10-Q

U.S. Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2015

or

¨ Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the transition period ended from                  to                    

Commission File Number    000-50400   

Select Bancorp, Inc.

(Exact name of Registrant as specified in its charter)

North Carolina	20-0218264
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

700 W. Cumberland Street
Dunn, North Carolina	28334
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (910) 892-7080

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 such 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 ¨

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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 ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

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

As of August 7, 2015, the Registrant had outstanding 11,499,398 shares of Common Stock, $1.00 par value per share.

		Page No.
Part I.	FINANCIAL INFORMATION
Item 1 -	Financial Statements (Unaudited)
	Consolidated Balance Sheets June 30, 2015 and December 31, 2014	3
	Consolidated Statements of Operations Three Months and Six Months Ended June 30, 2015 and 2014	4
	Consolidated Statements of Comprehensive Income Three Months and Six Months Ended June 30, 2015 and 2014	5
	Consolidated Statements of Changes in Shareholders’ Equity Six Months Ended June 30, 2015 and 2014	6
	Consolidated Statements of Cash Flows Six Months Ended June 30, 2015 and 2014	7
	Notes to Consolidated Financial Statements	9
Item 2 -	Management’s Discussion and Analysis of Financial Condition and  Results of Operations	54
Item 4 -	Controls and Procedures	64
Part II.	OTHER INFORMATION
Item 6 -	Exhibits	65
	Signatures	66
	Exhibit Index	68

2

Part I. Financial Information

Item 1 - Financial Statements

SELECT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2015			December 31,
	(Unaudited)			2014*
	(In thousands, except share
	and per share data)
ASSETS
Cash and due from banks	$	13,210		$	14,417
Interest-earning deposits in other banks		14,326			22,810
Certificates of deposit		1,000			1,000
Federal funds sold and repurchase agreements		-			20,183
Investment securities available for sale, at fair value		86,938			102,235
Loans		573,729			552,038
Allowance for loan losses		(6,842	)		(6,844	)
NET LOANS		566,887			545,194
Accrued interest receivable		2,268			2,416
Stock in Federal Home Loan Bank of Atlanta (“FHLB”), at cost		2,049			1,524
Other non-marketable securities		845			896
Foreclosed real estate		1,030			1,585
Premises and equipment, net		18,401			17,599
Bank owned life insurance		21,277			20,966
Goodwill		6,931			6,931
Core deposit intangible		1,320			1,625
Other assets		5,961			6,740
TOTAL ASSETS	$	742,443		$	766,121
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand	$	133,545		$	129,831
Savings		38,221			37,000
Money market and NOW		162,040			166,511
Time		245,803			285,560
TOTAL DEPOSITS		579,609			618,902
Short-term debt		32,884			20,733
Long-term debt		24,914			25,591
Accrued interest payable		197			276
Accrued expenses and other liabilities		3,287			2,934
TOTAL LIABILITIES		640,891			668,436
Shareholders’ Equity:
Preferred stock, no par value, 5,000,000 shares authorized; 7,645 shares issued and outstanding at June 30, 2015 and December 31, 2014		7,645			7,645
Common stock, $1.00 par value, 25,000,000 shares authorized; 11,499,398 and 11,377,980 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		11,499			11,378
Additional paid-in capital		68,814			68,406
Retained earnings		12,973			9,447
Common stock issued to deferred compensation trust, at cost; 252,148 and 259,551 shares at June 30, 2015 and December 31, 2014, respectively		(2,060	)		(2,121	)
Directors’ Deferred Compensation Plan Rabbi Trust		2,060			2,121
Accumulated other comprehensive income		621			809
TOTAL SHAREHOLDERS’ EQUITY		101,552			97,685
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	742,443		$	766,121

* Derived from audited consolidated financial statements.

See accompanying notes.

3

SELECT BANCORP, INC.

 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
	(In thousands, except share and per share data)
INTEREST INCOME
Loans	$	7,789		$	4,816		$	15,538		$	9,689
Federal funds sold and interest-earning deposits in other banks		6			31			31			58
Investments		467			414			935			827
TOTAL INTEREST INCOME		8,262			5,261			16,504			10,574
INTEREST EXPENSE
Money market, NOW and savings deposits		96			59			195			117
Time deposits		614			959			1,335			1,934
Short term debt		25			7			46			13
Long term debt		100			73			198			144
TOTAL INTEREST EXPENSE		835			1,098			1,774			2,208
NET INTEREST INCOME		7,427			4,163			14,730			8,366
PROVISION FOR (RECOVERY OF) LOAN LOSSES		(139	)		(427	)		(9	)		(476	)
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) LOAN LOSSES		7,566			4,590			14,739			8,842
NON-INTEREST INCOME
Gain on sale of investment securities		134			-			219			-
Service charges on deposit accounts		263			226			522			453
Other fees and income		544			339			1,063			737
TOTAL NON-INTEREST INCOME		941			565			1,804			1,190
NON-INTEREST EXPENSE
Personnel		3,011			2,101			6,072			4,256
Occupancy and equipment		565			396			1,112			780
Deposit insurance		106			103			267			206
Professional fees		387			310			742			593
Core deposit intangible amortization		150			29			305			58
Merger/acquisition related expenses		35			237			35			398
Information systems		521			320			884			668
Foreclosed real estate related expense		35			40			59			311
Other		743			618			1,447			1,336
TOTAL NON-INTEREST EXPENSE		5,553			4,154			10,923			8,606
INCOME BEFORE INCOME TAX		2,954			1,001			5,620			1,426
INCOME TAXES		1,133			388			2,056			541
NET INCOME		1,821			613			3,564			885
DIVIDENDS AND ACCRETION OF PREFERRED STOCK		19			-			38			-
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,802		$	613		$	3,526		$	885
NET INCOME PER COMMON SHARE
Basic	$	0.16		$	0.09		$	0.31		$	0.13
Diluted	$	0.16		$	0.09		$	0.31		$	0.13
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		11,481,137			6,923,640			11,453,908			6,922,651
Diluted		11,548,878			6,928,428			11,529,605			6,926,318

See accompanying notes.

4

SELECT BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
	(In thousands)
Net income	$	1,821		$	613		$	3,564		$	885
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities available for sale		(680	)		547			(72	)		929
Tax effect		259			(204	)		25			(346	)
		(421	)		343			(47	)		583
Reclassification adjustment for gain (loss) included in net income		(134	)		-			(219	)		-
Tax effect		45			-			78			-
		(89	)		-			(141	)		-
Total		(510	)		343			(188	)		583
Total comprehensive income	$	1,311		$	956		$	3,376		$	1,468

See accompanying notes.

5

SELECT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in thousands, except share data)
														Common						Accumulated
														Stock						Other
														Issued						Compre-
									Additional					to Deferred						hensive			Total
	Preferred Stock				Common Stock				paid-in		Retained			Compensation			Deferred			Income			Shareholders’
	Shares		Amount		Shares		Amount		Capital		Earnings			Trust			Comp Plan			(Loss)			Equity
Balance at December 31, 2013		-	$	-		6,921,352	$	6,922	$	42,062	$	7,128		$	(1,976	)	$	1,976		$	(108	)	$	56,004
Net income		-		-		-		-		-		885			-			-			-			885
Other comprehensive income, net		-		-		-		-		-		-			-			-			583			583
Stock option exercises		-		-		9,816		9		59		-			-			-			-			68
Stock based compensation		-		-		-		-		11		-			-			-			-			11
Director equity incentive plan, net		-		-		-		-		-		-			(90	)		90			-			-
Balance at June 30, 2014		-	$	-		6,931,168	$	6,931	$	42,132	$	8,013		$	(2,066	)	$	2,066		$	475		$	57,551
Balance at December 31, 2014		7,645	$	7,645		11,377,980	$	11,378	$	68,406	$	9,447		$	(2,121	)	$	2,121		$	809		$	97,685
Net income		-		-		-		-		-		3,564			-			-			-			3,564
Other comprehensive income, net		-		-		-		-		-		-			-			-			(188	)		(188	)
Preferred stock dividends paid		-		-		-		-		-		(38	)		-			-			-			(38	)
Stock option exercises		-		-		121,418		121		391		-			-			-			-			512
Stock based compensation		-		-		-		-		17		-			-			-			-			17
Director equity incentive plan, net		-		-		-		-		-		-			61			(61	)		-			-
Balance at June 30, 2015		7,645	$	7,645		11,499,398	$	11,499	$	68,814	$	12,973		$	(2,060	)	$	2,060		$	621		$	101,552

See accompanying notes.

6

SELECT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
	June 30,
	2015			2014
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,564		$	885
Adjustments to reconcile net income to net cash provided by operating activities:
Recovery of loan losses		(9	)		(476	)
Depreciation and amortization of premises and equipment		541			281
Amortization and accretion of investment securities		491			449
Amortization of deferred loan fees and costs		(134	)		(152	)
Amortization of core deposit intangible		305			58
Stock-based compensation		17			11
Accretion on acquired loans		(848	)		-
Amortization of acquisition premium on time deposits		(451	)		-
Net accretion of acquisition discount on borrowings		(244	)		-
Increase in cash surrender value of bank owned life insurance		(311	)		(115	)
Net loss on sale and write-downs of foreclosed real estate		55			273
Net (gain) loss on investment security sales and pay-downs		(219	)		-
Change in assets and liabilities:
Net change in accrued interest receivable		148			184
Net change in other assets		882			453
Net change in accrued expenses and other liabilities		274			(61	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		4,061			1,790
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase (redemption) of FHLB stock		(525	)		234
Redemption of non-marketable security		51			14
Purchase of investment securities available for sale		(7,057	)		(7,445	)
Maturities of investment securities available for sale		11,429			7,102
Mortgage-backed securities pay-downs		4,722			4,206
Proceeds from sale of investment securities available for sale		5,640			550
Net change in loans outstanding		(20,702	)		11,993
Proceeds from sale of foreclosed real estate		500			1,226
Purchases of premises and equipment		(1,343	)		(311	)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES		(7,285	)		17,569

See accompanying notes.

7

SELECT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

	Six Months Ended
	June 30,
	2015			2014
	(In thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	$	(38,842	)	$	(19,724	)
Proceeds from short-term debt		19,976			874
Repayments on short-term debt		(7,779	)		-
Repayments on long-term debt		(479	)		-
Preferred stock dividends paid		(38	)		-
Proceeds from stock option exercises		512			68
NET CASH USED IN FINANCING ACTIVITIES		(26,650	)		(18,782	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(29,874	)		577
CASH AND CASH EQUIVALENTS, BEGINNING		58,410			72,869
CASH AND CASH EQUIVALENTS, ENDING	$	28,536		$	73,446
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	1,853		$	2,226
Taxes		1,058			10
Non-cash transactions:
Unrealized gains (losses) on investment securities available for sale, net of tax		(188	)		451
Transfers from loans to foreclosed real estate		-			660

See accompanying notes.

8

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE A - BASIS OF PRESENTATION

Select Bancorp, Inc. (the “Company”), formerly known as New Century Bancorp, Inc. (“New Century”), is a bank holding company whose principal business activity consists of ownership of Select Bank & Trust Company (the “Bank”), formerly known as New Century Bank. The Bank is engaged in general commercial and retail banking and operates under the banking laws of North Carolina and the rules and regulations of the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks. The Bank undergoes periodic examinations by those regulatory authorities.

On September 30, 2013, the Company signed a merger agreement with Select Bancorp, Inc. (“Legacy Select”), a bank holding company headquartered in Greenville, North Carolina, whose wholly-owned subsidiary, Select Bank & Trust Company (“Legacy Select Bank”), was a state-chartered commercial bank with approximately $276.9 million in assets. The merger, which closed July 25, 2014, expanded the Bank’s North Carolina presence with six branches located in Greenville (two), Elizabeth City, Washington, Gibsonville and Burlington.

As a result of the merger, New Century acquired Legacy Select and Legacy Select Bank and changed its name to Select Bancorp, Inc. New Century Bank changed its name to Select Bank & Trust Company.

Under the terms of the merger agreement, former shareholders of Legacy Select common stock received 1.8264 shares of the Company’s common stock for each share of Legacy Select common stock. The Company issued 4,416,500 shares of common stock in the merger.

In addition, each share of Legacy Select’s issued and outstanding preferred stock was exchanged for one newly issued share of the Company’s preferred stock having terms substantially identical to the Legacy Select preferred stock. All of the issued and outstanding shares of Company’s preferred stock are held by the Secretary of the United States Treasury and were issued in connection with Legacy Select’s participation in the Small Business Lending Fund.

All significant inter-company transactions and balances have been eliminated in consolidation. In management’s opinion, the financial information, which is unaudited, reflects all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial information as of and for the three and six month periods ended June 30, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, as well as the amounts of income and expense during the reporting period. Actual results could differ from those estimates. Operating results for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015.

The organization and business of the Company, accounting policies followed by the Company and other relevant information are contained in the notes to the financial statements filed as part of the Company’s 2014 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2015. This quarterly report should be read in conjunction with the Annual Report.

Certain reclassifications of the information in prior periods were made to conform to the June 30, 2015 presentation. Such reclassifications had no effect on shareholders’ equity or net income.

9

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE B - PER SHARE RESULTS

Basic net income per share is computed based upon the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the dilutive effect of stock options outstanding during the period. At June 30, 2015 and 2014 there were 111,080 and 91,183 anti-dilutive options outstanding, respectively.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Weighted average shares used for basic net income available to common shareholders		11,481,137		6,923,640		11,453,908		6,922,651
Effect of dilutive stock options		67,741		4,788		75,697		3,667
Weighted average shares used for diluted net income available to common shareholders		11,548,878		6,928,428		11,529,605		6,926,318

NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS

The following summarizes recent accounting pronouncements and their expected impact on the Company:

In January 2014, the Financial Accounting Standards Board (FASB) amended the Receivables topic of the Accounting Standards Codification. The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (OREO). In addition, the amendments require a creditor to reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods beginning after December 15, 2014, with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. The Company will apply the amendments prospectively. This update became effective during the first quarter.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The amendments in this Update provide amendments that are subject to transition guidance: effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

10

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS (continued)

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this Update provide a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This Update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in this Update are effective for periods beginning after December 15, 2016 and early adoption is not permitted. Adoption of this update is not expected to have a material impact on the Company’s financial position or results of operations because this ASU does not apply to financial instruments.

In January 2014, the FASB issued ASU 2014-04, Receivables-Troubled Debt Restructuring by Creditors (Subtopic 310-40). This ASU clarifies that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.

The amendments in this ASU were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. We adopted the guidance effective first quarter of 2015. The initial adoption did not have any effect on our consolidated financial position or consolidated results of operations. The new disclosures required by this ASU are included in Note F.

In August 2014, the FASB issued ASU 2014-11 Transfers and Servicing (Topic 860). This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The ASU requires a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The ASU also requires expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings.

The accounting changes in this ASU were effective for fiscal years beginning after December 15, 2014. In addition, the disclosure for certain transactions accounted for as a sale was effective for the fiscal period beginning after December 15, 2014, the disclosures for transactions accounted for as secured borrowings were required to be presented for fiscal periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. We adopted the guidance effective first quarter of 2015. The initial adoption did not have any effect on our consolidated financial position or consolidated results of operations. The new disclosures required by this ASU are included in Note I.

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS (continued)

In January 2015, the FASB issued ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect these amendments to have a material effect on its financial statements.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

From time to time, the FASB issues exposure drafts for proposed statements of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as statements of financial accounting standards. Management considers the effect of the proposed statements on the consolidated financial statements of the Company and monitors the status of changes to and proposed effective dates of exposure drafts.

Note D – Business Combinations

On September 30, 2013, the Company executed a merger agreement with Legacy Select, a bank holding company headquartered in Greenville, North Carolina, whose wholly-owned subsidiary, Legacy Select Bank, was a state-chartered commercial bank with approximately $276.9 million in assets as of the merger date, July 25, 2014. The merger expanded the Bank’s North Carolina presence with six branches in Greenville (two), Elizabeth City, Washington, Gibsonville and Burlington.

As a result of the merger, New Century acquired Legacy Select and Legacy Select Bank and changed its name to Select Bancorp, Inc. New Century Bank changed its name to Select Bank & Trust Company. Under the acquisition method, the assets and liabilities of Legacy Select, as of the effective date of the acquisition, are recorded at their respective fair values. For the acquisition of Legacy Select, estimated fair values of assets acquired and liabilities assumed are based on the information that is available, and the Company believes this information provides a reasonable basis for determining fair values. Management has substantially completed its valuation of Legacy Select’s assets and liabilities, but may refine those valuations for up to one year following closing of the transaction. Any changes resulting from the evaluation of these or other estimates as of the acquisition date may change the amount of the preliminary fair values recorded.

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

Note D – Business Combinations (continued)

Under the terms of the merger agreement, shareholders of Legacy Select common stock received 1.8264 shares of the Company’s common stock for each share of Legacy Select common stock, for a value of approximately $31.1 million in the aggregate, based on 2,418,347 shares of Legacy Select common stock outstanding and the $6.76 per share closing price of the Company’s common stock on July 25, 2014, valuing each share of Legacy Select common stock at $12.35.

Each share of Legacy Select’s issued and outstanding preferred stock was exchanged for one newly issued share of the Company’s preferred stock having terms substantially identical to Legacy Select’s preferred stock. All of the issued and outstanding shares of the Company’s preferred stock are held by the Secretary of the United States Treasury and were issued in connection with Legacy Select’s participation in the Small Business Lending Fund. On July 25, 2014, 202,842 Legacy Select stock options were converted to 370,278 Company stock options. At June 30, 2015, 218,462 of these converted options were outstanding and exercisable with an average weighted remaining contractual life of approximately 3.01 years and an aggregate intrinsic value of $628,000. There were no forfeitures and 149,529 options were exercised since the merger related to Legacy Select stock options through June 30, 2015. In determining the acquisition date fair value of purchased credit-impaired (“PCI”) loans, and in subsequent accounting, the Company generally aggregates loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are referred to as the “accretable yield” and recorded as interest income prospectively.

PCI loans acquired totaled $28.6 million at estimated fair value and acquired performing loans totaled $189.0 million at estimated fair value. In addition, $1.6 million of core deposit intangibles and $6.9 million in goodwill were recorded as components of the acquisition. The transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at estimated fair value on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition. Accordingly, deferred tax asset and goodwill were adjusted during the quarter.

NOTE E - FAIR VALUE MEASUREMENTS

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

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Notes to Consolidated Financial Statements (Unaudited)

NOTE E – FAIR VALUE MEASUREMENTS (continued)

Fair value estimates are made at a specific moment in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.

Because no active market readily exists for a portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Fair Value Hierarchy

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

· Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

· Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

· Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis.

Investment Securities Available-for-Sale (“AFS”)

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include U.S. government agency securities, mortgage-backed securities issued by government sponsored entities, and municipal bonds. There have been no changes in valuation techniques for the three and six months ended June 30, 2015. Valuation techniques are consistent with techniques used in prior periods.

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE E – FAIR VALUE MEASUREMENTS (continued)

The following tables summarize quantitative disclosures about the fair value measurement for each category of assets carried at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

Investment securities available for sale June 30, 2015	Fair value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. government agencies – GSE's	$	23,546	$	-	$	23,546	$	-
Mortgage-backed securities - GSE’s		43,649		-		43,649		-
Municipal bonds		19,743		-		19,743		-
Total	$	86,938	$	-	$	86,938	$	-

Investment securities available for sale December 31, 2014	Fair value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. government agencies – GSE's	$	27,921	$	-	$	27,921	$	-
Mortgage-backed securities - GSE’s		53,304		-		53,304		-
Municipal bonds		21,010		-		21,010		-
Total	$	102,235	$	-	$	102,235	$	-

The following is a description of valuation methodologies used for assets recorded at fair value on a non-recurring basis.

Loans

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC 310, “Receivables”. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, or liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At June 30, 2015 and December 31, 2014, substantially all of the total impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as non-recurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as non-recurring Level 3. The significant unobservable input used in the fair value measurement of the Company’s impaired loans is the discount applied to appraised values to account for expected liquidation and selling costs. At June 30, 2015, the discounts used are weighted between 5% and 47%. There were no transfers between levels from the prior reporting periods and there have been no changes in valuation techniques for the three months ended June 30, 2015.

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Notes to Consolidated Financial Statements (Unaudited)

NOTE E – FAIR VALUE MEASUREMENTS (continued)

Foreclosed Real Estate

Foreclosed real estate are properties recorded at the balance of the loan or an estimated fair value less estimated selling costs, whichever is less. Inputs include appraised values on the properties or recent sales activity for similar assets in the property’s market. Therefore, foreclosed real estate is classified within Level 3 of the hierarchy. The significant unobservable input used in the fair value measurement of the Company’s impaired loans is the discount applied to appraised values to account for expected liquidation and selling costs. At June 30, 2015, the discounts used ranged between 5% and 90%. There have been no changes in valuation techniques for the three months ended June 30, 2015.

The following tables summarize quantitative disclosures about the fair value measurement for each category of assets carried at fair value on a non-recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

Asset Category June 30, 2015	Fair value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	5,416	$	-	$	-	$	5,416
Foreclosed real estate		1,030		-		-		1,030
Total	$	6,446	$	-	$	-	$	6,446

Asset Category December 31, 2014	Fair value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)
Impaired loans	$	6,896	$	-	$	-	$	6,896
Foreclosed real estate		1,585		-		-		1,585
Total	$	8,481	$	-	$	-	$	8,481

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE E – FAIR VALUE MEASUREMENTS (continued)

The following table presents the carrying values and estimated fair values of the Company's financial instruments at June 30, 2015 and December 31, 2014:

	June 30, 2015
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	13,210	$	13,210	$	13,210	$	-	$	-
Certificates of deposit		1,000		1,000		1,000		-		-
Interest-earning deposits in other banks		14,326		14,326		14,326		-		-
Investment securities available for sale		86,938		86,938		-		86,938		-
Loans, net		566,887		576,016		-		-		576,016
Accrued interest receivable		2,268		2,268		-		-		2,268
Stock in FHLB		2,049		2,049		-		-		2,049
Other non-marketable securities		845		845		-		-		845
Financial liabilities:
Deposits	$	579,609	$	581,304	$	-	$	581,304	$	-
Short term debt		32,884		32,884		-		32,884		-
Long term debt		24,914		17,701		-		17,701		-
Accrued interest payable		197		197		-		197		-

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE E – FAIR VALUE MEASUREMENTS (continued)

	December 31, 2014
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	14,417	$	14,417	$	14,417	$	-	$	-
Certificates of deposit		1,000		1,000		1,000		-		-
Interest-earning deposits in other banks		22,810		22,810		22,810		-		-
Federal funds sold and repurchase agreeements		20,183		20,183		20,183		-		-
Investment securities available for sale		102,235		102,235		-		102,235		-
Loans, net		545,194		555,736		-		-		555,736
Accrued interest receivable		2,416		2,416		-		-		2,416
Stock in the FHLB		1,524		1,524		-		-		1,524
Other non-marketable securities		896		896		-		-		896
Financial liabilities:
Deposits	$	618,902	$	621,049	$	-	$	621,049	$	-
Short-term debt		20,733		20,593		-		20,593		-
Long-term debt		25,591		20,771		-		20,771		-
Accrued interest payable		276		276		-		276		-

Cash and Due from Banks, Certificates of Deposit, Interest-Earning Deposits in Other Banks and Federal Funds Sold

The carrying amounts for cash and due from banks, certificates of deposit, interest-earning deposits in other banks and federal funds sold approximate fair value because of the short maturities of those instruments.

Investment Securities Available for Sale

Fair value for investment securities available for sale equals quoted market price if such information is available. If a quoted market price is not available, fair value is estimated using prices quoted for similar investments or quoted market prices obtained from independent pricing services.

Loans

For certain homogenous categories of loans, such as residential mortgages, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. However, the values likely do not represent exit prices due to distressed market conditions.

Stock in Federal Home Loan Bank of Atlanta

The fair value for FHLB stock approximates carrying value, based on the redemption provisions of the FHLB stock.

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Notes to Consolidated Financial Statements (Unaudited)

NOTE E – FAIR VALUE MEASUREMENTS (continued)

Other Non-Marketable Securities

The fair value of equity instruments in other non-marketable securities is assumed to approximate carrying value.

Deposits

The fair value of demand, savings, and money market and NOW deposits is the amount payable on demand at the reporting date. The fair values of time deposits are estimated using the rates currently offered for instruments of similar remaining maturities.

Short-term Debt

Short-term debt consists of repurchase agreements and FHLB advances with maturities of less than twelve months. The carrying values of these instruments is a reasonable estimate of fair value.

Long-term Debt

The fair values of long-term debt are based on discounted expected cash flows at the interest rate for debt with the same or similar remaining maturities and collateral requirements.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amounts of accrued interest receivable and payable approximate fair value because of the short maturities of these instruments.

Financial Instruments with Off-Balance Sheet Risk

With regard to financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of future financing commitments.

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Notes to Consolidated Financial Statements (Unaudited)

NOTE F - INVESTMENT SECURITIES

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, follow:

	June 30, 2015
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(In thousands)
Securities available for sale:
U.S. government agencies-GSE’s
Within 1 year	$	34	$	1	$	-		$	35
After 1 year but within 5 years		9,655		37		(16	)		9,676
After 5 years but within 10 years		11,559		51		(202	)		11,408
After 10 years		2,448		-		(21	)		2,427
Mortgage-backed securities-GSE’s
Within 1 year		9		-		-			9
After 1 year but within 5 years		31,100		677		(42	)		31,735
After 5 years but within 10 years		11,640		129		(10	)		11,759
After 10 years		130		16		-			146
Municipal bonds
Within 1 year		581		8		-			589
After 1 year but within 5 years		3,619		118		-			3,737
After 5 years but within 10 years		6,116		94		(2	)		6,208
After 10 years		9,057		153		(1	)		9,209
	$	85,948	$	1,284	$	(294	)	$	86,938

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE F - INVESTMENT SECURITIES (continued)

As of June 30, 2015, accumulated other comprehensive income included net unrealized gains totaling $1.0 million. Deferred tax liabilities resulting from these unrealized gains totaled $369,000.

	December 31, 2014
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(In thousands)
Securities available for sale:
U.S. government agencies-GSE’s
Within 1 year	$	6,352	$	8	$	-		$	6,360
After 1 year but within 5 years		6,018		21		(24	)		6,015
After 5 years but within 10 years		10,032		32		(227	)		9,837
After 10 years		5,778		-		(69	)		5,709
Mortgage-backed securities-GSE’s
Within 1 year		21		1		-			22
After 1 year but within 5 years		35,114		974		(39	)		36,049
After 5 years but within 10 years		17,143		140		(50	)		17,233
Municipal bonds
Within 1 year		576		3		-			579
After 1 year but within 5 years		3,806		144		-			3,950
After 5 years but within 10 years		6,351		116		(2	)		6,465
After 10 years		9,763		253		-			10,016
	$	100,954	$	1,692	$	(411	)	$	102,235

As of December 31, 2014, accumulated other comprehensive income included net unrealized gains totaling $1.3 million. Deferred tax liabilities resulting from these unrealized gains totaled $481,000.

Securities with a carrying value of $36.1 million and $85.1 million at June 30, 2015 and December 31, 2014, respectively, were pledged to secure public monies on deposit as required by law, customer repurchase agreements, and access to the Federal Reserve Discount Window.

Since none of the unrealized losses relate to the liquidity of the securities or the issuer’s ability to honor redemption obligations and the Company has the intent and ability to hold these securities to recovery, no other than temporary impairments were identified for these investments having unrealized losses for the periods ended June 30, 2015 and December 31, 2014. In 2014 the Company incurred a loss on the disposal of one security and did not realize any losses related to securities in 2015.

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Notes to Consolidated Financial Statements (Unaudited)

NOTE F- INVESTMENT SECURITIES (continued)

The following tables show the gross unrealized losses and fair value of the Company’s investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2015 and December 31, 2014.

	June 30, 2015
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	value		losses			value		losses			value		losses
	(In thousands)
Securities available for sale:
U.S. government agencies- GSE’s	$	3,345	$	(63	)	$	9,353	$	(176	)	$	12,698	$	(239	)
Mortgage-backed securities- GSE’s		6,239		(52	)		-		-			6,239		(52	)
Municipal bonds		682		(3	)		-		-			682		(3	)
Total temporarily impaired securities	$	10,266	$	(118	)	$	9,353	$	(176	)	$	19,619	$	(294	)

At June 30, 2015, the Company had six AFS securities with an unrealized loss for twelve or more consecutive months. Six U.S. government agency GSE’s had unrealized losses for more than twelve months totaling $176,000 at June 30, 2015. Two U.S. government agency GSE, five mortgage-backed GSE’s, and two municipal bonds had unrealized losses for less than twelve months totaling $118,000 at June 30, 2015. All unrealized losses are attributable to the general trend of interest rates. During the second quarter of 2015 gross proceeds of investment sales amounted to $2.2 million and gains of $134,000.

	December 31, 2014
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	value		losses			value		losses			value		losses
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s	$	2,926	$	(24	)	$	12,731	$	(296	)	$	15,657	$	(320	)
Mortgage-backed securities- GSE’s		1,965		(28	)		4,590		(61	)		6,555		(89	)
Municipal bonds		-		-			112		(2	)		112		(2	)
Total temporarily impaired securities	$	4,891	$	(52	)	$	17,433	$	(359	)	$	22,324	$	(411	)

At December 31, 2014, the Company had thirteen AFS securities with an unrealized loss for twelve or more consecutive months. Eight U.S. government agency GSE’s, one municipal and four mortgage-backed GSE’s had unrealized losses for more than twelve months totaling $359,000 at December 31, 2014. Two U.S. government agency GSE’s and one mortgage-backed GSE bonds had unrealized losses for less than twelve months totaling $52,000 at December 31, 2014. All unrealized losses are attributable to the general trend of interest rates and the abnormal spreads of all debt instruments to U.S. Treasury securities. The Company incurred a $46,000 loss on one municipal security during 2014.

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS

Following is a summary of the composition of the Company’s loan portfolio at June 30, 2015 and December 31, 2014:

	June 30,						December 31,
Total Loans:	2015						2014
				Percent						Percent
	Amount			of total			Amount			of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	85,926			14.98	%	$	90,903			16.47	%
Commercial real estate		236,471			41.22	%		233,630			42.32	%
Multi-family residential		41,852			7.29	%		42,224			7.65	%
Construction		96,033			16.74	%		83,593			15.14	%
Home equity lines of credit (“HELOC”)		37,722			6.57	%		38,093			6.90	%
Total real estate loans		498,004			86.80	%		488,443			88.48	%
Other loans:
Commercial and industrial		70,404			12.27	%		58,217			10.55	%
Loans to individuals		5,947			1.04	%		5,953			1.08	%
Overdrafts		95			0.02	%		64			0.01	%
Total other loans		76,446			13.33	%		64,234			11.64	%
Gross loans		574,450						552,677
Less deferred loan origination fees, net		(721	)		(0.13	)%		(639	)		(0.12	)%
Total loans		573,729			100.00	%		552,038			100.00	%
Allowance for loan losses		(6,842	)					(6,844	)
Total loans, net	$	566,887					$	545,194

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

	June 30,					December 31,
Purchased Credit Impaired (PCI) Loans:	2015					2014
			Percent					Percent
	Amount		of total			Amount		of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	8,916		38.02	%	$	9,972		36.89	%
Commercial real estate		11,392		48.57	%		11,903		44.03	%
Multi-family residential		863		3.68	%		2,724		10.08	%
Construction		1,443		6.15	%		1,463		5.41	%
Home equity lines of credit (“HELOC”)		190		0.81	%		188		0.69	%
Total real estate loans		22,804		97.23	%		26,250		97.10	%
Other loans:
Commercial and industrial		528		2.25	%		657		2.43	%
Loans to individuals		122		0.52	%		128		0.47	%
Overdrafts		-		0.00	%		-		0.00	%
Total other loans		650		2.77	%		785		2.90	%
Gross loans		23,454					27,035
Less deferred loan origination fees, net		-		-	%		-		-	%
Total loans		23,454		100.00	%		27,035		100.00	%
Allowance for loan losses		68					-
Total loans, net	$	23,386				$	27,035

For PCI loans acquired from Legacy Select, the contractually required payments including principal and interest, cash flows expected to be collected and fair values as of the closing date of the merger and June 30, 2015 were:

(Dollars in thousands)	June 30, 2015		July 25, 2014
Contractually required payments	$	28,234	$	34,329
Nonaccretable difference		1,460		1,402
Cash flows expected to be collected		26,774		32,927
Accretable yield		3,320		4,360
Fair value	$	23,454	$	28,567

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

	June 30,						December 31,
Loans – excluding PCI:	2015						2014
				Percent						Percent
	Amount			of total			Amount			of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	77,010			13.99	%	$	80,931			15.42	%
Commercial real estate		225,079			40.90	%		221,727			42.23	%
Multi-family residential		40,989			7.45	%		39,500			7.52	%
Construction		94,590			17.19	%		82,130			15.64	%
Home equity lines of credit (“HELOC”)		37,532			6.82	%		37,905			7.22	%
Total real estate loans		475,200			86.35	%		462,193			88.03	%
Other loans:
Commercial and industrial		69,876			12.70	%		57,560			10.97	%
Loans to individuals		5,825			1.06	%		5,825			1.11	%
Overdrafts		95			0.02	%		64			0.01	%
Total other loans		75,796			13.78	%		63,449			12.09	%
Gross loans		550,996						525,642
Less deferred loan origination fees, net		(721	)		(0.13	)%		(639	)		(0.12	)%
Total loans		550,275			100.00	%		525,003			100.00	%
Allowance for loan losses		(6,774	)					(6,844	)
Total loans, net	$	543,501					$	518,159

Loans are primarily secured by real estate located in eastern and central North Carolina. Real estate loans can be affected by the condition of the local real estate market and by local economic conditions.

