Paragon Commercial 10-Q 7 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 02, 2016
Document And Entity Information
Entity Registrant Name	Paragon Commercial CORP
Entity Central Index Key	1,414,374
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		5,450,042
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Cash and due from banks:
Interest-earning	$ 59,080	$ 30,993
Noninterest-earning	14,626	24,537
Investment securities - available-for-sale, at fair value	178,606	168,896
Federal Home Loan Bank stock, at cost	5,425	8,061
Loans - net of unearned income and deferred fees	1,165,345	1,016,156
Allowance for loan losses	(7,925)	(7,641)
Net loans	1,157,420	1,008,515
Accrued interest receivable	4,022	3,795
Bank premises and equipment, net	15,858	16,433
Bank owned life insurance	28,943	28,274
Other real estate owned	5,183	5,453
Deferred tax assets	3,361	4,118
Other assets	6,335	6,836
Total assets	1,478,859	1,305,911
Deposits:
Noninterest-bearing demand	188,398	158,974
Interest-bearing checking and money market	767,124	504,092
Time deposits	243,563	319,781
Total deposits	1,199,085	982,847
Repurchase agreements and federal funds purchased	19,796	30,580
Federal Home Loan Bank advances	100,000	165,000
Other borrowings	0	4,800
Subordinated debentures	18,558	18,558
Other liabilities	6,398	6,468
Total liabilities	1,343,837	1,208,253
Stockholders' equity:
Common stock, $0.008 par value; 20,000,000 shares authorized; 5,450,042 and 4,581,334 issued and outstanding as of September 30, 2016 and December 31, 2015	44	37
Additional paid-in-capital	80,015	53,147
Accumulated other comprehensive loss	(165)	(886)
Retained earnings	55,128	45,360
Total stockholders' equity	135,022	97,658
Total liabilities and stockholders' equity	$ 1,478,859	$ 1,305,911

CONSOLIDATED BALANCE SHEETS (U3

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Stockholders' equity:
Common stock, par value (in dollars per share)	$ .008	$ .008
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	5,450,042	4,581,334
Common stock, shares outstanding (in shares)	5,450,042	4,581,334

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income:
Loans and fees on loans	$ 12,544	$ 11,223	$ 35,574	$ 32,189
Investment securities and FHLB stock	1,214	1,249	3,802	3,548
Federal funds and other	97	38	218	104
Total Interest income	13,855	12,510	39,594	35,841
Interest expense:
Interest-bearing checking and money market	966	727	2,659	1,987
Time deposits	588	799	1,711	2,609
Borrowings and repurchase agreements	534	328	1,605	924
Total interest expense	2,088	1,854	5,975	5,520
Net interest income	11,767	10,656	33,619	30,321
Provision for loan losses	391	0	391	750
Net interest income after provision for loan losses	11,376	10,656	33,228	29,571
Non-interest income:
Increase in cash surrender value of bank owned life insurance	220	225	669	632
Net gain on sale of securities	0	145	85	568
Service charges and fees	65	58	179	163
Mortgage origination fees and gains on sale of loans	59	44	124	156
Net loss on sale or impairment of foreclosed assets	0	(9)	(257)	(472)
Other fees and income	94	81	285	305
Total non-interest income	438	544	1,085	1,352
Non-interest expense:
Salaries and employee benefits	3,912	3,378	11,521	9,714
Furniture, equipment and software costs	456	482	1,450	1,383
Occupancy	362	366	1,048	1,203
Data processing	270	267	845	846
Director related fees and expenses	219	253	690	670
Professional fees	208	159	627	614
FDIC and other supervisory assessments	220	231	632	710
Advertising and public relations	239	116	661	537
Unreimbursed loan costs and foreclosure related expenses	172	281	383	750
Other	720	647	2,009	2,033
Total non-interest expense	6,778	6,180	19,866	18,460
Income before income taxes	5,036	5,020	14,447	12,463
Income tax expense	1,581	1,707	4,679	4,192
Net income	$ 3,455	$ 3,313	$ 9,768	$ 8,271
Net income per common share
Basic	$ 0.64	$ 0.73	$ 2.02	$ 1.84
Diluted	$ 0.64	$ 0.73	$ 2	$ 1.82

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements Of Comprehensive Income
Net income	$ 3,455	$ 3,313	$ 9,768	$ 8,271
Securities available for sale:
Unrealized gains (losses)	(1,058)	876	2,856	(366)
Reclassification of gains recognized in net income	0	(145)	(85)	(568)
Other comprehensive income (loss)	(1,058)	731	2,771	(934)
Deferred tax expense (benefit)	(405)	280	1,057	(357)
Other comprehensive income (loss), net of tax	(653)	451	1,714	(577)
Cash flow hedges:
Unrealized gains (losses)	544	(1,483)	(1,592)	(2,753)
Other comprehensive income (loss)	204	(568)	(599)	(1,054)
Deferred tax expense (benefit)	204	(568)	(599)	(1,054)
Other comprehensive income (loss), net of tax	340	(915)	(993)	(1,699)
Total other comprehensive income (loss), net of tax	(313)	(464)	721	(2,276)
Comprehensive income	$ 3,142	$ 2,849	$ 10,489	$ 5,995

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total
Beginning Balance, Shares at Dec. 31, 2014	4,530,000
Beginning Balance, Amount at Dec. 31, 2014	$ 36	$ 52,358	$ 1,142	$ 34,126	$ 87,662
Net income				8,271	8,271
Unrealized gain on securities, net of tax expense			(577)		(577)
Unrealized loss on cash flow hedges, net of tax benefit			(1,699)		(1,699)
Exercise of stock options, Shares	10,000
Exercise of stock options, Amount	$ 0	176			176
Issuance of stock for public offering, Amount					0
Issuance of restricted stock awards, Shares	30,656
Issuance of restricted stock awards, Amount	$ 1				1
Restricted stock expense recognized		278			278
Issuance of stock for employee stock purchase plan, Shares	9,778
Issuance of stock for employee stock purchase plan, Amount	$ 0	181			181
Ending Balance, Shares at Sep. 30, 2015	4,580,434
Ending Balance, Amount at Sep. 30, 2015	$ 37	52,993	(1,134)	42,397	94,293
Beginning Balance, Shares at Dec. 31, 2015	4,581,334
Beginning Balance, Amount at Dec. 31, 2015	$ 37	53,147	(886)	45,360	97,658
Net income				9,768	9,768
Unrealized gain on securities, net of tax expense			1,714		1,714
Unrealized loss on cash flow hedges, net of tax benefit			(993)		(993)
Exercise of stock options, Amount					0
Issuance of stock for public offering, Shares	845,588
Issuance of stock for public offering, Amount	$ 6	26,392			26,398
Issuance of restricted stock awards, Shares	17,793
Issuance of restricted stock awards, Amount	$ 1				1
Restricted stock expense recognized		319			319
Issuance of stock for employee stock purchase plan, Shares	5,327
Issuance of stock for employee stock purchase plan, Amount	$ 0	157			157
Ending Balance, Shares at Sep. 30, 2016	5,450,042
Ending Balance, Amount at Sep. 30, 2016	$ 44	$ 80,015	$ (165)	$ 55,128	$ 135,022

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 9,768	$ 8,271
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,072	1,045
Provision for loan losses	391	750
Net loss on sale or impairment of foreclosed assets	257	472
Increase in cash surrender value of life insurance	(669)	(631)
Accretion of premiums/discounts on securities, net	567	685
Net gain on sale of securities	(85)	(568)
Loss on sale of property and equipment	0	(1)
Deferred tax expense	299	1,195
Restricted stock expense	320	279
Changes in assets and liabilities:
Accrued interest receivable and other assets	(1,318)	97
Accrued interest payable and other liabilities	(70)	505
Net cash provided by operating activities	10,532	12,099
Cash flows from investing activities:
Net decrease in Federal Home Loan Bank stock	2,636	(630)
Purchase of securities available for sale	(39,434)	(55,832)
Proceeds from maturities and paydowns of securities available for sale	16,299	13,299
Proceeds from sales of securities available for sale	15,714	52,644
Net increase in loans	(149,296)	(133,128)
Proceeds from sale of foreclosed real estate	13	4,876
Additions to bank premises and equipment	(497)	(511)
Other investing activites, net	0	(74)
Net cash used in investing activities	(154,565)	(119,356)
Cash flows from financing activities:
Net increase in demand and money market deposit accounts	292,456	168,972
Net decrease in time deposits	(76,218)	3,168
Net decrease in repurchase agreements	(10,784)	(1,504)
Net increase in FHLB and other borrowings	(69,800)	18,166
Net proceeds from sale of common stock	26,398	0
Exercise of stock options	0	176
Issuance of common stock for employee stock purchase plan	157	181
Net cash provided by financing activities	162,209	189,159
Net change in cash and cash equivalents	18,176	81,902
Cash and cash equivalents at beginning of year	55,530	36,395
Cash and cash equivalents at end of year	$ 73,706	$ 118,297

