(4) Loans

Major classifications of loans at December 31, 2015 and 2014 are summarized as follows (in thousands):

	December 31, 2015						December 31, 2014
	Amount			% of Total			Amount			% of Total
Residential real estate:
Closed-end 1-4 family - first lien	$	111,476			23.4	%	$	49,198			18.8	%
Closed-end 1-4 family - junior lien		5,246			1.1	%		1,638			0.6	%
Multi-family		17,553			3.7	%		5,455			2.1	%
Equity lines of credit		32,969			6.9	%		16,433			6.3	%
Total residential real estate		167,244			35.1	%		72,724			27.8	%
Commercial real estate:
Nonfarm nonresidential		149,597			31.5	%		90,657			34.7	%
Farmland		15,456			3.3	%		8,496			3.3	%
Total commercial real estate		165,053			34.8	%		99,153			37.9	%
Construction and land development:
Residential		21,302			4.5	%		6,792			2.6	%
Other		34,459			7.2	%		18,187			7.0	%
Total construction and land development		55,761			11.7	%		24,979			9.6	%
Commercial loans:
Other commercial loans		71,247			15.0	%		49,156			18.8	%
Agricultural		946			0.2	%		676			0.3	%
State, county, and municipal loans		7,414			1.6	%		5,986			2.3	%
Total commercial loans		79,607			16.8	%		55,818			21.4	%
Consumer loans		19,557			4.1	%		12,912			4.9	%
Total gross loans		487,222			102.5	%		265,586			101.6	%
Allowance for loan losses		(3,827	)		-0.8	%		(3,778	)		-1.4	%
Net deferred loan fees and discounts		(7,951	)		-1.7	%		(449	)		-0.2	%
Net loans	$	475,444			100.0	%	$	261,359			100.0	%

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2015 and 2014 (amounts in thousands). The acquired loans are not included in the allowance for loan losses calculation, as these loans are recorded at fair value and there has been no further indication of credit deterioration that would require an additional provision.

	Real Estate Mortgage Loans
Allowance for Loan Losses	Residential			Commercial			Construction and Land Development			Home Equity Lines Of Credit			Commercial			Consumer			Total
Balance - December 31, 2014	$	304		$	1,267		$	627		$	437		$	652		$	491		$	3,778
Provision for loan losses		63			302			(250	)		30			631			(220	)		556
Loan charge-offs		—			(267	)		—			(333	)		(90	)		(126	)		(816	)
Loan recoveries		1			—			192			16			57			43			309
Balance - December 31, 2015	$	368		$	1,302		$	569		$	150		$	1,250		$	188		$	3,827
Ending balance:
Individually evaluated for impairment	$	—		$	493		$	45		$	—		$	776		$	—		$	1,314
Collectively evaluated for impairment	$	368		$	809		$	524		$	150		$	474		$	188		$	2,513
Loans:
Individually evaluated for impairment	$	1,444		$	2,242		$	100		$	100		$	1,443		$	—		$	5,329
Collectively evaluated for impairment	$	132,726		$	162,281		$	55,634		$	32,869		$	78,020		$	19,540		$	481,070
Acquired loans with deteriorated credit quality	$	105		$	530		$	27		$	—		$	144		$	17		$	823
Percent of loans in each category to total loans		27.6	%		33.9	%		11.4	%		6.8	%		16.3	%		4.0	%		100.0	%

	Real Estate Mortgage Loans
Allowance for Loan Losses	Residential			Commercial			Construction and Land Development			Home Equity Lines Of Credit			Commercial			Consumer			Total
Balance - December 31, 2013	$	181		$	1,674		$	663		$	435		$	535		$	213		$	3,701
Provision for loan losses		157			267			169			25			123			316			1,057
Loan charge-offs		(34	)		(690	)		(259	)		(25	)		(126	)		(97	)		(1,231	)
Loan recoveries		—			16			54			2			120			59			251
Balance - December 31, 2014	$	304		$	1,267		$	627		$	437		$	652		$	491		$	3,778
Ending balance:
Individually evaluated for impairment	$	—		$	623		$	45		$	336		$	181		$	300		$	1,485
Collectively evaluated for impairment	$	304		$	644		$	582		$	101		$	471		$	191		$	2,293
Loans:
Individually evaluated for impairment	$	1,036		$	2,173		$	100		$	336		$	179		$	1,054		$	4,878
Collectively evaluated for impairment	$	55,255		$	96,980		$	24,879		$	16,097		$	55,639		$	11,858		$	260,708
Percent of loans in each category to total loans		21.2	%		37.3	%		9.4	%		6.2	%		21.0	%		4.9	%		100.0	%

The Bank individually evaluates for impairment all loans that are on nonaccrual status. Additionally, all troubled debt restructurings are individually evaluated for impairment. A loan is considered impaired when, based on current events and circumstances, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral-dependent. Management may also elect to apply an additional collective reserve to groups of impaired loans based on current economic or market factors. Interest payments received on impaired loans are generally applied as a reduction of the outstanding principal balance.