At June 30, 2015, the Company had pre-approved but unused lines of credit for customers totaling $123.5 million. In management’s opinion, these commitments, and undisbursed proceeds on loans reflected above, represent no more than normal lending risk to the Company and will be funded from normal sources of liquidity.

A floating lien of $74.8 million of quality loans was pledged to the FHLB to secure borrowings at June 30, 2015.

A description of the various loan products provided by the Bank is presented below.

1-to-4 Family Residential Loans

Residential 1-to-4 family loans are mortgage loans secured by residential real estate within the Bank’s market areas. These loans may also include loans that convert from construction loans into permanent financing and are secured by properties within the Bank’s market areas.

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Commercial Real Estate Loans

Commercial real estate loans are underwritten based on the borrower’s ability to generate adequate cash flow to repay the subject debt within reasonable terms. Commercial real estate loans typically include both owner and non-owner occupied properties with higher principal loan amounts. The repayment of these loans is generally dependent on the successful management of the property. Commercial real estate loans are sensitive to market and general economic conditions. Repayment analysis must be performed and consists of an identified primary/cash flow source of repayment and a secondary/liquidation source of repayment. The primary source of repayment is cash flow from income generated from rental or lease of the property. However, the cash flow can be supplemented with the borrower's and guarantor's global cash flow position. Other credit issues such as the business fundamentals and financial strength of the borrower/guarantor can be considered in determining adequacy of repayment ability. The secondary source of repayment is liquidation of the collateral, supplemented by a liquidation cushion provided by the financial assets of the borrower/guarantor. Management monitors and evaluates commercial real estate loans based on collateral, market area, and risk grade.

Multi-family Residential Loans

Multi-family residential loans are typically non-farm properties with 5 or more dwelling units in structures which include apartment buildings used primarily to accommodate households on a more or less permanent basis. Successful performance of these types of loans is primarily dependent on occupancy rates, rental rates, and property management.

Construction Loans

Construction loans are non-revolving extensions of credit secured by real property of which the proceeds are used to acquire and develop land and to construct commercial or residential buildings. The primary source of repayment for these types of loans is the sale of the improved property or permanent financing in which case the property is expected to generate the cash flow necessary for repayment on a permanent loan basis. Property cash flow may be supplemented with financial support from the borrowers/guarantors. Proper underwriting of a construction loan consists of the initial process of obtaining, analyzing, and approving various aspects of information pertaining to: the analysis of the permanent financing source, creditworthiness of the borrower and guarantors, ability of the contractor to perform under the terms of the contract, and the feasibility, marketability, and valuation of the project.

26

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Also, much consideration needs to be given to the cost of the project and sources of funds needed to complete construction as well as identifying any sources of equity funding. Construction loans are traditionally considered to be higher risk loans involving technical and legal requirements inherently different from other types of loans; however with thorough credit underwriting, proper loan structure, and diligent loan servicing, these risks can often be mitigated. Some examples of risks inherent in this type of lending include: underestimated costs, inflation of material and labor costs, site difficulties (i.e. rock, soil), project not built to plans, weather delays and natural disasters, borrower/contractor/subcontractor disputes which prompt liens, and interest rates increasing beyond budget.

Home Equity Lines of Credit

Home equity lines of credit are consumer-purpose revolving extensions of credit which are secured by first or second liens on owner-occupied residential real estate. Appropriate risk management and compliance practices are exercised to ensure that loan-to-value, lien perfection, and compliance risks are addressed and managed within the Bank’s established guidelines. The degree of utilization of revolving commitments within this loan segment is reviewed periodically to identify changes in the behavior of this borrowing group.

Commercial and Industrial Loans

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to generate positive cash flow, operate profitably and prudently expand its business. Underwriting standards are designed to promote relationships to include a full range of loan, deposit, and cash management services. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower and the guarantors. The cash flows of the borrower, however, may not be as expected and the collateral securing these loans may fluctuate in value. In the case of loans secured by accounts receivable, the availability of funds for repayment can be impacted by the borrower’s ability to collect amounts due from its customers.

Loans to Individuals & Overdrafts

Consumer loans are approved using Bank policies and procedures established to evaluate each credit request. All lending decisions and credit risks are required to be clearly documented. Several factors are considered in making these decisions such as credit score, adjusted net worth, liquidity, debt ratio, disposable income, credit history, and loan-to-value of the collateral. This process, combined with the relatively smaller loan amounts spreads the risk among many individual borrowers. Overdrafts on customer accounts are classified as loans for reporting purposes.

27

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

The following tables present an age analysis of past due loans, segregated by class of loans as of June 30, 2015 and December 31, 2014, respectively:

Total Loans:	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	130	$	405	$	535	$	69,869	$	70,404
Construction		-		199		199		95,834		96,033
Multi-family residential		437		-		437		41,415		41,852
Commercial real estate		835		770		1,605		234,866		236,471
Loans to individuals & overdrafts		1		-		1		6,041		6,042
1-to-4 family residential		380		6,218		6,598		79,328		85,926
HELOC		35		402		437		37,285		37,722
Deferred loan (fees) cost, net		-		-		-		-		(721	)
	$	1,818	$	7,994	$	9,812	$	564,638	$	573,729

Total PCI Loans:	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	-	$	-	$	-	$	528	$	528
Construction		-		-		-		1,443		1,443
Multi-family residential		437		-		437		426		863
Commercial real estate		553		-		553		10,839		11,392
Loans to individuals & overdrafts		-		-		-		122		122
1-to-4 family residential		-		280		280		8,636		8,916
HELOC		-		-		-		190		190
	$	990	$	280	$	1,270	$	22,184	$	23,454

Total Loans (excluding PCI):	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	130	$	405	$	535	$	69,341	$	69,876
Construction		-		199		199		94,391		94,590
Multi-family residential		-		-		-		40,989		40,989
Commercial real estate		282		770		1,052		224,027		225,079
Loans to individuals & overdrafts		1		-		1		5,919		5,920
1-to-4 family residential		380		5,938		6,318		70,692		77,010
HELOC		35		402		437		37,095		37,532
Deferred loan (fees) cost, net		-		-		-		-		(721	)
	$	828	$	7,714	$	8,542	$	542,454	$	550,275

28

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

There were two loans that amounted to $280,000 that were more than 90 days past due and still accruing interest at June 30, 2015.

	December 31, 2014
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(dollars in thousands)
Total Loans
Commercial and industrial	$	141	$	632	$	773	$	57,444	$	58,217
Construction		-		816		816		82,777		83,593
Multi-family residential		-		901		901		41,323		42,224
Commercial real estate		3,377		2,576		5,953		227,677		233,630
Loans to individuals & overdrafts		22		-		22		5,995		6,017
1 to 4 family residential		1,464		1,160		2,624		88,279		90,903
HELOC		14		853		867		37,226		38,093
Deferred loan (fees) cost, net		-		-		-		-		(639	)
	$	5,018	$	6,938	$	11,956	$	540,721	$	552,038
Loans- PCI
Commercial and industrial	$	2	$	-	$	2	$	655	$	657
Construction		-		-		-		1,463		1,463
Multi-family residential		-		-		-		2,724		2,724
Commercial real estate		562		-		562		11,341		11,903
Loans to individuals & overdrafts		-		-		-		128		128
1 to 4 family residential		283		-		283		9,689		9,972
HELOC		-		-		-		188		188
	$	847	$	-	$	847	$	26,188	$	27,035
Loans- excluding PCI
Commercial and industrial	$	139	$	632	$	771	$	56,789	$	57,560
Construction		-		816		816		81,314		82,130
Multi-family residential		-		901		901		38,599		39,500
Commercial real estate		2,815		2,576		5,391		216,336		221,727
Loans to individuals & overdrafts		22		-		22		5,867		5,889
1 to 4 family residential		1,181		1,160		2,341		78,590		80,931
HELOC		14		853		867		37,038		37,905
Deferred loan (fees) cost, net		-		-		-		-		(639	)
	$	4,171	$	6,938	$	11,109	$	514,533	$	525,003

There was one loan in the amount of $2.2 million greater than 90 days past due and still accruing interest at December 31, 2014.

29

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Impaired Loans

The following tables present information on loans that were considered to be impaired as of June 30, 2015 and December 31, 2014:

							Three months ended				Six months ended
	As of June 30, 2015						June 30, 2015				June 30, 2015
			Contractual						Interest Income				Interest Income
			Unpaid				Average		Recognized on		Average		Recognized on
	Recorded		Principal		Related		Recorded		Impaired		Recorded		Impaired
	Investment		Balance		Allowance		Investment		Loans		Investment		Loans
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	518	$	923	$	-	$	640	$	6	$	606	$	38
Construction		891		1,120		-		973		10		1,095		23
Commercial real estate		2,501		2,947		-		2,556		49		2,468		93
Loans to individuals & overdrafts		-		-		-		-		-		-		-
Multi-family residential		1,337		1,503		-		1,769		21		1,785		43
1 to 4 family residential		2,434		2,925		-		2,485		28		2,368		59
HELOC		646		795		-		641		9		641		20
Subtotal:		8,327		10,213		-		9,064		123		8,963		276
With an allowance recorded:
Commercial and industrial		11		12		3		11		-		138		-
Construction		165		168		78		166		1		166		2
Commercial real estate		4,409		5,336		299		4,436		19		4,643		80
Loans to individuals & overdrafts		-		-		-		-		-		-		-
Multi-family residential		-		-		-		-		-		-		-
1 to 4 family residential		502		504		66		495		6		476		10
HELOC		293		535		108		288		-		289		-
Subtotal:		5,380		6,555		554		5,396		26		5,712		92
Totals:
Commercial		9,832		12,009		380		10,551		106		10,901		279
Consumer		-		-		-		-		-		-		-
Residential		3,875		4,759		174		3,909		43		3,774		89
Grand Total:	$	13,707	$	16,768	$	554	$	14,460	$	149	$	14,675	$	368

Impaired loans at June 30, 2015 were approximately $13.7 million and were composed of $8.0 million in nonaccrual loans and $5.4 million in loans that were still accruing interest. Recorded investment represents the current principal balance of the loan. Approximately $5.4 million in impaired loans had specific allowances provided for them while the remaining $8.3 million had no specific allowances recorded at June 30, 2015. Of the $8.3 million with no allowance recorded, $1.7 million of those loans have had partial charge-offs recorded.

30

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Impaired Loans (continued)

							Three months ended				Six months ended
	As of December 31, 2014						June 30, 2014				June 30, 2014
			Contractual						Interest Income				Interest Income
			Unpaid				Average		Recognized on		Average		Recognized on
	Recorded		Principal		Related		Recorded		Impaired		Recorded		Impaired
	Investment		Balance		Allowance		Investment		Loans		Investment		Loans
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	478	$	478	$	-	$	124	$	2	$	159	$	5
Construction		1,300		1,525		-		1,706		20		1,846		43
Commercial real estate		2,652		3,536		-		3,363		37		3,639		106
Loans to individuals & overdrafts		-		2		-		2		-		-		2
Multi-family residential		2,232		2,515		-		2,335		36		2,359		74
1 to 4 family residential		2,301		2,750		-		2,421		25		2,968		64
HELOC		637		768		-		707		12		713		21
Subtotal:		9,600		11,574		-		10,658		132		11,684		315
With an allowance recorded:
Commercial and industrial		265		267		64		265		-		266		-
Construction		167		168		80		168		-		248		-
Commercial real estate		4,878		5,761		419		2,693		31		4,216		41
Loans to individuals & overdrafts		-		-		-		10		-		-		1
Multi-family residential		-		-		-		-		-		-		-
1 to 4 family residential		450		455		74		496		13		561		20
HELOC		284		526		50		473		4		477		9
Subtotal:		6,044		7,177		687		4,105		48		5,768		71
Totals:
Commercial		11,972		14,250		563		10,654		126		12,733		269
Consumer		-		2		-		12		-		-		3
Residential		3,672		4,499		124		4,097		54		4,719		114
Grand Total:	$	15,644	$	18,751	$	687	$	14,763	$	180	$	17,452	$	386

Impaired loans at December 31, 2014 were approximately $15.6 million and consisted of $6.9 million in non-accrual loans and $8.7 million in loans still in accruing status. Recorded investment represents the current principal balance for the loan. Approximately, $6.0 million of the $15.6 million in impaired loans at December 31, 2014 had specific allowances recorded while the remaining $9.6 million had no specific allowances recorded. Of the $9.6 million with no allowance recorded, $1.6 million of those loans have had partial charge-offs recorded.

Loans are placed on non-accrual status when it has been determined that all contractual principal and interest will not be received. Any payments received on these loans are applied to principal first and then to interest only after all principal has been collected. In the case of an impaired loan that is still on accrual basis, payments are applied to both principal and interest.

31

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Troubled Debt Restructurings

The following table presents loans that were modified as troubled debt restructurings (“TDRs”) with a breakdown of the types of concessions made by loan class during the three and six months ended June 30, 2015 and 2014:

	Three months ended June 30, 2015						Six months ended June 30, 2015
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number		Recorded		Recorded		Number		Recorded		Recorded
	of loans		Investment		Investment		of loans		Investment		Investment
	(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-	$	-		1	$	22	$	22
Total		-	$	-	$	-		1	$	22	$	22

	Three months ended June 30, 2014						Six months ended June 30, 2014
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number		Recorded		Recorded		Number		Recorded		Recorded
	of loans		Investment		Investment		of loans		Investment		Investment
	(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-	$	-		1	$	22	$	22
Total		-		-		-		1		22		22
Extended payment terms:
Commercial real estate		1		46		42		1		46		42
1-to-4 family residential		1		947		942		1		947		942
Total		2		993		984		2		993		984
Total		2	$	993	$	984		3	$	1,015	$	1,006

Loans may be considered troubled debt restructurings for reasons other than below market interest rates, extended payment terms or forgiveness of principal. Loans in the “Other” category are those that were renewed at terms that vary from those that the Bank would enter into for new loans of the same type.

32

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Troubled Debt Restructurings (continued)

The following table presents loans that were modified as TDRs within the past twelve months with a breakdown of the types for which there was a payment default together with concessions made by loan class during the twelve month period ended June 30, 2015 and 2014:

	Twelve months ended				Twelve months ended
	June 30, 2015				June 30, 2014
	Number		Recorded		Number		Recorded
	of loans		investment		of loans		investment
	(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-		4	$	298
Total		-		-		4		298
Extended payment terms:
Commercial real estate		1		140		1		947
1-to-4 family residential		-		-		2		933
Total		1		140		3		1,880
Other:
Construction		-		-		1		68
1-to-4 family residential		-		-		1		68
Total		-		-		2		136
Total		1	$	140		9	$	2,314

33

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Troubled Debt Restructurings (continued)

At June 30, 2015, the Bank had forty one loans with an aggregate balance of $6.7 million that were considered to be troubled debt restructurings. Of those TDRs, twenty-four loans with a balance totaling $3.7 million were still accruing as of June 30, 2015. The remaining TDRs with balances totaling $3.0 million as of June 30, 2015 were in non-accrual status.

At June 30, 2014, the Bank had forty-three loans with a total balance of $8.1 million that were considered to be troubled debt restructurings. Of those TDRs, twenty-four loans with balances totaling $5.3 million were still accruing as of June 30, 2014. The remaining TDRs with balances totaling $2.8 million as of June 30, 2014 were in non-accrual status.

Credit Quality Indicators

As part of the on-going monitoring of the credit quality of the loan portfolio, management utilizes a risk grading matrix to assign a risk grade to each of the Company’s loans. All non-consumer loans are graded on a scale of 1 to 9. A description of the general characteristics of these nine different risk grades is as follows:

· Risk Grade 1 (Superior) - Credits in this category are virtually risk-free and are well-collateralized by cash-equivalent instruments. The repayment program is well-defined and achievable. Repayment sources are numerous. No material documentation deficiencies or exceptions exist.

· Risk Grade 2 (Very Good) - This grade is reserved for loans secured by readily marketable collateral, or loans within guidelines to borrowers with liquid financial statements. A liquid financial statement is a financial statement with substantial liquid assets relative to debts. These loans have excellent sources of repayment, with no significant identifiable risk of collection, and conform in all respects to Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind).

· Risk Grade 3 (Good) - These loans have excellent sources of repayment, with no significant identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: Conformity in all respects with Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind). Loans assigned this risk grade will demonstrate the following characteristics:

o Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.

o Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.

· Risk Grade 4 (Acceptable) - This grade is given to acceptable loans. These loans have adequate sources of repayment, with little identifiable risk of collection. Loans assigned this risk grade will demonstrate the following characteristics:

o General conformity to the Bank's policy requirements, product guidelines and underwriting standards, with limited exceptions. Any exceptions that are identified during the underwriting and approval process have been adequately mitigated by other factors.

o Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.  

o Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.

34

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Credit Quality Indicators

· Risk Grade 5 (Acceptable With Care) - This grade is given to acceptable loans that show signs of weakness in either adequate sources of repayment or collateral, but have demonstrated mitigating factors that minimize the risk of delinquency or loss.  Loans assigned this grade may demonstrate some or all of the following characteristics:

o Additional exceptions to the Bank's policy requirements, product guidelines or underwriting standards that present a higher degree of risk to the Bank.  Although the combination and/or severity of identified exceptions is greater, all exceptions have been properly mitigated by other factors.

o Unproven, insufficient or marginal primary sources of repayment that appear sufficient to service the debt at this time.  Repayment weaknesses may be due to minor operational issues, financial trends, or reliance on projected (not historic) performance.

o Marginal or unproven secondary sources to liquidate the debt, including combinations of liquidation of collateral and liquidation value to the net worth of the borrower or guarantor.

· Risk Grade 6 (Watch List or Special Mention) – Loans in this category can have the following characteristics:

o Loans with underwriting guideline tolerances and/or exceptions and with no mitigating factors.

o Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank's position at some future date. Potential weaknesses are the result of deviations from prudent lending practices.

o Loans where adverse economic conditions that develop subsequent to the loan origination that don't jeopardize liquidation of the debt but do substantially increase the level of risk may also warrant this rating.

· Risk Grade 7 (Substandard) - A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as Substandard must 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. Loans consistently not meeting the repayment schedule should be downgraded to substandard. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action.

· Risk Grade 8 (Doubtful) - Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus 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. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.

· Risk Grade 9 (Loss) - Loans classified as Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan even though partial recovery may be affected in the future.

35

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Credit Quality Indicators (continued)

Consumer loans are graded on a scale of 1 to 9. A description of the general characteristics of the nine risk grades is as follows:

· Risk Grades 1 – 5 (Pass) – The loans in this category range from loans secured by cash with no risk of principal deterioration (Risk Grade 1) to loans that show signs of weakness in either adequate sources of repayment or collateral but have demonstrated mitigating factors that minimize the risk of delinquency or loss (Risk Grade 5).

· Risk Grade 6 (Watch List or Special Mention) - Watch List or Special Mention loans include the following characteristics:

o Loans within guideline tolerances or with exceptions of any kind that have not been mitigated by other economic or credit factors.

o Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank's position at some future date. Potential weaknesses are the result of deviations from prudent lending practices.

o Loans where adverse economic conditions that develop subsequent to the loan origination that don't jeopardize liquidation of the debt but do substantially increase the level of risk may also warrant this rating.

· Risk Grade 7 (Substandard) - A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as Substandard must 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.

· Risk Grade 8 (Doubtful) - Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus 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. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.

· Risk Grade 9 (Loss) - Loans classified Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be affected in the future.

36

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

The following tables present information on risk ratings of the commercial and consumer loan portfolios, segregated by loan class as of June 30, 2015 and December 31, 2014, respectively:

Total loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	982	$	-	$	-	$	-
Very good		1,128		-		-		-
Good		5,723		3,518		16,425		-
Acceptable		29,447		14,820		128,889		30,967
Acceptable with care		32,624		75,869		75,160		8,831
Special mention		70		872		9,550		-
Substandard		430		954		6,447		2,054
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	70,404	$	96,033	$	236,471	$	41,852

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	78,267	$	36,192
Special mention		3,795		471
Substandard		3,864		1,059
	$	85,926	$	37,722

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	6,020
Non –pass		22
	$	6,042

37

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Total PCI loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	-	$	-	$	-	$	-
Very good		-		-		-		-
Good		-		-		-		-
Acceptable		-		-		-		-
Acceptable with care		488		1,379		8,909		863
Special mention		-		64		1,931		-
Substandard		40		-		552		-
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	528	$	1,443	$	11,392	$	863

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	5,337	$	190
Special mention		2,980		-
Substandard		599		-
	$	8,916	$	190

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	113
Non –pass		9
	$	122

38

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Total loans, excluding PCI loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	982	$	-	$	-	$	-
Very good		1,128		-		-		-
Good		5,723		3,518		16,425		-
Acceptable		29,447		14,820		128,889		30,967
Acceptable with care		32,136		74,490		66,251		7,968
Special mention		70		808		7,619		-
Substandard		390		954		5,895		2,054
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	69,876	$	94,590	$	225,079	$	40,989

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	72,930	$	36,002
Special mention		815		471
Substandard		3,265		1,059
	$	77,010	$	37,532

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,907
Non –pass		13
	$	5,920

39

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Total Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	1,241	$	-	$	-	$	-
Very good		1,110		-		-		-
Good		5,282		2,705		15,276		-
Acceptable		26,132		13,579		128,056		31,619
Acceptable with care		23,404		65,717		75,554		8,374
Special mention		221		384		8,036		1,330
Substandard		827		1,208		6,708		901
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	58,217	$	83,593	$	233,630	$	42,224

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	82,794	$	36,357
Special mention		3,978		695
Substandard		4,131		1,041
	$	90,903	$	38,093

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,969
Non-pass		48
	$	6,017

40

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

PCI Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	-	$	-	$	-	$	-
Very good		-		-		-		-
Good		-		-		-		-
Acceptable		-		-		-		-
Acceptable with care		602		1,397		9,368		2,724
Special mention		-		66		1,973		-
Substandard		55		-		562		-
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	657	$	1,463	$	11,903	$	2,724

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	6,437	$	188
Special mention		2,926		-
Substandard		609		-
	$	9,972	$	188

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	117
Non-pass		11
	$	128

41

 

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Total Loans, excluding PCI Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	1,241	$	-	$	-	$	-
Very good		1,110		-		-		-
Good		5,282		2,705		15,276		-
Acceptable		26,132		13,579		128,056		31,619
Acceptable with care		22,802		64,320		66,186		5,650
Special mention		221		318		6,063		1,330
Substandard		772		1,208		6,146		901
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	57,560	$	82,130	$	221,727	$	39,500

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	76,357	$	36,169
Special mention		1,052		695
Substandard		3,522		1,041
	$	80,931	$	37,905

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,852
Non-pass		37
	$	5,889

42

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Determining the fair value of PCI loans at acquisition required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of cash flows expected to be collected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and is called the nonaccretable difference. In accordance with GAAP, there was no carry-over of previously established allowance for credit losses from the acquired company.

The following table documents changes to the amount of the accretable yield on PCI loans for the three and six months ended June 30, 2015 (dollars in thousands):

	Three Months			Six Months
	Ended June 30,			Ended June 30,
	2015			2015
	(Dollars in thousands)
Accretable yield, beginning of period	$	3,434		$	3,762
Accretion		(321	)		(649	)
Reclassification from (to) nonaccretable difference		95			95
Other changes, net		112			112
Accretable yield, end of period	$	3,320		$	3,320

43

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Allowance for Loan Losses

The allowance for loan losses is a reserve established through provisions for loan losses charged to income and represents management’s best estimate of probable loan losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated losses and risk inherent in the loan portfolio. The Company’s allowance for loan loss methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of reserves is designed to account for changes in credit quality as they occur. The provision for loan losses reflects loan quality trends, including the levels of and trends related to past due loans and economic conditions at the local and national levels. It also considers the quality and risk characteristics of the Company’s loan origination and servicing policies and practices.

As of March 31, 2014, the Company elected to change the allowance for loan loss model it uses to calculate historical loss rates and qualitative and environmental factors in its allowance for loan losses. The Company elected to change the model used for allowance for loan losses in order to utilize the loss migration, improve the objectivity of loss projections, and increase reliability of identifying losses inherent in the portfolio. The impact of the change to the model resulted in a $177,000 increase to the loan loss reserves as of the time of the change. In determining the loss history to be applied to its ASC 450 loan pools within the allowance for loan losses, the Company previously used loss history based on the weighted average net charge off history for the most recent fourteen consecutive quarters, based on the risk-graded pool to which the loss was assigned. Historical loss rates are now calculated by using a loss migration analysis associating losses to the risk-graded pool to which they relate for each of the previous twelve quarters. Then, using a twelve quarter look back period, loss factors are calculated for each risk-graded pool.

The new model continues to incorporate various internal and external qualitative and environmental factors as described in the Interagency Policy Statement on the Allowance for Loan and Lease Losses, dated December 2006. Input for these factors is determined on the basis of management observation, judgment, and experience. The factors utilized by the Company in the new model for all loan classes are as follows:

44

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Allowance for Loan Losses (continued)

Internal Factors

· Concentrations – Measures the increased risk derived from concentration of credit exposure in particular industry segments within the portfolio.

· Policy exceptions – Measures the risk derived from granting terms outside of underwriting guidelines.

· Compliance exceptions– Measures the risk derived from granting terms outside of regulatory guidelines.

· Document exceptions– Measures the risk exposure resulting from the inability to collect due to improperly executed documents and collateral imperfections.

· Financial information monitoring – Measures the risk associated with not having current borrower financial information.

· Nonaccrual – Reflects increased risk of loans with characteristics that merit nonaccrual status.

· Delinquency – Reflects the increased risk deriving from higher delinquency rates.

· Personnel turnover – Reflects staff competence in various types of lending.

· Portfolio growth – Measures the impact of growth and potential risk derived from new loan production.

External Factors

· GDP growth rate – Impact of general economic factors that affect the portfolio.

· North Carolina unemployment rate – Impact of local economic factors that affect the portfolio.

· Peer group delinquency rate – Measures risk associated with the credit requirements of competitors.

· Prime rate change – Measures the effect on the portfolio in the event of changes in the prime lending rate.

Each pool is assigned an adjustment to the potential loss percentage by assessing its characteristics against each of the factors listed above.

Reserves are generally divided into three allocation segments:

1. Individual reserves. These are calculated according to ASC Section 310-10-35 against loans evaluated individually and deemed to most likely be impaired.  All loans in non-accrual status and all substandard loans that are deemed to be collateral dependent are assessed for impairment. Loans are deemed uncollectible based on a variety of credit, collateral, documentation and other issues. In the case of uncollectible receivables, the collateral is considered unsecured and therefore fully charged off.

2. Formula reserves. Formula reserves are held against loans evaluated collectively. Loans are grouped by type or by risk grade, or some combination of the two. Loss estimates are based on historical loss rates for each respective loan group. Formula reserves represent the Company’s best estimate of losses that may be inherent, or embedded, within the group of loans, even if it is not apparent at this time which loans within any group or pool represent those embedded losses.

45

 

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

  NOTE G - LOANS (continued)

Allowance for Loan Losses (continued)

3. Qualitative and external reserves. If individual reserves represent estimated losses tied to specific loans, and formula reserves represent estimated losses tied to a pool of loans but not yet to any specific loan, then these reserves represent an estimate of likely incurred losses, but are not yet tied to any loan or group of loans.

All information related to the calculation of the three segments, including data analysis, assumptions, and calculations are documented. Assigning specific individual reserve amounts, formula reserve factors, or unallocated amounts based on unsupported assumptions or conclusions is not permitted.

46

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Allowance for Loan Losses (Continued)

The following tables present a roll forward of the Company’s allowance for loan losses by loan class for the three and six month periods ended June 30, 2015, respectively:

	Three months ended June 30, 2015
	Commercial								1 to 4						Loans to			Multi-
	and					Commercial			family						individuals &			family
Allowance for loan losses	industrial			Construction		real estate			residential			HELOC			overdrafts			residential			Total
Loans – excluding PCI
Balance, beginning of period	$	982		$	1,209	$	2,845		$	606		$	851		$	167		$	259		$	6,919
Provision for loan losses		192			100		(283	)		(45	)		(96	)		(7	)		(68	)		(207	)
Loans charged-off		(130	)		-		-			-			-			(11	)		(5	)		(146	)
Recoveries		33			4		11			41			9			4			106			208
Balance, end of period	$	1,077		$	1,313	$	2,573		$	602		$	764		$	153		$	292		$	6,774
PCI Loans
Balance, beginning of period	$	-		$	-	$	-		$	-		$	-		$	-		$	-		$	-
Provision for loan losses		-			-		57			-			9			-			2			68
Loans charged-off		-			-		-			-			-			-			-			-
Recoveries		-			-		-			-			-			-			-			-
Balance, end of period	$	-		$	-	$	57		$	-		$	9		$	-		$	2		$	68
Total Loans
Balance, beginning of period	$	982		$	1,209	$	2,845		$	606		$	851		$	167		$	259		$	6,919
Provision for loan losses		192			100		(226	)		(45	)		(87	)		(7	)		(66	)		(139	)
Loans charged-off		(130	)		-		-			-			-			(11	)		(5	)		(146	)
Recoveries		33			4		11			41			9			4			106			208
Balance, end of period	$	1,077		$	1,313	$	2,630		$	602		$	773		$	153		$	294		$	6,842
Ending Balance: individually evaluated for impairment	$	3		$	78	$	299		$	66		$	108		$	-		$	-		$	554
Ending Balance: collectively evaluated for impairment	$	1,074		$	1,235	$	2,331		$	536		$	665		$	153		$	294		$	6,288
Loans:
Ending Balance: collectively evaluated for impairment	$	69,875		$	94,977	$	229,561		$	82,990		$	36,783		$	6,042		$	40,515		$	560,734
Ending Balance: individually evaluated for impairment	$	529		$	1,056	$	6,910		$	2,936		$	939		$	-		$	1,337		$	13,707
Ending Balance	$	70,404		$	96,033	$	236,471		$	85,926		$	37,722		$	6,042		$	41,852		$	574,450

47

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

	Six months ended June 30, 2015
	Commercial								1 to 4						Loans to			Multi-
	and					Commercial			family						individuals &			Family
Allowance for loan losses	industrial			Construction		real estate			residential			HELOC			overdrafts			residential			Total
Loans – excluding PCI
Balance, beginning of period	$	803		$	1,103	$	2,914		$	630		$	930		$	185		$	279		$	6,844
Provision for loan losses		365			202		(323	)		(85	)		(137	)		(11	)		(88	)		(77	)
Loans charged-off		(130	)		-		(29	)		-			(40	)		(35	)		(5	)		(239	)
Recoveries		39			8		11			57			11			14			106			246
Balance, end of period	$	1,077		$	1,313	$	2,573		$	602		$	764		$	153		$	292		$	6,774
PCI Loans
Balance, beginning of period	$	-		$	-	$	-		$	-		$	-		$	-		$	-		$	-
Provision for loan losses		-			-		57			-			9			-			2			68
Loans charged-off		-			-		-			-			-			-			-			-
Recoveries		-			-		-			-			-			-			-			-
Balance, end of period	$	-		$	-	$	57		$	-		$	9		$	-		$	2		$	68
Total Loans
Balance, beginning of period	$	803		$	1,103	$	2,914		$	630		$	930		$	185		$	279		$	6,844
Provision for loan losses		365			202		(266	)		(85	)		(128	)		(11	)		(86	)		(9	)
Loans charged-off		(130	)		-		(29	)		-			(40	)		(35	)		(5	)		(239	)
Recoveries		39			8		11			57			11			14			106			246
Balance, end of period	$	1,077		$	1,313	$	2,630		$	602		$	773		$	153		$	294		$	6,842

48

 

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE G - LOANS (continued)

Allowance for Loan Losses (Continued)

The following tables present a roll forward of the Company’s allowance for loan losses by loan class for the three and six month periods ended June 30, 2014, respectively:

	Three months ended June 30, 2014
	Commercial								1-to-4						Loans to			Multi-
	and					Commercial			family						individuals &			family
Allowance for loan losses	industrial			Construction		real estate			residential			HELOC			overdrafts			residential			Total
									(In thousands)
Balance, beginning of period	$	513		$	889	$	3,283		$	585		$	1,293		$	171		$	291		$	7,025
Provision (recovery) for loan losses		(4	)		110		(384	)		(9	)		(106	)		(9	)		(25	)		(427	)
Loans charged-off		-			-		-			-			(231	)		(13	)		-			(244	)
Recoveries		14			3		4			12			53			7			-			93
Balance, end of period	$	523		$	1,002	$	2,903		$	588		$	1,009		$	156		$	266		$	6,447
Ending balance: individually evaluated for impairment	$	66		$	81	$	426		$	43		$	140		$	20		$	-		$	776
Ending balance: collectively evaluated for impairment	$	457		$	921	$	2,477		$	545		$	869		$	136		$	266		$	5,671
Loans:
Ending balance: collectively evaluated for impairment	$	31,272		$	58,739	$	150,985		$	27,721		$	29,502		$	5,637		$	16,105		$	319,961
Ending balance: individually evaluated for impairment	$	388		$	1,802	$	5,986		$	2,948		$	1,059		$	22		$	2,331		$	14,536
Ending balance	$	31,660		$	60,541	$	156,971		$	30,669		$	30,561		$	5,659		$	18,436		$	334,497

49

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

	Six months ended June 30, 2014
	Commercial								1-to-4						Loans to			Multi-
	and					Commercial			family						individuals &			family
Allowance for loan losses	industrial			Construction		real estate			Residential			HELOC			overdrafts			residential		Total
									(In thousands)
Balance, beginning of period	$	245		$	565	$	4,599		$	826		$	680		$	65		$	74	$	7,054
Provision (recovery) for loan losses		318			376		(1,724	)		(274	)		539			97			192		(476	)
Loans charged-off		(63	)		-		-			(1	)		(271	)		(19	)		-		(354	)
Recoveries		23			61		28			37			61			13			-		223
Balance, end of period	$	523		$	1,002	$	2,903		$	588		$	1,009		$	156		$	266	$	6,447

50

SELECT BANCORP, INC.
Notes to Consolidated Financial Statements (Unaudited)

NOTE H – ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents changes in accumulated other comprehensive income for the three and six months ended June 30, 2015 and 2014.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
	(In thousands)
Beginning balance	$	1,131		$	132		$	809		$	(108	)
Unrealized gain (loss) on investment securities available for sale		(680	)		547			(72	)		929
Tax effect		259			(204	)		25			(346	)
Other comprehensive gain (loss) before reclassification		(421	)		343			(47	)		583
Amounts reclassified from accumulated comprehensive income:
Realized loss on investment securities included in net income		(134	)		-			(219	)		-
Tax effect		45			-			78			-
Total reclassifications net of tax		(89	)		-			(141	)		-
Net current period other comprehensive income (loss)		510			343			(188	)		583
Ending balance	$	621		$	475		$	621		$	475

The income statement line items impacted by the reclassifications of realized gains (losses) on investment securities are the gain (loss) on the sale of securities and income tax expense line items in the consolidated statement of operations.