1. ORGANIZATION AND OPERATIONS

1. ORGANIZATION AND OPERATIONS	9 Months Ended
	Sep. 30, 2016
Organization And Operations
ORGANIZATION AND OPERATIONS	On April 2, 2001, Paragon Commercial Corporation (the “Company”) was incorporated for the purpose of serving as a holding company for Paragon Commercial Bank (the “Bank”). The Company currently has no operations and conducts no business on its own other than owning the Bank and two statutory business trusts, Paragon Commercial Capital Trust I and II. The Bank was incorporated on May 4, 1999 and began banking operations on May 10, 1999. The Bank is engaged in general commercial banking in Wake and Mecklenburg Counties, NC, operating 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. In addition, the Company undergoes periodic examinations by the Federal Reserve. The Company formed Paragon Commercial Capital Trust I (“Trust I”) during 2004 in order to facilitate the issuance of trust preferred securities. Trust I is a statutory business trust formed under the laws of the state of Delaware, of which all common securities are owned by the Company. The Company formed Paragon Commercial Capital Trust II (“Trust II”) during 2006 to serve the same purpose. The junior subordinated debentures issued by the Company to the trusts are classified as debt and the Company’s equity interest in the trusts are included in other assets. The trust preferred securities presently qualify as Tier 1 regulatory capital and are reported in Federal Reserve regulatory reports as minority interests in unconsolidated subsidiaries. The junior subordinated debentures do not qualify as Tier 1 regulatory capital. In June 2016, the Company completed its initial public offering in which it issued and sold 845,588 shares of common stock at a public offering price of $34.00 per share. The Company received net proceeds of $26.4 million after deducting underwriting discounts and commissions of approximately $1.7 million and other offering expenses of approximately $615,000. In addition to its headquarters and operations center in Raleigh, North Carolina, the Bank has locations in Charlotte and Cary, North Carolina.

2. BASIS OF PRESENTATION

2. BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2016
Basis Of Presentation
BASIS OF PRESENTATION	The accompanying unaudited consolidated financial statements include the accounts and transactions of Paragon Commercial Corporation and Paragon Commercial Bank. All significant intercompany transactions and balances are eliminated in consolidation. Paragon Commercial Capital Trusts I and II are not consolidated subsidiaries of the Company. The consolidated financial information included herein as of and for the three and nine month periods ended September 30, 2016 and 2015 is unaudited. Accordingly, it does not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the financial condition and results of operations for the interim periods. The December 31, 2015 consolidated balance sheet was derived from the Company’s December 31, 2015 audited consolidated financial statements as of and for the periods ended December 31, 2015. These unaudited interim consolidated financial statements as of and for the three and nine month periods ended September 30, 2016 and 2015 should be read in conjunction with the audited consolidated financial statements as of and for the periods ended December 31, 2015. The accounting policies followed by the Company and other relevant information is contained in the notes to the audited consolidated financial statements as of and for the periods ended December 31, 2015. Earnings Per Common Share Basic and diluted net income per common share have been computed by dividing net income for each period by the weighted average number of shares of common stock outstanding during each period. Diluted net income per common share reflects the potential dilution that could occur if outstanding stock options were exercised. Basic and diluted net income per common share have been computed based upon net income as presented in the accompanying unaudited consolidated statements of income divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below: Three months Nine months ended September 30, ended September 30, 2016 2015 2016 2015 Shares used in the computation of earnings per share: Weighted average number of shares outstanding - basic 5,406,867 4,520,749 4,846,574 4,502,293 Dilutive effect of restricted shares 32,729 45,214 35,867 47,796 Weighted average number of shares outstanding - diluted 5,439,596 4,565,963 4,882,441 4,550,089 Weighted average anti-dilutive stock options and unvested restricted shares excluded from the computation of diluted earnings per share are as follows: Three months Nine months ended September 30, ended September 30, 2016 2015 2016 2015 Anti-dilutive stock options 80,500 91,000 80,500 91,000 Unvested restricted shares 38,445 52,284 38,445 52,284 Comprehensive Income The Company reports as comprehensive income all changes in stockholders' equity during the year from sources other than stockholders. Other comprehensive income refers to all components (revenues, expenses, gains, and losses) of comprehensive income that are excluded from net income. The Company’s only two components of other comprehensive income are unrealized gains and losses on investment securities available-for-sale, net of income taxes and unrealized gains and losses on cash flow hedges, net of income taxes. Information concerning the Company’s accumulated other comprehensive income for the nine months ended September 30, 2016 and for the year ended December 31, 2015, respectively is as follows: September 30, December 31, (in thousands) 2016 2015 Unrealized gains on securities available-for-sale $ 4,149 $ 1,378 Deferred tax expense (1,587 ) (530 ) Other comprehensive income, net of tax 2,562 848 Unrealized losses on cash flow hedges (4,371 ) (2,779 ) Deferred tax benefit 1,644 1,045 Other comprehensive loss, net of tax (2,727 ) (1,734 ) Total other accumulated comprehensive income (loss) $ (165 ) $ (886 ) The accumulated balances related to each component of other accumulated comprehensive income (loss) are as follows: Unrealized Unrealized Gains and Gains and Losses on Losses on Available-for Cash Flow Sale Securities Hedges Total Balance as of December 31, 2015 $ 848 $ (1,734 ) $ (886 ) Other comprehensive income (loss) before reclassification 1,799 (993 ) 806 Amounts reclassified from accumulated other comprehensive income (85 ) - (85 ) Net current-period other comprehensive income (loss) 1,714 (993 ) 721 Balance as of September 30, 2016 $ 2,562 $ (2,727 ) $ (165 ) Balance as of December 31, 2014 $ 1,645 $ (503 ) $ 1,142 Other comprehensive loss before reclassification (9 ) (1,699 ) (1,708 ) Amounts reclassified from accumulated other comprehensive income (568 ) - (568 ) Net current-period other comprehensive loss (577 ) (1,699 ) (2,276 ) Balance as of September 30, 2015 $ 1,068 $ (2,202 ) $ (1,134 ) Recent Accounting Pronouncements In February 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under 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. In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB deferred the effective date of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB issued amendments to the Interest topic of the Accounting Standards Codification (the “ASC”) to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the ASC to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effect that implementation of the new standard will have on its financial statements. In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards Codification to clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company will apply the guidance prospectively to each period presented. The Company does not expect these amendments to have a material effect on its financial statements. In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements. In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not expect these amendments to have a material effect on its financial statements. In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows. In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. 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 the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. Reclassifications Certain amounts in the 2015 financial statements have been reclassified to conform to the 2016 presentation. The reclassifications had no effect on total assets, net income or stockholders' equity as previously reported.

3. INVESTMENT SECURITIES

3. INVESTMENT SECURITIES	9 Months Ended
	Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]
INVESTMENT SECURITIES	The following is a summary of the securities portfolio by major classification at September 30, 2016 and December 31, 2015. Gross Gross Estimated Amortized Unrealized Unrealized Fair (in thousands) Cost Gains Losses Value September 30, 2016 Available-for-sale: U.S. Agency obligations $ 17,673 $ 503 $ - $ 18,176 Collateralized mortgage obligations 45,802 740 - 46,542 Mortgage-backed securities 46,999 829 - 47,828 Municipal bonds 61,304 2,286 - 63,590 Other 2,679 19 228 2,470 $ 174,457 $ 4,377 $ 228 $ 178,606 December 31, 2015 Available-for-sale: U.S. Agency obligations $ 19,778 $ 196 $ 73 $ 19,901 Collateralized mortgage obligations 60,826 321 206 60,941 Mortgage-backed securities 31,074 326 90 31,310 Municipal bonds 53,163 1,346 75 54,434 Other 2,677 10 377 2,310 $ 167,518 $ 2,199 $ 821 $ 168,896 The fair values of securities available-for-sale at September 30, 2016 by contractual maturity are shown below. Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. After One After Five No Stated Within Within Within After Maturity (in thousands) 1 Year Five Years Ten Years Ten Years Date Total U.S. Agency obligations $ - $ - $ - $ 18,176 $ - $ 18,176 Collateralized mortgage obligations - - - 46,542 - 46,542 Mortgage-backed securities - - 13,666 34,162 - 47,828 Municipal bonds - 1,812 6,342 55,436 - 63,590 Other - - 500 - 1,970 2,470 $ - $ 1,812 $ 20,508 $ 154,316 $ 1,970 $ 178,606 The following tables show gross unrealized losses and fair values of investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position on September 30, 2016 and December 31, 2015. Less Than 12 Months 12 Months or Greater Total (in thousands) Unrealized Unrealized Unrealized September 30, 2016 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ - $ - $ - $ - $ - $ - Collateralized mortgage obligations - - - - - - Mortgage-backed securities - - - - - - Municipal bonds - - - - - - Other 1,925 228 - - 1,925 228 Total temporarily impaired securities $ 1,925 $ 228 $ - $ - $ 1,925 $ 228 Less Than 12 Months 12 Months or Greater Total (in thousands) Unrealized Unrealized Unrealized December 31, 2015 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ 3,007 $ - $ 3,178 $ 73 $ 6,185 $ 73 Collateralized mortgage obligations 26,086 159 2,983 47 29,069 206 Mortgage-backed securities 18,575 90 - - 18,575 90 Municipal bonds 3,896 6 7,990 69 11,886 75 Other 1,774 377 - - 1,774 377 Total temporarily impaired securities $ 53,338 $ 632 $ 14,151 $ 189 $ 67,489 $ 821 The table below summarizes the number of investment securities in an unrealized loss position: September 30, December 31, Available-for-sale: 2016 2015 U.S. Agency obligations - 3 Collateralized mortgage obligations - 7 Mortgage-backed securities - 6 Municipal bonds - 22 Other 1 1 1 39 The unrealized losses primarily relate to debt securities that have incurred fair value reductions due to higher market interest rates since the securities were purchased. The unrealized losses are not likely to reverse unless and until market interest rates decline to the levels that existed when the securities were purchased. Since none of the unrealized losses on the debt securities in 2016 or 2015 relate to the marketability of the securities or the issuer’s ability to honor redemption obligations and since management has the intent to hold these securities until maturity and believes it is more likely than not that the Company will not have to sell any such securities before a recovery of cost given the current liquidity position, none of those debt securities are deemed to be other than temporarily impaired. The following table summarizes securities gains for the periods presented: Three months Nine months ended September 30, ended September 30, (in thousands) 2016 2015 2016 2015 Gross gains on sales of securities available for sale $ - $ 158 $ 136 $ 585 Gross losses on sales of securities available for sale - (13 ) (51 ) (17 ) Total securities gains $ - $ 145 $ 85 $ 568 Securities with a fair value of $52.2 million and $78.4 million were pledged as of September 30, 2016 and December 31, 2015, respectively, to secure repurchase agreements, lines of credit and other borrowings.