The following tables present impaired loans by class of loans as of December 31, 2015 and 2014 (amounts in thousands). The purchased credit-impaired loans are not included in these tables because they are carried at fair value and accordingly have no related associated allowance.

	Total		Impaired Loans		Impaired Loans
December 31, 2015	Impaired		With No		With		Allowance for
Nonaccruing Impaired Loans	Loans		Allowance		Allowance		Loan Losses
Mortgage loans on real estate:
Residential	$	375	$	375	$	—	$	—
Commercial real estate		1,415		1,050		365		188
Construction and land development		—		—		—		—
Equity lines of credit		—		—		—		—
Total mortgage loans on real estate		1,790		1,425		365		188
Commercial loans		1,021		—		1,021		491
Consumer loans		—		—		—		—
Total Loans	$	2,811	$	1,425	$	1,386	$	679

	Total		Impaired Loans		Impaired Loans
	Impaired		With No		With		Allowance for
Accruing Impaired Loans	Loans		Allowance		Allowance		Loan Losses
Mortgage loans on real estate:
Residential	$	1,069	$	1,069	$	—	$	—
Commercial real estate		827		—		827		304
Construction and land development		100		—		100		45
Equity lines of credit		100		100		—		—
Total mortgage loans on real estate		2,096		1,169		927		349
Commercial loans		422		—		422		285
Consumer loans		—		—		—		—
Total Loans	$	2,518	$	1,169	$	1,349	$	634

	Total		Impaired Loans		Impaired Loans
	Impaired		With No		With		Allowance for
Total Impaired Loans	Loans		Allowance		Allowance		Loan Losses
Mortgage loans on real estate:
Residential	$	1,444	$	1,444	$	—	$	—
Commercial real estate		2,242		1,050		1,192		492
Construction and land development		100		—		100		45
Equity lines of credit		100		100		—		—
Total mortgage loans on real estate		3,886		2,594		1,292		537
Commercial loans		1,443		—		1,443		776
Consumer loans		—		—		—		—
Total Loans	$	5,329	$	2,594	$	2,735	$	1,313

	Total		Impaired Loans		Impaired Loans
December 31, 2014	Impaired		With No		With		Allowance for
Nonaccruing Impaired Loans	Loans		Allowance		Allowance		Loan Losses
Mortgage loans on real estate:
Residential	$	204	$	204	$	—	$	—
Commercial real estate		—		—		—		—
Construction and land development		—		—		—		—
Equity lines of credit		336		—		336		336
Total mortgage loans on real estate		540		204		336		336
Commercial loans		—		—		—		—
Consumer loans		—		—		—		—
Total Loans	$	540	$	204	$	336	$	336

	Total		Impaired Loans		Impaired Loans
	Impaired		With No		With		Allowance for
Accruing Impaired Loans	Loans		Allowance		Allowance		Loan Losses
Mortgage loans on real estate:
Residential	$	832	$	698	$	134	$	—
Commercial real estate		2,173		670		1,503		623
Construction and land development		100		—		100		45
Equity lines of credit		—		—		—		—
Total mortgage loans on real estate		3,105		1,368		1,737		668
Commercial loans		179		—		179		181
Consumer loans		1,054		—		1,054		300
Total Loans	$	4,338	$	1,368	$	2,970	$	1,149

	Total		Impaired Loans		Impaired Loans
	Impaired		With No		With		Allowance for
Total Impaired Loans	Loans		Allowance		Allowance		Loan Losses
Mortgage loans on real estate:
Residential	$	1,036	$	902	$	134	$	—
Commercial real estate		2,173		670		1,503		623
Construction and land development		100		—		100		45
Equity lines of credit		336		—		336		336
Total mortgage loans on real estate		3,645		1,572		2,073		1,004
Commercial loans		179		—		179		181
Consumer loans		1,054		—		1,054		300
Total Loans	$	4,878	$	1,572	$	3,306	$	1,485

The following table presents the average recorded investment in impaired loans and the interest income recognized on impaired loans in the years ended December 31, 2015 and 2014 by loan category (in thousands).