NOTE I - REPURCHASE AGREEMENTS

We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and secure long-term funding needs. Repurchase agreements are transactions whereby we offer to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates the Company to repurchase the security on an agreed upon date at an agreed upon repurchase price plus interest at an agreed upon rate. Securities sold under agreements to repurchase are recorded at the amount of cash received in connection with the transaction and are reflected as short-term borrowings.

We monitor collateral levels on a continuous basis and maintain records of each transaction specifically describing the applicable security and the counterparty’s fractional interest in that security, and we segregate the security from its general assets in accordance with regulations governing custodial holdings of securities. The primary risk with our repurchase agreements is market risk associated with the investments securing the transactions, as we may be required to provide additional collateral based on fair value changes of the underlying investments. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents. The carrying value of available for sale investment securities pledged as collateral under repurchase agreements totaled $12.9 million and $15.7 million at June 30, 2015 and December 31, 2014, respectively.

51

SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE I - REPURCHASE AGREEMENTS (continued)

The remaining contractual maturity of the securities sold under agreements to repurchase by class of collateral pledged included in short-term borrowings as of June 30, 2015 and December 31, 2014 is presented in the following tables.

	June 30, 2015
	Remaining Contractual Maturity of the Agreements
(Dollars in thousands)	Overnight and continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase agreements
Government agency	$	2,622	$	-	$	-	$	-	$	2,622
Mortgage Back Securities		8,142		-		-		-		8,142
Municipals		2,120		-		-		-		2,120
Total borrowings	$	12,884	$	-	$	-	$	-	$	12,884
Gross amount of recognized liabilities for repurchase agreements									$	12,884

	December 31, 2014
	Remaining Contractual Maturity of the Agreements
	Overnight and continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase agreements
Government agency	$	4,909	$	-	$	-	$	-	$	4,909
Mortgage Back Securities		8,228		-		-		-		8,228
Municipals		2,526		-		-		-		2,526
Total borrowings	$	15,663	$	-	$	-	$	-	$	15,663
Gross amount of recognized liabilities for repurchase agreements									$	15,663

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SELECT BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE J – OTHER REAL ESTATE OWNED

The following table explains changes in other real estate owned during the six months ended June 30, 2015 and 2014 (dollars in thousands):

	Six Months			Six Months
	Ended June 30,			Ended June 30,
	2015			2014
	(Dollars in thousands)
Beginning balance January 1	$	1,585		$	2,008
Sales		(543	)		(1,227	)
Writedowns		(55	)		(272	)
Transfers		43			660
Ending balance	$	1,030		$	1,169

At June 30, 2015 and December 31, 2014, the Company had $1.0 million and $1.6 million, respectively, of foreclosed residential real estate property in OREO. The Company did not have any recorded investment in consumer mortgage loans collateralized by residential real estate property in the process of foreclosure at June 30, 2015 and December 31, 2014, respectively.

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

Management’s discussion and analysis is intended to assist readers in the understanding and evaluation of the financial condition and results of operations of Select Bancorp, Inc. (the “Company”). This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, without limitation, our future economic performance, plans and objectives for future operations, and projections of revenues and other financial items that are based on our beliefs, as well as assumptions made by and information currently available to us. The words “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “could,” “project,” “predict,” “expect,” “estimate,” “continue,” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements. Our actual results, performance or achievements may differ materially from the results expressed or implied by our forward-looking statements. Factors that could influence actual results, performance or achievements include changes in national, regional and local market conditions, legislative and regulatory conditions, and the interest rate environment.

Overview

The Company is a commercial bank holding company and has one banking subsidiary, Select Bank & Trust Company (referred to as the “Bank”), and one unconsolidated subsidiary, New Century Statutory Trust I, which issued trust preferred securities in 2004 to provide additional capital for general corporate purposes. The Company’s only business activity is the ownership of the Bank and New Century Statutory Trust I. This discussion focuses primarily on the financial condition and operating results of the Bank.

The Bank’s lending activities are oriented to the consumer/retail customer as well as to the small- to medium-sized businesses located in Harnett, Cumberland, Johnston, Pitt, Robeson, Sampson, Wake, Pasquotank, Martin, Alamance, Guilford, and Wayne counties in North Carolina. The Bank offers the standard complement of commercial, consumer, and mortgage lending products, as well as the ability to structure products to fit specialized needs. The deposit services offered by the Bank include small business and personal checking accounts, savings accounts and certificates of deposit. The Bank concentrates on customer relationships in building its customer deposit base and competes aggressively in the area of transaction accounts.

The Company was formerly known as New Century Bancorp, Inc. On July 25, 2014 New Century Bancorp, Inc. acquired Select Bancorp, Inc. (“Legacy Select”) by merger. The combined company is now known as Select Bancorp, Inc., which we refer to in this report as the Company. Legacy Select was a bank holding company headquartered in Greenville, North Carolina, whose wholly owned subsidiary, Select Bank & Trust Company, was a state-chartered commercial bank with approximately $276.9 million in assets. The merger expanded the Company’s North Carolina presence with the addition of six branches located in Greenville (two), Elizabeth City, Washington, Gibsonville, and Burlington. As noted throughout the following discussion and analysis, the combination of the former New Century Bancorp and Legacy Select has had a significant impact on the Company’s financial condition and results of operations.

The Company is building a new branch at 416 South Hughes Boulevard, Elizabeth City, North Carolina which is expected to be completed in October 2015. The Company’s branch at 100 Nance Court will relocate to this location. In addition, we plan to acquire two new branches located at 1101 New Pointe Boulevard, Leland, North Carolina 28451 and 168 NC Highway 24, Morehead City, North Carolina in December 2015.

In August 2015, we will be closing our branches located at 220 Burlington Street, Gibsonville, North Carolina and 523 S. Worth Street, Burlington, North Carolina and will be combining them with our new Burlington branch located at 3158 South Church Street. In addition, we will be closing our branch located at 6390 Ramsey Street, Fayetteville, North Carolina and will be combining it with our Fayetteville branch at 2818 Raeford Road in September 2015.

Comparison of Financial Condition at

June 30, 2015 and December 31, 2014

During the first six months of 2015, total assets decreased by $23.7 million to $742.4 million as of June 30, 2015. The decrease in assets was due primarily to a reduction in liquid assets related to maturing time deposits. Earning assets at June 30, 2015 totaled $671.3 million and consisted of $566.9 million in net loans, $86.9 million in investment securities, $15.3 million in overnight investments and interest-bearing deposits in other banks and $2.1 million in non-marketable equity securities. Total deposits and shareholders’ equity at the end of the second quarter of 2015 were $579.6 million and $101.6 million, respectively.

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Since the end of 2014, gross loans have increased by $21.7 million to $573.7 million as of June 30, 2015. At June 30, 2015, gross loans consisted of $70.4 million in commercial and industrial loans, $236.5 million in commercial real estate loans, $41.9 million in multi-family residential loans, $6.0 million in consumer loans, $85.9 million in residential real estate loans, $37.7 million in HELOCs, and $96.0 million in construction loans. Deferred loan fees, net of costs, on these loans were $721,000 at June 30, 2015.

At June 30, 2015, there were no federal funds sold and no repurchase agreements. At December 31, 2014, the Company held $3.0 million in federal funds sold and $17.2 million in repurchase agreements. Interest-earning deposits in other banks were $24.2 million at June 30, 2015, a $4.4 million decrease from December 31, 2014. The Company’s investment securities at June 30, 2015 were $86.9 million, a decrease of $15.3 million from December 31, 2014 in order to provide funding for higher yielding loans. The investment portfolio as of June 30, 2015 consisted of $23.5 million in government agency debt securities, $43.6 million in mortgage-backed securities and $19.7 million in municipal securities. The net unrealized gain on these securities was $990,000.

At June 30, 2015, the Company had an investment of $2.1 million in the form of Federal Home Loan Bank (“FHLB”) stock, which increased by $525,000 from December 31, 2014. Also, the Company had $845,000 in other non-marketable securities at June 30, 2015, which decreased by $51,000 from December, 31, 2014 due to a security redemption.

At June 30, 2015, non-earning assets were $71.2 million, a decrease of $1.2 million from $72.3 million as of December 31, 2014. Non-earning assets included $13.2 million in cash and due from banks, bank premises and equipment of $18.4 million, goodwill of $6.9 million, core deposit intangible of $1.3 million, accrued interest receivable of $2.3 million, foreclosed real estate of $1.0 million, $21.3 million in bank owned life insurance (“BOLI”), and $4.3 million in deferred tax assets. Since the income on BOLI is included in non-interest income, this asset is not included in the Company’s calculation of earning assets. The decrease in non-earning assets was due primarily to the reduction in deposits and the corresponding reduction in on-balance sheet cash.

Total deposits at June 30, 2015 were $579.6 million and consisted of $133.5 million in non-interest-bearing demand deposits, $162.0 million in money market and NOW accounts, $38.2 million in savings accounts, and $245.8 million in time deposits. Total deposits decreased by $39.3 million from $618.9 million as of December 31, 2014, due primarily to the reduction in time deposits. The Bank had $497,000 in brokered demand deposits and $317,000 in brokered time deposits as of June 30, 2015.

As of June 30, 2015, the Company had $32.9 million of short-term debt of which $12.9 million was repurchase agreements with local customers, $32.5 million (of which $11.5 million is identified as long-term debt) in FHLB borrowings, and $12.4 million in junior subordinated debentures that are classified as long-term debt.

Total shareholders’ equity at June 30, 2015 was $101.6 million, an increase of $3.9 million from $97.7 million as of December 31, 2014. Accumulated other comprehensive income relating to available for sale securities decreased $188,000 during the six months ended June 30, 2015. Other changes in shareholders’ equity included increases of $17,000 in stock-based compensation, net income of $3.6 million, and $512,000 from the exercise of stock options.

Past Due Loans, Non-performing Assets, and Asset Quality

At June 30, 2015, the Company had $1.8 million in loans that were 30 to 89 days past due. This represented 0.32% of gross loans outstanding on that date. This is a decrease from December 31, 2014 when there were $5.0 million in loans that were 30-89 days past due or 0.91% of gross loans outstanding. Non-accrual loans increased from $6.9 million at December 31, 2014 to $8.0 million at June 30, 2015.

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The percentage of non-performing loans (non-accrual loans and accruing troubled debt restructurings) to total loans decreased from 2.15% at December 31, 2014 to 2.04% at June 30, 2015. The Company has experienced an increase in non-accruals from $6.9 million at December 31, 2014 to $8.0 million as of June 30, 2015 and a decrease in accruing troubled debt restructurings from $4.9 million at December 31, 2014 to $3.7 million as of June 30, 2015. Of the $1.1 million increase in non-accrual loans in the first half of the year, the increase is concentrated in the 1-to- 4 family residential loans.

At June 30, 2015, the Company had forty-one loans totaling $6.7 million that were considered to be troubled debt restructurings. Twenty-four of these loans totaling $3.7 million were still in accruing status with the remaining TDRs included in non-accrual loans. All TDRs are considered impaired loans regardless of accrual status and have been included as non-performing assets in the table below.

The table below sets forth, for the periods indicated, information about the Company’s non-accrual loans, loans past due 90 days or more and still accruing interest, total non-performing loans (non-accrual loans plus accruing TDRs), and total non-performing assets.

	For Periods Ended
	June 30,			December 31,
	2015			2014
	(Dollars in thousands)
Non-accrual loans	$	7,994		$	6,938
Accruing TDRs		3,708			4,938
Total non-performing loans		11,702			11,876
Foreclosed real estate		1,030			1,585
Total non-performing assets	$	12,732		$	13,461
Accruing loans past due 90 days or more	$	280		$	2,230
Allowance for loan losses	$	6,842		$	6,844
Non-performing loans to period end loans		2.04	%		2.15	%
Non-performing loans and accruing loans past due 90 days or more to period end loans		2.09	%		2.56	%
Allowance for loans losses to period end loans		1.19	%		1.24	%
Allowance for loan losses to non-performing loans		58	%		58	%
Allowance for loan losses to non-performing assets		54	%		51	%
Allowance for loan losses to non-performing assets and accruing loans past due 90 days or more		53	%		44	%
Non-performing assets to total assets		1.71	%		1.76	%
Non-performing assets and accruing loans past due 90 days or more to total assets		1.75	%		2.05	%

Total non-performing assets (non-accrual loans, accruing TDRs, and foreclosed real estate) at June 30, 2015 and December 31, 2014 were $12.7 million and $13.5 million, respectively. The allowance for loan losses at June 30, 2015 represented 54% of non-performing assets compared to 51% at December 31, 2014.

Total impaired loans at June 30, 2015 were $13.7 million. This includes $8.0 million in loans that were classified as impaired because they were in non-accrual status and $5.4 million in loans that were determined to be impaired for other reasons. Of these loans, $5.4 million required a specific reserve of $554,000 at June 30, 2015.

Total impaired loans at December 31, 2014 were $15.6 million. This includes $6.9 million in loans that were considered to be impaired due to being in non-accrual status and $8.7 million in loans that were deemed to be impaired for other reasons. Of these loans, $6.0 million required a specific reserve of $687,000 at December 31, 2014.

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The allowance for loan losses was $6.8 million at June 30, 2015 or 1.19% of gross loans outstanding. This is a decrease from the 1.24% reported as a percentage of gross loans at December 31, 2014. The Legacy Select loans have been recorded at estimated fair value as of the acquisition date and the related credit risk is reflected as a fair value adjustment rather than separately in the allowance for losses as required in acquisition accounting. This required accounting under generally accepted accounting principles has resulted in a lower percentage of the allowance for loan losses to gross loans at June 30, 2015 compared to the allowance percentage before the Legacy Select merger. The allowance for loan losses at June 30, 2015 and December 31, 2014 represented 58% of non-performing loans. It is management’s assessment that the allowance for loan losses as of June 30, 2015 is appropriate in light of the risk inherent within the Company’s loan portfolio. No assurances, however, can be given that further adjustments to the allowance for loan losses may not be deemed necessary in the future.

Other Lending Risk Factors

Besides monitoring non-performing loans and past due loans, management also monitors trends in the loan portfolio that may indicate more than normal risk. A discussion of certain other risk factors follows. Some loans or groups of loans may contain one or more of these individual loan risk factors. Therefore, an accumulation of the amounts or percentages of the individual loan risk factors may not necessarily be an indication of the cumulative risk in the total loan portfolio.

Regulatory Loan to Value

The Company monitors its exposure to loans that exceed the guidelines established by regulators for loan to value (“LTV”) ratios.

At June 30, 2015 and December 31, 2014 the Company had $11.2 million and $11.1 million in non 1-to-4 family residential loans that exceeded the regulatory LTV limits, respectively. At June 30, 2015 and December 31, 2014, the Company had $6.0 million of 1-to-4 family residential loans that exceeded the regulatory LTV limits. The total amount of these loans represented 15.8% and 16.5% of total risk-based capital as of June 30, 2015 and December 31, 2014, which is less than the 100% maximum allowed. These loans may provide more than ordinary risk to the Company if the real estate market weakens in terms of market activity or collateral valuations.

Business Sector Concentrations

Loan concentrations in certain business sectors can be impacted by lower than normal retail sales, higher unemployment, higher vacancy rates, and a weakening in real estate market conditions. The Company has established an internal commercial real estate guideline of 40% of risk-based capital for any single product line.

At June 30, 2015 the Company had two product type groups which exceeded this guideline; Real Estate Construction – Speculative and Presold, which represented 67% of risk-based capital, or $72.3 million; and 1-to-4 Family Residential, which represented 62% of risk-based capital, or $66.6 million. All other commercial real estate groups were at or below the 40% threshold. At December 31, 2014, the Company exceeded the 40% guideline in two product types. The 1-to-4 Family Residential and the Multi-family Residential represented 68% of Risk-Based Capital or $70.0 million and 41% of Risk-Based Capital or $42.4 million, respectively at December 31, 2014. All other commercial real estate product types were under the 40% threshold. These two product types exceeded established guidelines as a result of loans acquired in the merger with Legacy Select.

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Acquisition, Development, and Construction Loans (“ADC”)

The tables below provide information regarding loans the Company originates for the purpose of acquisition, development, and construction of both residential and commercial properties as of
June 30, 2015 and December 31, 2014.

Acquisition, Development and Construction Loans

(Dollars in thousands)

	June 30, 2015									December 31, 2014
				Land and Land									Land and Land
	Construction			Development			Total			Construction			Development			Total
Total ADC loans	$	80,754		$	15,280		$	96,033		$	72,161		$	11,432		$	83,593
Average Loan Size	$	158		$	300					$	155		$	216
Percentage of total loans		14.08	%		2.66	%		16.74	%		13.07	%		2.07	%		15.14	%
Non-accrual loans	$	199		$	-		$	199		$	591		$	224		$	815

Management closely monitors the ADC portfolio by reviewing funding based on project completeness, monthly and quarterly inspections as required by the project, collateral value, geographic concentrations, spec-to-presold ratios and performance of similar loans in the Company’s market area.

Geographic Concentrations

Certain risks exist arising from the geographic location of specific types of higher than normal risk real estate loans. Below is a table showing geographic concentrations for ADC and HELOC loans at
June 30, 2015 and December 31, 2014.

	June 30, 2015										December 31, 2014
	ADC Loans		Percent			HELOC		Percent			ADC Loans		Percent			HELOC		Percent
	(Dollars in thousands)
Harnett County	$	5,065		5.27	%	$	5,860		15.53	%	$	4,466		5.34	%	$	5,925		15.55	%
Alamance County		365		0.38	%		436		1.16	%		422		0.50	%		292		0.76	%
Beaufort County		2,190		2.28	%		1,227		3.25	%		834		1.00	%		1,244		3.27	%
Cumberland County		27,968		29.12	%		5,533		14.67	%		29,404		35.18	%		5,816		15.27	%
Guilford County		9		0.01	%		312		0.83	%		10		0.01	%		157		0.41	%
Hoke County		2,153		2.24	%		47		0.12	%		2,385		2.85	%		144		0.38	%
Johnston County		1,310		1.36	%		591		1.57	%		1,615		1.93	%		556		1.46	%
Pasquotank County		1,396		1.45	%		779		2.07	%		1,906		2.28	%		722		1.90	%
Pitt County		17,268		17.98	%		4,647		12.32	%		16,273		19.47	%		4,245		11.14	%
Robeson County		553		0.58	%		3,901		10.34	%		648		0.78	%		3,941		10.35	%
Sampson County		283		0.30	%		1,436		3.81	%		343		0.41	%		1,600		4.20	%
Wake County		16,236		16.91	%		812		2.15	%		10,113		12.10	%		800		2.10	%
Wayne County		3,765		3.92	%		5,268		13.96	%		2,109		2.52	%		5,451		14.31	%
All other locations		17,472		18.20	%		6,873		18.22	%		13,065		15.63	%		7,200		18.90	%
Total	$	96,033		100.00	%	$	37,722		100.00	%	$	83,593		100.00	%	$	38,093		100.00	%

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Interest Only Payments

Another risk factor that exists in the total loan portfolio pertains to loans with interest only payment terms. At June 30, 2015, the Company had $122.5 million in loans that had terms permitting interest only payments. This represented 21.4% of the total loan portfolio. At December 31, 2014, the Company had $103.7 million in loans that had terms permitting interest only payments. This represented 18.8% of the total loan portfolio. Recognizing the risk inherent with interest only loans, it is customary and general industry practice that loans in the ADC portfolio permit interest only payments during the acquisition, development, and construction phases of such projects.

Large Dollar Concentrations

Concentrations of high dollar loans or large customer relationships may pose additional risk in the total loan portfolio. The Company’s ten largest loans or lines of credit totaled $46.7 million, or 8.1% of total loans, at June 30, 2015 compared to $46.7 million, or 8.4% of total loans, at December 31, 2014. The Company’s ten largest customer relationships totaled $73.8 million, or 12.9% of total loans, at June 30, 2015 compared to $68.7 million, or 12.4% of total loans, at December 31, 2014. Deterioration or loss in any one or more of these high dollar loan or customer concentrations could have an immediate, significant adverse impact on the Company’s capital position.

Comparison of Results of Operations for the

Three months ended June 30, 2015 and 2014

General. During the second quarter of 2015, the Company had net income of $1.8 million as compared with net income of $613,000 for the second quarter of 2014. Net income per common share for the second quarter of 2015 was $0.16, basic and diluted, compared with net income per common share of $0.09, basic and diluted, for the second quarter of 2014. Results of operations for the second quarter of 2015 were primarily impacted by an increase of $3.0 million in interest income and an increase in non-interest expense of $1.4 million, which was primarily related to increased personnel expense of $910,000 related to the increase in post-merger earning assets and associated expenses. The Company recorded a recovery of loan losses of $139,000 for the second quarter of 2015 compared to a recovery of $427,000 in the second quarter of 2014. Net interest margin of 4.46% in the first quarter of 2015 increased 82 basis points from the same period in 2014 resulting from the accretion of the credit mark associated with the acquired loan portfolio.

Net Interest Income. Net interest income increased to $7.4 million for the second quarter of 2015 from $4.2 million for the second quarter of 2014. The Company’s total interest income was affected by the increase in loan balances due to the Legacy Select merger. Average total interest-earning assets were $674.0 million in the second quarter of 2015 compared with $463.8 million during the same period in 2014, while the yield on those assets increased 42 basis points from 4.54% to 4.96% which was primarily due to the yield accretion on the acquired loans.

The Company’s average interest-bearing liabilities increased by $135.7 million to $507.2 million for the quarter ended June 30, 2015 from $371.5 million for the same period one year earlier and the cost of those funds decreased from 1.20% to 0.66%, or 54 basis points. During the second quarter of 2015, the Company’s net interest margin was 4.46% and net interest spread was 4.30%. In the same quarter ended one year earlier, net interest margin was 3.64% and net interest spread was 3.34%.

Provision for Loan Losses. Provisions for loan losses are charged to income to bring the allowance for loan losses to a level deemed appropriate by management. In evaluating the allowance for loan losses, management considers factors that include growth, composition and industry diversification of the portfolio, historical loan loss experience, current delinquency levels, adverse situations that may affect a borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions and other relevant factors. In determining the loss history to be applied to its ASC 450 loan pools within the allowance for loan losses, the Company previously used loss history based on the weighted average net charge off history for the most recent fourteen consecutive quarters, based on the risk-graded pool to which the loss was assigned. Historical loss rates are now calculated by using a loss migration analysis associating losses to the risk-graded pool to which they relate for each of the previous twelve quarters. Then, using a twelve quarter look back period, loss factors are calculated for each risk-graded pool. During the second quarter of 2015, the Company recorded an impairment from the acquired loans of $68,000 and had a recovery of loan losses of $139,000, as compared to the recovery of $427,000 that was recorded in the second quarter of 2014. In both 2015 and 2014, the small recovery resulted from a low level of net charge-offs and improving overall credit metrics.

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Non-Interest Income. Non-interest income for the quarter ended June 30, 2015 was $941,000, an increase of $376,000 from the second quarter of 2014. Service charges on deposit accounts increased $37,000 to $263,000 for the quarter ended June 30, 2015 from $226,000 for the same period in 2014, primarily due to the Legacy Select merger. Other non-deposit fees and income increased $205,000 from the second quarter of 2014 to the second quarter of 2015 due to increases in various other items related to the Legacy Select merger. The Company recognized a gain on sale of investment securities of $134,000 for the second quarter of 2015.

Non-Interest Expenses. Non-interest expenses increased by $1.4 million to $5.6 million for the quarter ended June 30, 2015, from $4.1 million for the same period in 2014. In general, most categories of non-interest expenses increased, offset by decreases in foreclosed real estate-related expenses and $202,000 in merger and restructuring charges related to the acquisition of Legacy Select. The following are highlights of the significant categories of non-interest expenses during the second quarter of 2015 compared to the same period in 2014:

· Personnel expenses increased $910,000 to $3.0 million, due to additions in personnel and the Legacy Select merger.

· Foreclosed real estate-related expense decreased $5,000, primarily due to declining balances in the other real estate owned portfolio.

· There were $35,000 of acquisition/merger related expenses incurred in the second quarter of 2015, as compared to $237,000 in the second quarter of 2014.

· Professional fees increased by $77,000 to $387,000, due to the increased operational size of the Company resulting from the Legacy Select merger.

· Occupancy and equipment increased by $169,000 to $565,000, due to the additional six branches acquired in the merger with Legacy Select.

· Other non-interest expenses increased by $190,000, due to increases in several categories of other non-interest expenses and the merger with Legacy Select.

Provision for Income Taxes. The Company’s effective tax rate was 38.4% and 38.8% for the quarters ended June 30, 2015 and 2014, respectively. The effective tax rate for the second quarter of 2014 was impacted by an adjustment to reduce the Company’s deferred tax asset resulting from enacted lower corporate tax rates for the State of North Carolina.

As of June 30, 2015 and December, 31, 2014, the Company had a net deferred tax asset in the amount of $4.3 million and $4.1 million, respectively. In evaluating whether the Company will realize the full benefit of the net deferred tax asset, management considered both positive and negative evidence, including among other things, recent earnings trends, projected earnings, and asset quality. As of June 30, 2015 and December 31, 2014, management concluded that the net deferred tax assets were fully realizable. The Company will continue to monitor deferred tax assets closely to evaluate whether the full benefit of the net deferred tax asset will require a valuation allowance. Significant negative trends in credit quality or losses from operations, among other trends, could impact the realization of the deferred tax asset in the future.

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Comparison of Results of Operations for the

Six months ended June 30, 2015 and 2014

General. During the first six months of 2015, the Company had net income of $3.6 million as compared with net income of $885,000 for the first six months of 2014. Net income per share for the first six months of 2015 was $0.31, basic and diluted, compared with net income per share of $0.13, basic and diluted, for the first six months of 2014. Results of operations for the first six months of 2015 compared to 2014 was primarily impacted by an increase of $5.9 million in interest income. Net interest margin of 4.44% in the first six months of 2015 increased 86 basis points from the same period in 2014.

Net Interest Income. Net interest income increased to $14.7 million for the first six months of 2015 from $8.4 million for the first six months of 2014. The Company’s total interest income was affected by the increase in total loan balances in connection with the merger with Legacy Select. Average total interest-earning assets were $675.5 million in the first six months of 2015 compared with $467.5 million during the same period in 2014, while the yield on those assets increased 41 basis points from 4.56% to 4.97%.

The Company’s average interest-bearing liabilities increased by $138.7 million to $513.7 million for the six months ended June 30, 2015 from $375.0 million for the same period one year earlier and the cost of those funds decreased from 1.22% to 0.70%, or 52 basis points. During the first six months of 2015, the Company’s net interest margin was 4.44% and net interest spread was 4.27%. In the same period ended one year earlier, net interest margin was 3.58% and net interest spread was 3.34%.

Provision for Loan Losses. Provisions for loan losses are charged to income to bring the allowance for loan losses to a level deemed appropriate by management. In evaluating the allowance for loan losses, management considers factors that include growth, composition and industry diversification of the portfolio, historical loan loss experience, current delinquency levels, adverse situations that may affect a borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions and other relevant factors. In determining the loss history to be applied to its ASC 450 loan pools within the allowance for loan losses, the Company has previously used loss history based on the weighted average net charge off history for the most recent fourteen consecutive quarters, based on the risk-graded pool to which the loss was assigned. Historical loss rates are now calculated by using a loss migration analysis associating losses to the risk-graded pool to which they relate for each of the previous twelve quarters. Then, using a twelve quarter look back period, loss factors are calculated for each risk-graded pool. During the first six months of 2015, the Company recorded a recovery of loan losses of $9,000 which is a smaller recovery than the $476,000 recovery that was recorded in the first six months of 2014. In both 2015 and 2014, the recovery resulted from a low level of net charge-offs and overall improving credit metrics.

Non-Interest Income. Non-interest income for the six months ended June 30, 2015 was $1.8 million, an increase of $614,000 from the first six months of 2014. Service charges on deposit accounts increased $69,000 to $522,000 for the six months ended June 30, 2015 from $453,000 for the same period in 2014, primarily due to an increase in overdraft charges. Other non-deposit fees and income increased $326,000 from the first six months of 2014 to the first six months of 2015, due to increases in various other items related to the Legacy Select merger. The Company recognized a gain on sale of investment securities of $219,000 for the first six months of 2015.

Non-Interest Expenses. Non-interest expenses increased by $2.5 million to $10.9 million for the six months ended June 30, 2015, from $8.4 million for the same period in 2014. In general, most categories of non-interest expenses increased, offset by decreases in merger and foreclosed real estate related expenses. Non-interest expenses were also impacted in 2014 by $398,000 in merger and restructuring charges related to the acquisition of Legacy Select. The following are highlights of the significant categories of non-interest expenses during the first six months of 2015 versus the same period in 2014:

· Personnel expenses increased $1.8 million to $6.1 million, due to additions in personnel and the Legacy Select merger.

61

· Occupancy and equipment expenses increased due to the increased number of branches acquired in connection with the Legacy Select merger.

· Merger related expenses incurred in the first six months of 2014 were $398,000 compared to $35,000 in the 2015 period.

· Other non-interest expenses increased by $322,000, due to small increases in several categories of other non-interest expenses as a result of the merger with Legacy Select.

Provision for Income Taxes. The Company’s effective tax rate was 36.6% and 37.9% for the six months ended June 30, 2015 and 2014, respectively. The effective tax rate for the first six months of 2014 was impacted by non-deductible merger expenses incurred in 2014.

As of June 30, 2015 and December, 31, 2014, the Company had a net deferred tax asset in the amount of $4.3 million and $4.3 million, respectively. In evaluating whether the Company will realize the full benefit of the net deferred tax asset, management considered both positive and negative evidence, including among other things recent earnings trends, projected earnings, and asset quality. As of June 30, 2015 and December 31, 2014, management concluded that the net deferred tax assets were fully realizable. The Company will continue to monitor deferred tax assets closely to evaluate whether the full benefit of the net deferred tax asset will require a valuation allowance. Significant negative trends in credit quality or losses from operations, among other trends, could impact the realization of the deferred tax asset in the future.

Liquidity

The Company’s liquidity is a measure of its ability to fund loans, withdrawals and maturities of deposits, and other cash outflows in a cost effective manner. The principal sources of liquidity are deposits, scheduled payments and prepayments of loan principal, maturities of investment securities, access to liquid deposits, and funds provided by operations. While scheduled loan payments and maturing investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Liquid assets (consisting of cash and due from banks, interest-earning deposits with other banks, federal funds sold and investment securities classified as available for sale) represented 15.6% of total assets at June 30, 2015 as compared to 21.0% as of December 31, 2014 which resulted primarily from letting higher rate deposits roll off.