4. LOANS AND ALLOWANCE FOR LOAN

4. LOANS AND ALLOWANCE FOR LOAN LOSSES	9 Months Ended
	Sep. 30, 2016
Receivables [Abstract]
3. LOANS AND ALLOWANCE FOR LOAN LOSSES	Following is a summary of loans at September 30, 2016 and December 31, 2015: September 30, December 31, (in thousands) 2016 2015 Construction and land development $ 74,605 $ 64,702 Commercial real estate: Non-farm, non-residential 356,833 307,722 Owner occupied 178,631 147,017 Multifamily, nonresidential and junior liens 96,643 79,170 Total commercial real estate 632,107 533,909 Consumer real estate: Home equity lines 86,361 78,943 Secured by 1-4 family residential, secured by first deeds of trust 190,913 167,053 Secured by 1-4 family residential, secured by second deeds of trust 4,358 3,711 Total consumer real estate 281,632 249,707 Commercial and industrial loans (except those secured by real estate) 164,913 153,669 Consumer and other 11,558 13,539 Total loans 1,164,815 1,015,526 Deferred loan (fees) costs 530 630 Allowance for loan losses (7,925 ) (7,641 ) Net loans $ 1,157,420 $ 1,008,515 A further breakdown of the make-up of the construction and development and commercial real estate portfolio at September 30, 2016 and December 31, 2015 is as follows: September 30, December 31, (in thousands) 2016 2015 Construction and land development: Land $ 15,650 $ 16,026 Residential 31,370 29,864 Commercial 27,585 18,812 Total construction and land development $ 74,605 $ 64,702 Commercial real estate: Non-farm, non-residential: Office $ 102,065 $ 92,991 Industrial 41,710 38,518 Hotel/motel 21,453 18,935 Retail 161,447 135,200 Special purpose/Other 30,158 22,078 356,833 307,722 Owner occupied : Office 59,358 51,775 Industrial 43,027 40,337 Retail 26,216 12,157 Special purpose/Other 50,030 42,748 178,631 147,017 Multifamily, nonresidential and junior liens 96,643 79,170 Total commercial real estate $ 632,107 $ 533,909 Loans are primarily made in the Research Triangle and Charlotte areas of North Carolina. Real estate loans can be affected by the condition of the local real estate market. Commercial and installment loans can be affected by the local economic conditions. Changes in the allowance for loan losses for the three and nine months ended September 30, 2016 and 2015 were as follows: Commercial & Industrial Construction Consumer Loans Not and Land Commercial Real Secured By Consumer Total (in thousands) Development Real Estate Estate Real Estate & Other Loans Three months ended September 30, 2016 Beginning balance $ 406 $ 3,278 $ 1,887 $ 2,307 $ 108 $ 7,986 Provision for loan losses (64 ) 128 204 147 (24 ) 391 Loans charged off - - - (682 ) - (682 ) Recoveries 58 3 1 168 - 230 Net (chargeoffs) recoveries 58 3 1 (514 ) - (452 ) Ending balance $ 400 $ 3,409 $ 2,092 $ 1,940 $ 84 $ 7,925 Nine months ended September 30, 2016 Beginning balance $ 509 $ 3,156 $ 2,046 $ 1,786 $ 144 $ 7,641 Provision for loan losses (404 ) 194 39 632 (70 ) 391 Loans charged off - - - (682 ) (1 ) (683 ) Recoveries 295 59 7 204 11 576 Net (chargeoffs) recoveries 295 59 7 (478 ) 10 (107 ) Ending balance $ 400 $ 3,409 $ 2,092 $ 1,940 $ 84 $ 7,925 Three months ended September 30, 2015 Beginning balance $ 801 $ 2,086 $ 2,237 $ 2,388 $ 57 $ 7,569 Provision for loan losses (230 ) 624 125 (520 ) 1 - Loans charged off (14 ) - - - - (14 ) Recoveries 10 11 42 - - 63 Net (chargeoffs) recoveries (4 ) 11 42 - - 49 Ending balance $ 567 $ 2,721 $ 2,404 $ 1,868 $ 58 $ 7,618 Nine months ended September 30, 2015 Beginning balance $ 960 $ 2,510 $ 1,594 $ 1,662 $ 143 $ 6,869 Provision for loan losses (442 ) 476 768 33 (85 ) 750 Loans charged off (14 ) (276 ) - - - (290 ) Recoveries 63 11 42 173 - 289 Net (chargeoffs) recoveries 49 (265 ) 42 173 - (1 ) Ending balance $ 567 $ 2,721 $ 2,404 $ 1,868 $ 58 $ 7,618 The balance in the allowance for loan losses and the recorded investment in loans by portfolio segment are based on the impairment method as of September 30, 2016 and December 31, 2015 and were as follows: Commercial & Industrial Construction Consumer Loans Not and Land Commercial Real Secured By Consumer Total (in thousands) Development Real Estate Estate Real Estate & Other Loans September 30, 2016 Allowance for Loan Losses: Individually evaluated for impairment $ 1 $ 6 $ 233 $ 516 $ - $ 756 Collectively evaluated for impairment 399 3,403 1,859 1,424 84 7,169 Total ending allowance $ 400 $ 3,409 $ 2,092 $ 1,940 $ 84 $ 7,925 Loans: Individually evaluated for impairment $ 128 $ 860 $ 946 $ 1,516 $ - $ 3,450 Collectively evaluated for impairment 74,477 631,247 280,686 163,397 11,558 1,161,365 Total ending loans $ 74,605 $ 632,107 $ 281,632 $ 164,913 $ 11,558 $ 1,164,815 (in thousands) December 31, 2015 Allowance for Loan Losses: Individually evaluated for impairment $ 4 $ 72 $ 115 $ 297 $ 21 $ 509 Collectively evaluated for impairment 505 3,084 1,931 1,489 123 7,132 Total ending allowance $ 509 $ 3,156 $ 2,046 $ 1,786 $ 144 $ 7,641 Loans: Individually evaluated for impairment $ 238 $ 2,619 $ 411 $ 602 $ 21 $ 3,891 Collectively evaluated for impairment 64,464 531,290 249,296 153,067 13,518 1,011,635 Total ending loans $ 64,702 $ 533,909 $ 249,707 $ 153,669 $ 13,539 $ 1,015,526 Loans are charged down or off as soon as the Company determines that the full principal balance due under any loan becomes uncollectible. The amount of the charge is determined as follows: • If unsecured, the loan must be charged off in full. • If secured, the outstanding principal balance of the loan should be charged down to the net realizable value of the collateral. Loans are considered uncollectible when: • No regularly scheduled payment has been made within four months unless fully secured and in the process of collection. • The collateral value is insufficient to cover the outstanding indebtedness and it is unlikely the borrower will have the ability to pay the debt in a timely manner. • The loan is unsecured, the borrower files for bankruptcy protection and there is no other (guarantor, etc.) support from an entity outside of the bankruptcy proceedings. Impaired loans totaled $3.5 million and $3.9 million at September 30, 2016 and December 31, 2015, respectively. Included in the $3.5 million at September 30, 2016 is $1.1 million of loans classified as troubled debt restructurings (“TDRs”). Included in the $3.9 million at December 31, 2015 is $2.8 million of loans classified as TDRs. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrower’s financial difficulties that it would not otherwise consider. All TDRs are considered impaired. The following table provides information on performing and nonperforming TDRs as of September 30, 2016 and December 31, 2015: September 30, December 31, (in thousands) 2016 2015 Performing TDRs: Commercial real estate $ 533 $ 2,220 Consumer real estate 339 346 Commercial and industrial loans - 47 Total performing TDRs 872 2,613 Nonperforming TDRs: Construction and land development 128 104 Consumer real estate 60 65 Consumer and other - 21 Total nonperformingTDRs 188 190 Total TDRs $ 1,060 $ 2,803 During the first nine months of 2016, there were five new loans totaling $1.3 million identified as TDRs. There were no loans considered as TDRs in 2015 that subsequently defaulted in 2016. Of the five new loans identified as a TDR, three were to the same borrower in the amount of $1.1 million within the commercial and industrial (“C&I”) portfolio. The designation of TDR to this same borrower was given due to the Bank extending the maturity date of the three loans during a forbearance agreement; the market would not support terms for this type of loan and was classified as a TDR. The borrower subsequently defaulted on the revised terms. The Bank has since liquidated these loans and they are no longer included in the TDR total. Another loan in the amount of $127,000 that is a real estate construction and land development loan was coded a TDR due to renewal of interest only terms; these are not terms that would be provided in the market hence the TDR designation. The last loan was for $37,000 is a C&I loan and was coded a TDR due to change in interest rate and repayment terms that would not be provided in the market. The borrower subsequently defaulted on the revised loans and the Bank charged the balance of the loan to the loan loss reserve. That loan is no longer included in the Bank’s TDR total. In order to quantify the value