant Unobservable Inputs (Level 3)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	—	$	423
Commercial RE	260		29
Residential	60		59
Other real estate owned:
Commercial RE	$	135	$	198
Residential	72		—

Schedule of quantitative and qualitative information about Level 3 fair value measurements for financial instruments measured on a non-recurring basis

The following table presents quantitative and qualitative information about Level 3 fair value measurements for financial instruments measured on a non-recurring basis at September 30, 2015.

	September 30, 2015	Valuation Techniques	Unobservable Inputs (Dollars in thousands)	Range (Weighted Avg)
Impaired loans:
Commercial RE	260	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(50.00%)
Residential RE	60	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(20.00%)
Other real estate owned:
Commercial RE	135	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	8%-40% (33.13%)
Residential RE	72	Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(38.46%)

The following table presents quantitative and qualitative information about Level 3 fair value measurements for financial instruments measured on a non-recurring basis at December 31, 2014.

	December 31, 2014		Valuation Techniques	Unobservable Inputs (Dollars in thousands)	Range (Weighted Avg)
Impaired loans:
Commercial	$	423	Market Approach	Discounts to allow for market value of assets	50%-70% (67.35%)
Commercial RE	29		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(20.00%)
Residential	59		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	(10.00%)
Other real estate owned:
Commercial RE	198		Sales Comparison	Adjustments for limited use nature of certain properties, age of appraisal, location, and/or condition	8%-55% (38.29%)

Schedule of carrying amount and estimated fair values of financial instruments

			Fair Value Measurements at
			September 30, 2015
	Carrying Amount		Level 1		Level 2	Level 3	Total
Financial Assets
Cash and cash equivalents	$	11,206	$	11,206			$	11,206
Interest-bearing deposits in other financial institutions	2,480		2,480				2,480
Loans, net of allowance	321,808					323,917	323,917
Loans held for sale	155				158		158
Accrued interest receivable	1,597				320	1,277	1,597
Federal Home Loan Bank stock	2,025						N/A
Financial Liabilities
Demand and savings deposits	$	200,842	$	200,842			$	200,842
Time deposits	161,649				161,938		161,938
FHLB advances	13,000				12,925		12,925
Other borrowings	2,500				2,500		2,500
Subordinate debentures	5,000					2,836	2,836
Accrued interest payable	233		9		199	25	233

			Fair Value Measurements at
			December 31, 2014
	Carrying Amount		Level 1		Level 2	Level 3	Total
Financial Assets
Cash and cash equivalents	$	11,322	$	11,322			$	11,322
Loans, net of allowance	313,081					316,075	316,075
Accrued interest receivable	1,527				323	1,204	1,527
Federal Home Loan Bank stock	2,025						N/A
Financial Liabilities
Demand and savings deposits	$	190,910	$	156,790			$	156,790
Time deposits	150,874				151,504		151,504
FHLB advances	24,000				23,835		23,835
Other borrowings	1,500				1,500		1,500
Subordinate debentures	5,000					2,395	2,395
Accrued interest payable	231		9		222		231