The Company has been a net seller of federal funds since its inception and strives to maintain a position of liquidity sufficient to fund future loan demand and to satisfy fluctuations in deposit levels. Should the need arise, the Company would have the capability to sell securities classified as available for sale or to borrow funds as necessary. As of June 30, 2015, the Company had existing credit lines with other financial institutions to purchase up to $80.0 million in federal funds. Also, as a member of the FHLB of Atlanta, the Company may obtain advances of up to 10% of total assets, subject to available collateral. A floating lien of $74.8 million of qualifying loans is pledged to the FHLB to secure borrowings. At June 30, 2015, the Company had $32.5 million in FHLB advances outstanding. Another source of short-term borrowings is securities sold under agreements to repurchase. At June 30, 2015, in addition to FHLB advances, total borrowings consisted of securities sold under agreements to repurchase of $12.9 million and junior subordinated debentures of $12.4 million.

Total deposits were $579.6 million at June 30, 2015. Time deposits, which are the only deposit accounts that have stated maturity dates, are generally considered to be rate sensitive. Time deposits represented 42.4% of total deposits at June 30, 2015. Time deposits of $250,000 or more represented 9.2% of the Company’s total deposits at June 30, 2015. At quarter-end, the Company had $317,000 in brokered time deposits and $497,000 in brokered demand deposits. Management believes most other time deposits are relationship-oriented. While the Bank will need to pay competitive rates to retain these deposits at their maturities, there are other subjective factors that will determine their continued retention. Based upon prior experience, the Company anticipates that a substantial portion of outstanding certificates of deposit will renew upon maturity.

62

Management believes that current sources of funds provide adequate liquidity for the Bank’s current cash flow needs. The Company maintains minimal cash balances at the parent holding company level. Management believes that the current cash balances will provide adequate liquidity for the Company’s current cash flow needs.

Capital Resources

A significant measure of the strength of a financial institution is its capital base. Federal regulations have classified and defined capital into the following components: (1) Tier 1 capital, which includes common shareholders’ equity and qualifying preferred equity, and (2) Tier 2 capital, which includes a portion of the allowance for loan losses, certain qualifying long-term debt and preferred stock which does not qualify as Tier 1 capital. Financial institutions and holding companies became subject to the new Basel III capital requirements beginning on January 1, 2015. A new part of the capital ratios profile is the Common Equity Tier 1 risk-based ratio which does not include limited life components such as trust preferred securities and Small Business Lending Fund (SBLF) preferred stock. Minimum capital levels are regulated by risk-based capital adequacy guidelines, which require a financial institution to maintain capital as a percentage of its assets, and certain off-balance sheet items adjusted for predefined credit risk factors (risk-adjusted assets). The Company’s equity to assets ratio was 13.68% at June 30, 2015.

As the following table indicates, at June 30, 2015, the Company and the Bank both exceeded minimum regulatory capital requirements as specified in the tables below.

	Actual			Minimum
Select Bancorp, Inc.	Ratio			Requirement
Total risk-based capital ratio		16.87	%		8.00	%
Tier 1 risk-based capital ratio		15.85	%		6.00	%
Leverage ratio		14.34	%		4.00	%
Common equity Tier 1 risk-based capital ratio		12.89	%		4.50	%

				Regulatory
	Actual			Minimum			Well-Capitalized
Select Bank & Trust	Ratio			Requirement			Requirement
Total risk-based capital ratio		16.29	%		8.00	%		10.00	%
Tier 1 risk-based capital ratio		15.26	%		6.00	%		8.00	%
Leverage ratio		13.81	%		4.00	%		5.00	%
Common equity Tier 1 risk-based capital ratio		15.26	%		4.50	%		6.50	%

During 2004, the Company issued $12.4 million of junior subordinated debentures to a newly formed subsidiary, New Century Statutory Trust I, which in turn issued $12.0 million of trust preferred securities. The proceeds from the sale of the trust preferred securities provided additional capital for the growth and expansion of the Bank. Under the current applicable regulatory guidelines, all of the proceeds from the issuance of these trust preferred securities qualify as Tier 1 capital as of June 30, 2015.

Management expects that the Bank will remain “well-capitalized” for regulatory purposes, although there can be no assurance that additional capital will not be required in the future.

Legal Proceedings

The Company is not currently engaged in, nor are any of its properties subject to, any material legal proceedings.  From time to time, the Bank is a party to legal proceedings in the ordinary course of business wherein it attempts to collect loans, enforce its security interest in loans, or other matters of similar nature.

63

Item 4. Controls and Procedures

Disclosure Controls and Procedures. At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective (1) to provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

Changes in internal control over financial reporting. Management of the Company has evaluated, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, changes in the Company's internal controls over financial reporting (as defined in Rule 13a−15(f) and 15d−15(f) of the Exchange Act) during the second quarter of 2015. In connection with such evaluation, the Company has determined that there have been no changes in internal control over financial reporting during the second quarter of 2015 that have materially affected or are reasonably likely to materially affect, the Company's internal control over financial reporting.

64

Part II.   OTHER INFORMATION

Item 6.   Exhibits

Exhibit Number	Description of Exhibit
2.1	Purchase and Assumption Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on June19, 2015.
3.1	Bylaw of Select Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on May 22, 2015.
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
101	Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, in XBRL (eXtensible Business Reporting Language)

65

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SELECT BANCORP, INC.
Date: August 13, 2015	By:	/s/ William L. Hedgepeth II
		William L. Hedgepeth II
		President and Chief Executive Officer
Date: August 13, 2015	By:	/s/ Mark A. Jeffries
		Mark A. Jeffries
		Executive Vice President and Chief Financial Officer

66

SIGNATURES

Under the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SELECT BANCORP, INC.
Date: August 13, 2015	By:	/s/ William L. Hedgepeth II
		William L. Hedgepeth II
		President and Chief Executive Officer
Date: August 13, 2015	By:	/s/ Mark A. Jeffries
		Mark A. Jeffries
		Executive Vice President and Chief Financial Officer

67

Exhibit Index

Exhibit Number	Description of Exhibit
2.1	Purchase and Assumption Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on June19, 2015.
3.1	Bylaw of Select Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on May 22, 2015.
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
101	Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, in XBRL (eXtensible Business Reporting Language)

68

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William L. Hedgepeth II, certify that:

(1) I have reviewed this quarterly report for the quarter ended June 30, 2015 on Form 10-Q of Select Bancorp, Inc. (the "Registrant");

(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 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)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 internal 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 Registrant'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 Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

(5) The Registrant's other certifying officer 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: August 13, 2015	By:	/s/ William L. Hedgepeth II
		William L. Hedgepeth II
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark A. Jeffries, certify that:

(1) I have reviewed this quarterly report for the quarter ended June 30, 2015 on Form 10-Q of Select Bancorp, Inc. (the "Registrant");

(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 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)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 internal 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 Registrant'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 Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

(5) The Registrant's other certifying officer 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: August 13, 2015	By:	/s/ Mark A. Jeffries
		Mark A. Jeffries
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned hereby certifies that (i) the Form 10-Q filed by Select Bancorp, Inc. (the "Issuer") for the quarter ended June 30, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Issuer on the dates and for the periods presented therein.

Date: August 13, 2015	By:	/s/ William L. Hedgepeth II
		William L. Hedgepeth II
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned hereby certifies that (i) the Form 10-Q filed by Select Bancorp, Inc. (the "Issuer") for the quarter ended June 30, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Issuer on the dates and for the periods presented therein.

Date: August 13, 2015	By:	/s/ Mark A. Jeffries
		Mark A. Jeffries
		Executive Vice President and Chief Financial Officer

XML

LOANS (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	$ 8,327		$ 8,327		$ 9,600
With no related allowance, Contractual Unpaid Principal Balance	10,213		10,213		11,574
With no related allowance, Average Recorded Investment	9,064	$ 10,658	8,963	$ 11,684
With no related allowance, Interest Income Recognized on Impaired Loans	123	132	276	315
With an related allowance, Recorded Investment	5,380		5,380		6,044
With an related allowance, Contractual Unpaid Principal Balance	6,555		6,555		7,177
Related Allowance	554		554		687
With an related allowance, Average Recorded Investment	5,396	4,105	5,712	5,768
With an related allowance, Interest Income Recognized on Impaired Loans	26	48	92	71
Recorded Investment Total	13,707		13,707		15,644
Contractual Unpaid Principal Balance Total	16,768		16,768		18,751
Average Recorded Investment Total	14,460	14,763	14,675	17,452
Interest Income Recognized on impaired Loans Total	149	180	368	386
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	174		174		124
Recorded Investment Total	3,875		3,875		3,672
Contractual Unpaid Principal Balance Total	4,759		4,759		4,499
Average Recorded Investment Total	3,909	4,097	3,774	4,719
Interest Income Recognized on impaired Loans Total	43	54	89	114
Commercial Loan [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	380		380		563
Recorded Investment Total	9,832		9,832		11,972
Contractual Unpaid Principal Balance Total	12,009		12,009		14,250
Average Recorded Investment Total	10,551	10,654	10,901	12,733
Interest Income Recognized on impaired Loans Total	106	126	279	269
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	0		0		0
Recorded Investment Total	0		0		0
Contractual Unpaid Principal Balance Total	0		0		2
Average Recorded Investment Total	0	12	0	0
Interest Income Recognized on impaired Loans Total	0	0	0	3
Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	518		518		478
With no related allowance, Contractual Unpaid Principal Balance	923		923		478
With no related allowance, Average Recorded Investment	640	124	606	159
With no related allowance, Interest Income Recognized on Impaired Loans	6	2	38	5
With an related allowance, Recorded Investment	11		11		265
With an related allowance, Contractual Unpaid Principal Balance	12		12		267
Related Allowance	3		3		64
With an related allowance, Average Recorded Investment	11	265	138	266
With an related allowance, Interest Income Recognized on Impaired Loans	0	0	0	0
Construction Loans Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	891		891		1,300
With no related allowance, Contractual Unpaid Principal Balance	1,120		1,120		1,525
With no related allowance, Average Recorded Investment	973	1,706	1,095	1,846
With no related allowance, Interest Income Recognized on Impaired Loans	10	20	23	43
With an related allowance, Recorded Investment	165		165		167
With an related allowance, Contractual Unpaid Principal Balance	168		168		168
Related Allowance	78		78		80
With an related allowance, Average Recorded Investment	166	168	166	248
With an related allowance, Interest Income Recognized on Impaired Loans	1	0	2	0
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	2,501		2,501		2,652
With no related allowance, Contractual Unpaid Principal Balance	2,947		2,947		3,536
With no related allowance, Average Recorded Investment	2,556	3,363	2,468	3,639
With no related allowance, Interest Income Recognized on Impaired Loans	49	37	93	106
With an related allowance, Recorded Investment	4,409		4,409		4,878
With an related allowance, Contractual Unpaid Principal Balance	5,336		5,336		5,761
Related Allowance	299		299		419
With an related allowance, Average Recorded Investment	4,436	2,693	4,643	4,216
With an related allowance, Interest Income Recognized on Impaired Loans	19	31	80	41
Loans to Individuals and Overdrafts [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	0		0		0
With no related allowance, Contractual Unpaid Principal Balance	0		0		2
With no related allowance, Average Recorded Investment	0	2	0	0
With no related allowance, Interest Income Recognized on Impaired Loans	0	0	0	2
With an related allowance, Recorded Investment	0		0		0
With an related allowance, Contractual Unpaid Principal Balance	0		0		0
Related Allowance	0		0		0
With an related allowance, Average Recorded Investment	0	10	0	0
With an related allowance, Interest Income Recognized on Impaired Loans	0	0	0	1
Multi Family Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	1,337		1,337		2,232
With no related allowance, Contractual Unpaid Principal Balance	1,503		1,503		2,515
With no related allowance, Average Recorded Investment	1,769	2,335	1,785	2,359
With no related allowance, Interest Income Recognized on Impaired Loans	21	36	43	74
With an related allowance, Recorded Investment	0		0		0
With an related allowance, Contractual Unpaid Principal Balance	0		0		0
Related Allowance	0		0		0
With an related allowance, Average Recorded Investment	0	0	0	0
With an related allowance, Interest Income Recognized on Impaired Loans	0	0	0	0
Home Equity Line of Credit [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	646		646		637
With no related allowance, Contractual Unpaid Principal Balance	795		795		768
With no related allowance, Average Recorded Investment	641	707	641	713
With no related allowance, Interest Income Recognized on Impaired Loans	9	12	20	21
With an related allowance, Recorded Investment	293		293		284
With an related allowance, Contractual Unpaid Principal Balance	535		535		526
Related Allowance	108		108		50
With an related allowance, Average Recorded Investment	288	473	289	477
With an related allowance, Interest Income Recognized on Impaired Loans	0	4	0	9
Family Residential Real Estate 1 to 4 [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	2,434		2,434		2,301
With no related allowance, Contractual Unpaid Principal Balance	2,925		2,925		2,750
With no related allowance, Average Recorded Investment	2,485	2,421	2,368	2,968
With no related allowance, Interest Income Recognized on Impaired Loans	28	25	59	64
With an related allowance, Recorded Investment	502		502		450
With an related allowance, Contractual Unpaid Principal Balance	504		504		455
Related Allowance	66		66		$ 74
With an related allowance, Average Recorded Investment	495	496	476	561
With an related allowance, Interest Income Recognized on Impaired Loans	$ 6	$ 13	$ 10	$ 20

XML

OTHER REAL ESTATE OWNED (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015		Jun. 30, 2014
Schedule Of Real Estate Owned Properties [Line Items]
Beginning balance January 1	$ 1,585	[1]	$ 2,008
Sales	(543)		(1,227)
Writedowns	(55)		(272)
Transfers	0		660
Ending balance	$ 1,030		$ 1,169

[1] Derived from audited consolidated financial statements.

XML

REPURCHASE AGREEMENTS (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	$ 86,938	$ 102,235	[1]
Gross amount of recognized liabilities for repurchase agreements	12,884	15,663
Municipal Bonds [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	2,120	2,526
Government agency [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	2,622	4,909
Mortgage Back Securities [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	8,142	8,228
Overnight and continuous [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	12,884	15,663
Overnight and continuous [Member] | Municipal Bonds [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	2,120	2,526
Overnight and continuous [Member] | Government agency [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	2,622	4,909
Overnight and continuous [Member] | Mortgage Back Securities [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	8,142	8,228
Maturity Less than 30 Days [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity Less than 30 Days [Member] | Municipal Bonds [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity Less than 30 Days [Member] | Government agency [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity Less than 30 Days [Member] | Mortgage Back Securities [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity 30 to 90 Days [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity 30 to 90 Days [Member] | Municipal Bonds [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity 30 to 90 Days [Member] | Government agency [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity 30 to 90 Days [Member] | Mortgage Back Securities [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity Greater than 90 Days [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity Greater than 90 Days [Member] | Municipal Bonds [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity Greater than 90 Days [Member] | Government agency [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	0	0
Maturity Greater than 90 Days [Member] | Mortgage Back Securities [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available-for-sale Securities, Total	$ 0	$ 0

[1] Derived from audited consolidated financial statements.

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INVESTMENT SECURITIES (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Total	$ 85,948	$ 100,954
Available-for-sale Securities, Gross Unrealized Gain	1,284	1,692
Available-for-sale Securities, Gross Unrealized Loss	(294)	(411)
Available-for-sale Securities, Fair Value Total	86,938	102,235	[1]
Us Government Agencies Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost, Due within one year	34	6,352
Gross Unrealized Gains, Due within one year	1	8
Gross Unrealized Losses, Due within one year	0	0
Fair Value, Due within one year	35	6,360
Amortized Cost, Due after one but within five years	9,655	6,018
Gross Unrealized Gains, Due after one but within five years	37	21
Gross Unrealized Losses, Due after one but within five years	(16)	(24)
Fair Value, Due after one but within five years	9,676	6,015
Amortized Cost, Due after five but within ten years	11,559	10,032
Gross Unrealized Gains, Due after five but within ten years	51	32
Gross Unrealized Losses, Due after five but within ten years	(202)	(227)
Fair Value, Due after five but within ten years	11,408	9,837
Amortized Cost, Due after ten years	2,448	5,778
Gross Unrealized Gains, Due after ten years	0	0
Gross Unrealized Losses, Due after ten years	(21)	(69)
Fair Value, Due after ten years	2,427	5,709
Available-for-sale Securities, Fair Value Total	2,622	4,909
Mortgage-Backed Securities, Issued By Us Government Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost, Due within one year	9	21
Gross Unrealized Gains, Due within one year	0	1
Gross Unrealized Losses, Due within one year	0	0
Fair Value, Due within one year	9	22
Amortized Cost, Due after one but within five years	31,100	35,114
Gross Unrealized Gains, Due after one but within five years	677	974
Gross Unrealized Losses, Due after one but within five years	(42)	(39)
Fair Value, Due after one but within five years	31,735	36,049
Amortized Cost, Due after five but within ten years	11,640	17,143
Gross Unrealized Gains, Due after five but within ten years	129	140
Gross Unrealized Losses, Due after five but within ten years	(10)	(50)
Fair Value, Due after five but within ten years	11,759	17,233
Amortized Cost, Due after ten years	130
Gross Unrealized Gains, Due after ten years	16
Gross Unrealized Losses, Due after ten years	0
Fair Value, Due after ten years	146
Available-for-sale Securities, Fair Value Total	8,142	8,228
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost, Due within one year	581	576
Gross Unrealized Gains, Due within one year	8	3
Gross Unrealized Losses, Due within one year	0	0
Fair Value, Due within one year	589	579
Amortized Cost, Due after one but within five years	3,619	3,806
Gross Unrealized Gains, Due after one but within five years	118	144
Gross Unrealized Losses, Due after one but within five years	0	0
Fair Value, Due after one but within five years	3,737	3,950
Amortized Cost, Due after five but within ten years	6,116	6,351
Gross Unrealized Gains, Due after five but within ten years	94	116
Gross Unrealized Losses, Due after five but within ten years	(2)	(2)
Fair Value, Due after five but within ten years	6,208	6,465
Amortized Cost, Due after ten years	9,057	9,763
Gross Unrealized Gains, Due after ten years	153	253
Gross Unrealized Losses, Due after ten years	(1)	0
Fair Value, Due after ten years	9,209	10,016
Available-for-sale Securities, Fair Value Total	$ 2,120	$ 2,526

[1] Derived from audited consolidated financial statements.

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BASIS OF PRESENTATION (Details Textual) - USD ($) $ in Millions	1 Months Ended
	Jul. 25, 2014	Sep. 30, 2013
Basis Of Presentation [Line Items]
Assets Value of Merger		$ 276.9
Common Stock [Member]
Basis Of Presentation [Line Items]
Stock Issued During Period, Shares, New Issues	4,416,500
Business Combination Shares Issued Ratio	1.8264

XML

LOANS (Details 6) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
Schedule Of Certain Loans Acquired In Transfer Accounted For As Debt Securities Accretable Yield [Line Items]
Accretable yield, beginning of period	$ 3,434	$ 3,762
Accretion	(321)	(649)
Reclassification from (to) nonaccretable difference	95	95
Other changes, net	112	112
Accretable yield, end of period	$ 3,320	$ 3,320

XML

LOANS (Details 1) - USD ($) $ in Thousands	Jun. 30, 2015	Jul. 25, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Contractually required payments	$ 28,234	$ 34,329
Nonaccretable difference	1,460	1,402
Cash flows expected to be collected	26,774	32,927
Accretable yield	3,320	4,360
Fair value	$ 23,454	$ 28,567

XML

REPURCHASE AGREEMENTS (Detail Textual) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Securities Sold under Agreements to Repurchase [Member]
Repurchase Agreements Agreements Securities Borrowed [Line Items]
Available For Sale Securities Pledged As Collateral Carrying Value	$ 12.9	$ 15.7

XML

PER SHARE RESULTS

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE B - PER SHARE RESULTS

Basic net income per share is computed based upon the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the dilutive effect of stock options outstanding during the period. At June 30, 2015 and 2014 there were 111,080 and 91,183 anti-dilutive options outstanding, respectively.                 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Weighted average shares used for basic net income available to common shareholders		11,481,137		6,923,640		11,453,908		6,922,651
Effect of dilutive stock options		67,741		4,788		75,697		3,667
Weighted average shares used for diluted net income available to common shareholders		11,548,878		6,928,428		11,529,605		6,926,318

XML

LOANS (Details 7) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015		Jun. 30, 2014	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		$ 7,025	$ 6,844	[1]	$ 7,054
Provision for loan losses		(427)			(476)
Loans charged-off		(244)			(354)
Recoveries		93			223
Allowance for loan losses, Balance, end of period	$ 6,842	6,447	6,842		6,447
Ending Balance: individually evaluated for impairment	554	776	554		776
Ending Balance: collectively evaluated for impairment	6,288	5,671	6,288		5,671
Loans
Ending balance: collectively evaluated for impairment	560,734	319,961	560,734		319,961
Ending balance: individually evaluated for impairment	13,707	14,536	13,707		14,536
Ending balance	573,729	334,497	573,729		334,497	$ 552,038	[1]
Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	68		68
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	(68)		(68)
Loans
Ending balance	23,454		23,454			27,035
Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	6,919		6,844
Provision for loan losses	(207)		(77)
Loans charged-off	(146)		(239)
Recoveries	208		246
Allowance for loan losses, Balance, end of period	6,774		6,774
Loans
Ending balance	550,275		550,275			525,003
Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	6,919		6,844
Provision for loan losses	(139)		(9)
Loans charged-off	(146)		(239)
Recoveries	208		246
Allowance for loan losses, Balance, end of period	6,842		6,842
Loans
Ending balance	573,729		573,729			552,038
Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		513			245
Provision for loan losses		(4)			318
Loans charged-off		0			(63)
Recoveries		14			23
Allowance for loan losses, Balance, end of period		523			523
Ending Balance: individually evaluated for impairment	3	66	3		66
Ending Balance: collectively evaluated for impairment	1,074	457	1,074		457
Loans
Ending balance: collectively evaluated for impairment	69,875	31,272	69,875		31,272
Ending balance: individually evaluated for impairment	529	388	529		388
Ending balance	70,404	31,660	70,404		31,660
Commercial and Industrial [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	0		0
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	0		0
Loans
Ending balance	528		528			657
Commercial and Industrial [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	982		803
Provision for loan losses	192		365
Loans charged-off	(130)		(130)
Recoveries	33		39
Allowance for loan losses, Balance, end of period	1,077		1,077
Loans
Ending balance	69,876		69,876			57,560
Commercial and Industrial [Member] | Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	982		803
Provision for loan losses	192		365
Loans charged-off	(130)		(130)
Recoveries	33		39
Allowance for loan losses, Balance, end of period	1,077		1,077
Loans
Ending balance	70,404		70,404			58,217
Construction Loans Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		889			565
Provision for loan losses		110			376
Loans charged-off		0			0
Recoveries		3			61
Allowance for loan losses, Balance, end of period		1,002			1,002
Ending Balance: individually evaluated for impairment	78	81	78		81
Ending Balance: collectively evaluated for impairment	1,235	921	1,235		921
Loans
Ending balance: collectively evaluated for impairment	94,977	58,739	94,977		58,739
Ending balance: individually evaluated for impairment	1,056	1,802	1,056		1,802
Ending balance	96,033	60,541	96,033		60,541
Construction Loans Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	0		0
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	0		0
Loans
Ending balance	1,443		1,443			1,463
Construction Loans Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	1,209		1,103
Provision for loan losses	100		202
Loans charged-off	0		0
Recoveries	4		8
Allowance for loan losses, Balance, end of period	1,313		1,313
Loans
Ending balance	94,590		94,590			82,130
Construction Loans Real Estate [Member] | Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	1,209		1,103
Provision for loan losses	100		202
Loans charged-off	0		0
Recoveries	4		8
Allowance for loan losses, Balance, end of period	1,313		1,313
Loans
Ending balance	96,033		96,033			83,593
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		3,283			4,599
Provision for loan losses		(384)			(1,724)
Loans charged-off		0			0
Recoveries		4			28
Allowance for loan losses, Balance, end of period		2,903			2,903
Ending Balance: individually evaluated for impairment	299	426	299		426
Ending Balance: collectively evaluated for impairment	2,331	2,477	2,331		2,477
Loans
Ending balance: collectively evaluated for impairment	229,561	150,985	229,561		150,985
Ending balance: individually evaluated for impairment	6,910	5,986	6,910		5,986
Ending balance	236,471	156,971	236,471		156,971
Commercial Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	57		57
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	57		57
Loans
Ending balance	11,392		11,392			11,903
Commercial Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	2,845		2,914
Provision for loan losses	(283)		(323)
Loans charged-off	0		(29)
Recoveries	11		11
Allowance for loan losses, Balance, end of period	2,573		2,573
Loans
Ending balance	225,079		225,079			221,727
Commercial Real Estate [Member] | Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	2,845		2,914
Provision for loan losses	(226)		(266)
Loans charged-off	0		(29)
Recoveries	11		11
Allowance for loan losses, Balance, end of period	2,630		2,630
Loans
Ending balance	236,471		236,471			233,630
Family Residential Real Estate 1 to 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		585			826
Provision for loan losses		(9)			(274)
Loans charged-off		0			(1)
Recoveries		12			37
Allowance for loan losses, Balance, end of period		588			588
Ending Balance: individually evaluated for impairment	66	43	66		43
Ending Balance: collectively evaluated for impairment	536	545	536		545
Loans
Ending balance: collectively evaluated for impairment	82,990	27,721	82,990		27,721
Ending balance: individually evaluated for impairment	2,936	2,948	2,936		2,948
Ending balance	85,926	30,669	85,926		30,669
Family Residential Real Estate 1 to 4 [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	0		0
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	0		0
Loans
Ending balance	8,916		8,916			9,972
Family Residential Real Estate 1 to 4 [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	606		630
Provision for loan losses	(45)		(85)
Loans charged-off	0		0
Recoveries	41		57
Allowance for loan losses, Balance, end of period	602		602
Loans
Ending balance	77,010		77,010			80,931
Family Residential Real Estate 1 to 4 [Member] | Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	606		630
Provision for loan losses	(45)		(85)
Loans charged-off	0		0
Recoveries	41		57
Allowance for loan losses, Balance, end of period	602		602
Loans
Ending balance	85,926		85,926			90,903
Home Equity Line of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		1,293			680
Provision for loan losses		(106)			539
Loans charged-off		(231)			(271)
Recoveries		53			61
Allowance for loan losses, Balance, end of period		1,009			1,009
Ending Balance: individually evaluated for impairment	108	140	108		140
Ending Balance: collectively evaluated for impairment	665	869	665		869
Loans
Ending balance: collectively evaluated for impairment	36,783	29,502	36,783		29,502
Ending balance: individually evaluated for impairment	939	1,059	939		1,059
Ending balance	37,722	30,561	37,722		30,561
Home Equity Line of Credit [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	9		9
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	9		9
Loans
Ending balance	190		190			188
Home Equity Line of Credit [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	851		930
Provision for loan losses	(96)		(137)
Loans charged-off	0		(40)
Recoveries	9		11
Allowance for loan losses, Balance, end of period	764		764
Loans
Ending balance	37,532		37,532			37,905
Home Equity Line of Credit [Member] | Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	851		930
Provision for loan losses	(87)		(128)
Loans charged-off	0		(40)
Recoveries	9		11
Allowance for loan losses, Balance, end of period	773		773
Loans
Ending balance	37,722		37,722			38,093
Loans to Individuals and Overdrafts [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		171			65
Provision for loan losses		(9)			97
Loans charged-off		(13)			(19)
Recoveries		7			13
Allowance for loan losses, Balance, end of period		156			156
Ending Balance: individually evaluated for impairment	0	20	0		20
Ending Balance: collectively evaluated for impairment	153	136	153		136
Loans
Ending balance: collectively evaluated for impairment	6,042	5,637	6,042		5,637
Ending balance: individually evaluated for impairment	0	22	0		22
Ending balance	6,042	5,659	6,042		5,659
Loans to Individuals and Overdrafts [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	0		0
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	0		0
Loans
Ending balance	122		122			128
Loans to Individuals and Overdrafts [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	167		185
Provision for loan losses	(7)		(11)
Loans charged-off	(11)		(35)
Recoveries	4		14
Allowance for loan losses, Balance, end of period	153		153
Loans
Ending balance	5,920		5,920			5,889
Loans to Individuals and Overdrafts [Member] | Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	167		185
Provision for loan losses	(7)		(11)
Loans charged-off	(11)		(35)
Recoveries	4		14
Allowance for loan losses, Balance, end of period	153		153
Loans
Ending balance	6,042		6,042			6,017
Multi Family Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period		291			74
Provision for loan losses		(25)			192
Loans charged-off		0			0
Recoveries		0			0
Allowance for loan losses, Balance, end of period		266			266
Ending Balance: individually evaluated for impairment	0	0	0		0
Ending Balance: collectively evaluated for impairment	294	266	294		266
Loans
Ending balance: collectively evaluated for impairment	40,515	16,105	40,515		16,105
Ending balance: individually evaluated for impairment	1,337	2,331	1,337		2,331
Ending balance	41,852	$ 18,436	41,852		$ 18,436
Multi Family Residential Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	0		0
Provision for loan losses	2		2
Loans charged-off	0		0
Recoveries	0		0
Allowance for loan losses, Balance, end of period	2		2
Loans
Ending balance	863		863			2,724
Multi Family Residential Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	259		279
Provision for loan losses	(68)		(88)
Loans charged-off	(5)		(5)
Recoveries	106		106
Allowance for loan losses, Balance, end of period	292		292
Loans
Ending balance	40,989		40,989			39,500
Multi Family Residential Real Estate [Member] | Total Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Balance, beginning of period	259		279
Provision for loan losses	(66)		(86)
Loans charged-off	(5)		(5)
Recoveries	106		106
Allowance for loan losses, Balance, end of period	294		294
Loans
Ending balance	$ 41,852		$ 41,852			$ 42,224

[1] Derived from audited consolidated financial statements.

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets, Fair Value Disclosure, Recurring	$ 86,938	$ 102,235
US Government Agencies Debt Securities [Member]
Assets, Fair Value Disclosure, Recurring	23,546	27,921
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets, Fair Value Disclosure, Recurring	43,649	53,304
Municipal Bonds [Member]
Assets, Fair Value Disclosure, Recurring	19,743	21,010
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | US Government Agencies Debt Securities [Member]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | Municipal Bonds [Member]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure, Recurring	86,938	102,235
Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Assets, Fair Value Disclosure, Recurring	23,546	27,921
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets, Fair Value Disclosure, Recurring	43,649	53,304
Fair Value, Inputs, Level 2 [Member] | Municipal Bonds [Member]
Assets, Fair Value Disclosure, Recurring	19,743	21,010
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 [Member] | US Government Agencies Debt Securities [Member]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 [Member] | Municipal Bonds [Member]
Assets, Fair Value Disclosure, Recurring	$ 0	$ 0

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BUSINESS COMBINATIONS (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	Jul. 25, 2014	Jun. 30, 2015	Dec. 31, 2014	[1]	Sep. 30, 2013
Business Acquisition [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	370,278
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number		218,462
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term		3 years 4 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value		$ 628,000
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Acquired During Period, at Acquisition, at Fair Value	$ 28,567,000	23,454,000
Assets Value of Merger					$ 276,900,000
Finite-Lived Intangible Assets, Net		1,320,000	$ 1,625,000
Goodwill		$ 6,931,000	$ 6,931,000
Common Stock [Member]
Business Acquisition [Line Items]
Business Combination Shares Issued Ratio	1.8264
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 31,100,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	2,418,347
Business Acquisition, Share Price	$ 6.76
Share Price	$ 12.35
Legacy Select [Member]
Business Acquisition [Line Items]
Share Based Compensation Arrangement By Acquired Share Based Payment Award Options Converted Number	202,842
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Exercises In Period		149,529
Purchased Credit Impaired Loans [Member]
Business Acquisition [Line Items]
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Acquired During Period, at Acquisition, at Fair Value	$ 28,600,000
Performing Loans [Member]
Business Acquisition [Line Items]
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Acquired During Period, at Acquisition, at Fair Value	$ 189,000,000

[1] Derived from audited consolidated financial statements.