of any impairment, the Company evaluates loans individually. At September 30, 2016, the Company had $3.5 million of impaired loans. The detail of loans evaluated for impairment as of September 30, 2016 is presented below: Unpaid Contractual (in thousands) Recorded Principal Allocated September 30, 2016 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 127 $ 166 $ - Commercial real estate 534 536 - Commercial and industrial loans 91 356 - Loans with a specific valuation allowance: Construction and land development 1 29 1 Commercial real estate 326 327 6 Consumer real estate 946 975 233 Commercial and industrial loans 1,425 1,457 516 Total $ 3,450 $ 3,846 $ 756 At December 31, 2015, the Company had $3.9 million of impaired loans. The detail of loans evaluated for impairment as of December 31, 2015 is presented below: Unpaid Contractual (in thousands) Recorded Principal Allocated December 31, 2015 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 234 $ 397 $ - Commercial real estate 2,220 2,319 - Loans with a specific valuation allowance: Construction and land development 4 29 4 Commercial real estate 399 480 72 Consumer real estate 411 474 115 Commercial and industrial loans (except those secured by real estate) 602 895 297 Consumer and other 21 26 21 Total $ 3,891 $ 4,620 $ 509 The average recorded investment balance of impaired loans for the three- and nine-month periods ending September 30, 2016 and 2015 are as follows: Three months ended September 30, 2016 2015 Average Interest Average Interest (in thousands) Balance Income Balance Income Construction and land development $ 130 $ - $ 252 $ - Commercial real estate 867 10 4,030 48 Consumer real estate 947 7 820 7 Commercial and industrial loans 2,149 18 657 10 Consumer and other - - 23 - $ 4,093 $ 35 $ 5,782 $ 65 Nine months ended September 30, 2016 2015 Average Interest Average Interest (in thousands) Balance Income Balance Income Construction and land development $ 229 $ - $ 330 $ 1 Commercial real estate 2,398 37 9,170 139 Consumer real estate 951 15 825 21 Commercial and industrial loans 2,802 48 739 32 Consumer and other 20 - 24 - $ 6,400 $ 100 $ 11,088 $ 193 When the Company cannot reasonably expect full and timely repayment of its loan, the loan is placed on nonaccrual status. The Company will continue to track the contractual interest for purposes of customer reporting and any potential litigation or later collection of the loan but accrual of interest for the Company’s financial statement purposes is to be discontinued. Subsequent payments of interest can be recognized as income on a cash basis provided that full collection of principal is expected. Otherwise, all payments received are to be applied to principal only. At the time of nonaccrual, past due or accrued interest is reversed from income. Loans over 90 days past due will automatically be placed on nonaccrual status. Loans that are less delinquent may also be placed on nonaccrual status if full collection of principal and interest is unlikely. The following table presents the recorded investment in nonaccrual loans by portfolio segment as of September 30, 2016 and December 31, 2015: Nonaccrual September 30, December 31, (in thousands) 2016 2015 Construction and land development $ 128 $ 238 Consumer real estate 604 65 Commercial and industrial loans 216 189 Consumer and other - 21 Total $ 948 $ 513 There were no loans 90 days or more past due and accruing interest at September 30, 2016 or December 31, 2015. The following table presents the aging of the recorded investment in past due loans as of September 30, 2016 and December 31, 2015 by portfolio segment: Greater 30 - 59 60 - 89 than 90 Days Days Days Total (in thousands) Past Past Past Non- Past Total September 30, 2016 Due Due Due Accrual Due Current Loans Construction and land development $ - $ - $ - $ 128 $ 128 $ 74,477 $ 74,605 Commercial real estate - - - - - 632,107 632,107 Consumer real estate 194 - - 604 798 280,834 281,632 Commercial and industrial loans 305 - - 216 521 164,392 164,913 Consumer and other - - - - - 11,558 11,558 Total $ 499 $ - $ - $ 948 $ 1,447 $ 1,163,368 $ 1,164,815 Greater 30 - 59 60 - 89 than 90 Days Days Days Total (in thousands) Past Past Past Non- Past Total December 31, 2015 Due Due Due Accrual Due Current Loans Construction and land development $ - $ - $ - $ 238 $ 238 $ 64,464 $ 64,702 Commercial real estate - - - - - 533,909 533,909 Consumer real estate - - - 65 65 249,642 249,707 Commercial and industrial loans - - - 189 189 153,480 153,669 Consumer and other - - - 21 21 13,518 13,539 Total $ - $ - $ - $ 513 $ 513 $ 1,015,013 $ 1,015,526 Credit Quality Indicators The Company utilizes a nine point grading system in order to evaluate the level of inherent risk in the loan portfolio as part of its allowance for loan losses methodology. Loans collectively evaluated for impairment are grouped by loan type and, in the case of commercial and construction loans, by risk rating. Each loan type is assigned an allowance factor based on risk grade, historical loss experience, economic conditions, overall portfolio quality including delinquency rates and commercial real estate loan concentrations (as applicable). As risk grades increase, additional reserves are applied stated in basis points in order to account for the added inherent risk. The Company categorizes all business and commercial purpose loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by setting the risk grade at the inception of a loan through the approval process. A certain percentage of loan dollars is reviewed each year by a third party loan review function. The risk rating process is inherently subjective and based upon management’s evaluation of the specific facts and circumstances for individual borrowers. As such, the assigned risk ratings are subject to change based upon changes in borrower status and changes in the external environment affecting the borrower. The Company uses the following definitions for risk ratings: · Risk Grade 1 – Minimal · Risk Grade 2 – Modest · Risk Grade 3 – Average · Risk Grade 4 – Acceptable - · Risk Grade 5 - Acceptable with Care · Risk Grade 6 - Special Mention or Critical - o Repayment performance has not been demonstrated to prudent standards; o Repayment performance is inconsistent and highly sensitive to business and operating cycle swings; o Fatal documentation errors and; o Performing as agreed without documented capacity or collateral protectio n. · Risk Grade 7 – Substandard - · Risk Grade 8 – Doubtful - o Injection of capital; o Alternative financing; o Liquidation of assets or the pledging of additional collateral. The ability of the borrower to service the debt is extremely weak, overdue status is constant, the debt has been placed on nonaccrual status and no definite repayment schedule exists. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off. There were no loans rated as doubtful as of September 30, 2016 or December 31, 2015. · Risk Grade 9 – Loss As of September 30, 2016 and December 31, 2015 and based on the most recent analysis performed, the risk category of unimpaired loans by class of loans is as follows: Risk Grade (in thousands) 1 2 3 4 5 6 7 Total September 30, 2016 Construction and land development $ - $ 676 $ 714 $ 21,173 $ 51,708 $ 205 $ - $ 74,476 Commercial real estate - 560 219,780 302,865 104,621 3,415 - 631,241 Consumer real estate 52 19,926 128,522 96,324 34,574 1,292 - 280,690 Commercial and industrial loans 2,263 1,340 29,806 100,638 28,700 652 - 163,399 Consumer and other 1,161 485 1,113 7,836 964 - - 11,559 Total $ 3,476 $ 22,987 $ 379,935 $ 528,836 $ 220,567 $ 5,564 $ - $ 1,161,365 Risk Grade (in thousands) 1 2 3 4 5 6 7 Total December 31, 2015 Construction and land development $ 26 $ 200 $ 2,545 $ 14,318 $ 47,133 $ 242 $ - $ 64,464 Commercial real estate - 619 195,935 243,771 87,492 3,473 - 531,290 Consumer real estate 53 10,933 111,123 92,127 34,346 714 - 249,296 Commercial and industrial loans 2,168 1,909 24,675 96,900 26,802 612 - 153,066 Consumer and other 980 1,069 960 8,392 1,936 182 - 13,519 Total $ 3,227 $ 14,730 $ 335,238 $ 455,508 $ 197,709 $ 5,223 $ - $ 1,011,635 Loans with a carrying value of $810.5 million and $689.0 million were pledged as of September 30, 2016 and December 31, 2015, respectively, to secure lines of credit with the Federal Reserve and the Federal Home Loan Bank.

