ALLOWANCE FOR LOAN LOSSES (Tables)

3 Months Ended

Mar. 31, 2015

An analysis of the allowance for loan losses is as follows as of the dates presented (dollars in thousands):

	March 31, 2015			December 31, 2014
Balance, beginning of period	$	4,630		$	3,380
Provision for loan losses		700			1,628
Loans charged off		(142	)		(459	)
Recoveries		191			81
Balance, end of period	$	5,379		$	4,630

Summary of Allowance for Loan Losses

The following tables outline the changes in the allowance for loan losses by collateral type, the allowances for loans individually and collectively evaluated for impairment, and the amount of loans individually and collectively evaluated for impairment as of and for the three months ended March 31, 2015 and the year ended December 31, 2014 (dollars in thousands):

	March 31, 2015
	Construction &									Commercial		Commercial &
	Development			Farmland		1‑4 Family		Multifamily		Real Estate		Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	526		$	18	$	909	$	137	$	1,571	$	390		$	1,079			4,630
Charge-offs		(5	)		-		-		-		-		(56	)		(81	)		(142	)
Recoveries		1			-		3		-		-		180			7			191
Provision		116			5		112		27		387		(105	)		158			700
Ending balance	$	638		$	23	$	1,024	$	164	$	1,958	$	409		$	1,163		$	5,379
Ending allowance balance for loans individually evaluated for impairment		-			-		-		-		-		-			104			104
Ending allowance balance for loans collectively evaluated for impairment	$	638		$	23	$	1,024	$	164	$	1,958	$	409		$	1,059		$	5,275
Ending allowance balance for loans acquired with deteriorated credit quality	$	-		$	-	$	-	$	-	$	-	$	-		$	-		$	-

Loans receivable:
Balance of loans individually evaluated for impairment	$	1,511		$	-	$	1,842	$	1,066	$	862	$	119		$	730		$	6,130
Balance of loans collectively evaluated for impairment		72,460			3,270		137,945		18,153		236,746		58,684			113,051			640,309
Total period-end balance	$	73,971		$	3,270	$	139,787	$	19,219	$	237,608	$	58,803		$	113,781		$	646,439

Balance of loans acquired with deteriorated credit quality	$	753		$	-	$	833	$	1,065	$	-	$	-		$	44		$	2,695

	December 31, 2014
	Construction &									Commercial			Commercial &
	Development		Farmland		1‑4 Family			Multifamily		Real Estate			Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	420	$	4	$	567		$	101	$	992		$	397		$	899			3,380
Charge-offs		-		-		(123	)		-		(3	)		(16	)		(317	)		(459	)
Recoveries		1		-		4			-		1			17			58			81
Provision		105		14		461			36		581			(8	)		439			1,628
Ending balance	$	526	$	18	$	909		$	137	$	1,571		$	390		$	1,079		$	4,630
Ending allowance balance for loans individually evaluated for impairment		-		-		-			-		-			-			70			70
Ending allowance balance for loans collectively evaluated for impairment	$	526	$	18	$	909		$	137	$	1,571		$	390		$	1,009		$	4,560
Ending allowance balance for loans acquired with deteriorated credit quality	$	-	$	-	$	-		$	-	$	-		$	-		$	-		$	-

Loans receivable:
Balance of loans individually evaluated for impairment	$	1,989	$	-	$	1,621		$	1,055	$	866		$	180		$	467		$	6,178
Balance of loans collectively evaluated for impairment		69,361		2,919		135,898			16,403		224,192			54,007			113,832			616,612
Total period-end balance	$	71,350	$	2,919	$	137,519		$	17,458	$	225,058		$	54,187		$	114,299		$	622,790

Balance of loans acquired with deteriorated credit quality	$	820	$	-	$	858		$	1,054	$	-		$	-		$	46		$	2,778

Schedule of Aging Analysis of Loans

The following tables include the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, as of the dates indicated. The Company determined the specific allowance based on the present values of expected future cash flows, discounted at the loan’s effective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral, less selling cost, was used to determine the specific allowance recorded (dollars in thousands).