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LOANS (Details Textual) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2014	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired Financing Receivable, Recorded Investment		$ 13,707	$ 15,644
Impaired Loans Required for Specific Reserves		5,400	6,000
With no related allowance, Recorded Investment		8,327	9,600
Increase (Decrease) in Finance Receivables		1,700	1,600
Allowance for Loan and Lease Losses, Period Increase (Decrease)	$ 177
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged		74,800
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Recorded Investment, Past Due, Total		280	2,200
Nonaccrual Impaired Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired Financing Receivable, Recorded Investment		8,000	6,900
Accrual Impaired Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired Financing Receivable, Recorded Investment		5,400	$ 8,700
Troubled Debt Restructurings [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired Financing Receivable, Recorded Investment		6,700		$ 8,100
Troubled Debt Restructuring Accrual Status [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired Financing Receivable, Recorded Investment		3,700		5,300
Troubled Debt Restructuring Nonaccrual Status [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired Financing Receivable, Recorded Investment		3,000		$ 2,800
Unused Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Line of Credit Facility, Maximum Amount Outstanding During Period		$ 123,500

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FAIR VALUE MEASUREMENTS (Details 1) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets, Fair Value Disclosure, Nonrecurring	$ 6,446	$ 8,481
Impaired Loans [Member]
Assets, Fair Value Disclosure, Nonrecurring	5,416	6,896
Foreclosed Real Estate [Member]
Assets, Fair Value Disclosure, Nonrecurring	1,030	1,585
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 1 [Member] | Foreclosed Real Estate [Member]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 2 [Member] | Foreclosed Real Estate [Member]
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure, Nonrecurring	6,446	8,481
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member]
Assets, Fair Value Disclosure, Nonrecurring	5,416	6,896
Fair Value, Inputs, Level 3 [Member] | Foreclosed Real Estate [Member]
Assets, Fair Value Disclosure, Nonrecurring	$ 1,030	$ 1,585

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FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financial assets:
Cash and due from banks	$ 13,210	$ 14,417	[1]
Certificates of deposit	1,000	1,000
Interest-earning deposits in other banks	14,326	22,810
Federal funds sold and repurchase agreements	0	20,183	[1]
Investment securities available for sale	86,938	102,235
Loans, net	566,887	545,194
Accrued interest receivable	2,268	2,416	[1]
Stock in FHLB	2,049	1,524	[1]
Other non-marketable securities	845	896
Financial liabilities:
Deposits	579,609	618,902	[1]
Short term debt	32,884	20,733	[1]
Long term debt	24,914	25,591	[1]
Accrued interest payable	197	276	[1]
Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and due from banks	13,210	14,417
Certificates of deposit	1,000	1,000
Interest-earning deposits in other banks	14,326	22,810
Federal funds sold and repurchase agreements		20,183
Investment securities available for sale	86,938	102,235
Loans, net	576,016	555,736
Accrued interest receivable	2,268	2,416
Stock in FHLB	2,049	1,524
Other non-marketable securities	845	896
Financial liabilities:
Deposits	581,304	621,049
Short term debt	32,884	20,593
Long term debt	17,701	20,771
Accrued interest payable	197	276
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and due from banks	13,210	14,417
Certificates of deposit	1,000	1,000
Interest-earning deposits in other banks	14,326	22,810
Federal funds sold and repurchase agreements		20,183
Investment securities available for sale	0	0
Loans, net	0	0
Accrued interest receivable	0	0
Stock in FHLB	0	0
Other non-marketable securities	0	0
Financial liabilities:
Deposits	0	0
Short term debt	0	0
Long term debt	0	0
Accrued interest payable	0	0
Fair Value, Inputs, Level 2 [Member]
Financial assets:
Cash and due from banks	0	0
Certificates of deposit	0	0
Interest-earning deposits in other banks	0	0
Federal funds sold and repurchase agreements		0
Investment securities available for sale	86,938	102,235
Loans, net	0	0
Accrued interest receivable	0	0
Stock in FHLB	0	0
Other non-marketable securities	0	0
Financial liabilities:
Deposits	581,304	621,049
Short term debt	32,884	20,593
Long term debt	17,701	20,771
Accrued interest payable	197	276
Fair Value, Inputs, Level 3 [Member]
Financial assets:
Cash and due from banks	0	0
Certificates of deposit	0	0
Interest-earning deposits in other banks	0	0
Federal funds sold and repurchase agreements		0
Investment securities available for sale	0	0
Loans, net	576,016	555,736
Accrued interest receivable	2,268	2,416
Stock in FHLB	2,049	1,524
Other non-marketable securities	845	896
Financial liabilities:
Deposits	0	0
Short term debt	0	0
Long term debt	0	0
Accrued interest payable	$ 0	$ 0

[1] Derived from audited consolidated financial statements.

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE A - BASIS OF PRESENTATION

Select Bancorp, Inc. (the “Company”), formerly known as New Century Bancorp, Inc. (“New Century”), is a bank holding company whose principal business activity consists of ownership of Select Bank & Trust Company (the “Bank”), formerly known as New Century Bank. The Bank is engaged in general commercial and retail banking and operates under the banking laws of North Carolina and the rules and regulations of the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks. The Bank undergoes periodic examinations by those regulatory authorities.

On September 30, 2013, the Company signed a merger agreement with Select Bancorp, Inc. (“Legacy Select”), a bank holding company headquartered in Greenville, North Carolina, whose wholly-owned subsidiary, Select Bank & Trust Company (“Legacy Select Bank”), was a state-chartered commercial bank with approximately $276.9 million in assets. The merger, which closed July 25, 2014, expanded the Bank’s North Carolina presence with six branches located in Greenville (two), Elizabeth City, Washington, Gibsonville and Burlington.

As a result of the merger, New Century acquired Legacy Select and Legacy Select Bank and changed its name to Select Bancorp, Inc. New Century Bank changed its name to Select Bank & Trust Company.

Under the terms of the merger agreement, former shareholders of Legacy Select common stock received 1.8264 shares of the Company’s common stock for each share of Legacy Select common stock. The Company issued 4,416,500 shares of common stock in the merger.

In addition, each share of Legacy Select’s issued and outstanding preferred stock was exchanged for one newly issued share of the Company’s preferred stock having terms substantially identical to the Legacy Select preferred stock. All of the issued and outstanding shares of Company’s preferred stock are held by the Secretary of the United States Treasury and were issued in connection with Legacy Select’s participation in the Small Business Lending Fund.

All significant inter-company transactions and balances have been eliminated in consolidation. In management’s opinion, the financial information, which is unaudited, reflects all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial information as of and for the three and six month periods ended June 30, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, as well as the amounts of income and expense during the reporting period. Actual results could differ from those estimates. Operating results for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015.

The organization and business of the Company, accounting policies followed by the Company and other relevant information are contained in the notes to the financial statements filed as part of the Company’s 2014 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2015. This quarterly report should be read in conjunction with the Annual Report.

Certain reclassifications of the information in prior periods were made to conform to the June 30, 2015 presentation. Such reclassifications had no effect on shareholders’ equity or net income.

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FAIR VALUE MEASUREMENTS (Details Textual)	Jun. 30, 2015
Minimum [Member]
Percentage Of Discount From Impaired Loans	5.00%
Maximum [Member]
Percentage Of Discount From Impaired Loans	47.00%
Fair Value [Member] | Minimum [Member]
Percentage Of Discount From Impaired Loans	5.00%
Fair Value [Member] | Maximum [Member]
Percentage Of Discount From Impaired Loans	90.00%

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LOANS (Details 4) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($) Loans	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($) Loans	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)
Financing Receivable, Modifications [Line Items]
Number of loans | Loans		2		3
Pre-Modification Outstanding Recorded Investment		$ 993		$ 1,015
Post-Modification Outstanding Recorded Investment		984		1,006
Number of loans					1	9
Financing Receivable, Modifications, Recorded Investment	$ 140	$ 2,314	$ 140	$ 2,314	$ 140	$ 2,314
Residential 1 to 4 Family Below Market Interest Rate [Member]
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	1	1
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 22	$ 22
Post-Modification Outstanding Recorded Investment	0	0	22	22
Number of loans					0	4
Financing Receivable, Modifications, Recorded Investment	$ 0	$ 298	$ 0	$ 298	$ 0	$ 298
Below Market Interest Rate [Member]
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	1	1
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 22	$ 22
Post-Modification Outstanding Recorded Investment	0	0	22	22
Number of loans					0	4
Financing Receivable, Modifications, Recorded Investment	0	298	0	298	$ 0	$ 298
Construction Extended Payment Term [Member]
Financing Receivable, Modifications [Line Items]
Number of loans					0	1
Financing Receivable, Modifications, Recorded Investment	0	$ 68	0	$ 68	$ 0	$ 68
Commercial Real Estate Extended Payment Term [Member]
Financing Receivable, Modifications [Line Items]
Number of loans | Loans		1		1
Pre-Modification Outstanding Recorded Investment		$ 46		$ 46
Post-Modification Outstanding Recorded Investment		42		42
Number of loans					1	1
Financing Receivable, Modifications, Recorded Investment	140	$ 947	140	$ 947	$ 140	$ 947
Residential 1 to 4 Family Extended Payment Term [Member]
Financing Receivable, Modifications [Line Items]
Number of loans | Loans		1		1
Pre-Modification Outstanding Recorded Investment		$ 947		$ 947
Post-Modification Outstanding Recorded Investment		942		942
Number of loans					0	2
Financing Receivable, Modifications, Recorded Investment	0	$ 933	0	$ 933	$ 0	$ 933
Extended Payment Term [Member]
Financing Receivable, Modifications [Line Items]
Number of loans | Loans		2		2
Pre-Modification Outstanding Recorded Investment		$ 993		$ 993
Post-Modification Outstanding Recorded Investment		984		984
Number of loans					1	3
Financing Receivable, Modifications, Recorded Investment	140	1,880	140	1,880	$ 140	$ 1,880
Residential 1 to 4 Family Other [Member]
Financing Receivable, Modifications [Line Items]
Number of loans					0	1
Financing Receivable, Modifications, Recorded Investment	0	68	0	68	$ 0	$ 68
Other [Member]
Financing Receivable, Modifications [Line Items]
Number of loans					0	2
Financing Receivable, Modifications, Recorded Investment	$ 0	$ 136	$ 0	$ 136	$ 0	$ 136

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	[1]
ASSETS
Cash and due from banks	$ 13,210	$ 14,417
Interest-earning deposits in other banks	14,326	22,810
Certificates of deposit	1,000	1,000
Federal funds sold and repurchase agreements	0	20,183
Investment securities available for sale, at fair value	86,938	102,235
Loans	573,729	552,038
Allowance for loan losses	(6,842)	(6,844)
NET LOANS	566,887	545,194
Accrued interest receivable	2,268	2,416
Stock in Federal Home Loan Bank of Atlanta ("FHLB"), at cost	2,049	1,524
Other non-marketable securities	845	896
Foreclosed real estate	1,030	1,585
Premises and equipment, net	18,401	17,599
Bank owned life insurance	21,277	20,966
Goodwill	6,931	6,931
Core deposit intangible	1,320	1,625
Other assets	5,961	6,740
TOTAL ASSETS	742,443	766,121
Deposits:
Demand	133,545	129,831
Savings	38,221	37,000
Money market and NOW	162,040	166,511
Time	245,803	285,560
TOTAL DEPOSITS	579,609	618,902
Short-term debt	32,884	20,733
Long-term debt	24,914	25,591
Accrued interest payable	197	276
Accrued expenses and other liabilities	3,287	2,934
TOTAL LIABILITIES	640,891	668,436
Shareholders’ Equity:
Preferred stock, no par value, 5,000,000 shares authorized; 7,645 shares issued and outstanding at June 30, 2015 and December 31, 2014	7,645	7,645
Common stock, $1.00 par value, 25,000,000 shares authorized; 11,499,398 and 11,377,980 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively	11,499	11,378
Additional paid-in capital	68,814	68,406
Retained earnings	12,973	9,447
Common stock issued to deferred compensation trust, at cost; 252,148 and 259,551 shares at June 30, 2015 and December 31, 2014, respectively	(2,060)	(2,121)
Directors’ Deferred Compensation Plan Rabbi Trust	2,060	2,121
Accumulated other comprehensive income	621	809
TOTAL SHAREHOLDERS’ EQUITY	101,552	97,685
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 742,443	$ 766,121

[1] Derived from audited consolidated financial statements.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015		Jun. 30, 2014
Beginning balance	$ 1,131	$ 132	$ 809	[1]	$ (108)
Unrealized gain (loss) on investment securities available for sale	(680)	547	(72)		929
Tax effect	259	(204)	25		(346)
Other comprehensive gain (loss) before reclassification	(421)	343	(47)		583
Amounts reclassified from accumulated comprehensive income:
Realized loss on investment securities included in net income	(134)	0	(219)		0
Tax effect	45	0	78		0
Total reclassifications net of tax	(89)	0	(141)		0
Net current period other comprehensive income (loss)	(510)	343	(188)		583
Ending balance	$ 621	$ 475	$ 621		$ 475

[1] Derived from audited consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Common Stock Issued to Deferred Compensation Trust [Member]	Directors' Deferred Compensation Plan [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 31, 2013	$ 56,004	$ 0	$ 6,922	$ 42,062	$ 7,128	$ (1,976)	$ 1,976	$ (108)
Balance (in shares) at Dec. 31, 2013		0	6,921,352
Net income	885	$ 0	$ 0	0	885	0	0	0
Other comprehensive income, net	583	0	0	0	0	0	0	583
Stock option exercises	68	$ 0	$ 9	59	0	0	0	0
Stock option exercises (in shares)		0	9,816
Stock based compensation	11	$ 0	$ 0	11	0	0	0	0
Director equity incentive plan, net	0	0	0	0	0	(90)	90	0
Balance at Jun. 30, 2014	57,551	$ 0	$ 6,931	42,132	8,013	(2,066)	2,066	475
Balance (in shares) at Jun. 30, 2014		0	6,931,168
Balance at Dec. 31, 2014	97,685	$ 7,645	$ 11,378	68,406	9,447	(2,121)	2,121	809
Balance (in shares) at Dec. 31, 2014		7,645	11,377,980
Net income	3,564	$ 0	$ 0	0	3,564	0	0	0
Other comprehensive income, net	(188)	0	0	0	0	0	0	(188)
Preferred stock dividends paid	(38)	0	0	0	(38)	0	0	0
Stock option exercises	512	$ 0	$ 121	391	0	0	0	0
Stock option exercises (in shares)		0	121,418
Stock based compensation	17	$ 0	$ 0	17	0	0	0	0
Director equity incentive plan, net	0	0	0	0	0	61	(61)	0
Balance at Jun. 30, 2015	$ 101,552	$ 7,645	$ 11,499	$ 68,814	$ 12,973	$ (2,060)	$ 2,060	$ 621
Balance (in shares) at Jun. 30, 2015		7,645	11,499,398

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INVESTMENT SECURITIES (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Unrealized Gain (Loss)			$ 1,000,000		$ 1,300,000
Deferred Income Taxes and Other Liabilities, Noncurrent	$ 369,000		369,000		481,000
US Government Securities, at Carrying Value	36,100,000		$ 36,100,000		$ 85,100,000
Trading Securities, Description			At June 30, 2015, the Company had six AFS securities with an unrealized loss for twelve or more consecutive months. Six U.S. government agency GSEs had unrealized losses for more than twelve months totaling $176,000 at June 30, 2015. Two U.S. government agency GSE, five mortgage-backed GSEs, and two municipal bonds had unrealized losses for less than twelve months totaling $118,000 at June 30, 2015.		At December 31, 2014, the Company had thirteen AFS securities with an unrealized loss for twelve or more consecutive months. Eight U.S. government agency GSE’s, one municipal and four mortgage-backed GSE’s had unrealized losses for more than twelve months totaling $359,000 at December 31, 2014. Two U.S. government agency GSE’s and one mortgage-backed GSE bonds had unrealized losses for less than twelve months totaling $52,000 at December 31, 2014.
Gain (Loss) on Sale of Securities, Net	$ 134,000	$ 0	$ 219,000	$ 0	$ 46,000
Proceeds from Sale of Available-for-sale Securities, Total			$ 5,640,000	$ 550,000

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

6 Months Ended

Jun. 30, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following table presents changes in accumulated other comprehensive income for the three and six months ended June 30, 2015 and 2014.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
	(In thousands)
Beginning balance	$	1,131	$	132	$	809	$	(108)
Unrealized gain (loss) on investment securities available for sale		(680)		547		(72)		929
Tax effect		259		(204)		25		(346)
Other comprehensive gain (loss) before reclassification		(421)		343		(47)		583
Amounts reclassified from accumulated comprehensive income:
Realized loss on investment securities included in net income		(134)		-		(219)		-
Tax effect		45		-		78		-
Total reclassifications net of tax		(89)		-		(141)		-
Net current period other comprehensive income (loss)		510		343		(188)		583
Ending balance	$	621	$	475	$	621	$	475

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LOANS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014		Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 573,729		$ 552,038	[1]	$ 334,497
Allowance for loan losses	(6,842)		(6,844)	[1]	(6,447)	$ (7,025)	$ (7,054)
Total loans, net	566,887		545,194	[1]
Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	574,450		552,677
Deferred loan (fees) cost, net	(721)		(639)
Loans	573,729		552,038
Allowance for loan losses	(6,842)	$ (6,919)	(6,844)
Total loans, net	$ 566,887		$ 545,194
Percentage of Deferred Origination Fees	(0.13%)		(0.12%)
Percent of Loans	100.00%		100.00%
Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 23,454		$ 27,035
Deferred loan (fees) cost, net	0		0
Loans	23,454		27,035
Allowance for loan losses	68	0	0
Total loans, net	$ 23,386		$ 27,035
Percentage of Deferred Origination Fees	0.00%		0.00%
Percent of Loans	100.00%		100.00%
Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 550,996		$ 525,642
Deferred loan (fees) cost, net	(721)		(639)
Loans	550,275		525,003
Allowance for loan losses	(6,774)	(6,919)	(6,844)
Total loans, net	$ 543,501		$ 518,159
Percentage of Deferred Origination Fees	(0.13%)		(0.12%)
Percent of Loans	100.00%		100.00%
Family Residential Real Estate 1 to 4 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 85,926				30,669
Allowance for loan losses					(588)	(585)	(826)
Family Residential Real Estate 1 to 4 [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	85,926		$ 90,903
Allowance for loan losses	$ (602)	(606)	$ (630)
Percent of Loans	14.98%		16.47%
Family Residential Real Estate 1 to 4 [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 8,916		$ 9,972
Allowance for loan losses	$ 0	0	$ 0
Percent of Loans	38.02%		36.89%
Family Residential Real Estate 1 to 4 [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 77,010		$ 80,931
Loans	77,010		80,931
Allowance for loan losses	$ (602)	(606)	$ (630)
Percent of Loans	13.99%		15.42%
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 236,471				156,971
Allowance for loan losses					(2,903)	(3,283)	(4,599)
Commercial Real Estate [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	236,471		$ 233,630
Allowance for loan losses	$ (2,630)	(2,845)	$ (2,914)
Percent of Loans	41.22%		42.32%
Commercial Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 11,392		$ 11,903
Allowance for loan losses	$ (57)	0	$ 0
Percent of Loans	48.57%		44.03%
Commercial Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 225,079		$ 221,727
Loans	225,079		221,727
Allowance for loan losses	$ (2,573)	(2,845)	$ (2,914)
Percent of Loans	40.90%		42.23%
Multi Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 41,852				18,436
Allowance for loan losses					(266)	(291)	(74)
Multi Family Residential Real Estate [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	41,852		$ 42,224
Allowance for loan losses	$ (294)	(259)	$ (279)
Percent of Loans	7.29%		7.65%
Multi Family Residential Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 863		$ 2,724
Allowance for loan losses	$ (2)	0	$ 0
Percent of Loans	3.68%		10.08%
Multi Family Residential Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 40,989		$ 39,500
Loans	40,989		39,500
Allowance for loan losses	$ (292)	(259)	$ (279)
Percent of Loans	7.45%		7.52%
Construction Loans Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 96,033				60,541
Allowance for loan losses					(1,002)	(889)	(565)
Construction Loans Real Estate [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	96,033		$ 83,593
Allowance for loan losses	$ (1,313)	(1,209)	$ (1,103)
Percent of Loans	16.74%		15.14%
Construction Loans Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 1,443		$ 1,463
Allowance for loan losses	$ 0	0	$ 0
Percent of Loans	6.15%		5.41%
Construction Loans Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 94,590		$ 82,130
Loans	94,590		82,130
Allowance for loan losses	$ (1,313)	(1,209)	$ (1,103)
Percent of Loans	17.19%		15.64%
Home Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 37,722				30,561
Allowance for loan losses					(1,009)	(1,293)	(680)
Home Equity Line of Credit [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	37,722		$ 38,093
Allowance for loan losses	$ (773)	(851)	$ (930)
Percent of Loans	6.57%		6.90%
Home Equity Line of Credit [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 190		$ 188
Allowance for loan losses	$ (9)	0	$ 0
Percent of Loans	0.81%		0.69%
Home Equity Line of Credit [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 37,532		$ 37,905
Loans	37,532		37,905
Allowance for loan losses	$ (764)	(851)	$ (930)
Percent of Loans	6.82%		7.22%
Real Estate [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 498,004		$ 488,443
Percent of Loans	86.80%		88.48%
Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 22,804		$ 26,250
Percent of Loans	97.23%		97.10%
Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 475,200		$ 462,193
Percent of Loans	86.35%		88.03%
Commercial and Industrial Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 70,404				31,660
Allowance for loan losses					$ (523)	$ (513)	$ (245)
Commercial and Industrial Other [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	70,404		$ 58,217
Allowance for loan losses	$ (1,077)	(982)	$ (803)
Percent of Loans	12.27%		10.55%
Commercial and Industrial Other [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 528		$ 657
Allowance for loan losses	$ 0	0	$ 0
Percent of Loans	2.25%		2.43%
Commercial and Industrial Other [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 69,876		$ 57,560
Loans	69,876		57,560
Allowance for loan losses	$ (1,077)	$ (982)	$ (803)
Percent of Loans	12.70%		10.97%
Loans to Individuals [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 5,947		$ 5,953
Percent of Loans	1.04%		1.08%
Loans to Individuals [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 122		$ 128
Percent of Loans	0.52%		0.47%
Loans to Individuals [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 5,825		$ 5,825
Percent of Loans	1.06%		1.11%
Overdrafts [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 95		$ 64
Percent of Loans	0.02%		0.01%
Overdrafts [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 0		$ 0
Percent of Loans	0.00%		0.00%
Overdrafts [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 95		$ 64
Percent of Loans	0.02%		0.01%
Other Loans [Member] | Total Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 76,446		$ 64,234
Percent of Loans	13.33%		11.64%
Other Loans [Member] | Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 650		$ 785
Percent of Loans	2.77%		2.90%
Other Loans [Member] | Excluding Purchase Credit Impairment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 75,796		$ 63,449
Percent of Loans	13.78%		12.09%

[1] Derived from audited consolidated financial statements.

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OTHER REAL ESTATE OWNED (Tables)

6 Months Ended

Jun. 30, 2015

Banking and Thrift [Abstract]

Schedule Of Real Estate Owned Properties [Table Text Block]

The following table explains changes in other real estate owned during the six months ended June 30, 2015 and 2014 (dollars in thousands):

	Six Months		Six Months
	Ended June 30,		Ended June 30,
	2015		2014
	(Dollars in thousands)
Beginning balance January 1	$	1,585	$	2,008
Sales		(543)		(1,227)
Writedowns		(55)		(272)
Transfers		43		660
Ending balance	$	1,030	$	1,169

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 3,564	$ 885
Adjustments to reconcile net income to net cash provided by operating activities:
Recovery of loan losses	(9)	(476)
Depreciation and amortization of premises and equipment	541	281
Amortization and accretion of investment securities	491	449
Amortization of deferred loan fees and costs	(134)	(152)
Amortization of core deposit intangible	305	58
Stock-based compensation	17	11
Accretion on acquired loans	(848)	0
Amortization of acquisition premium on time deposits	(451)	0
Net accretion of acquisition discount on borrowings	(244)	0
Increase in cash surrender value of bank owned life insurance	(311)	(115)
Net loss on sale and write-downs of foreclosed real estate	55	273
Net (gain) loss on investment security sales and pay-downs	(219)	0
Change in assets and liabilities:
Net change in accrued interest receivable	148	184
Net change in other assets	882	453
Net change in accrued expenses and other liabilities	274	(61)
NET CASH PROVIDED BY OPERATING ACTIVITIES	4,061	1,790
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase (redemption) of FHLB stock	(525)	234
Redemption of non-marketable security	51	14
Purchase of investment securities available for sale	(7,057)	(7,445)
Maturities of investment securities available for sale	11,429	7,102
Mortgage-backed securities pay-downs	4,722	4,206
Proceeds from sale of investment securities available for sale	5,640	550
Net change in loans outstanding	(20,702)	11,993
Proceeds from sale of foreclosed real estate	500	1,226
Purchases of premises and equipment	(1,343)	(311)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES	(7,285)	17,569
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	(38,842)	(19,724)
Proceeds from short-term debt	19,976	874
Repayments on short-term debt	(7,779)	0
Repayments on long-term debt	(479)	0
Preferred stock dividends paid	(38)	0
Proceeds from stock option exercises	512	68
NET CASH USED IN FINANCING ACTIVITIES	(26,650)	(18,782)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(29,874)	577
CASH AND CASH EQUIVALENTS, BEGINNING	58,410	72,869
CASH AND CASH EQUIVALENTS, ENDING	28,536	73,446
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest	1,853	2,226
Taxes	1,058	10
Non-cash transactions:
Unrealized gains (losses) on investment securities available for sale, net of tax	(188)	451
Transfers from loans to foreclosed real estate	$ 0	$ 660

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	7,645	7,645
Preferred Stock, Shares Outstanding	7,645	7,645
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	11,499,398	11,377,980
Common stock, shares outstanding	11,499,398	11,377,980
Deferred Compensation, Share-based Payments [Member]
Common stock, shares issued	252,148	259,551

XML

OTHER REAL ESTATE OWNED

6 Months Ended

Jun. 30, 2015

Banking and Thrift [Abstract]

Real Estate Owned [Text Block]

NOTE J – OTHER REAL ESTATE OWNED

The following table explains changes in other real estate owned during the six months ended June 30, 2015 and 2014 (dollars in thousands):

	Six Months		Six Months
	Ended June 30,		Ended June 30,
	2015		2014
	(Dollars in thousands)
Beginning balance January 1	$	1,585	$	2,008
Sales		(543)		(1,227)
Writedowns		(55)		(272)
Transfers		43		660
Ending balance	$	1,030	$	1,169

At June 30, 2015 and December 31, 2014, the Company had $1.0 million and $1.6 million, respectively, of foreclosed residential real estate property in OREO.  The Company did not have any recorded investment in consumer mortgage loans collateralized by residential real estate property in the process of foreclosure at June 30, 2015 and December 31, 2014, respectively.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 07, 2015
Document Information [Line Items]
Entity Registrant Name	SELECT BANCORP, INC.
Entity Central Index Key	0001263762
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	SLCT
Entity Common Stock, Shares Outstanding		11,499,398
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

XML

PER SHARE RESULTS (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

Basic net income per share is computed based upon the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the dilutive effect of stock options outstanding during the period. At June 30, 2015 and 2014 there were 111,080 and 91,183 anti-dilutive options outstanding, respectively.                 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Weighted average shares used for basic net income available to common shareholders		11,481,137		6,923,640		11,453,908		6,922,651
Effect of dilutive stock options		67,741		4,788		75,697		3,667
Weighted average shares used for diluted net income available to common shareholders		11,548,878		6,928,428		11,529,605		6,926,318

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
INTEREST INCOME
Loans	$ 7,789	$ 4,816	$ 15,538	$ 9,689
Federal funds sold and interest-earning deposits in other banks	6	31	31	58
Investments	467	414	935	827
TOTAL INTEREST INCOME	8,262	5,261	16,504	10,574
INTEREST EXPENSE
Money market, NOW and savings deposits	96	59	195	117
Time deposits	614	959	1,335	1,934
Short term debt	25	7	46	13
Long term debt	100	73	198	144
TOTAL INTEREST EXPENSE	835	1,098	1,774	2,208
NET INTEREST INCOME	7,427	4,163	14,730	8,366
PROVISION FOR (RECOVERY OF) LOAN LOSSES	(139)	(427)	(9)	(476)
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) LOAN LOSSES	7,566	4,590	14,739	8,842
NON-INTEREST INCOME
Gain on sale of investment securities	134	0	219	0
Service charges on deposit accounts	263	226	522	453
Other fees and income	544	339	1,063	737
TOTAL NON-INTEREST INCOME	941	565	1,804	1,190
NON-INTEREST EXPENSE
Personnel	3,011	2,101	6,072	4,256
Occupancy and equipment	565	396	1,112	780
Deposit insurance	106	103	267	206
Professional fees	387	310	742	593
Core deposit intangible amortization	150	29	305	58
Merger/acquisition related expenses	35	237	35	398
Information systems	521	320	884	668
Foreclosed real estate related expense	35	40	59	311
Other	743	618	1,447	1,336
TOTAL NON-INTEREST EXPENSE	5,553	4,154	10,923	8,606
INCOME BEFORE INCOME TAX	2,954	1,001	5,620	1,426
INCOME TAXES	1,133	388	2,056	541
NET INCOME	1,821	613	3,564	885
DIVIDENDS AND ACCRETION OF PREFERRED STOCK	19	0	38	0
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$ 1,802	$ 613	$ 3,526	$ 885
NET INCOME PER COMMON SHARE
Basic (in dollars per share)	$ 0.16	$ 0.09	$ 0.31	$ 0.13
Diluted (in dollars per share)	$ 0.16	$ 0.09	$ 0.31	$ 0.13
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic (in shares)	11,481,137	6,923,640	11,453,908	6,922,651
Diluted (in shares)	11,548,878	6,928,428	11,529,605	6,926,318

XML

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE E - FAIR VALUE MEASUREMENTS

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

Fair value estimates are made at a specific moment in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.

Because no active market readily exists for a portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Fair Value Hierarchy

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

· Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

· Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

· Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis.

Investment Securities Available-for-Sale (“AFS”)

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include U.S. government agency securities, mortgage-backed securities issued by government sponsored entities, and municipal bonds. There have been no changes in valuation techniques for the three and six months ended June 30, 2015. Valuation techniques are consistent with techniques used in prior periods.

The following tables summarize quantitative disclosures about the fair value measurement for each category of assets carried at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

			Quoted Prices in		Significant
Investment securities			Active Markets		Other		Significant
available for sale			for Identical		Observable		Unobservable
June 30, 2015	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
U.S. government agencies – GSE's	$	23,546	$	-	$	23,546	$	-
Mortgage-backed securities - GSE’s		43,649		-		43,649		-
Municipal bonds		19,743		-		19,743		-
Total	$	86,938	$	-	$	86,938	$	-

			Quoted Prices in		Significant
Investment securities			Active Markets		Other		Significant
available for sale			for Identical		Observable		Unobservable
December 31, 2014	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
U.S. government agencies – GSE's	$	27,921	$	-	$	27,921	$	-
Mortgage-backed securities - GSE’s		53,304		-		53,304		-
Municipal bonds		21,010		-		21,010		-
Total	$	102,235	$	-	$	102,235	$	-

The following is a description of valuation methodologies used for assets recorded at fair value on a non-recurring basis.

Loans

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC 310, “Receivables”. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, or liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At June 30, 2015 and December 31, 2014, substantially all of the total impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as non-recurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as non-recurring Level 3. The significant unobservable input used in the fair value measurement of the Company’s impaired loans is the discount applied to appraised values to account for expected liquidation and selling costs. At June 30, 2015, the discounts used are weighted between 5% and 47%. There were no transfers between levels from the prior reporting periods and there have been no changes in valuation techniques for the three months ended June 30, 2015.

Foreclosed Real Estate

Foreclosed real estate are properties recorded at the balance of the loan or an estimated fair value less estimated selling costs, whichever is less. Inputs include appraised values on the properties or recent sales activity for similar assets in the property’s market. Therefore, foreclosed real estate is classified within Level 3 of the hierarchy. The significant unobservable input used in the fair value measurement of the Company’s impaired loans is the discount applied to appraised values to account for expected liquidation and selling costs. At June 30, 2015, the discounts used ranged between 5% and 90%. There have been no changes in valuation techniques for the three months ended June 30, 2015.

The following tables summarize quantitative disclosures about the fair value measurement for each category of assets carried at fair value on a non-recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

			Quoted Prices in		Significant
			Active Markets		Other		Significant
Asset Category			for Identical		Observable		Unobservable
June 30, 2015	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
Impaired loans	$	5,416	$	-	$	-	$	5,416
Foreclosed real estate		1,030		-		-		1,030
Total	$	6,446	$	-	$	-	$	6,446

			Quoted Prices in		Significant
			Active Markets		Other		Significant
Asset Category			for Identical		Observable		Unobservable
December 31, 2014	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs  (Level 3)
Impaired loans	$	6,896	$	-	$	-	$	6,896
Foreclosed real estate		1,585		-		-		1,585
Total	$	8,481	$	-	$	-	$	8,481

The following table presents the carrying values and estimated fair values of the Company's financial instruments at June 30, 2015 and December 31, 2014:

	June 30, 2015
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	13,210	$	13,210	$	13,210	$	-	$	-
Certificates of deposit		1,000		1,000		1,000		-		-
Interest-earning deposits in other banks		14,326		14,326		14,326		-		-
Investment securities available for sale		86,938		86,938		-		86,938		-
Loans, net		566,887		576,016		-		-		576,016
Accrued interest receivable		2,268		2,268		-		-		2,268
Stock in FHLB		2,049		2,049		-		-		2,049
Other non-marketable securities		845		845		-		-		845
Financial liabilities:
Deposits	$	579,609	$	581,304	$	-	$	581,304	$	-
Short term debt		32,884		32,884		-		32,884		-
Long term debt		24,914		17,701		-		17,701		-
Accrued interest payable		197		197		-		197		-

	December 31, 2014
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	14,417	$	14,417	$	14,417	$	-	$	-
Certificates of deposit		1,000		1,000		1,000		-		-
Interest-earning deposits in other banks		22,810		22,810		22,810		-		-
Federal funds sold and repurchase agreeements		20,183		20,183		20,183		-		-
Investment securities available for sale		102,235		102,235		-		102,235		-
Loans, net		545,194		555,736		-		-		555,736
Accrued interest receivable		2,416		2,416		-		-		2,416
Stock in the FHLB		1,524		1,524		-		-		1,524
Other non-marketable securities		896		896		-		-		896
Financial liabilities:
Deposits	$	618,902	$	621,049	$	-	$	621,049	$	-
Short-term debt		20,733		20,593		-		20,593		-
Long-term debt		25,591		20,771		-		20,771		-
Accrued interest payable		276		276		-		276		-

Cash and Due from Banks, Certificates of Deposit, Interest-Earning Deposits in Other Banks and Federal Funds Sold

The carrying amounts for cash and due from banks, certificates of deposit, interest-earning deposits in other banks and federal funds sold approximate fair value because of the short maturities of those instruments.