5. OFF-BALANCE SHEET RISK

5. OFF-BALANCE SHEET RISK	9 Months Ended
	Sep. 30, 2016
Off-balance Sheet Risk
OFF-BALANCE SHEET RISK	The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of credit is based on management’s credit evaluation of the borrower. Collateral obtained varies but may include real estate, stocks, bonds, and certificates of deposit. A summary of the contract amounts of the Company’s exposure to off-balance sheet credit risk as of September 30, 2016 and December 31, 2015 is as follows: September 30, December 31, (in thousands) 2016 2015 Financial instruments whose contract amounts represent credit risk: Undisbursed lines of credit $ 202,012 $ 163,572 Standby letters of credit 3,899 3,188 Total $ 205,911 $ 166,760

6. DERIVATIVES AND FINANCIAL IN

6. DERIVATIVES AND FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2016
Derivatives And Financial Instruments
DERIVATIVES AND FINANCIAL INSTRUMENTS	To mitigate exposure to variability in expected future cash flows resulting from changes in interest rates, in May 2013 the Company entered into two forward swap arrangements (the “Swaps”) whereby the Company would pay fixed rates on two short-term borrowings at some point in the future for a determined period of time. For both agreements, the Company would renew advances with the Federal Home Loan Bank (“FHLB”) for 3-month terms as a primary funding source and pay the prevailing 3-month rate. The first swap, a “2-5 Swap”, was a $20 million agreement whereby 2 years from the May 2013 execution date, the Company would begin to swap out the 3-month FHLB advance pricing at that date for a fixed rate of 1.964% for a period of 5 years. The second swap, a “3-5 Swap”, was similar in terms except that it was a $30 million agreement whereby 3 years from the May 2013 execution date, the Company would begin to swap out the 3-month FHLB advance pricing at that date for a fixed rate of 2.464% for a period of 5 years. The Company designated the forward-starting interest rate swaps (the hedging instruments) as cash flow hedges of the risk of changes attributable to the benchmark 3-Month LIBOR interest rate risk for the forecasted issuances of FHLB advances arising from a rollover strategy. The Company intended to sequentially issue a series of 3-month fixed rate debt as part of a planned roll-over of short-term debt for the next seven to eight years. In September 2014, as a result of continued increasing fixed rate exposure, the Company determined that an additional strategy was needed and, as a result, exited from the Swaps for a deferred gain of $372,000. In their place, the Company purchased three interest rate caps with a strike price of 3-month LIBOR at 0.50% and a five-year term. The instruments hedged were $100 million of FHLB borrowings maturing quarterly on the same reset dates. The Company executed three separate agreements between $30 million and $35 million maturing between August 2019 and October 2019. The following table reflects the cash flow hedges included in the consolidated balance sheets as of September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Notational Fair Notational Fair (in thousands) Amount Value Amount Value Included in other assets: Cap 1 - maturing August 2019 $ 35,000 $ 590 $ 35,000 $ 1,334 Cap 2 - maturing September 2019 35,000 603 35,000 1,360 Cap 3 - maturing October 2019 30,000 529 30,000 1,216 $ 100,000 $ 1,722 $ 100,000 $ 3,910 Remaining amortization of the premium on the interest rate caps is as follows: (in thousands) 2016 (remaining quarter) $ 315 2017 1,779 2018 2,247 2019 1,752 $ 6,093 The Company recorded $257,000 and $45,000 for the three-month periods ended September 30, 2016 and 2015, respectively, in amortization associated with the interest rate caps. The Company recorded $598,000 and $64,000 for the nine-month periods ended September 30, 2016 and 2015, respectively, in amortization associated with the interest rate caps. Those expenses are reflected in the consolidated statements of income as a component of borrowings and repurchase agreements interest expense. Remaining amortization of the gain associated with the exit of the Swaps is as follows: (in thousands) 2016 (remaining quarter) $ 19 2017 74 2018 74 Thereafter 147 $ 314 The Company realized $19,000 and $38,000 in gains on the Swaps during the three- and nine-month periods ended September 30, 2016, respectively, shown as a reduction of borrowings and repurchase agreements interest expense. The Company anticipates little to no ineffectiveness in this hedging relationship as long as the terms are matched at each forecasted debt issuance. The Company notes that the actual interest cost incurred at each rollover will be a function of market rates at that time. However the Company is only hedging the benchmark interest rate risk in each rollover. The Company does not use derivatives for trading or speculative purposes.

7. FAIR VALUE OF FINANCIAL INST

7. FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2016
Fair Value Of Financial Instruments
FAIR VALUE OF FINANCIAL INSTRUMENTS	Fair value is a market-based measurement and is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. In general, the transaction price will equal the exit price and, therefore, represent the fair value of the asset or liability at initial recognition. In determining whether a transaction price represents the fair value of the asset or liability at initial recognition, each reporting entity is required to consider factors specific to the transaction and the asset or liability, the principal or most advantageous market for the asset or liability, and market participants with whom the entity would transact in the market. Outlined below is the application of the fair value hierarchy applied to the Company’s financial assets that are carried at fair value. Level 1 Level 2 Level 3 The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair Value on a Recurring Basis The Company measures certain assets at fair value on a recurring basis, as described below. Investment Securities Available-for-Sale 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. agency securities, mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets. Derivative Assets and Liabilities Derivative instruments held or issued by the Company for risk management purposes are traded in over-the-counter markets where quoted market prices are not readily available. For those derivatives, the Company measures fair value using models that use primarily market observable inputs, such as yield curves and option volatilities, and include the value associated with counterparty credit risk. The Company classifies derivative instruments held or issued for risk management purposes as Level 2. As of September 30, 2016 and December 31, 2015, the Company’s derivative instruments consist solely of interest rate caps. Below is a table that presents information about assets measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015: Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (in thousands) Total Identical Assets Inputs Inputs Description Fair Value (Level 1) (Level 2) (Level 3) September 30, 2016 Securities available-for-sale: U.S. Agency obligations $ 18,176 $ - $ 18,176 $ - Collateralized mortgage obligations 46,542 - 46,542 - Mortgage-backed securities 47,828 - 47,828 - Municipal bonds 63,590 - 63,590 Other 2,470 1,970 - 500 178,606 1,970 176,136 500 Interest rate caps 1,722 - 1,722 - Total assets at fair value $ 180,328 $ 1,970 $ 177,858 $ 500 December 31, 2015 Securities available-for-sale: U.S. Agency obligations $ 19,901 $ - $ 19,901 $ - Collateralized mortgage obligations 60,941 - 60,941 - Mortgage-backed securities 31,310 - 31,310 - Municipal bonds 54,434 - 54,434 Other 2,310 1,810 - 500 168,896 1,810 166,586 500 Interest rate caps 3,910 - 3,910 - Total assets at fair value $ 172,806 $ 1,810 $ 170,496 $ 500 The table below summarizes the Company’s activity in investment securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2016. Level 3 Investment (in thousands) Securities Balance at December 31, 2015 $ 500 Purchases - Balance at September 30, 2016 $ 500 Fair Value on a Nonrecurring Basis The Company measures certain assets at fair value on a nonrecurring basis, as described below. Impaired 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 the impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, 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. Impaired loans 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 nonrecurring Level 2. When current 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 nonrecurring Level 3. Impaired loans totaled $3.5 million and $3.9 million at September 30, 2016 and December 31, 2015, respectively. Other Real Estate Owned Other real estate owned, which includes foreclosed assets, is adjusted to fair value upon transfer of loans and premises to other real estate. Subsequently, other real estate owned is carried at the lower of carrying value or fair value. At the date of transfer, losses are charged to the allowance for credit losses. Subsequent write-downs are charged to expense in the period they are incurred. Below is a table that presents information about assets measured at fair value on a nonrecurring basis at September 30, 2016 and December 31, 2015: Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (in thousands) Total Identical Assets Inputs Inputs September 30, 2016 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 2,694 $ - $ - $ 2,694 Other real estate owned 5,183 - - 5,183 Total $ 7,877 $ - $ - $ 7,877 Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (in thousands) Total Identical Assets Inputs Inputs December 31, 2015 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 3,382 $ - $ - $ 3,382 Other real estate owned 5,453 - - 5,453 Total $ 8,835 $ - $ - $ 8,835 For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of September 30, 2016 and December 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows: September 30, 2016 and December 31, 2015 Valuation Significant Significant Technique Observable Inputs unobservable Inputs Impaired loans Appraisal value Appraisals and/or sales of Appraisals discounted 5% to 10% for comparable properties sales commissions and other holding costs Other real estate owned Appraisal value/ Appraisals and/or sales of Appraisals discounted 5% to 10% for Comparison sale/ comparable properties sales commissions and other holding costs Other estimates The Company provides certain disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Accordingly, certain financial instruments and all nonfinancial instruments are excluded from disclosure. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash and Due from Banks The carrying amounts for cash and due from banks approximate fair value because of the short maturities of those instruments. Federal Home Loan Bank Stock The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of such Federal Home Loan Bank stock. Bank-owned life insurance The carrying value of bank-owned life insurance approximates fair value because this investment is carried at cash surrender value, as determined by the insurer. Loans The fair value 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. Deposits The fair value of demand deposits is the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting expected cash flows using the rates currently offered for instruments of similar remaining maturities. Accrued Interest The carrying amount is a reasonable estimate of fair value. Short-Term Borrowings and Long-Term Debt The fair values are based on discounting expected cash flows using the current interest rates for debt with the same or similar remaining maturities and collateral requirements. 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. The following table presents the estimated fair values and carrying amounts of the Company’s financial instruments, none of which are held for trading purposes, at September 30, 2016 and December 31, 2015: September 30, 2016 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 73,706 $ 73,706 $ 73,706 $ - $ - Investment securities available-for- sale 178,606 178,606 1,969 176,137 500 Loans, net 1,157,420 1,158,081 - 1,155,387 2,694 Accrued interest receivable 4,022 4,022 4,022 - - Federal Home Loan Bank stock 5,425 5,425 - - 5,425 Bank-owned life insurance 28,943 28,943 - 28,943 - Interest rate caps 1,722 1,722 - 1,722 - Financial liabilities: Non-maturing deposits 955,522 955,522 - 955,522 - Time deposits 243,563 244,160 - 244,160 - Accrued interest payable 259 259 259 - - Repurchase agreements and federal funds purchased 19,796 19,796 - 19,796 - FHLB Advances and other borrowings 100,000 100,012 - 100,012 - Subordinated debt 18,558 14,203 - 14,203 - December 31, 2015 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 55,530 $ 55,530 $ 55,530 $ - $ - Investment securities available-for- sale 168,896 168,896 1,810 166,586 500 Loans, net 1,008,515 1,013,415 - 1,010,033 3,382 Accrued interest receivable 3,795 3,795 3,795 - - Federal Home Loan Bank stock 8,061 8,061 - - 8,061 Bank-owned life insurance 28,274 28,274 - 28,274 - Interest rate caps 3,910 3,910 - 3,910 - Financial liabilities: Non-maturing deposits 663,066 663,066 - 663,066 - Time deposits 319,781 320,246 - 320,246 - Accrued interest payable 356 356 356 - - Repurchase agreements and federal funds purchased 30,580 30,580 - 30,580 - FHLB Advances and other borrowings 169,800 169,800 - 169,800 - Subordinated debt 18,558 15,591 - 15,591 -