	Year Ended December 31,2015				Year Ended December 31,2014
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Mortgage loans on real estate:
Residential real estate	$	1,169	$	78	$	928	$	76
Commercial real estate		2,659	32			2,822	95
Construction and land development		116	6		568		7
Equity lines of credit		174	5		428		1
Total mortgage loans on real estate		4,118	121			4,746	179
Commercial loans		1,319	17		132		9
Consumer loans		—		—		1,124	44
Total Loans	$	5,437	$	137	$	6,002	$	232

For the years ended December 31, 2015 and 2014, the Bank did not recognize a material amount of interest income on impaired loans.

The following tables present the aging of the recorded investment in past due loans and non-accrual loan balances as of December 31, 2015 and 2014 by class of loans (amounts in thousands).

	Accruing Loans
			30-89 Days		90+ Days		Nonaccrual
As of December 31, 2015	Current		Past Due		Past Due		Loans		Total Loans
Mortgage loans on real estate:
Residential	$	131,608	$	2,058	$	129	$	480	$	134,275
Commercial real estate		163,638		—		—		1,415		165,053
Construction and land development		55,676		21		—		64		55,761
Equity lines of credit		32,934		35		—		—		32,969
Total mortgage loans on real estate		383,856		2,114		129		1,959		388,058
Commercial loans		78,282		249		17		1,059		79,607
Consumer loans		19,264		134		91		68		19,557
Total Loans	$	481,402	$	2,497	$	237	$	3,086	$	487,222

	Accruing Loans
			30-89 Days		90+ Days		Nonaccrual
As of December 31, 2014	Current		Past Due		Past Due		Loans		Total Loans
Mortgage loans on real estate:
Residential	$	55,702	$	358	$	—	$	231	$	56,291
Commercial real estate		98,397		462		294		—		99,153
Construction and land development		24,879		—		100		—		24,979
Equity lines of credit		16,097		—		—		336		16,433
Total mortgage loans on real estate		195,075		820		394		567		196,856
Commercial loans		55,588		189		30		12		55,819
Consumer loans		12,821		65		—		26		12,912
Total Loans	$	263,484	$	1,074	$	424	$	605	$	265,587

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Bank uses the following definitions for their risk ratings:

Accruing Loans – Special Mention: Weakness exists that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities. Collateral values generally afford adequate coverage but may not be immediately marketable.

Substandard: Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.

Doubtful: Specific weaknesses characterized as Substandard that are severe enough to make collection in full unlikely. There is no reliable secondary source of full repayment. Loans classified as doubtful will usually be placed on non-accrual, analyzed and fully or partially charged off based on a review of any collateral and other relevant factors.

Nonaccrual: Specific weakness characterized as Doubtful that are severe enough for the loan to be placed on nonaccrual status because collection of all contractual principal and interest payments is considered unlikely.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be “Pass” rated loans. As of December 31, 2015 and 2014, and based on the most recent analyses performed, the risk category of loans by class of loans is as follows (amounts in thousands):

	Accruing Loans
			Special				Nonaccrual
As of December 31, 2015	Pass		Mention		Substandard		Loans		Total
Mortgage loans on real estate:
Residential	$	123,862	$	6,765	$	3,168	$	480	$	134,275
Commercial real estate		155,235		7,019		1,384		1,415		165,053
Construction and land development		54,083		845		769		64		55,761
Equity lines of credit		32,740		104		125		—		32,969
Total mortgage loans on real estate		365,920		14,733		5,446		1,959		388,058
Commercial loans		75,335		2,598		632		1,042		79,607
Consumer loans		18,924		428		137		68		19,557
Total Loans	$	460,179	$	17,759	$	6,215	$	3,069	$	487,222

	Accruing Loans
			Special				Nonaccrual
As of December 31, 2014	Pass		Mention		Substandard		Loans		Total
Mortgage loans on real estate:
Residential	$	47,200	$	7,868	$	992	$	231	$	56,291
Commercial real estate		88,838		8,113		2,202		—		99,153
Construction and land development		21,131		3,680		168		—		24,979
Equity lines of credit		15,287		785		25		336		16,433
Total mortgage loans on real estate		172,456		20,446		3,387		567		196,856
Commercial loans		52,327		3,294		186		12		55,819
Consumer loans		11,346		441		1,099		26		12,912
Total Loans	$	236,129	$	24,181	$	4,672	$	605	$	265,587