Investment Securities Available for Sale

Fair value for investment securities available for sale equals quoted market price if such information is available. If a quoted market price is not available, fair value is estimated using prices quoted for similar investments or quoted market prices obtained from independent pricing services.

Loans

For certain homogenous categories of loans, such as residential mortgages, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. However, the values likely do not represent exit prices due to distressed market conditions.

Stock in Federal Home Loan Bank of Atlanta

The fair value for FHLB stock approximates carrying value, based on the redemption provisions of the FHLB stock.

Other Non-Marketable Securities

The fair value of equity instruments in other non-marketable securities is assumed to approximate carrying value.

Deposits

The fair value of demand, savings, and money market and NOW deposits is the amount payable on demand at the reporting date. The fair values of time deposits are estimated using the rates currently offered for instruments of similar remaining maturities.

Short-term Debt

Short-term debt consists of repurchase agreements and FHLB advances with maturities of less than twelve months. The carrying values of these instruments is a reasonable estimate of fair value.

Long-term Debt

The fair values of long-term debt are based on discounted expected cash flows at the interest rate for debt with the same or similar remaining maturities and collateral requirements.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amounts of accrued interest receivable and payable approximate fair value because of the short maturities of these instruments.

Financial Instruments with Off-Balance Sheet Risk

With regard to financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of future financing commitments.

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BUSINESS COMBINATIONS

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Note D – Business Combinations

On September 30, 2013, the Company executed a merger agreement with Legacy Select, a bank holding company headquartered in Greenville, North Carolina, whose wholly-owned subsidiary, Legacy Select Bank, was a state-chartered commercial bank with approximately $276.9 million in assets as of the merger date, July 25, 2014. The merger expanded the Bank’s North Carolina presence with six branches in Greenville (two), Elizabeth City, Washington, Gibsonville and Burlington.

As a result of the merger, New Century acquired Legacy Select and Legacy Select Bank and changed its name to Select Bancorp, Inc. New Century Bank changed its name to Select Bank & Trust Company. Under the acquisition method, the assets and liabilities of Legacy Select, as of the effective date of the acquisition, are recorded at their respective fair values. For the acquisition of Legacy Select, estimated fair values of assets acquired and liabilities assumed are based on the information that is available, and the Company believes this information provides a reasonable basis for determining fair values. Management has substantially completed its valuation of Legacy Select’s assets and liabilities, but may refine those valuations for up to one year following closing of the transaction. Any changes resulting from the evaluation of these or other estimates as of the acquisition date may change the amount of the preliminary fair values recorded.

Under the terms of the merger agreement, shareholders of Legacy Select common stock received 1.8264 shares of the Company’s common stock for each share of Legacy Select common stock, for a value of approximately $31.1 million in the aggregate, based on 2,418,347 shares of Legacy Select common stock outstanding and the $6.76 per share closing price of the Company’s common stock on July 25, 2014, valuing each share of Legacy Select common stock at $12.35.

Each share of Legacy Select’s issued and outstanding preferred stock was exchanged for one newly issued share of the Company’s preferred stock having terms substantially identical to Legacy Select’s preferred stock. All of the issued and outstanding shares of the Company’s preferred stock are held by the Secretary of the United States Treasury and were issued in connection with Legacy Select’s participation in the Small Business Lending Fund. On July 25, 2014, 202,842 Legacy Select stock options were converted to 370,278 Company stock options. At June 30, 2015, 218,462 of these converted options were outstanding and exercisable with an average weighted remaining contractual life of approximately 3.01 years and an aggregate intrinsic value of $628,000. There were no forfeitures and 149,529 options were exercised since the merger related to Legacy Select stock options through June 30, 2015. In determining the acquisition date fair value of purchased credit-impaired (“PCI”) loans, and in subsequent accounting, the Company generally aggregates loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are referred to as the “accretable yield” and recorded as interest income prospectively.

PCI loans acquired totaled $28.6 million at estimated fair value and acquired performing loans totaled $189.0 million at estimated fair value. In addition, $1.6 million of core deposit intangibles and $6.9 million in goodwill were recorded as components of the acquisition. The transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at estimated fair value on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition. Accordingly,  deferred tax and goodwill were adjusted during the quarter.    

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REPURCHASE AGREEMENTS (Tables)

6 Months Ended

Jun. 30, 2015

Banking and Thrift [Abstract]

Remaining Contractual Maturity Of The Securities Sold Under Agreements To Repurchase By Class Of Collateral Pledged [Table Text Block]

The remaining contractual maturity of the securities sold under agreements to repurchase by class of collateral pledged included in short-term borrowings as of June 30, 2015 and December 31, 2014 is presented in the following tables.

	June 30, 2015
	Remaining Contractual Maturity of the Agreements
(Dollars in thousands)	Overnight and continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase
agreements
Government agency	$	2,622	$	-	$	-	$	-	$	2,622
Mortgage Back Securities		8,142		-		-		-		8,142
Municipals		2,120		-		-		-		2,120
Total borrowings	$	12,884	$	-	$	-	$	-	$	12,884
Gross amount of recognized liabilities for repurchase agreements									$	12,884

	December 31, 2014
	Remaining Contractual Maturity of the Agreements
	Overnight and continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase agreements
Government agency	$	4,909	$	-	$	-	$	-	$	4,909
Mortgage Back Securities		8,228		-		-		-		8,228
Municipals		2,526		-		-		-		2,526
Total borrowings	$	15,663	$	-	$	-	$	-	$	15,663
Gross amount of recognized liabilities for repurchase agreements									$	15,663

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

The following tables summarize quantitative disclosures about the fair value measurement for each category of assets carried at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

			Quoted Prices in		Significant
Investment securities			Active Markets		Other		Significant
available for sale			for Identical		Observable		Unobservable
June 30, 2015	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
U.S. government agencies – GSE's	$	23,546	$	-	$	23,546	$	-
Mortgage-backed securities - GSE’s		43,649		-		43,649		-
Municipal bonds		19,743		-		19,743		-
Total	$	86,938	$	-	$	86,938	$	-

			Quoted Prices in		Significant
Investment securities			Active Markets		Other		Significant
available for sale			for Identical		Observable		Unobservable
December 31, 2014	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
U.S. government agencies – GSE's	$	27,921	$	-	$	27,921	$	-
Mortgage-backed securities - GSE’s		53,304		-		53,304		-
Municipal bonds		21,010		-		21,010		-
Total	$	102,235	$	-	$	102,235	$	-

Fair Value Measurements, Nonrecurring [Table Text Block]

The following tables summarize quantitative disclosures about the fair value measurement for each category of assets carried at fair value on a non-recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

			Quoted Prices in		Significant
			Active Markets		Other		Significant
Asset Category			for Identical		Observable		Unobservable
June 30, 2015	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
Impaired loans	$	5,416	$	-	$	-	$	5,416
Foreclosed real estate		1,030		-		-		1,030
Total	$	6,446	$	-	$	-	$	6,446

			Quoted Prices in		Significant
			Active Markets		Other		Significant
Asset Category			for Identical		Observable		Unobservable
December 31, 2014	Fair value		Assets (Level 1)		Inputs (Level 2)		Inputs  (Level 3)
Impaired loans	$	6,896	$	-	$	-	$	6,896
Foreclosed real estate		1,585		-		-		1,585
Total	$	8,481	$	-	$	-	$	8,481

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

The following table presents the carrying values and estimated fair values of the Company's financial instruments at June 30, 2015 and December 31, 2014:

	June 30, 2015
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	13,210	$	13,210	$	13,210	$	-	$	-
Certificates of deposit		1,000		1,000		1,000		-		-
Interest-earning deposits in other banks		14,326		14,326		14,326		-		-
Investment securities available for sale		86,938		86,938		-		86,938		-
Loans, net		566,887		576,016		-		-		576,016
Accrued interest receivable		2,268		2,268		-		-		2,268
Stock in FHLB		2,049		2,049		-		-		2,049
Other non-marketable securities		845		845		-		-		845
Financial liabilities:
Deposits	$	579,609	$	581,304	$	-	$	581,304	$	-
Short term debt		32,884		32,884		-		32,884		-
Long term debt		24,914		17,701		-		17,701		-
Accrued interest payable		197		197		-		197		-

	December 31, 2014
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	14,417	$	14,417	$	14,417	$	-	$	-
Certificates of deposit		1,000		1,000		1,000		-		-
Interest-earning deposits in other banks		22,810		22,810		22,810		-		-
Federal funds sold and repurchase agreeements		20,183		20,183		20,183		-		-
Investment securities available for sale		102,235		102,235		-		102,235		-
Loans, net		545,194		555,736		-		-		555,736
Accrued interest receivable		2,416		2,416		-		-		2,416
Stock in the FHLB		1,524		1,524		-		-		1,524
Other non-marketable securities		896		896		-		-		896
Financial liabilities:
Deposits	$	618,902	$	621,049	$	-	$	621,049	$	-
Short-term debt		20,733		20,593		-		20,593		-
Long-term debt		25,591		20,771		-		20,771		-
Accrued interest payable		276		276		-		276		-

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ACCUMULATED OTHER COMPREHENSIVE INCOME

6 Months Ended

Jun. 30, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss) [Text Block]

NOTE H – ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents changes in accumulated other comprehensive income for the three and six months ended June 30, 2015 and 2014.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
	(In thousands)
Beginning balance	$	1,131	$	132	$	809	$	(108)
Unrealized gain (loss) on investment securities available for sale		(680)		547		(72)		929
Tax effect		259		(204)		25		(346)
Other comprehensive gain (loss) before reclassification		(421)		343		(47)		583
Amounts reclassified from accumulated comprehensive income:
Realized loss on investment securities included in net income		(134)		-		(219)		-
Tax effect		45		-		78		-
Total reclassifications net of tax		(89)		-		(141)		-
Net current period other comprehensive income (loss)		510		343		(188)		583
Ending balance	$	621	$	475	$	621	$	475

The income statement line items impacted by the reclassifications of realized gains (losses) on investment securities are the gain (loss) on the sale of securities and income tax expense line items in the consolidated statement of operations.

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INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE F - INVESTMENT SECURITIES

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, follow:

	June 30, 2015
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
	(In thousands)
Securities available for sale:
U.S. government agencies-GSE’s
Within 1 year	$	34	$	1	$	-	$	35
After 1 year but within 5 years		9,655		37		(16)		9,676
After 5 years but within 10 years		11,559		51		(202)		11,408
After 10 years		2,448		-		(21)		2,427
Mortgage-backed securities-GSE’s
Within 1 year		9		-		-		9
After 1 year but within 5 years		31,100		677		(42)		31,735
After 5 years but within 10 years		11,640		129		(10)		11,759
After 10 years		130		16		-		146
Municipal bonds
Within 1 year		581		8		-		589
After 1 year but within 5 years		3,619		118		-		3,737
After 5 years but within 10 years		6,116		94		(2)		6,208
After 10 years		9,057		153		(1)		9,209
	$	85,948	$	1,284	$	(294)	$	86,938

As of June 30, 2015, accumulated other comprehensive income included net unrealized gains totaling $1.0 million. Deferred tax liabilities resulting from these unrealized gains totaled $369,000.

	December 31, 2014
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
	(In thousands)
Securities available for sale:
U.S. government agencies-GSE’s
Within 1 year	$	6,352	$	8	$	-	$	6,360
After 1 year but within 5 years		6,018		21		(24)		6,015
After 5 years but within 10 years		10,032		32		(227)		9,837
After 10 years		5,778		-		(69)		5,709
Mortgage-backed securities-GSE’s
Within 1 year		21		1		-		22
After 1 year but within 5 years		35,114		974		(39)		36,049
After 5 years but within 10 years		17,143		140		(50)		17,233
Municipal bonds
Within 1 year		576		3		-		579
After 1 year but within 5 years		3,806		144		-		3,950
After 5 years but within 10 years		6,351		116		(2)		6,465
After 10 years		9,763		253		-		10,016
	$	100,954	$	1,692	$	(411)	$	102,235

As of December 31, 2014, accumulated other comprehensive income included net unrealized gains totaling $1.3 million. Deferred tax liabilities resulting from these unrealized gains totaled $481,000.

Securities with a carrying value of $36.1 million and $85.1 million at June 30, 2015 and December 31, 2014, respectively, were pledged to secure public monies on deposit as required by law, customer repurchase agreements, and access to the Federal Reserve Discount Window.

Since none of the unrealized losses relate to the liquidity of the securities or the issuer’s ability to honor redemption obligations and the Company has the intent and ability to hold these securities to recovery, no other than temporary impairments were identified for these investments having unrealized losses for the periods ended June 30, 2015 and December 31, 2014. In 2014 the Company incurred a loss on the disposal of one security and did not realize any losses related to securities in 2015.

The following tables show the gross unrealized losses and fair value of the Company’s investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2015 and December 31, 2014.

	June 30, 2015
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
	(In thousands)
Securities available for sale:
U.S. government agencies- GSE’s	$	3,345	$	(63)	$	9,353	$	(176)	$	12,698	$	(239)
Mortgage-backed securities- GSE’s		6,239		(52)		-		-		6,239		(52)
Municipal bonds		682		(3)		-		-		682		(3)
Total temporarily impaired securities	$	10,266	$	(118)	$	9,353	$	(176)	$	19,619	$	(294)

At June 30, 2015, the Company had six AFS securities with an unrealized loss for twelve or more consecutive months. Six U.S. government agency GSE’s had unrealized losses for more than twelve months totaling $176,000 at June 30, 2015. Two U.S. government agency GSE, five mortgage-backed GSE’s, and two municipal bonds had unrealized losses for less than twelve months totaling $118,000 at June 30, 2015. All unrealized losses are attributable to the general trend of interest rates. During the second quarter of 2015 gross proceeds of investment sales amounted to $2.2 million and gains of $134,000.

	December 31, 2014
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s	$	2,926	$	(24)	$	12,731	$	(296)	$	15,657	$	(320)
Mortgage-backed securities- GSE’s		1,965		(28)		4,590		(61)		6,555		(89)
Municipal bonds		-		-		112		(2)		112		(2)
Total temporarily impaired securities	$	4,891	$	(52)	$	17,433	$	(359)	$	22,324	$	(411)

At December 31, 2014, the Company had thirteen AFS securities with an unrealized loss for twelve or more consecutive months. Eight U.S. government agency GSE’s, one municipal and four mortgage-backed GSE’s had unrealized losses for more than twelve months totaling $359,000 at December 31, 2014. Two U.S. government agency GSE’s and one mortgage-backed GSE bonds had unrealized losses for less than twelve months totaling $52,000 at December 31, 2014. All unrealized losses are attributable to the general trend of interest rates and the abnormal spreads of all debt instruments to U.S. Treasury securities. The Company incurred a $46,000 loss on one municipal security during 2014.

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LOANS

6 Months Ended

Jun. 30, 2015

Loans and Leases Receivable Disclosure [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE G - LOANS

Following is a summary of the composition of the Company’s loan portfolio at June 30, 2015 and December 31, 2014:

	June 30,					December 31,
Total Loans:	2015					2014
			Percent					Percent
	Amount		of total			Amount		of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	85,926		14.98	%	$	90,903		16.47	%
Commercial real estate		236,471		41.22	%		233,630		42.32	%
Multi-family residential		41,852		7.29	%		42,224		7.65	%
Construction		96,033		16.74	%		83,593		15.14	%
Home equity lines of credit (“HELOC”)		37,722		6.57	%		38,093		6.90	%
Total real estate loans		498,004		86.80	%		488,443		88.48	%
Other loans:
Commercial and industrial		70,404		12.27	%		58,217		10.55	%
Loans to individuals		5,947		1.04	%		5,953		1.08	%
Overdrafts		95		0.02	%		64		0.01	%
Total other loans		76,446		13.33	%		64,234		11.64	%
Gross loans		574,450					552,677
Less deferred loan origination fees, net		(721)		(0.13)	%		(639)		(0.12)	%
Total loans		573,729		100.00	%		552,038		100.00	%
Allowance for loan losses		(6,842)					(6,844)
Total loans, net	$	566,887				$	545,194

	June 30,					December 31,
Purchased Credit Impaired (PCI) Loans:	2015					2014
			Percent					Percent
	Amount		of total			Amount		of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	8,916		38.02	%	$	9,972		36.89	%
Commercial real estate		11,392		48.57	%		11,903		44.03	%
Multi-family residential		863		3.68	%		2,724		10.08	%
Construction		1,443		6.15	%		1,463		5.41	%
Home equity lines of credit (“HELOC”)		190		0.81	%		188		0.69	%
Total real estate loans		22,804		97.23	%		26,250		97.10	%
Other loans:
Commercial and industrial		528		2.25	%		657		2.43	%
Loans to individuals		122		0.52	%		128		0.47	%
Overdrafts		-		0.00	%		-		0.00	%
Total other loans		650		2.77	%		785		2.90	%
Gross loans		23,454					27,035
Less deferred loan origination fees, net		-		-	%		-		-	%
Total loans		23,454		100.00	%		27,035		100.00	%
Allowance for loan losses		68					-
Total loans, net	$	23,386				$	27,035

For PCI loans acquired from Legacy Select, the contractually required payments including principal and interest, cash flows expected to be collected and fair values as of the closing date of the merger and June 30, 2015 were:

(Dollars in thousands)	June 30, 2015		July 25, 2014
Contractually required payments	$	28,234	$	34,329
Nonaccretable difference		1,460		1,402
Cash flows expected to be collected		26,774		32,927
Accretable yield		3,320		4,360
Fair value	$	23,454	$	28,567

	June 30,					December 31,
Loans – excluding PCI:	2015					2014
			Percent					Percent
	Amount		of total			Amount		of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	77,010		13.99	%	$	80,931		15.42	%
Commercial real estate		225,079		40.90	%		221,727		42.23	%
Multi-family residential		40,989		7.45	%		39,500		7.52	%
Construction		94,590		17.19	%		82,130		15.64	%
Home equity lines of credit (“HELOC”)		37,532		6.82	%		37,905		7.22	%
Total real estate loans		475,200		86.35	%		462,193		88.03	%
Other loans:
Commercial and industrial		69,876		12.70	%		57,560		10.97	%
Loans to individuals		5,825		1.06	%		5,825		1.11	%
Overdrafts		95		0.02	%		64		0.01	%
Total other loans		75,796		13.78	%		63,449		12.09	%
Gross loans		550,996					525,642
Less deferred loan origination fees, net		(721)		(0.13)	%		(639)		(0.12)	%
Total loans		550,275		100.00	%		525,003		100.00	%
Allowance for loan losses		(6,774)					(6,844)
Total loans, net	$	543,501				$	518,159

Loans are primarily secured by real estate located in eastern and central North Carolina. Real estate loans can be affected by the condition of the local real estate market and by local economic conditions.

At June 30, 2015, the Company had pre-approved but unused lines of credit for customers totaling $123.5 million. In management’s opinion, these commitments, and undisbursed proceeds on loans reflected above, represent no more than normal lending risk to the Company and will be funded from normal sources of liquidity.

A floating lien of $74.8 million of quality loans was pledged to the FHLB to secure borrowings at June 30, 2015.

A description of the various loan products provided by the Bank is presented below.

1-to-4 Family Residential Loans

Residential 1-to-4 family loans are mortgage loans secured by residential real estate within the Bank’s market areas. These loans may also include loans that convert from construction loans into permanent financing and are secured by properties within the Bank’s market areas.

Commercial Real Estate Loans

Commercial real estate loans are underwritten based on the borrower’s ability to generate adequate cash flow to repay the subject debt within reasonable terms. Commercial real estate loans typically include both owner and non-owner occupied properties with higher principal loan amounts. The repayment of these loans is generally dependent on the successful management of the property. Commercial real estate loans are sensitive to market and general economic conditions. Repayment analysis must be performed and consists of an identified primary/cash flow source of repayment and a secondary/liquidation source of repayment. The primary source of repayment is cash flow from income generated from rental or lease of the property. However, the cash flow can be supplemented with the borrower's and guarantor's global cash flow position. Other credit issues such as the business fundamentals and financial strength of the borrower/guarantor can be considered in determining adequacy of repayment ability. The secondary source of repayment is liquidation of the collateral, supplemented by a liquidation cushion provided by the financial assets of the borrower/guarantor. Management monitors and evaluates commercial real estate loans based on collateral, market area, and risk grade.

Multi-family Residential Loans

Multi-family residential loans are typically non-farm properties with 5 or more dwelling units in structures which include apartment buildings used primarily to accommodate households on a more or less permanent basis. Successful performance of these types of loans is primarily dependent on occupancy rates, rental rates, and property management.

Construction Loans

Construction loans are non-revolving extensions of credit secured by real property of which the proceeds are used to acquire and develop land and to construct commercial or residential buildings. The primary source of repayment for these types of loans is the sale of the improved property or permanent financing in which case the property is expected to generate the cash flow necessary for repayment on a permanent loan basis. Property cash flow may be supplemented with financial support from the borrowers/guarantors. Proper underwriting of a construction loan consists of the initial process of obtaining, analyzing, and approving various aspects of information pertaining to: the analysis of the permanent financing source, creditworthiness of the borrower and guarantors, ability of the contractor to perform under the terms of the contract, and the feasibility, marketability, and valuation of the project.

Also, much consideration needs to be given to the cost of the project and sources of funds needed to complete construction as well as identifying any sources of equity funding. Construction loans are traditionally considered to be higher risk loans involving technical and legal requirements inherently different from other types of loans; however with thorough credit underwriting, proper loan structure, and diligent loan servicing, these risks can often be mitigated. Some examples of risks inherent in this type of lending include: underestimated costs, inflation of material and labor costs, site difficulties (i.e. rock, soil), project not built to plans, weather delays and natural disasters, borrower/contractor/subcontractor disputes which prompt liens, and interest rates increasing beyond budget.

Home Equity Lines of Credit

Home equity lines of credit are consumer-purpose revolving extensions of credit which are secured by first or second liens on owner-occupied residential real estate. Appropriate risk management and compliance practices are exercised to ensure that loan-to-value, lien perfection, and compliance risks are addressed and managed within the Bank’s established guidelines. The degree of utilization of revolving commitments within this loan segment is reviewed periodically to identify changes in the behavior of this borrowing group.

Commercial and Industrial Loans

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to generate positive cash flow, operate profitably and prudently expand its business. Underwriting standards are designed to promote relationships to include a full range of loan, deposit, and cash management services. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower and the guarantors. The cash flows of the borrower, however, may not be as expected and the collateral securing these loans may fluctuate in value. In the case of loans secured by accounts receivable, the availability of funds for repayment can be impacted by the borrower’s ability to collect amounts due from its customers.

Loans to Individuals & Overdrafts

Consumer loans are approved using Bank policies and procedures established to evaluate each credit request. All lending decisions and credit risks are required to be clearly documented. Several factors are considered in making these decisions such as credit score, adjusted net worth, liquidity, debt ratio, disposable income, credit history, and loan-to-value of the collateral. This process, combined with the relatively smaller loan amounts spreads the risk among many individual borrowers.  Overdrafts on customer accounts are classified as loans for reporting purposes.

The following tables present an age analysis of past due loans, segregated by class of loans as of June 30, 2015 and December 31, 2014, respectively:

Total Loans:	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	130	$	405	$	535	$	69,869	$	70,404
Construction		-		199		199		95,834		96,033
Multi-family residential		437		-		437		41,415		41,852
Commercial real estate		835		770		1,605		234,866		236,471
Loans to individuals & overdrafts		1		-		1		6,041		6,042
1-to-4 family residential		380		6,218		6,598		79,328		85,926
HELOC		35		402		437		37,285		37,722
Deferred loan (fees) cost, net		-		-		-		-		(721	)
	$	1,818	$	7,994	$	9,812	$	564,638	$	573,729

Total PCI Loans:	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	-	$	-	$	-	$	528	$	528
Construction		-		-		-		1,443		1,443
Multi-family residential		437		-		437		426		863
Commercial real estate		553		-		553		10,839		11,392
Loans to individuals & overdrafts		-		-		-		122		122
1-to-4 family residential		-		280		280		8,636		8,916
HELOC		-		-		-		190		190
	$	990	$	280	$	1,270	$	22,184	$	23,454

Total Loans (excluding PCI):	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	130	$	405	$	535	$	69,341	$	69,876
Construction		-		199		199		94,391		94,590
Multi-family residential		-		-		-		40,989		40,989
Commercial real estate		282		770		1,052		224,027		225,079
Loans to individuals & overdrafts		1		-		1		5,919		5,920
1-to-4 family residential		380		5,938		6,318		70,692		77,010
HELOC		35		402		437		37,095		37,532
Deferred loan (fees) cost, net		-		-		-		-		(721	)
	$	828	$	7,714	$	8,542	$	542,454	$	550,275

There were two loans that amounted to $280,000 that were more than 90 days past due and still accruing interest at June 30, 2015.

	December 31, 2014
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(dollars in thousands)
Total Loans
Commercial and industrial	$	141	$	632	$	773	$	57,444	$	58,217
Construction		-		816		816		82,777		83,593
Multi-family residential		-		901		901		41,323		42,224
Commercial real estate		3,377		2,576		5,953		227,677		233,630
Loans to individuals & overdrafts		22		-		22		5,995		6,017
1 to 4 family residential		1,464		1,160		2,624		88,279		90,903
HELOC		14		853		867		37,226		38,093
Deferred loan (fees) cost, net		-		-		-		-		(639)
	$	5,018	$	6,938	$	11,956	$	540,721	$	552,038
Loans- PCI
Commercial and industrial	$	2	$	-	$	2	$	655	$	657
Construction		-		-		-		1,463		1,463
Multi-family residential		-		-		-		2,724		2,724
Commercial real estate		562		-		562		11,341		11,903
Loans to individuals & overdrafts		-		-		-		128		128
1 to 4 family residential		283		-		283		9,689		9,972
HELOC		-		-		-		188		188
	$	847	$	-	$	847	$	26,188	$	27,035
Loans- excluding PCI
Commercial and industrial	$	139	$	632	$	771	$	56,789	$	57,560
Construction		-		816		816		81,314		82,130
Multi-family residential		-		901		901		38,599		39,500
Commercial real estate		2,815		2,576		5,391		216,336		221,727
Loans to individuals & overdrafts		22		-		22		5,867		5,889
1 to 4 family residential		1,181		1,160		2,341		78,590		80,931
HELOC		14		853		867		37,038		37,905
Deferred loan (fees) cost, net		-		-		-		-		(639)
	$	4,171	$	6,938	$	11,109	$	514,533	$	525,003

There was one loan in the amount of $2.2 million greater than 90 days past due and still accruing interest at December 31, 2014.

Impaired Loans

The following tables present information on loans that were considered to be impaired as of June 30, 2015 and December 31, 2014:

							Three months ended				Six months ended
	As of June 30, 2015						June 30, 2015				June 30, 2015
			Contractual						Interest Income				Interest Income
			Unpaid				Average		Recognized on		Average		Recognized on
	Recorded		Principal		Related		Recorded		Impaired		Recorded		Impaired
	Investment		Balance		Allowance		Investment		Loans		Investment		Loans
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	518	$	923	$	-	$	640	$	6	$	606	$	38
Construction		891		1,120		-		973		10		1,095		23
Commercial real estate		2,501		2,947		-		2,556		49		2,468		93
Loans to individuals & overdrafts		-		-		-		-		-		-		-
Multi-family residential		1,337		1,503		-		1,769		21		1,785		43
1 to 4 family residential		2,434		2,925		-		2,485		28		2,368		59
HELOC		646		795		-		641		9		641		20
Subtotal:		8,327		10,213		-		9,064		123		8,963		276
With an allowance recorded:
Commercial and industrial		11		12		3		11		-		138		-
Construction		165		168		78		166		1		166		2
Commercial real estate		4,409		5,336		299		4,436		19		4,643		80
Loans to individuals & overdrafts		-		-		-		-		-		-		-
Multi-family residential		-		-		-		-		-		-		-
1 to 4 family residential		502		504		66		495		6		476		10
HELOC		293		535		108		288		-		289		-
Subtotal:		5,380		6,555		554		5,396		26		5,712		92
Totals:
Commercial		9,832		12,009		380		10,551		106		10,901		279
Consumer		-		-		-		-		-		-		-
Residential		3,875		4,759		174		3,909		43		3,774		89
Grand Total:	$	13,707	$	16,768	$	554	$	14,460	$	149	$	14,675	$	368

Impaired loans at June 30, 2015 were approximately $13.7 million and were composed of $8.0 million in nonaccrual loans and $5.4 million in loans that were still accruing interest. Recorded investment represents the current principal balance of the loan. Approximately $5.4 million in impaired loans had specific allowances provided for them while the remaining $8.3 million had no specific allowances recorded at June 30, 2015. Of the $8.3 million with no allowance recorded, $1.7 million of those loans have had partial charge-offs recorded.

							Three months ended				Six months ended
	As of December 31, 2014						June 30, 2014				June 30, 2014
			Contractual						Interest Income				Interest Income
			Unpaid				Average		Recognized on		Average		Recognized on
	Recorded		Principal		Related		Recorded		Impaired		Recorded		Impaired
	Investment		Balance		Allowance		Investment		Loans		Investment		Loans
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	478	$	478	$	-	$	124	$	2	$	159	$	5
Construction		1,300		1,525		-		1,706		20		1,846		43
Commercial real estate		2,652		3,536		-		3,363		37		3,639		106
Loans to individuals & overdrafts		-		2		-		2		-		-		2
Multi-family residential		2,232		2,515		-		2,335		36		2,359		74
1 to 4 family residential		2,301		2,750		-		2,421		25		2,968		64
HELOC		637		768		-		707		12		713		21
Subtotal:		9,600		11,574		-		10,658		132		11,684		315
With an allowance recorded:
Commercial and industrial		265		267		64		265		-		266		-
Construction		167		168		80		168		-		248		-
Commercial real estate		4,878		5,761		419		2,693		31		4,216		41
Loans to individuals & overdrafts		-		-		-		10		-		-		1
Multi-family residential		-		-		-		-		-		-		-
1 to 4 family residential		450		455		74		496		13		561		20
HELOC		284		526		50		473		4		477		9
Subtotal:		6,044		7,177		687		4,105		48		5,768		71
Totals:
Commercial		11,972		14,250		563		10,654		126		12,733		269
Consumer		-		2		-		12		-		-		3
Residential		3,672		4,499		124		4,097		54		4,719		114
Grand Total:	$	15,644	$	18,751	$	687	$	14,763	$	180	$	17,452	$	386

Impaired loans at December 31, 2014 were approximately $15.6 million and consisted of $6.9 million in non-accrual loans and $8.7 million in loans still in accruing status. Recorded investment represents the current principal balance for the loan. Approximately, $6.0 million of the $15.6 million in impaired loans at December 31, 2014 had specific allowances recorded while the remaining $9.6 million had no specific allowances recorded. Of the $9.6 million with no allowance recorded, $1.6 million of those loans have had partial charge-offs recorded.

Loans are placed on non-accrual status when it has been determined that all contractual principal and interest will not be received. Any payments received on these loans are applied to principal first and then to interest only after all principal has been collected. In the case of an impaired loan that is still on accrual basis, payments are applied to both principal and interest.

Troubled Debt Restructurings

The following table presents loans that were modified as troubled debt restructurings (“TDRs”) with a breakdown of the types of concessions made by loan class during the three and six months ended June 30, 2015 and 2014:

	Three months ended June 30, 2015						Six months ended June 30, 2015
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number		Recorded		Recorded		Number		Recorded		Recorded
	of loans		Investment		Investment		of loans		Investment		Investment
		(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-	$	-		1	$	22	$	22
Total		-	$	-	$	-		1	$	22	$	22

		Three months ended June 30, 2014					Six months ended June 30, 2014
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number		Recorded		Recorded		Number		Recorded		Recorded
	of loans		Investment		Investment		of loans		Investment		Investment
	(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-	$	-		1	$	22	$	22
Total		-		-		-		1		22		22
Extended payment terms:
Commercial real estate		1		46		42		1		46		42
1-to-4 family residential		1		947		942		1		947		942
Total		2		993		984		2		993		984
Total		2	$	993	$	984		3	$	1,015	$	1,006

Loans may be considered troubled debt restructurings for reasons other than below market interest rates, extended payment terms or forgiveness of principal. Loans in the “Other” category are those that were renewed at terms that vary from those that the Bank would enter into for new loans of the same type.