	March 31, 2015
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Construction and development	$	1,594	$	1,593	$	-
1-4 Family residential		1,307		1,302		-
Multifamily		-		-		-
Commercial real estate		746		746		-
Total mortgage loans on real estate		3,647		3,641		-
Commercial and industrial		120		120		-
Consumer		82		82		-
Total		3,849		3,843		-

With related allowance recorded:
Consumer		311		311		104
Total		311		311		104

Total loans:
Construction and development		1,594		1,593		-
1-4 Family residential		1,307		1,302		-
Multifamily		-		-		-
Commercial real estate		746		746		-
Total mortgage loans on real estate		3,647		3,641		-
Commercial and industrial		120		120		-
Consumer		393		393		104
Total	$	4,160	$	4,154	$	104

	December 31, 2014
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Construction and development	$	1,543	$	1,543	$	-
1-4 Family residential		837		837		-
Multifamily		-		-		-
Commercial real estate		749		749		-
Total mortgage loans on real estate		3,129		3,129		-
Commercial and industrial		179		179		-
Consumer		79		79		-
Total		3,387		3,387		-

With related allowance recorded:
Consumer		180		180		70
Total		180		180		70

Total loans:
Construction and development		1,543		1,543		-
1-4 Family residential		837		837		-
Multifamily		-		-		-
Commercial real estate		749		749		-
Total mortgage loans on real estate		3,129		3,129		-
Commercial and industrial		179		179		-
Consumer		260		259		70
Total	$	3,568	$	3,567	$	70

Presented in the tables below is the average recorded investment of the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. The average balances are calculated based on the month-end balances of the loans during the period reported (dollars in thousands).

	For the three months ended March 31, 2015
	Average		Interest
	Recorded		Income
	Investment		Recognized
With no related allowance recorded:
Construction and development	$	1,902	$	4
1-4 Family residential		1,292		14
Multifamily		-		-
Commercial real estate		765		-
Total mortgage loans on real estate		3,959		18
Commercial and industrial		194		1
Consumer		135		1
Total		4,288		20

With related allowance recorded:
Consumer		243		-
Total		243		-

Total loans:
Construction and development		1,902		4
1-4 Family residential		1,292		14
Multifamily		-		-
Commercial real estate		765		-
Total mortgage loans on real estate		3,959		18
Commercial and industrial		194		1
Consumer		378		1
Total	$	4,531	$	20

	For the three months ended March 31, 2014
	Average		Interest
	Recorded		Income
	Investment		Recognized
With no related allowance recorded:
Construction and development	$	1,471	$	8
1-4 Family residential		1,463		18
Multifamily		994		18
Commercial real estate		251		4
Total mortgage loans on real estate		4,179		48
Commercial and industrial		172		-
Consumer		37		-
Total		4,388		48

With related allowance recorded:
Consumer		180		-
Total		180		-

Total loans:
Construction and development		1,471		8
1-4 Family residential		1,463		18
Multifamily		994		18
Commercial real estate		251		4
Total mortgage loans on real estate		4,179		48
Commercial and industrial		172		-
Consumer		217		-
Total	$	4,568	$	48

Summary of TDR Pre- and Post-modification Outstanding Recorded Investments by Loan Categories

The following table presents the TDR pre- and post-modification outstanding recorded investments by loan categories as of the dates presented (dollars in thousands):

	March 31, 2015					March 31, 2014
		Pre-		Post-			Pre-		Post-
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
Troubled debt restructurings	Contracts	Investment		Investment		Contracts	Investment		Investment
Construction and land development	5	$	207	$	207	2	$	457	$	457
1-4 Family	3		1,257		1,257	1		358		358
Commercial and industrial	1		1		1	1		3		3
Consumer	1		44		44	-		-		-
Total		$	1,509	$	1,509		$	818	$	818

Summary of Accruing and Nonaccrual TDRs and Related Loan Losses by Portfolio Type

The following is a summary of accruing and nonaccrual TDRs and the related loan losses by portfolio type as of the dates presented (dollars in thousands):

	TDRs

							Related
	Accruing		Nonaccrual		Total		Allowance
March 31, 2015
Construction and land development	$	207	$	-	$	207	$	-
1-4 Family		893		364		1,257		-
Commercial and industrial		1		-		1		-
Consumer		44		-		44		-
Total	$	1,145	$	364	$	1,509	$	-

March 31, 2014
Construction and land development	$	457	$	-	$	457	$	-
1-4 Family		358		-		358		-
Commercial and industrial		3		-		3		-
Total	$	818	$	-	$	818	$	-

Summary of Average Recorded Investment and Interest Income Recognized for TDRs

The following table includes the average recorded investment and interest income recognized for TDRs for the three months ended March 31, 2015 and 2014 (dollars in thousands):

	TDRs
	Average Recorded Investment		Interest Income Recognized
March 31, 2015
Construction and development	$	209	$	4
1-4 Family		1,257		11
Commercial and industrial		1		-
Consumer		44		1
Total	$	1,511	$	16

March 31, 2014
Construction and development	$	459	$	7
1-4 Family		359		8
Commercial and industrial		3		-
Total	$	821	$	15