8. SUPPLEMENTAL CASH FLOW DISCL

8. SUPPLEMENTAL CASH FLOW DISCLOSURE	9 Months Ended
	Sep. 30, 2016
Supplemental Cash Flow Disclosure
SUPPLEMENTAL CASH FLOW DISCLOSURE	For the nine-months ended September 30, (in thousands) 2016 2015 Supplemental Disclosures of Cash Flow Information: Interest paid $ 6,072 $ 5,576 Income taxes paid $ 4,485 $ 3,185 Supplemental Schedule of Noncash Investing and Financing Activites: Change in fair value of securities available-for-sale, net of taxes $ 2,771 $ (934 ) Change in fair value of cash flow hedges, net of taxes $ (1,592 ) $ (2,753 ) Transfer from loans to foreclosed real estate $ - $ 3,300

9. HOLDING COMPANY LINE

9. HOLDING COMPANY LINE	9 Months Ended
	Sep. 30, 2016
Holding Company Line
HOLDING COMPANY LINE	In the third quarter of 2016, the Company entered into a $20.0 million secured holding company line of credit with an unaffiliated institution. The terms of the note include interest at prime plus 0.50% and will expire in September 2017. The line is secured by 100% of the stock of the Bank owned by the Company. The Company has not drawn on the note and has no balance at September 30, 2016.

10. ISSUANCE OF COMMON STOCK

10. ISSUANCE OF COMMON STOCK	9 Months Ended
	Sep. 30, 2016
Issuance Of Common Stock
ISSUANCE OF COMMON STOCK	During the second quarter of 2016, the Company issued 19,145 shares of common stock to certain employees under its long-term stock-based incentive compensation plan. During the third quarter of 2016, there were 1,352 shares of common stock previously issued to certain employees under its long-term stock-based incentive compensation plan which were forfeited. In addition, during the third quarter of 2016, the Company issued 1,528 shares to employees under its employee stock purchase plan. On June 21, 2016, the Company sold a total of 845,588 shares of common stock in our initial public offering at an initial public offering price of $34.00 per share. The Company received net proceeds as a result of the offering of $26.4 million. Of the net proceeds, $3.8 million was deployed to repay the remaining balance on corporate borrowings with the remainder deposited into the Bank for utilization in strategic growth and initiatives.

11. SUBSEQUENT EVENTS

11. SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring through the date the financial statements were available to be issued and no subsequent events occurred requiring accrual or disclosure.

2. BASIS OF PRESENTATION (Polic

2. BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2016
Basis Of Presentation Policies
Earnings Per Common Share	Basic and diluted net income per common share have been computed by dividing net income for each period by the weighted average number of shares of common stock outstanding during each period. Diluted net income per common share reflects the potential dilution that could occur if outstanding stock options were exercised. Basic and diluted net income per common share have been computed based upon net income as presented in the accompanying unaudited consolidated statements of income divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below: Three months Nine months ended September 30, ended September 30, 2016 2015 2016 2015 Shares used in the computation of earnings per share: Weighted average number of shares outstanding - basic 5,406,867 4,520,749 4,846,574 4,502,293 Dilutive effect of restricted shares 32,729 45,214 35,867 47,796 Weighted average number of shares outstanding - diluted 5,439,596 4,565,963 4,882,441 4,550,089 Weighted average anti-dilutive stock options and unvested restricted shares excluded from the computation of diluted earnings per share are as follows: Three months Nine months ended September 30, ended September 30, 2016 2015 2016 2015 Anti-dilutive stock options 80,500 91,000 80,500 91,000 Unvested restricted shares 38,445 52,284 38,445 52,284
Comprehensive Income	The Company reports as comprehensive income all changes in stockholders' equity during the year from sources other than stockholders. Other comprehensive income refers to all components (revenues, expenses, gains, and losses) of comprehensive income that are excluded from net income. The Company’s only two components of other comprehensive income are unrealized gains and losses on investment securities available-for-sale, net of income taxes and unrealized gains and losses on cash flow hedges, net of income taxes. Information concerning the Company’s accumulated other comprehensive income for the nine months ended September 30, 2016 and for the year ended December 31, 2015, respectively is as follows: September 30, December 31, (in thousands) 2016 2015 Unrealized gains on securities available-for-sale $ 4,149 $ 1,378 Deferred tax expense (1,587 ) (530 ) Other comprehensive income, net of tax 2,562 848 Unrealized losses on cash flow hedges (4,371 ) (2,779 ) Deferred tax benefit 1,644 1,045 Other comprehensive loss, net of tax (2,727 ) (1,734 ) Total other accumulated comprehensive income (loss) $ (165 ) $ (886 ) The accumulated balances related to each component of other accumulated comprehensive income (loss) are as follows: Unrealized Unrealized Gains and Gains and Losses on Losses on Available-for Cash Flow Sale Securities Hedges Total Balance as of December 31, 2015 $ 848 $ (1,734 ) $ (886 ) Other comprehensive income (loss) before reclassification 1,799 (993 ) 806 Amounts reclassified from accumulated other comprehensive income (85 ) - (85 ) Net current-period other comprehensive income (loss) 1,714 (993 ) 721 Balance as of September 30, 2016 $ 2,562 $ (2,727 ) $ (165 ) Balance as of December 31, 2014 $ 1,645 $ (503 ) $ 1,142 Other comprehensive loss before reclassification (9 ) (1,699 ) (1,708 ) Amounts reclassified from accumulated other comprehensive income (568 ) - (568 ) Net current-period other comprehensive loss (577 ) (1,699 ) (2,276 ) Balance as of September 30, 2015 $ 1,068 $ (2,202 ) $ (1,134 )
Recent Accounting Pronouncements	In February 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under 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. In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB deferred the effective date of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB issued amendments to the Interest topic of the Accounting Standards Codification (the “ASC”) to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the ASC to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effect that implementation of the new standard will have on its financial statements. In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards Codification to clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company will apply the guidance prospectively to each period presented. The Company does not expect these amendments to have a material effect on its financial statements. In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements. In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not expect these amendments to have a material effect on its financial statements. In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows. In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. 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 the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Reclassifications	Certain amounts in the 2015 financial statements have been reclassified to conform to the 2016 presentation. The reclassifications had no effect on total assets, net income or stockholders' equity as previously reported.