The following table presents loans that were modified as TDRs within the past twelve months with a breakdown of the types for which there was a payment default together with concessions made by loan class during the twelve month period ended June 30, 2015 and 2014:

	Twelve months ended				Twelve months ended
	June 30, 2015				June 30, 2014
	Number		Recorded		Number		Recorded
	of loans		investment		of loans		investment
	(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-		4	$	298
Total		-		-		4		298
Extended payment terms:
Commercial real estate		1		140		1		947
1-to-4 family residential		-		-		2		933
Total		1		140		3		1,880
Other:
Construction		-		-		1		68
1-to-4 family residential		-		-		1		68
Total		-		-		2		136
Total		1	$	140		9	$	2,314

At June 30, 2015, the Bank had forty one loans with an aggregate balance of $6.7 million that were considered to be troubled debt restructurings. Of those TDRs, twenty-four loans with a balance totaling $3.7 million were still accruing as of June 30, 2015. The remaining TDRs with balances totaling $3.0 million as of June 30, 2015 were in non-accrual status.

At June 30, 2014, the Bank had forty-three loans with a total balance of $8.1 million that were considered to be troubled debt restructurings. Of those TDRs, twenty-four loans with balances totaling $5.3 million were still accruing as of June 30, 2014. The remaining TDRs with balances totaling $2.8 million as of June 30, 2014 were in non-accrual status.

Credit Quality Indicators

As part of the on-going monitoring of the credit quality of the loan portfolio, management utilizes a risk grading matrix to assign a risk grade to each of the Company’s loans. All non-consumer loans are graded on a scale of 1 to 9. A description of the general characteristics of these nine different risk grades is as follows:

· Risk Grade 1 (Superior) - Credits in this category are virtually risk-free and are well-collateralized by cash-equivalent instruments. The repayment program is well-defined and achievable. Repayment sources are numerous. No material documentation deficiencies or exceptions exist.

· Risk Grade 2 (Very Good) - This grade is reserved for loans secured by readily marketable collateral, or loans within guidelines to borrowers with liquid financial statements. A liquid financial statement is a financial statement with substantial liquid assets relative to debts. These loans have excellent sources of repayment, with no significant identifiable risk of collection, and conform in all respects to Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind).

· Risk Grade 3 (Good) - These loans have excellent sources of repayment, with no significant identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: Conformity in all respects with Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind). Loans assigned this risk grade will demonstrate the following characteristics:

o Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.

o Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.

· Risk Grade 4 (Acceptable) - This grade is given to acceptable loans. These loans have adequate sources of repayment, with little identifiable risk of collection. Loans assigned this risk grade will demonstrate the following characteristics:

o General conformity to the Bank's policy requirements, product guidelines and underwriting standards, with limited exceptions. Any exceptions that are identified during the underwriting and approval process have been adequately mitigated by other factors.

o Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.  

o Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.

Credit Quality Indicators

· Risk Grade 5 (Acceptable With Care) - This grade is given to acceptable loans that show signs of weakness in either adequate sources of repayment or collateral, but have demonstrated mitigating factors that minimize the risk of delinquency or loss.  Loans assigned this grade may demonstrate some or all of the following characteristics:

o Additional exceptions to the Bank's policy requirements, product guidelines or underwriting standards that present a higher degree of risk to the Bank.  Although the combination and/or severity of identified exceptions is greater, all exceptions have been properly mitigated by other factors.

o Unproven, insufficient or marginal primary sources of repayment that appear sufficient to service the debt at this time.  Repayment weaknesses may be due to minor operational issues, financial trends, or reliance on projected (not historic) performance.

o Marginal or unproven secondary sources to liquidate the debt, including combinations of liquidation of collateral and liquidation value to the net worth of the borrower or guarantor.

· Risk Grade 6 (Watch List or Special Mention) – Loans in this category can have the following characteristics:

o Loans with underwriting guideline tolerances and/or exceptions and with no mitigating factors.

o Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank's position at some future date. Potential weaknesses are the result of deviations from prudent lending practices.

o Loans where adverse economic conditions that develop subsequent to the loan origination that don't jeopardize liquidation of the debt but do substantially increase the level of risk may also warrant this rating.

· Risk Grade 7 (Substandard) - A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as Substandard must 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. Loans consistently not meeting the repayment schedule should be downgraded to substandard. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action.

· Risk Grade 8 (Doubtful) - Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus 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. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.

· Risk Grade 9 (Loss) - Loans classified as Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan even though partial recovery may be affected in the future.

Consumer loans are graded on a scale of 1 to 9. A description of the general characteristics of the nine risk grades is as follows:

· Risk Grades 1 – 5 (Pass) – The loans in this category range from loans secured by cash with no risk of principal deterioration (Risk Grade 1) to loans that show signs of weakness in either adequate sources of repayment or collateral but have demonstrated mitigating factors that minimize the risk of delinquency or loss (Risk Grade 5).

· Risk Grade 6 (Watch List or Special Mention) - Watch List or Special Mention loans include the following characteristics:

o Loans within guideline tolerances or with exceptions of any kind that have not been mitigated by other economic or credit factors.

o Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank's position at some future date. Potential weaknesses are the result of deviations from prudent lending practices.

o Loans where adverse economic conditions that develop subsequent to the loan origination that don't jeopardize liquidation of the debt but do substantially increase the level of risk may also warrant this rating.

· Risk Grade 7 (Substandard) - A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as Substandard must 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.

· Risk Grade 8 (Doubtful) - Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus 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. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.

· Risk Grade 9 (Loss) - Loans classified Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be affected in the future.

The following tables present information on risk ratings of the commercial and consumer loan portfolios, segregated by loan class as of June 30, 2015 and December 31, 2014, respectively:

Total loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	982	$	-	$	-	$	-
Very good		1,128		-		-		-
Good		5,723		3,518		16,425		-
Acceptable		29,447		14,820		128,889		30,967
Acceptable with care		32,624		75,869		75,160		8,831
Special mention		70		872		9,550		-
Substandard		430		954		6,447		2,054
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	70,404	$	96,033	$	236,471	$	41,852

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	78,267	$	36,192
Special mention		3,795		471
Substandard		3,864		1,059
	$	85,926	$	37,722

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	6,020
Non –pass		22
	$	6,042

Total PCI loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	-	$	-	$	-	$	-
Very good		-		-		-		-
Good		-		-		-		-
Acceptable		-		-		-		-
Acceptable with care		488		1,379		8,909		863
Special mention		-		64		1,931		-
Substandard		40		-		552		-
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	528	$	1,443	$	11,392	$	863

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	5,337	$	190
Special mention		2,980		-
Substandard		599		-
	$	8,916	$	190

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	113
Non –pass		9
	$	122

Total loans, excluding PCI loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	982	$	-	$	-	$	-
Very good		1,128		-		-		-
Good		5,723		3,518		16,425		-
Acceptable		29,447		14,820		128,889		30,967
Acceptable with care		32,136		74,490		66,251		7,968
Special mention		70		808		7,619		-
Substandard		390		954		5,895		2,054
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	69,876	$	94,590	$	225,079	$	40,989

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	72,930	$	36,002
Special mention		815		471
Substandard		3,265		1,059
	$	77,010	$	37,532

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,907
Non –pass		13
	$	5,920

Total Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	1,241	$	-	$	-	$	-
Very good		1,110		-		-		-
Good		5,282		2,705		15,276		-
Acceptable		26,132		13,579		128,056		31,619
Acceptable with care		23,404		65,717		75,554		8,374
Special mention		221		384		8,036		1,330
Substandard		827		1,208		6,708		901
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	58,217	$	83,593	$	233,630	$	42,224

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	82,794	$	36,357
Special mention		3,978		695
Substandard		4,131		1,041
	$	90,903	$	38,093

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,969
Non-pass		48
	$	6,017

PCI Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	-	$	-	$	-	$	-
Very good		-		-		-		-
Good		-		-		-		-
Acceptable		-		-		-		-
Acceptable with care		602		1,397		9,368		2,724
Special mention		-		66		1,973		-
Substandard		55		-		562		-
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	657	$	1,463	$	11,903	$	2,724

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	6,437	$	188
Special mention		2,926		-
Substandard		609		-
	$	9,972	$	188

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	117
Non-pass		11
	$	128

Total Loans, excluding PCI Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	1,241	$	-	$	-	$	-
Very good		1,110		-		-		-
Good		5,282		2,705		15,276		-
Acceptable		26,132		13,579		128,056		31,619
Acceptable with care		22,802		64,320		66,186		5,650
Special mention		221		318		6,063		1,330
Substandard		772		1,208		6,146		901
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	57,560	$	82,130	$	221,727	$	39,500

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	76,357	$	36,169
Special mention		1,052		695
Substandard		3,522		1,041
	$	80,931	$	37,905

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,852
Non-pass		37
	$	5,889

Determining the fair value of PCI loans at acquisition required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of cash flows expected to be collected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and is called the nonaccretable difference. In accordance with GAAP, there was no carry-over of previously established allowance for credit losses from the acquired company.

The following table documents changes to the amount of the accretable yield on PCI loans for the three and six months ended June 30, 2015 (dollars in thousands):

	Three Months		Six Months
	Ended June 30,		Ended June 30,
	2015		2015
	(Dollars in thousands)
Accretable yield, beginning of period	$	3,434	$	3,762
Accretion		(321)		(649)
Reclassification from (to) nonaccretable difference		95		95
Other changes, net		112		112
Accretable yield, end of period	$	3,320	$	3,320

Allowance for Loan Losses

The allowance for loan losses is a reserve established through provisions for loan losses charged to income and represents management’s best estimate of probable loan losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated losses and risk inherent in the loan portfolio. The Company’s allowance for loan loss methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of reserves is designed to account for changes in credit quality as they occur. The provision for loan losses reflects loan quality trends, including the levels of and trends related to past due loans and economic conditions at the local and national levels. It also considers the quality and risk characteristics of the Company’s loan origination and servicing policies and practices.

As of March 31, 2014, the Company elected to change the allowance for loan loss model it uses to calculate historical loss rates and qualitative and environmental factors in its allowance for loan losses. The Company elected to change the model used for allowance for loan losses in order to utilize the loss migration, improve the objectivity of loss projections, and increase reliability of identifying losses inherent in the portfolio. The impact of the change to the model resulted in a $177,000 increase to the loan loss reserves as of the time of the change. In determining the loss history to be applied to its ASC 450 loan pools within the allowance for loan losses, the Company previously used loss history based on the weighted average net charge off history for the most recent fourteen consecutive quarters, based on the risk-graded pool to which the loss was assigned. Historical loss rates are now calculated by using a loss migration analysis associating losses to the risk-graded pool to which they relate for each of the previous twelve quarters. Then, using a twelve quarter look back period, loss factors are calculated for each risk-graded pool.

The new model continues to incorporate various internal and external qualitative and environmental factors as described in the Interagency Policy Statement on the Allowance for Loan and Lease Losses, dated December 2006. Input for these factors is determined on the basis of management observation, judgment, and experience. The factors utilized by the Company in the new model for all loan classes are as follows:

Internal Factors

⋅ Concentrations – Measures the increased risk derived from concentration of credit exposure in particular industry segments within the portfolio.

⋅ Policy exceptions – Measures the risk derived from granting terms outside of underwriting guidelines.

⋅ Compliance exceptions– Measures the risk derived from granting terms outside of regulatory guidelines.

⋅ Document exceptions– Measures the risk exposure resulting from the inability to collect due to improperly executed documents and collateral imperfections.

⋅ Financial information monitoring – Measures the risk associated with not having current borrower financial information.

⋅ Nonaccrual – Reflects increased risk of loans with characteristics that merit nonaccrual status.

⋅ Delinquency – Reflects the increased risk deriving from higher delinquency rates.

⋅ Personnel turnover – Reflects staff competence in various types of lending.

⋅ Portfolio growth – Measures the impact of growth and potential risk derived from new loan production.

External Factors

⋅ GDP growth rate – Impact of general economic factors that affect the portfolio.

⋅ North Carolina unemployment rate – Impact of local economic factors that affect the portfolio.

⋅ Peer group delinquency rate – Measures risk associated with the credit requirements of competitors.

⋅ Prime rate change – Measures the effect on the portfolio in the event of changes in the prime lending rate.

Each pool is assigned an adjustment to the potential loss percentage by assessing its characteristics against each of the factors listed above.

Reserves are generally divided into three allocation segments:

1. Individual reserves. These are calculated according to ASC Section 310-10-35 against loans evaluated individually and deemed to most likely be impaired.  All loans in non-accrual status and all substandard loans that are deemed to be collateral dependent are assessed for impairment. Loans are deemed uncollectible based on a variety of credit, collateral, documentation and other issues. In the case of uncollectible receivables, the collateral is considered unsecured and therefore fully charged off.

2. Formula reserves. Formula reserves are held against loans evaluated collectively. Loans are grouped by type or by risk grade, or some combination of the two. Loss estimates are based on historical loss rates for each respective loan group. Formula reserves represent the Company’s best estimate of losses that may be inherent, or embedded, within the group of loans, even if it is not apparent at this time which loans within any group or pool represent those embedded losses.

3. Qualitative and external reserves. If individual reserves represent estimated losses tied to specific loans, and formula reserves represent estimated losses tied to a pool of loans but not yet to any specific loan, then these reserves represent an estimate of likely incurred losses, but are not yet tied to any loan or group of loans.

All information related to the calculation of the three segments, including data analysis, assumptions, and calculations are documented. Assigning specific individual reserve amounts, formula reserve factors, or unallocated amounts based on unsupported assumptions or conclusions is not permitted.

The following tables present a roll forward of the Company’s allowance for loan losses by loan class for the three and six month periods ended June 30, 2015, respectively:

	Three months ended June 30, 2015
	Commercial						1 to 4				Loans to		Multi-
	and				Commercial		family				individuals &		family
Allowance for loan losses	industrial		Construction		real estate		residential		HELOC		overdrafts		residential		Total
Loans – excluding PCI
Balance, beginning of period	$	982	$	1,209	$	2,845	$	606	$	851	$	167	$	259	$	6,919
Provision for loan losses		192		100		(283)		(45)		(96)		(7)		(68)		(207)
Loans charged-off		(130)		-		-		-		-		(11)		(5)		(146)
Recoveries		33		4		11		41		9		4		106		208
Balance, end of period	$	1,077	$	1,313	$	2,573	$	602	$	764	$	153	$	292	$	6,774
PCI Loans
Balance, beginning of period	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Provision for loan losses		-		-		57		-		9		-		2		68
Loans charged-off		-		-		-		-		-		-		-		-
Recoveries		-		-		-		-		-		-		-		-
Balance, end of period	$	-	$	-	$	57	$	-	$	9	$	-	$	2	$	68
Total Loans
Balance, beginning of period	$	982	$	1,209	$	2,845	$	606	$	851	$	167	$	259	$	6,919
Provision for loan losses		192		100		(226)		(45)		(87)		(7)		(66)		(139)
Loans charged-off		(130)		-		-		-		-		(11)		(5)		(146)
Recoveries		33		4		11		41		9		4		106		208
Balance, end of period	$	1,077	$	1,313	$	2,630	$	602	$	773	$	153	$	294	$	6,842
Ending Balance: individually evaluated for impairment	$	3	$	78	$	299	$	66	$	108	$	-	$	-	$	554
Ending Balance: collectively evaluated for impairment	$	1,074	$	1,235	$	2,331	$	536	$	665	$	153	$	294	$	6,288
Loans:
Ending Balance: collectively evaluated for impairment	$	69,875	$	94,977	$	229,561	$	82,990	$	36,783	$	6,042	$	40,515	$	560,734
Ending Balance: individually evaluated for impairment	$	529	$	1,056	$	6,910	$	2,936	$	939	$	-	$	1,337	$	13,707
Ending Balance	$	70,404	$	96,033	$	236,471	$	85,926	$	37,722	$	6,042	$	41,852	$	574,450

	Six months ended June 30, 2015
	Commercial						1 to 4				Loans to		Multi-
	and				Commercial		family				individuals &		Family
Allowance for loan losses	industrial		Construction		real estate		residential		HELOC		overdrafts		residential		Total
Loans – excluding PCI
Balance, beginning of period	$	803	$	1,103	$	2,914	$	630	$	930	$	185	$	279	$	6,844
Provision for loan losses		365		202		(323)		(85)		(137)		(11)		(88)		(77)
Loans charged-off		(130)		-		(29)		-		(40)		(35)		(5)		(239)
Recoveries		39		8		11		57		11		14		106		246
Balance, end of period	$	1,077	$	1,313	$	2,573	$	602	$	764	$	153	$	292	$	6,774
PCI Loans
Balance, beginning of period	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Provision for loan losses		-		-		57		-		9		-		2		68
Loans charged-off		-		-		-		-		-		-		-		-
Recoveries		-		-		-		-		-		-		-		-
Balance, end of period	$	-	$	-	$	57	$	-	$	9	$	-	$	2	$	68
Total Loans
Balance, beginning of period	$	803	$	1,103	$	2,914	$	630	$	930	$	185	$	279	$	6,844
Provision for loan losses		365		202		(266)		(85)		(128)		(11)		(86)		(9)
Loans charged-off		(130)		-		(29)		-		(40)		(35)		(5)		(239)
Recoveries		39		8		11		57		11		14		106		246
Balance, end of period	$	1,077	$	1,313	$	2,630	$	602	$	773	$	153	$	294	$	6,842

The following tables present a roll forward of the Company’s allowance for loan losses by loan class for the three and six month periods ended June 30, 2014, respectively:

	Three months ended June 30, 2014
	Commercial						1-to-4				Loans to		Multi-
	and				Commercial		family				individuals &		family
Allowance for loan losses	industrial		Construction		real estate		residential		HELOC		overdrafts		residential		Total
							(In thousands)
Balance, beginning of period	$	513	$	889	$	3,283	$	585	$	1,293	$	171	$	291	$	7,025
Provision (recovery) for loan losses		(4)		110		(384)		(9)		(106)		(9)		(25)		(427)
Loans charged-off		-		-		-		-		(231)		(13)		-		(244)
Recoveries		14		3		4		12		53		7		-		93
Balance, end of period	$	523	$	1,002	$	2,903	$	588	$	1,009	$	156	$	266	$	6,447
Ending balance: individually evaluated for impairment	$	66	$	81	$	426	$	43	$	140	$	20	$	-	$	776
Ending balance: collectively evaluated for impairment	$	457	$	921	$	2,477	$	545	$	869	$	136	$	266	$	5,671
Loans:
Ending balance: collectively evaluated for impairment	$	31,272	$	58,739	$	150,985	$	27,721	$	29,502	$	5,637	$	16,105	$	319,961
Ending balance: individually evaluated for impairment	$	388	$	1,802	$	5,986	$	2,948	$	1,059	$	22	$	2,331	$	14,536
Ending balance	$	31,660	$	60,541	$	156,971	$	30,669	$	30,561	$	5,659	$	18,436	$	334,497

	Six months ended June 30, 2014
	Commercial						1-to-4				Loans to		Multi-
	and				Commercial		family				individuals &		family
Allowance for loan losses	industrial		Construction		real estate		Residential		HELOC		overdrafts		residential		Total
							(In thousands)
Balance, beginning of period	$	245	$	565	$	4,599	$	826	$	680	$	65	$	74	$	7,054
Provision (recovery) for loan losses		318		376		(1,724)		(274)		539		97		192		(476)
Loans charged-off		(63)		-		-		(1)		(271)		(19)		-		(354)
Recoveries		23		61		28		37		61		13		-		223
Balance, end of period	$	523	$	1,002	$	2,903	$	588	$	1,009	$	156	$	266	$	6,447

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REPURCHASE AGREEMENTS

6 Months Ended

Jun. 30, 2015

Banking and Thrift [Abstract]

Remaining Contractual Maturity Of The Securities Sold Under Agreements To Repurchase By Class Of Collateral Pledged [Text Block]

NOTE I - REPURCHASE AGREEMENTS

We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and secure long-term funding needs. Repurchase agreements are transactions whereby we offer to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates the Company to repurchase the security on an agreed upon date at an agreed upon repurchase price plus interest at an agreed upon rate. Securities sold under agreements to repurchase are recorded at the amount of cash received in connection with the transaction and are reflected as short-term borrowings.

We monitor collateral levels on a continuous basis and maintain records of each transaction specifically describing the applicable security and the counterparty’s fractional interest in that security, and we segregate the security from its general assets in accordance with regulations governing custodial holdings of securities. The primary risk with our repurchase agreements is market risk associated with the investments securing the transactions, as we may be required to provide additional collateral based on fair value changes of the underlying investments. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents. The carrying value of available for sale investment securities pledged as collateral under repurchase agreements totaled $12.9 million and $15.7 million at June 30, 2015 and December 31, 2014, respectively.

The remaining contractual maturity of the securities sold under agreements to repurchase by class of collateral pledged included in short-term borrowings as of June 30, 2015 and December 31, 2014 is presented in the following tables.

	June 30, 2015
	Remaining Contractual Maturity of the Agreements
(Dollars in thousands)	Overnight and continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase
agreements
Government agency	$	2,622	$	-	$	-	$	-	$	2,622
Mortgage Back Securities		8,142		-		-		-		8,142
Municipals		2,120		-		-		-		2,120
Total borrowings	$	12,884	$	-	$	-	$	-	$	12,884
Gross amount of recognized liabilities for repurchase agreements									$	12,884

	December 31, 2014
	Remaining Contractual Maturity of the Agreements
	Overnight and continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase agreements
Government agency	$	4,909	$	-	$	-	$	-	$	4,909
Mortgage Back Securities		8,228		-		-		-		8,228
Municipals		2,526		-		-		-		2,526
Total borrowings	$	15,663	$	-	$	-	$	-	$	15,663
Gross amount of recognized liabilities for repurchase agreements									$	15,663

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INVESTMENT SECURITIES (Details 1) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
US Government Agencies Debt Securities [Member]
Securities available for sale:
Less Than 12 Months Fair value	$ 3,345	$ 2,926
12 Months or More Unrealized losses	(63)	(24)
12 Months or More Fair value	9,353	12,731
12 Months or More Unrealized losses	(176)	(296)
Total Fair value	12,698	15,657
Total Unrealized losses	(239)	(320)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities available for sale:
Less Than 12 Months Fair value	6,239	1,965
12 Months or More Unrealized losses	(52)	(28)
12 Months or More Fair value	0	4,590
12 Months or More Unrealized losses	0	(61)
Total Fair value	6,239	6,555
Total Unrealized losses	(52)	(89)
Municipal Bonds [Member]
Securities available for sale:
Less Than 12 Months Fair value	682	0
12 Months or More Unrealized losses	(3)	0
12 Months or More Fair value	0	112
12 Months or More Unrealized losses	0	(2)
Total Fair value	682	112
Total Unrealized losses	(3)	(2)
Temporarily Impaired Securities [Member]
Securities available for sale:
Less Than 12 Months Fair value	10,266	4,891
12 Months or More Unrealized losses	(118)	(52)
12 Months or More Fair value	9,353	17,433
12 Months or More Unrealized losses	(176)	(359)
Total Fair value	19,619	22,324
Total Unrealized losses	$ (294)	$ (411)

XML

LOANS (Tables)

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Following is a summary of the composition of the Company’s loan portfolio at June 30, 2015 and December 31, 2014:

	June 30,					December 31,
Total Loans:	2015					2014
			Percent					Percent
	Amount		of total			Amount		of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	85,926		14.98	%	$	90,903		16.47	%
Commercial real estate		236,471		41.22	%		233,630		42.32	%
Multi-family residential		41,852		7.29	%		42,224		7.65	%
Construction		96,033		16.74	%		83,593		15.14	%
Home equity lines of credit (“HELOC”)		37,722		6.57	%		38,093		6.90	%
Total real estate loans		498,004		86.80	%		488,443		88.48	%
Other loans:
Commercial and industrial		70,404		12.27	%		58,217		10.55	%
Loans to individuals		5,947		1.04	%		5,953		1.08	%
Overdrafts		95		0.02	%		64		0.01	%
Total other loans		76,446		13.33	%		64,234		11.64	%
Gross loans		574,450					552,677
Less deferred loan origination fees, net		(721)		(0.13)	%		(639)		(0.12)	%
Total loans		573,729		100.00	%		552,038		100.00	%
Allowance for loan losses		(6,842)					(6,844)
Total loans, net	$	566,887				$	545,194

	June 30,					December 31,
Purchased Credit Impaired (PCI) Loans:	2015					2014
			Percent					Percent
	Amount		of total			Amount		of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	8,916		38.02	%	$	9,972		36.89	%
Commercial real estate		11,392		48.57	%		11,903		44.03	%
Multi-family residential		863		3.68	%		2,724		10.08	%
Construction		1,443		6.15	%		1,463		5.41	%
Home equity lines of credit (“HELOC”)		190		0.81	%		188		0.69	%
Total real estate loans		22,804		97.23	%		26,250		97.10	%
Other loans:
Commercial and industrial		528		2.25	%		657		2.43	%
Loans to individuals		122		0.52	%		128		0.47	%
Overdrafts		-		0.00	%		-		0.00	%
Total other loans		650		2.77	%		785		2.90	%
Gross loans		23,454					27,035
Less deferred loan origination fees, net		-		-	%		-		-	%
Total loans		23,454		100.00	%		27,035		100.00	%
Allowance for loan losses		68					-
Total loans, net	$	23,386				$	27,035

	June 30,					December 31,
Loans – excluding PCI:	2015					2014
			Percent					Percent
	Amount		of total			Amount		of total
	(Dollars in thousands)
Real estate loans:
1 to 4 family residential	$	77,010		13.99	%	$	80,931		15.42	%
Commercial real estate		225,079		40.90	%		221,727		42.23	%
Multi-family residential		40,989		7.45	%		39,500		7.52	%
Construction		94,590		17.19	%		82,130		15.64	%
Home equity lines of credit (“HELOC”)		37,532		6.82	%		37,905		7.22	%
Total real estate loans		475,200		86.35	%		462,193		88.03	%
Other loans:
Commercial and industrial		69,876		12.70	%		57,560		10.97	%
Loans to individuals		5,825		1.06	%		5,825		1.11	%
Overdrafts		95		0.02	%		64		0.01	%
Total other loans		75,796		13.78	%		63,449		12.09	%
Gross loans		550,996					525,642
Less deferred loan origination fees, net		(721)		(0.13)	%		(639)		(0.12)	%
Total loans		550,275		100.00	%		525,003		100.00	%
Allowance for loan losses		(6,774)					(6,844)
Total loans, net	$	543,501				$	518,159

Schedule of Fair Values of Expected Cash Flows and Loan Related Payments to Acquired Company at the Time of Merger [Table Text Block]

For PCI loans acquired from Legacy Select, the contractually required payments including principal and interest, cash flows expected to be collected and fair values as of the closing date of the merger and June 30, 2015 were:

(Dollars in thousands)	June 30, 2015		July 25, 2014
Contractually required payments	$	28,234	$	34,329
Nonaccretable difference		1,460		1,402
Cash flows expected to be collected		26,774		32,927
Accretable yield		3,320		4,360
Fair value	$	23,454	$	28,567

Past Due Financing Receivables [Table Text Block]

The following tables present an age analysis of past due loans, segregated by class of loans as of June 30, 2015 and December 31, 2014, respectively:

Total Loans:	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	130	$	405	$	535	$	69,869	$	70,404
Construction		-		199		199		95,834		96,033
Multi-family residential		437		-		437		41,415		41,852
Commercial real estate		835		770		1,605		234,866		236,471
Loans to individuals & overdrafts		1		-		1		6,041		6,042
1-to-4 family residential		380		6,218		6,598		79,328		85,926
HELOC		35		402		437		37,285		37,722
Deferred loan (fees) cost, net		-		-		-		-		(721	)
	$	1,818	$	7,994	$	9,812	$	564,638	$	573,729

Total PCI Loans:	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	-	$	-	$	-	$	528	$	528
Construction		-		-		-		1,443		1,443
Multi-family residential		437		-		437		426		863
Commercial real estate		553		-		553		10,839		11,392
Loans to individuals & overdrafts		-		-		-		122		122
1-to-4 family residential		-		280		280		8,636		8,916
HELOC		-		-		-		190		190
	$	990	$	280	$	1,270	$	22,184	$	23,454

Total Loans (excluding PCI):	June 30, 2015
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(In thousands)
Commercial and industrial	$	130	$	405	$	535	$	69,341	$	69,876
Construction		-		199		199		94,391		94,590
Multi-family residential		-		-		-		40,989		40,989
Commercial real estate		282		770		1,052		224,027		225,079
Loans to individuals & overdrafts		1		-		1		5,919		5,920
1-to-4 family residential		380		5,938		6,318		70,692		77,010
HELOC		35		402		437		37,095		37,532
Deferred loan (fees) cost, net		-		-		-		-		(721	)
	$	828	$	7,714	$	8,542	$	542,454	$	550,275

There were two loans that amounted to $280,000 that were more than 90 days past due and still accruing interest at June 30, 2015.

	December 31, 2014
	30+		Non-		Total
	Days		Accrual		Past				Total
	Past Due		Loans		Due		Current		Loans
	(dollars in thousands)
Total Loans
Commercial and industrial	$	141	$	632	$	773	$	57,444	$	58,217
Construction		-		816		816		82,777		83,593
Multi-family residential		-		901		901		41,323		42,224
Commercial real estate		3,377		2,576		5,953		227,677		233,630
Loans to individuals & overdrafts		22		-		22		5,995		6,017
1 to 4 family residential		1,464		1,160		2,624		88,279		90,903
HELOC		14		853		867		37,226		38,093
Deferred loan (fees) cost, net		-		-		-		-		(639)
	$	5,018	$	6,938	$	11,956	$	540,721	$	552,038
Loans- PCI
Commercial and industrial	$	2	$	-	$	2	$	655	$	657
Construction		-		-		-		1,463		1,463
Multi-family residential		-		-		-		2,724		2,724
Commercial real estate		562		-		562		11,341		11,903
Loans to individuals & overdrafts		-		-		-		128		128
1 to 4 family residential		283		-		283		9,689		9,972
HELOC		-		-		-		188		188
	$	847	$	-	$	847	$	26,188	$	27,035
Loans- excluding PCI
Commercial and industrial	$	139	$	632	$	771	$	56,789	$	57,560
Construction		-		816		816		81,314		82,130
Multi-family residential		-		901		901		38,599		39,500
Commercial real estate		2,815		2,576		5,391		216,336		221,727
Loans to individuals & overdrafts		22		-		22		5,867		5,889
1 to 4 family residential		1,181		1,160		2,341		78,590		80,931
HELOC		14		853		867		37,038		37,905
Deferred loan (fees) cost, net		-		-		-		-		(639)
	$	4,171	$	6,938	$	11,109	$	514,533	$	525,003

Impaired Financing Receivables [Table Text Block]

The following tables present information on loans that were considered to be impaired as of June 30, 2015 and December 31, 2014:

							Three months ended				Six months ended
	As of June 30, 2015						June 30, 2015				June 30, 2015
			Contractual						Interest Income				Interest Income
			Unpaid				Average		Recognized on		Average		Recognized on
	Recorded		Principal		Related		Recorded		Impaired		Recorded		Impaired
	Investment		Balance		Allowance		Investment		Loans		Investment		Loans
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	518	$	923	$	-	$	640	$	6	$	606	$	38
Construction		891		1,120		-		973		10		1,095		23
Commercial real estate		2,501		2,947		-		2,556		49		2,468		93
Loans to individuals & overdrafts		-		-		-		-		-		-		-
Multi-family residential		1,337		1,503		-		1,769		21		1,785		43
1 to 4 family residential		2,434		2,925		-		2,485		28		2,368		59
HELOC		646		795		-		641		9		641		20
Subtotal:		8,327		10,213		-		9,064		123		8,963		276
With an allowance recorded:
Commercial and industrial		11		12		3		11		-		138		-
Construction		165		168		78		166		1		166		2
Commercial real estate		4,409		5,336		299		4,436		19		4,643		80
Loans to individuals & overdrafts		-		-		-		-		-		-		-
Multi-family residential		-		-		-		-		-		-		-
1 to 4 family residential		502		504		66		495		6		476		10
HELOC		293		535		108		288		-		289		-
Subtotal:		5,380		6,555		554		5,396		26		5,712		92
Totals:
Commercial		9,832		12,009		380		10,551		106		10,901		279
Consumer		-		-		-		-		-		-		-
Residential		3,875		4,759		174		3,909		43		3,774		89
Grand Total:	$	13,707	$	16,768	$	554	$	14,460	$	149	$	14,675	$	368

Impaired loans at June 30, 2015 were approximately $13.7 million and were composed of $8.0 million in nonaccrual loans and $5.4 million in loans that were still accruing interest. Recorded investment represents the current principal balance of the loan. Approximately $5.4 million in impaired loans had specific allowances provided for them while the remaining $8.3 million had no specific allowances recorded at June 30, 2015. Of the $8.3 million with no allowance recorded, $1.7 million of those loans have had partial charge-offs recorded.

							Three months ended				Six months ended
	As of December 31, 2014						June 30, 2014				June 30, 2014
			Contractual						Interest Income				Interest Income
			Unpaid				Average		Recognized on		Average		Recognized on
	Recorded		Principal		Related		Recorded		Impaired		Recorded		Impaired
	Investment		Balance		Allowance		Investment		Loans		Investment		Loans
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	478	$	478	$	-	$	124	$	2	$	159	$	5
Construction		1,300		1,525		-		1,706		20		1,846		43
Commercial real estate		2,652		3,536		-		3,363		37		3,639		106
Loans to individuals & overdrafts		-		2		-		2		-		-		2
Multi-family residential		2,232		2,515		-		2,335		36		2,359		74
1 to 4 family residential		2,301		2,750		-		2,421		25		2,968		64
HELOC		637		768		-		707		12		713		21
Subtotal:		9,600		11,574		-		10,658		132		11,684		315
With an allowance recorded:
Commercial and industrial		265		267		64		265		-		266		-
Construction		167		168		80		168		-		248		-
Commercial real estate		4,878		5,761		419		2,693		31		4,216		41
Loans to individuals & overdrafts		-		-		-		10		-		-		1
Multi-family residential		-		-		-		-		-		-		-
1 to 4 family residential		450		455		74		496		13		561		20
HELOC		284		526		50		473		4		477		9
Subtotal:		6,044		7,177		687		4,105		48		5,768		71
Totals:
Commercial		11,972		14,250		563		10,654		126		12,733		269
Consumer		-		2		-		12		-		-		3
Residential		3,672		4,499		124		4,097		54		4,719		114
Grand Total:	$	15,644	$	18,751	$	687	$	14,763	$	180	$	17,452	$	386

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table presents loans that were modified as troubled debt restructurings (“TDRs”) with a breakdown of the types of concessions made by loan class during the three and six months ended June 30, 2015 and 2014:

	Three months ended June 30, 2015						Six months ended June 30, 2015
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number		Recorded		Recorded		Number		Recorded		Recorded
	of loans		Investment		Investment		of loans		Investment		Investment
		(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-	$	-		1	$	22	$	22
Total		-	$	-	$	-		1	$	22	$	22

		Three months ended June 30, 2014					Six months ended June 30, 2014
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number		Recorded		Recorded		Number		Recorded		Recorded
	of loans		Investment		Investment		of loans		Investment		Investment
	(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-	$	-		1	$	22	$	22
Total		-		-		-		1		22		22
Extended payment terms:
Commercial real estate		1		46		42		1		46		42
1-to-4 family residential		1		947		942		1		947		942
Total		2		993		984		2		993		984
Total		2	$	993	$	984		3	$	1,015	$	1,006

The following table presents loans that were modified as TDRs within the past twelve months with a breakdown of the types for which there was a payment default together with concessions made by loan class during the twelve month period ended June 30, 2015 and 2014:

	Twelve months ended				Twelve months ended
	June 30, 2015				June 30, 2014
	Number		Recorded		Number		Recorded
	of loans		investment		of loans		investment
	(Dollars in thousands)
Below market interest rate:
1-to-4 family residential		-	$	-		4	$	298
Total		-		-		4		298
Extended payment terms:
Commercial real estate		1		140		1		947
1-to-4 family residential		-		-		2		933
Total		1		140		3		1,880
Other:
Construction		-		-		1		68
1-to-4 family residential		-		-		1		68
Total		-		-		2		136
Total		1	$	140		9	$	2,314

Financing Receivable Credit Quality Indicators [Table Text Block]

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	982	$	-	$	-	$	-
Very good		1,128		-		-		-
Good		5,723		3,518		16,425		-
Acceptable		29,447		14,820		128,889		30,967
Acceptable with care		32,624		75,869		75,160		8,831
Special mention		70		872		9,550		-
Substandard		430		954		6,447		2,054
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	70,404	$	96,033	$	236,471	$	41,852

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	78,267	$	36,192
Special mention		3,795		471
Substandard		3,864		1,059
	$	85,926	$	37,722

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	6,020
Non –pass		22
	$	6,042

Total PCI loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	-	$	-	$	-	$	-
Very good		-		-		-		-
Good		-		-		-		-
Acceptable		-		-		-		-
Acceptable with care		488		1,379		8,909		863
Special mention		-		64		1,931		-
Substandard		40		-		552		-
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	528	$	1,443	$	11,392	$	863

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	5,337	$	190
Special mention		2,980		-
Substandard		599		-
	$	8,916	$	190

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	113
Non –pass		9
	$	122

Total loans, excluding PCI loans:

June 30, 2015
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
			(In thousands)
Superior	$	982	$	-	$	-	$	-
Very good		1,128		-		-		-
Good		5,723		3,518		16,425		-
Acceptable		29,447		14,820		128,889		30,967
Acceptable with care		32,136		74,490		66,251		7,968
Special mention		70		808		7,619		-
Substandard		390		954		5,895		2,054
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	69,876	$	94,590	$	225,079	$	40,989

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	72,930	$	36,002
Special mention		815		471
Substandard		3,265		1,059
	$	77,010	$	37,532

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,907
Non –pass		13
	$	5,920

Total Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	1,241	$	-	$	-	$	-
Very good		1,110		-		-		-
Good		5,282		2,705		15,276		-
Acceptable		26,132		13,579		128,056		31,619
Acceptable with care		23,404		65,717		75,554		8,374
Special mention		221		384		8,036		1,330
Substandard		827		1,208		6,708		901
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	58,217	$	83,593	$	233,630	$	42,224

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	82,794	$	36,357
Special mention		3,978		695
Substandard		4,131		1,041
	$	90,903	$	38,093

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,969
Non-pass		48
	$	6,017

PCI Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	-	$	-	$	-	$	-
Very good		-		-		-		-
Good		-		-		-		-
Acceptable		-		-		-		-
Acceptable with care		602		1,397		9,368		2,724
Special mention		-		66		1,973		-
Substandard		55		-		562		-
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	657	$	1,463	$	11,903	$	2,724

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	6,437	$	188
Special mention		2,926		-
Substandard		609		-
	$	9,972	$	188

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	117
Non-pass		11
	$	128

Total Loans, excluding PCI Loans:

December 31, 2014
Commercial
Credit
Exposure By	Commercial				Commercial
Internally	and				Real		Multi-family
Assigned Grade	industrial		Construction		estate		residential
	(dollars in thousands)
Superior	$	1,241	$	-	$	-	$	-
Very good		1,110		-		-		-
Good		5,282		2,705		15,276		-
Acceptable		26,132		13,579		128,056		31,619
Acceptable with care		22,802		64,320		66,186		5,650
Special mention		221		318		6,063		1,330
Substandard		772		1,208		6,146		901
Doubtful		-		-		-		-
Loss		-		-		-		-
	$	57,560	$	82,130	$	221,727	$	39,500

Consumer Credit
Exposure By
Internally	1-to-4 family
Assigned Grade	residential		HELOC
Pass	$	76,357	$	36,169
Special mention		1,052		695
Substandard		3,522		1,041
	$	80,931	$	37,905

Consumer Credit
Exposure Based	Loans to
On Payment	individuals &
Activity	overdrafts
Pass	$	5,852
Non-pass		37
	$	5,889

Schedule Of Certain Loans Acquired In Transfer Accounted For As Debt Securities Accretable Yield [Table Text Block]

The following table documents changes to the amount of the accretable yield on PCI loans for the three and six months ended June 30, 2015 (dollars in thousands):

	Three Months		Six Months
	Ended June 30,		Ended June 30,
	2015		2015
	(Dollars in thousands)
Accretable yield, beginning of period	$	3,434	$	3,762
Accretion		(321)		(649)
Reclassification from (to) nonaccretable difference		95		95
Other changes, net		112		112
Accretable yield, end of period	$	3,320	$	3,320

Allowance for Credit Losses on Financing Receivables [Table Text Block]

The following tables present a roll forward of the Company’s allowance for loan losses by loan class for the three and six month periods ended June 30, 2015, respectively:

	Three months ended June 30, 2015
	Commercial						1 to 4				Loans to		Multi-
	and				Commercial		family				individuals &		family
Allowance for loan losses	industrial		Construction		real estate		residential		HELOC		overdrafts		residential		Total
Loans – excluding PCI
Balance, beginning of period	$	982	$	1,209	$	2,845	$	606	$	851	$	167	$	259	$	6,919
Provision for loan losses		192		100		(283)		(45)		(96)		(7)		(68)		(207)
Loans charged-off		(130)		-		-		-		-		(11)		(5)		(146)
Recoveries		33		4		11		41		9		4		106		208
Balance, end of period	$	1,077	$	1,313	$	2,573	$	602	$	764	$	153	$	292	$	6,774
PCI Loans
Balance, beginning of period	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Provision for loan losses		-		-		57		-		9		-		2		68
Loans charged-off		-		-		-		-		-		-		-		-
Recoveries		-		-		-		-		-		-		-		-
Balance, end of period	$	-	$	-	$	57	$	-	$	9	$	-	$	2	$	68
Total Loans
Balance, beginning of period	$	982	$	1,209	$	2,845	$	606	$	851	$	167	$	259	$	6,919
Provision for loan losses		192		100		(226)		(45)		(87)		(7)		(66)		(139)
Loans charged-off		(130)		-		-		-		-		(11)		(5)		(146)
Recoveries		33		4		11		41		9		4		106		208
Balance, end of period	$	1,077	$	1,313	$	2,630	$	602	$	773	$	153	$	294	$	6,842
Ending Balance: individually evaluated for impairment	$	3	$	78	$	299	$	66	$	108	$	-	$	-	$	554
Ending Balance: collectively evaluated for impairment	$	1,074	$	1,235	$	2,331	$	536	$	665	$	153	$	294	$	6,288
Loans:
Ending Balance: collectively evaluated for impairment	$	69,875	$	94,977	$	229,561	$	82,990	$	36,783	$	6,042	$	40,515	$	560,734
Ending Balance: individually evaluated for impairment	$	529	$	1,056	$	6,910	$	2,936	$	939	$	-	$	1,337	$	13,707
Ending Balance	$	70,404	$	96,033	$	236,471	$	85,926	$	37,722	$	6,042	$	41,852	$	574,450

	Six months ended June 30, 2015
	Commercial						1 to 4				Loans to		Multi-
	and				Commercial		family				individuals &		Family
Allowance for loan losses	industrial		Construction		real estate		residential		HELOC		overdrafts		residential		Total
Loans – excluding PCI
Balance, beginning of period	$	803	$	1,103	$	2,914	$	630	$	930	$	185	$	279	$	6,844
Provision for loan losses		365		202		(323)		(85)		(137)		(11)		(88)		(77)
Loans charged-off		(130)		-		(29)		-		(40)		(35)		(5)		(239)
Recoveries		39		8		11		57		11		14		106		246
Balance, end of period	$	1,077	$	1,313	$	2,573	$	602	$	764	$	153	$	292	$	6,774
PCI Loans
Balance, beginning of period	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Provision for loan losses		-		-		57		-		9		-		2		68
Loans charged-off		-		-		-		-		-		-		-		-
Recoveries		-		-		-		-		-		-		-		-
Balance, end of period	$	-	$	-	$	57	$	-	$	9	$	-	$	2	$	68
Total Loans
Balance, beginning of period	$	803	$	1,103	$	2,914	$	630	$	930	$	185	$	279	$	6,844
Provision for loan losses		365		202		(266)		(85)		(128)		(11)		(86)		(9)
Loans charged-off		(130)		-		(29)		-		(40)		(35)		(5)		(239)
Recoveries		39		8		11		57		11		14		106		246
Balance, end of period	$	1,077	$	1,313	$	2,630	$	602	$	773	$	153	$	294	$	6,842

The following tables present a roll forward of the Company’s allowance for loan losses by loan class for the three and six month periods ended June 30, 2014, respectively:

	Three months ended June 30, 2014
	Commercial						1-to-4				Loans to		Multi-
	and				Commercial		family				individuals &		family
Allowance for loan losses	industrial		Construction		real estate		residential		HELOC		overdrafts		residential		Total
							(In thousands)
Balance, beginning of period	$	513	$	889	$	3,283	$	585	$	1,293	$	171	$	291	$	7,025
Provision (recovery) for loan losses		(4)		110		(384)		(9)		(106)		(9)		(25)		(427)
Loans charged-off		-		-		-		-		(231)		(13)		-		(244)
Recoveries		14		3		4		12		53		7		-		93
Balance, end of period	$	523	$	1,002	$	2,903	$	588	$	1,009	$	156	$	266	$	6,447
Ending balance: individually evaluated for impairment	$	66	$	81	$	426	$	43	$	140	$	20	$	-	$	776
Ending balance: collectively evaluated for impairment	$	457	$	921	$	2,477	$	545	$	869	$	136	$	266	$	5,671
Loans:
Ending balance: collectively evaluated for impairment	$	31,272	$	58,739	$	150,985	$	27,721	$	29,502	$	5,637	$	16,105	$	319,961
Ending balance: individually evaluated for impairment	$	388	$	1,802	$	5,986	$	2,948	$	1,059	$	22	$	2,331	$	14,536
Ending balance	$	31,660	$	60,541	$	156,971	$	30,669	$	30,561	$	5,659	$	18,436	$	334,497

	Six months ended June 30, 2014
	Commercial						1-to-4				Loans to		Multi-
	and				Commercial		family				individuals &		family
Allowance for loan losses	industrial		Construction		real estate		Residential		HELOC		overdrafts		residential		Total
							(In thousands)
Balance, beginning of period	$	245	$	565	$	4,599	$	826	$	680	$	65	$	74	$	7,054
Provision (recovery) for loan losses		318		376		(1,724)		(274)		539		97		192		(476)
Loans charged-off		(63)		-		-		(1)		(271)		(19)		-		(354)
Recoveries		23		61		28		37		61		13		-		223
Balance, end of period	$	523	$	1,002	$	2,903	$	588	$	1,009	$	156	$	266	$	6,447

XML

PER SHARE RESULTS (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Weighted Average Number Of Shares [Line Items]
Weighted average shares used for basic net income available to common shareholders	11,481,137	6,923,640	11,453,908	6,922,651
Effect of dilutive stock options	67,741	4,788	75,697	3,667
Weighted average shares used for diluted net income available to common shareholders	11,548,878	6,928,428	11,529,605	6,926,318

XML

OTHER REAL ESTATE OWNED (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	[1]	Jun. 30, 2014	Dec. 31, 2013
Schedule Of Real Estate Owned Properties [Line Items]
Real Estate Acquired Through Foreclosure	$ 1,030	$ 1,585		$ 1,169	$ 2,008

[1] Derived from audited consolidated financial statements.

XML

LOANS (Details 5) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014		Jun. 30, 2014
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 573,729	$ 552,038	[1]	$ 334,497
Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	573,729	552,038
Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	23,454	27,035
Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	550,275	525,003
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	70,404			31,660
Commercial and Industrial [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	70,404	58,217
Commercial and Industrial [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	528	657
Commercial and Industrial [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	69,876	57,560
Commercial and Industrial [Member] | Superior [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	982	1,241
Commercial and Industrial [Member] | Superior [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Superior [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	982	1,241
Commercial and Industrial [Member] | Very Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,128	1,110
Commercial and Industrial [Member] | Very Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Very Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,128	1,110
Commercial and Industrial [Member] | Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,723	5,282
Commercial and Industrial [Member] | Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,723	5,282
Commercial and Industrial [Member] | Acceptable [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	29,447	26,132
Commercial and Industrial [Member] | Acceptable [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Acceptable [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	29,447	26,132
Commercial and Industrial [Member] | Acceptable With Care [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	32,624	23,404
Commercial and Industrial [Member] | Acceptable With Care [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	488	602
Commercial and Industrial [Member] | Acceptable With Care [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	32,136	22,802
Commercial and Industrial [Member] | Special Mention [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	70	221
Commercial and Industrial [Member] | Special Mention [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Special Mention [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	70	221
Commercial and Industrial [Member] | Substandard [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	430	827
Commercial and Industrial [Member] | Substandard [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	40	55
Commercial and Industrial [Member] | Substandard [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	390	772
Commercial and Industrial [Member] | Doubtful [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Doubtful [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Doubtful [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Loss [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Loss [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial and Industrial [Member] | Loss [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	96,033
Construction Loans [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,443
Construction Loans [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	94,590	82,130
Construction Loans [Member] | Superior [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Superior [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Superior [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Very Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Very Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Very Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,518	2,705
Construction Loans [Member] | Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,518	2,705
Construction Loans [Member] | Acceptable [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,820	13,579
Construction Loans [Member] | Acceptable [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Acceptable [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,820	13,579
Construction Loans [Member] | Acceptable With Care [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	75,869	65,717
Construction Loans [Member] | Acceptable With Care [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,379	1,397
Construction Loans [Member] | Acceptable With Care [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	74,490	64,320
Construction Loans [Member] | Special Mention [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	872	384
Construction Loans [Member] | Special Mention [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	64	66
Construction Loans [Member] | Special Mention [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	808	318
Construction Loans [Member] | Substandard [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	954	1,208
Construction Loans [Member] | Substandard [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Substandard [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	954	1,208
Construction Loans [Member] | Doubtful [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Doubtful [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Doubtful [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Loss [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Loss [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Construction Loans [Member] | Loss [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	236,471			156,971
Commercial Real Estate [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	236,471	233,630
Commercial Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	11,392	11,903
Commercial Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	225,079	221,727
Commercial Real Estate [Member] | Superior [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Superior [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Superior [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Very Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Very Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Very Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	16,425	15,276
Commercial Real Estate [Member] | Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	16,425	15,276
Commercial Real Estate [Member] | Acceptable [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	128,889	128,056
Commercial Real Estate [Member] | Acceptable [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Acceptable [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	128,889	128,056
Commercial Real Estate [Member] | Acceptable With Care [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	75,160	75,554
Commercial Real Estate [Member] | Acceptable With Care [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	8,909	9,368
Commercial Real Estate [Member] | Acceptable With Care [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	66,251	66,186
Commercial Real Estate [Member] | Special Mention [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	9,550	8,036
Commercial Real Estate [Member] | Special Mention [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,931	1,973
Commercial Real Estate [Member] | Special Mention [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	7,619	6,063
Commercial Real Estate [Member] | Substandard [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	6,447	6,708
Commercial Real Estate [Member] | Substandard [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	552	562
Commercial Real Estate [Member] | Substandard [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,895	6,146
Commercial Real Estate [Member] | Doubtful [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Doubtful [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Doubtful [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Loss [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Loss [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Commercial Real Estate [Member] | Loss [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	41,852			18,436
Multi Family Residential Real Estate [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	41,852	42,224
Multi Family Residential Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	863	2,724
Multi Family Residential Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	40,989	39,500
Multi Family Residential Real Estate [Member] | Superior [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Superior [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Superior [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Very Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Very Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Very Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Good [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Good [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Good [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Acceptable [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	30,967	31,619
Multi Family Residential Real Estate [Member] | Acceptable [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Acceptable [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	30,967	31,619
Multi Family Residential Real Estate [Member] | Acceptable With Care [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	8,831	8,374
Multi Family Residential Real Estate [Member] | Acceptable With Care [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	863	2,724
Multi Family Residential Real Estate [Member] | Acceptable With Care [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	7,968	5,650
Multi Family Residential Real Estate [Member] | Special Mention [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	1,330
Multi Family Residential Real Estate [Member] | Special Mention [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Special Mention [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	1,330
Multi Family Residential Real Estate [Member] | Substandard [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	2,054	901
Multi Family Residential Real Estate [Member] | Substandard [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Substandard [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	2,054	901
Multi Family Residential Real Estate [Member] | Doubtful [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Doubtful [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Doubtful [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Loss [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Loss [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Multi Family Residential Real Estate [Member] | Loss [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	0
Loans to Individuals and Overdrafts [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	6,042			5,659
Loans to Individuals and Overdrafts [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	6,042	6,017
Loans to Individuals and Overdrafts [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	122	128
Loans to Individuals and Overdrafts [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,920	5,889
Loans to Individuals and Overdrafts [Member] | Pass [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	6,020	5,969
Loans to Individuals and Overdrafts [Member] | Pass [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	113	117
Loans to Individuals and Overdrafts [Member] | Pass [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,907	5,852
Loans to Individuals and Overdrafts [Member] | Non-Pass [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	22	48
Loans to Individuals and Overdrafts [Member] | Non-Pass [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	9	11
Loans to Individuals and Overdrafts [Member] | Non-Pass [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	13	37
Family Residential Real Estate 1 to 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	85,926			30,669
Family Residential Real Estate 1 to 4 [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	85,926	90,903
Family Residential Real Estate 1 to 4 [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	8,916	9,972
Family Residential Real Estate 1 to 4 [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	77,010	80,931
Family Residential Real Estate 1 to 4 [Member] | Pass [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	78,267	82,794
Family Residential Real Estate 1 to 4 [Member] | Pass [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,337
Family Residential Real Estate 1 to 4 [Member] | Pass [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	72,930	76,357
Family Residential Real Estate 1 to 4 [Member] | Special Mention [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,795	3,978
Family Residential Real Estate 1 to 4 [Member] | Special Mention [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	2,980
Family Residential Real Estate 1 to 4 [Member] | Special Mention [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	815	1,052
Family Residential Real Estate 1 to 4 [Member] | Substandard [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,864	4,131
Family Residential Real Estate 1 to 4 [Member] | Substandard [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	599
Family Residential Real Estate 1 to 4 [Member] | Substandard [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,265	3,522
Home Equity Line Of Credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	37,722			$ 30,561
Home Equity Line Of Credit [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	37,722	38,093
Home Equity Line Of Credit [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	190	188
Home Equity Line Of Credit [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	37,532	37,905
Home Equity Line Of Credit [Member] | Pass [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	36,192	36,357
Home Equity Line Of Credit [Member] | Pass [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	190
Home Equity Line Of Credit [Member] | Pass [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	36,002	36,169
Home Equity Line Of Credit [Member] | Special Mention [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	471	695
Home Equity Line Of Credit [Member] | Special Mention [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0
Home Equity Line Of Credit [Member] | Special Mention [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	471	695
Home Equity Line Of Credit [Member] | Substandard [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,059	1,041
Home Equity Line Of Credit [Member] | Substandard [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0
Home Equity Line Of Credit [Member] | Substandard [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 1,059	$ 1,041

[1] Derived from audited consolidated financial statements.

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net income	$ 1,821	$ 613	$ 3,564	$ 885
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities available for sale	(680)	547	(72)	929
Tax effect	259	(204)	25	(346)
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax	(421)	343	(47)	583
Reclassification adjustment for gain (loss) included in net income	(134)	0	(219)	0
Tax effect	45	0	78	0
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Net of Tax	(89)	0	(141)	0
Total	(510)	343	(188)	583
Total comprehensive income	$ 1,311	$ 956	$ 3,376	$ 1,468

XML

RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2015

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS

The following summarizes recent accounting pronouncements and their expected impact on the Company:

In January 2014, the Financial Accounting Standards Board (FASB) amended the Receivables topic of the Accounting Standards Codification. The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (OREO). In addition, the amendments require a creditor to reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods beginning after December 15, 2014, with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. The Company will apply the amendments prospectively. This update became effective during the first quarter.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The amendments in this Update provide amendments that are subject to transition guidance: effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this Update provide a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This Update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in this Update are effective for periods beginning after December 15, 2016 and early adoption is not permitted. Adoption of this update is not expected to have a material impact on the Company’s financial position or results of operations because this ASU does not apply to financial instruments.

In January 2014, the FASB issued ASU 2014-04, Receivables-Troubled Debt Restructuring by Creditors (Subtopic 310-40). This ASU clarifies that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.

The amendments in this ASU were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. We adopted the guidance effective first quarter of 2015. The initial adoption did not have any effect on our consolidated financial position or consolidated results of operations. The new disclosures required by this ASU are included in Note F.

In August 2014, the FASB issued ASU 2014-11 Transfers and Servicing (Topic 860). This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The ASU requires a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The ASU also requires expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings.

The accounting changes in this ASU were effective for fiscal years beginning after December 15, 2014. In addition, the disclosure for certain transactions accounted for as a sale was effective for the fiscal period beginning after December 15, 2014, the disclosures for transactions accounted for as secured borrowings were required to be presented for fiscal periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. We adopted the guidance effective first quarter of 2015. The initial adoption did not have any effect on our consolidated financial position or consolidated results of operations. The new disclosures required by this ASU are included in Note I.

In January 2015, the FASB issued ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect these amendments to have a material effect on its financial statements.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

From time to time, the FASB issues exposure drafts for proposed statements of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as statements of financial accounting standards. Management considers the effect of the proposed statements on the consolidated financial statements of the Company and monitors the status of changes to and proposed effective dates of exposure drafts.

XML

PER SHARE RESULTS (Details Textual) - shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	111,080	91,183

XML

Label	Element	Value
Net Income (Loss) Attributable to Parent, Total	us-gaap_NetIncomeLoss	$ 1,821
Net Income (Loss) Attributable to Parent, Total	us-gaap_NetIncomeLoss	613
Provision Recovery for Loan Losses	slct_ProvisionRecoveryForLoanLosses	(139)
Provision Recovery for Loan Losses	slct_ProvisionRecoveryForLoanLosses	$ (427)

XML

LOANS (Details 2) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014		Jun. 30, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 573,729	$ 552,038	[1]	$ 334,497
Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	7,994	6,938
Total Past DueTotal Past DueTotal Past Due	9,812	11,956
Current	564,638	540,721
Deferred loan (fees) cost, net	(721)	(639)
Total Loans	573,729	552,038
Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	1,818	5,018
Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	280	0
Total Past DueTotal Past DueTotal Past Due	1,270	847
Current	22,184	26,188
Deferred loan (fees) cost, net	0	0
Total Loans	23,454	27,035
Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	990	847
Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	7,714	6,938
Total Past DueTotal Past DueTotal Past Due	8,542	11,109
Current	542,454	514,533
Deferred loan (fees) cost, net	(721)	(639)
Total Loans	550,275	525,003
Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	828	4,171
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	70,404			31,660
Commercial and Industrial [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	405	632
Total Past DueTotal Past DueTotal Past Due	535	773
Current	69,869	57,444
Total Loans	70,404	58,217
Commercial and Industrial [Member] | Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	130	141
Commercial and Industrial [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	0	2
Current	528	655
Total Loans	528	657
Commercial and Industrial [Member] | Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	2
Commercial and Industrial [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	405	632
Total Past DueTotal Past DueTotal Past Due	535	771
Current	69,341	56,789
Total Loans	69,876	57,560
Commercial and Industrial [Member] | Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	130	139
Construction Loans Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	96,033			60,541
Construction Loans Real Estate [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	199	816
Total Past DueTotal Past DueTotal Past Due	199	816
Current	95,834	82,777
Total Loans	96,033	83,593
Construction Loans Real Estate [Member] | Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	0
Construction Loans Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	0	0
Current	1,443	1,463
Total Loans	1,443	1,463
Construction Loans Real Estate [Member] | Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	0
Construction Loans Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	199	816
Total Past DueTotal Past DueTotal Past Due	199	816
Current	94,391	81,314
Total Loans	94,590	82,130
Construction Loans Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	0
Multi Family Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	41,852			18,436
Multi Family Residential Real Estate [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	901
Total Past DueTotal Past DueTotal Past Due	437	901
Current	41,415	41,323
Total Loans	41,852	42,224
Multi Family Residential Real Estate [Member] | Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	437	0
Multi Family Residential Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	437	0
Current	426	2,724
Total Loans	863	2,724
Multi Family Residential Real Estate [Member] | Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	437	0
Multi Family Residential Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	901
Total Past DueTotal Past DueTotal Past Due	0	901
Current	40,989	38,599
Total Loans	40,989	39,500
Multi Family Residential Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	0
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	236,471			156,971
Commercial Real Estate [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	770	2,576
Total Past DueTotal Past DueTotal Past Due	1,605	5,953
Current	234,866	227,677
Total Loans	236,471	233,630
Commercial Real Estate [Member] | Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	835	3,377
Commercial Real Estate [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	553	562
Current	10,839	11,341
Total Loans	11,392	11,903
Commercial Real Estate [Member] | Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	553	562
Commercial Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	770	2,576
Total Past DueTotal Past DueTotal Past Due	1,052	5,391
Current	224,027	216,336
Total Loans	225,079	221,727
Commercial Real Estate [Member] | Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	282	2,815
Loans to Individuals and Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	6,042			5,659
Loans to Individuals and Overdrafts [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	1	22
Current	6,041	5,995
Total Loans	6,042	6,017
Loans to Individuals and Overdrafts [Member] | Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	1	22
Loans to Individuals and Overdrafts [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	0	0
Current	122	128
Total Loans	122	128
Loans to Individuals and Overdrafts [Member] | Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	0
Loans to Individuals and Overdrafts [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	1	22
Current	5,919	5,867
Total Loans	5,920	5,889
Loans to Individuals and Overdrafts [Member] | Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	1	22
Family Residential Real Estate 1 to 4 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	85,926			30,669
Family Residential Real Estate 1 to 4 [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	6,218	1,160
Total Past DueTotal Past DueTotal Past Due	6,598	2,624
Current	79,328	88,279
Total Loans	85,926	90,903
Family Residential Real Estate 1 to 4 [Member] | Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	380	1,464
Family Residential Real Estate 1 to 4 [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	280	0
Total Past DueTotal Past DueTotal Past Due	280	283
Current	8,636	9,689
Total Loans	8,916	9,972
Family Residential Real Estate 1 to 4 [Member] | Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	283
Family Residential Real Estate 1 to 4 [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	5,938	1,160
Total Past DueTotal Past DueTotal Past Due	6,318	2,341
Current	70,692	78,590
Total Loans	77,010	80,931
Family Residential Real Estate 1 to 4 [Member] | Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	380	1,181
Home Equity Line of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	37,722			$ 30,561
Home Equity Line of Credit [Member] | Total Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	402	853
Total Past DueTotal Past DueTotal Past Due	437	867
Current	37,285	37,226
Total Loans	37,722	38,093
Home Equity Line of Credit [Member] | Total Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	35	14
Home Equity Line of Credit [Member] | Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past DueTotal Past DueTotal Past Due	0	0
Current	190	188
Total Loans	190	188
Home Equity Line of Credit [Member] | Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	0	0
Home Equity Line of Credit [Member] | Excluding Purchase Credit Impairment Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	402	853
Total Past DueTotal Past DueTotal Past Due	437	867
Current	37,095	37,038
Total Loans	37,532	37,905
Home Equity Line of Credit [Member] | Excluding Purchase Credit Impairment Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past DueTotal Past DueTotal Past Due	$ 35	$ 14

[1] Derived from audited consolidated financial statements.

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INVESTMENT SECURITIES (Tables)

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, follow:

	June 30, 2015
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
	(In thousands)
Securities available for sale:
U.S. government agencies-GSE’s
Within 1 year	$	34	$	1	$	-	$	35
After 1 year but within 5 years		9,655		37		(16)		9,676
After 5 years but within 10 years		11,559		51		(202)		11,408
After 10 years		2,448		-		(21)		2,427
Mortgage-backed securities-GSE’s
Within 1 year		9		-		-		9
After 1 year but within 5 years		31,100		677		(42)		31,735
After 5 years but within 10 years		11,640		129		(10)		11,759
After 10 years		130		16		-		146
Municipal bonds
Within 1 year		581		8		-		589
After 1 year but within 5 years		3,619		118		-		3,737
After 5 years but within 10 years		6,116		94		(2)		6,208
After 10 years		9,057		153		(1)		9,209
	$	85,948	$	1,284	$	(294)	$	86,938

As of June 30, 2015, accumulated other comprehensive income included net unrealized gains totaling $1.0 million. Deferred tax liabilities resulting from these unrealized gains totaled $369,000.

	December 31, 2014
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
	(In thousands)
Securities available for sale:
U.S. government agencies-GSE’s
Within 1 year	$	6,352	$	8	$	-	$	6,360
After 1 year but within 5 years		6,018		21		(24)		6,015
After 5 years but within 10 years		10,032		32		(227)		9,837
After 10 years		5,778		-		(69)		5,709
Mortgage-backed securities-GSE’s
Within 1 year		21		1		-		22
After 1 year but within 5 years		35,114		974		(39)		36,049
After 5 years but within 10 years		17,143		140		(50)		17,233
Municipal bonds
Within 1 year		576		3		-		579
After 1 year but within 5 years		3,806		144		-		3,950
After 5 years but within 10 years		6,351		116		(2)		6,465
After 10 years		9,763		253		-		10,016
	$	100,954	$	1,692	$	(411)	$	102,235

Schedule of Unrealized Loss on Investments [Table Text Block]

The following tables show the gross unrealized losses and fair value of the Company’s investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2015 and December 31, 2014.

	June 30, 2015
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
	(In thousands)
Securities available for sale:
U.S. government agencies- GSE’s	$	3,345	$	(63)	$	9,353	$	(176)	$	12,698	$	(239)
Mortgage-backed securities- GSE’s		6,239		(52)		-		-		6,239		(52)
Municipal bonds		682		(3)		-		-		682		(3)
Total temporarily impaired securities	$	10,266	$	(118)	$	9,353	$	(176)	$	19,619	$	(294)

All unrealized losses are attributable to the general trend of interest rates. During the second quarter of 2015 gross proceeds of investment sales amounted to $2.2 million and gains of $134,000.

	December 31, 2014
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s	$	2,926	$	(24)	$	12,731	$	(296)	$	15,657	$	(320)
Mortgage-backed securities- GSE’s		1,965		(28)		4,590		(61)		6,555		(89)
Municipal bonds		-		-		112		(2)		112		(2)
Total temporarily impaired securities	$	4,891	$	(52)	$	17,433	$	(359)	$	22,324	$	(411)