2. BASIS OF PRESENTATION (Table

2. BASIS OF PRESENTATION (Tables)	9 Months Ended
	Sep. 30, 2016
Basis Of Presentation Tables
Shares used in the computation of earnings per share	Three months Nine months ended September 30, ended September 30, 2016 2015 2016 2015 Shares used in the computation of earnings per share: Weighted average number of shares outstanding - basic 5,406,867 4,520,749 4,846,574 4,502,293 Dilutive effect of restricted shares 32,729 45,214 35,867 47,796 Weighted average number of shares outstanding - diluted 5,439,596 4,565,963 4,882,441 4,550,089
Anti-dilutive shares	Three months Nine months ended September 30, ended September 30, 2016 2015 2016 2015 Anti-dilutive stock options 80,500 91,000 80,500 91,000 Unvested restricted shares 38,445 52,284 38,445 52,284
Accumulated other comprehensive income	September 30, December 31, (in thousands) 2016 2015 Unrealized gains on securities available-for-sale $ 4,149 $ 1,378 Deferred tax expense (1,587 ) (530 ) Other comprehensive income, net of tax 2,562 848 Unrealized losses on cash flow hedges (4,371 ) (2,779 ) Deferred tax benefit 1,644 1,045 Other comprehensive loss, net of tax (2,727 ) (1,734 ) Total other accumulated comprehensive income (loss) $ (165 ) $ (886 )
Balances related to each component of other comprehensive income (loss)	Unrealized Unrealized Gains and Gains and Losses on Losses on Available-for Cash Flow Sale Securities Hedges Total Balance as of December 31, 2015 $ 848 $ (1,734 ) $ (886 ) Other comprehensive income (loss) before reclassification 1,799 (993 ) 806 Amounts reclassified from accumulated other comprehensive income (85 ) - (85 ) Net current-period other comprehensive income (loss) 1,714 (993 ) 721 Balance as of September 30, 2016 $ 2,562 $ (2,727 ) $ (165 ) Balance as of December 31, 2014 $ 1,645 $ (503 ) $ 1,142 Other comprehensive loss before reclassification (9 ) (1,699 ) (1,708 ) Amounts reclassified from accumulated other comprehensive income (568 ) - (568 ) Net current-period other comprehensive loss (577 ) (1,699 ) (2,276 ) Balance as of September 30, 2015 $ 1,068 $ (2,202 ) $ (1,134 )

3. INVESTMENT SECURITIES (Table

3. INVESTMENT SECURITIES (Tables)	9 Months Ended
	Sep. 30, 2016
Investment Securities Tables
Summary of available-for-sale securities	Gross Gross Estimated Amortized Unrealized Unrealized Fair (in thousands) Cost Gains Losses Value September 30, 2016 Available-for-sale: U.S. Agency obligations $ 17,673 $ 503 $ - $ 18,176 Collateralized mortgage obligations 45,802 740 - 46,542 Mortgage-backed securities 46,999 829 - 47,828 Municipal bonds 61,304 2,286 - 63,590 Other 2,679 19 228 2,470 $ 174,457 $ 4,377 $ 228 $ 178,606 December 31, 2015 Available-for-sale: U.S. Agency obligations $ 19,778 $ 196 $ 73 $ 19,901 Collateralized mortgage obligations 60,826 321 206 60,941 Mortgage-backed securities 31,074 326 90 31,310 Municipal bonds 53,163 1,346 75 54,434 Other 2,677 10 377 2,310 $ 167,518 $ 2,199 $ 821 $ 168,896
Fair value of investment securities available for sale by contractual maturity	After One After Five No Stated Within Within Within After Maturity (in thousands) 1 Year Five Years Ten Years Ten Years Date Total U.S. Agency obligations $ - $ - $ - $ 18,176 $ - $ 18,176 Collateralized mortgage obligations - - - 46,542 - 46,542 Mortgage-backed securities - - 13,666 34,162 - 47,828 Municipal bonds - 1,812 6,342 55,436 - 63,590 Other - - 500 - 1,970 2,470 $ - $ 1,812 $ 20,508 $ 154,316 $ 1,970 $ 178,606
Current fair value and associated unrealized losses on investments in securities with unrealized losses	Less Than 12 Months 12 Months or Greater Total (in thousands) Unrealized Unrealized Unrealized September 30, 2016 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ - $ - $ - $ - $ - $ - Collateralized mortgage obligations - - - - - - Mortgage-backed securities - - - - - - Municipal bonds - - - - - - Other 1,925 228 - - 1,925 228 Total temporarily impaired securities $ 1,925 $ 228 $ - $ - $ 1,925 $ 228 Less Than 12 Months 12 Months or Greater Total (in thousands) Unrealized Unrealized Unrealized December 31, 2015 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ 3,007 $ - $ 3,178 $ 73 $ 6,185 $ 73 Collateralized mortgage obligations 26,086 159 2,983 47 29,069 206 Mortgage-backed securities 18,575 90 - - 18,575 90 Municipal bonds 3,896 6 7,990 69 11,886 75 Other 1,774 377 - - 1,774 377 Total temporarily impaired securities $ 53,338 $ 632 $ 14,151 $ 189 $ 67,489 $ 821
Investment securities in an unrealized loss position	September 30, December 31, Available-for-sale: 2016 2015 U.S. Agency obligations - 3 Collateralized mortgage obligations - 7 Mortgage-backed securities - 6 Municipal bonds - 22 Other 1 1 1 39
Securities gains for the periods	Three months Nine months ended September 30, ended September 30, (in thousands) 2016 2015 2016 2015 Gross gains on sales of securities available for sale $ - $ 158 $ 136 $ 585 Gross losses on sales of securities available for sale - (13 ) (51 ) (17 ) Total securities gains $ - $ 145 $ 85 $ 568

4. LOANS AND ALLOWANCE FOR LO22

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)	9 Months Ended
	Sep. 30, 2016
Loans And Allowance For Loan Losses Tables
Summary of loans	September 30, December 31, (in thousands) 2016 2015 Construction and land development $ 74,605 $ 64,702 Commercial real estate: Non-farm, non-residential 356,833 307,722 Owner occupied 178,631 147,017 Multifamily, nonresidential and junior liens 96,643 79,170 Total commercial real estate 632,107 533,909 Consumer real estate: Home equity lines 86,361 78,943 Secured by 1-4 family residential, secured by first deeds of trust 190,913 167,053 Secured by 1-4 family residential, secured by second deeds of trust 4,358 3,711 Total consumer real estate 281,632 249,707 Commercial and industrial loans (except those secured by real estate) 164,913 153,669 Consumer and other 11,558 13,539 Total loans 1,164,815 1,015,526 Deferred loan (fees) costs 530 630 Allowance for loan losses (7,925 ) (7,641 ) Net loans $ 1,157,420 $ 1,008,515 September 30, December 31, (in thousands) 2016 2015 Construction and land development: Land $ 15,650 $ 16,026 Residential 31,370 29,864 Commercial 27,585 18,812 Total construction and land development $ 74,605 $ 64,702 Commercial real estate: Non-farm, non-residential: Office $ 102,065 $ 92,991 Industrial 41,710 38,518 Hotel/motel 21,453 18,935 Retail 161,447 135,200 Special purpose/Other 30,158 22,078 356,833 307,722 Owner occupied : Office 59,358 51,775 Industrial 43,027 40,337 Retail 26,216 12,157 Special purpose/Other 50,030 42,748 178,631 147,017 Multifamily, nonresidential and junior liens 96,643 79,170 Total commercial real estate $ 632,107 $ 533,909
Changes in the allowance for loan losses	Commercial & Industrial Construction Consumer Loans Not and Land Commercial Real Secured By Consumer Total (in thousands) Development Real Estate Estate Real Estate & Other Loans Three months ended September 30, 2016 Beginning balance $ 406 $ 3,278 $ 1,887 $ 2,307 $ 108 $ 7,986 Provision for loan losses (64 ) 128 204 147 (24 ) 391 Loans charged off - - - (682 ) - (682 ) Recoveries 58 3 1 168 - 230 Net (chargeoffs) recoveries 58 3 1 (514 ) - (452 ) Ending balance $ 400 $ 3,409 $ 2,092 $ 1,940 $ 84 $ 7,925 Nine months ended September 30, 2016 Beginning balance $ 509 $ 3,156 $ 2,046 $ 1,786 $ 144 $ 7,641 Provision for loan losses (404 ) 194 39 632 (70 ) 391 Loans charged off - - - (682 ) (1 ) (683 ) Recoveries 295 59 7 204 11 576 Net (chargeoffs) recoveries 295 59 7 (478 ) 10 (107 ) Ending balance $ 400 $ 3,409 $ 2,092 $ 1,940 $ 84 $ 7,925 Three months ended September 30, 2015 Beginning balance $ 801 $ 2,086 $ 2,237 $ 2,388 $ 57 $ 7,569 Provision for loan losses (230 ) 624 125 (520 ) 1 - Loans charged off (14 ) - - - - (14 ) Recoveries 10 11 42 - - 63 Net (chargeoffs) recoveries (4 ) 11 42 - - 49 Ending balance $ 567 $ 2,721 $ 2,404 $ 1,868 $ 58 $ 7,618 Nine months ended September 30, 2015 Beginning balance $ 960 $ 2,510 $ 1,594 $ 1,662 $ 143 $ 6,869 Provision for loan losses (442 ) 476 768 33 (85 ) 750 Loans charged off (14 ) (276 ) - - - (290 ) Recoveries 63 11 42 173 - 289 Net (chargeoffs) recoveries 49 (265 ) 42 173 - (1 ) Ending balance $ 567 $ 2,721 $ 2,404 $ 1,868 $ 58 $ 7,618
Allowance for loan losses	Commercial & Industrial Construction Consumer Loans Not and Land Commercial Real Secured By Consumer Total (in thousands) Development Real Estate Estate Real Estate & Other Loans September 30, 2016 Allowance for Loan Losses: Individually evaluated for impairment $ 1 $ 6 $ 233 $ 516 $ - $ 756 Collectively evaluated for impairment 399 3,403 1,859 1,424 84 7,169 Total ending allowance $ 400 $ 3,409 $ 2,092 $ 1,940 $ 84 $ 7,925 Loans: Individually evaluated for impairment $ 128 $ 860 $ 946 $ 1,516 $ - $ 3,450 Collectively evaluated for impairment 74,477 631,247 280,686 163,397 11,558 1,161,365 Total ending loans $ 74,605 $ 632,107 $ 281,632 $ 164,913 $ 11,558 $ 1,164,815 (in thousands) December 31, 2015 Allowance for Loan Losses: Individually evaluated for impairment $ 4 $ 72 $ 115 $ 297 $ 21 $ 509 Collectively evaluated for impairment 505 3,084 1,931 1,489 123 7,132 Total ending allowance $ 509 $ 3,156 $ 2,046 $ 1,786 $ 144 $ 7,641 Loans: Individually evaluated for impairment $ 238 $ 2,619 $ 411 $ 602 $ 21 $ 3,891 Collectively evaluated for impairment 64,464 531,290 249,296 153,067 13,518 1,011,635 Total ending loans $ 64,702 $ 533,909 $ 249,707 $ 153,669 $ 13,539 $ 1,015,526
Performing and nonperforming TDRs	September 30, December 31, (in thousands) 2016 2015 Performing TDRs: Commercial real estate $ 533 $ 2,220 Consumer real estate 339 346 Commercial and industrial loans - 47 Total performing TDRs 872 2,613 Nonperforming TDRs: Construction and land development 128 104 Consumer real estate 60 65 Consumer and other - 21 Total nonperformingTDRs 188 190 Total TDRs $ 1,060 $ 2,803
Impaired loans	Unpaid Contractual (in thousands) Recorded Principal Allocated September 30, 2016 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 127 $ 166 $ - Commercial real estate 534 536 - Commercial and industrial loans 91 356 - Loans with a specific valuation allowance: Construction and land development 1 29 1 Commercial real estate 326 327 6 Consumer real estate 946 975 233 Commercial and industrial loans 1,425 1,457 516 Total $ 3,450 $ 3,846 $ 756 Unpaid Contractual (in thousands) Recorded Principal Allocated December 31, 2015 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 234 $ 397 $ - Commercial real estate 2,220 2,319 - Loans with a specific valuation allowance: Construction and land development 4 29 4 Commercial real estate 399 480 72 Consumer real estate 411 474 115 Commercial and industrial loans (except those secured by real estate) 602 895 297 Consumer and other 21 26 21 Total $ 3,891 $ 4,620 $ 509
Average recorded investment balance of impaired loans	Three months ended September 30, 2016 2015 Average Interest Average Interest (in thousands) Balance Income Balance Income Construction and land development $ 130 $ - $ 252 $ - Commercial real estate 867 10 4,030 48 Consumer real estate 947 7 820 7 Commercial and industrial loans 2,149 18 657 10 Consumer and other - - 23 - $ 4,093 $ 35 $ 5,782 $ 65 Nine months ended September 30, 2016 2015 Average Interest Average Interest (in thousands) Balance Income Balance Income Construction and land development $ 229 $ - $ 330 $ 1 Commercial real estate 2,398 37 9,170 139 Consumer real estate 951 15 825 21 Commercial and industrial loans 2,802 48 739 32 Consumer and other 20 - 24 - $ 6,400 $ 100 $ 11,088 $ 193
Non-accrual loans	Nonaccrual September 30, December 31, (in thousands) 2016 2015 Construction and land development $ 128 $ 238 Consumer real estate 604 65 Commercial and industrial loans 216 189 Consumer and other - 21 Total $ 948 $ 513
Age analysis of past due loans, by loan type	Greater 30 - 59 60 - 89 than 90 Days Days Days Total (in thousands) Past Past Past Non- Past Total September 30, 2016 Due Due Due Accrual Due Current Loans Construction and land development $ - $ - $ - $ 128 $ 128 $ 74,477 $ 74,605 Commercial real estate - - - - - 632,107 632,107 Consumer real estate 194 - - 604 798 280,834 281,632 Commercial and industrial loans 305 - - 216 521 164,392 164,913 Consumer and other - - - - - 11,558 11,558 Total $ 499 $ - $ - $ 948 $ 1,447 $ 1,163,368 $ 1,164,815 Greater 30 - 59 60 - 89 than 90 Days Days Days Total (in thousands) Past Past Past Non- Past Total December 31, 2015 Due Due Due Accrual Due Current Loans Construction and land development $ - $ - $ - $ 238 $ 238 $ 64,464 $ 64,702 Commercial real estate - - - - - 533,909 533,909 Consumer real estate - - - 65 65 249,642 249,707 Commercial and industrial loans - - - 189 189 153,480 153,669 Consumer and other - - - 21 21 13,518 13,539 Total $ - $ - $ - $ 513 $ 513 $ 1,015,013 $ 1,015,526
Credit risk profile of each loan type based on internally assigned risk grade	Risk Grade (in thousands) 1 2 3 4 5 6 7 Total September 30, 2016 Construction and land development $ - $ 676 $ 714 $ 21,173 $ 51,708 $ 205 $ - $ 74,476 Commercial real estate - 560 219,780 302,865 104,621 3,415 - 631,241 Consumer real estate 52 19,926 128,522 96,324 34,574 1,292 - 280,690 Commercial and industrial loans 2,263 1,340 29,806 100,638 28,700 652 - 163,399 Consumer and other 1,161 485 1,113 7,836 964 - - 11,559 Total $ 3,476 $ 22,987 $ 379,935 $ 528,836 $ 220,567 $ 5,564 $ - $ 1,161,365 Risk Grade (in thousands) 1 2 3 4 5 6 7 Total December 31, 2015 Construction and land development $ 26 $ 200 $ 2,545 $ 14,318 $ 47,133 $ 242 $ - $ 64,464 Commercial real estate - 619 195,935 243,771 87,492 3,473 - 531,290 Consumer real estate 53 10,933 111,123 92,127 34,346 714 - 249,296 Commercial and industrial loans 2,168 1,909 24,675 96,900 26,802 612 - 153,066 Consumer and other 980 1,069 960 8,392 1,936 182 - 13,519 Total $ 3,227 $ 14,730 $ 335,238 $ 455,508 $ 197,709 $ 5,223 $ - $ 1,011,635

5. OFF-BALANCE SHEET RISK (Tabl

5. OFF-BALANCE SHEET RISK (Tables)	9 Months Ended
	Sep. 30, 2016
Off-balance Sheet Risk Tables
Summary of the contract amounts exposed to off-balance sheet credit risk	September 30, December 31, (in thousands) 2016 2015 Financial instruments whose contract amounts represent credit risk: Undisbursed lines of credit $ 202,012 $ 163,572 Standby letters of credit 3,899 3,188 Total $ 205,911 $ 166,760

6. DERIVATIVES AND FINANCIAL 24

6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2016
Derivatives And Financial Instruments Tables
Summary of cash flow hedges	September 30, 2016 December 31, 2015 Notational Fair Notational Fair (in thousands) Amount Value Amount Value Included in other assets: Cap 1 - maturing August 2019 $ 35,000 $ 590 $ 35,000 $ 1,334 Cap 2 - maturing September 2019 35,000 603 35,000 1,360 Cap 3 - maturing October 2019 30,000 529 30,000 1,216 $ 100,000 $ 1,722 $ 100,000 $ 3,910
Amortization of the premium on the interest rate caps	(in thousands) 2016 (remaining quarter) $ 315 2017 1,779 2018 2,247 2019 1,752 $ 6,093
Remaining amortization of the gain associated with the exit of the swaps	(in thousands) 2016 (remaining quarter) $ 19 2017 74 2018 74 Thereafter 147 $ 314

7. FAIR VALUE OF FINANCIAL IN25

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value Of Financial Instruments Tables
Available for sale securities measured at fair value on a recurring basis	Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (in thousands) Total Identical Assets Inputs Inputs Description Fair Value (Level 1) (Level 2) (Level 3) September 30, 2016 Securities available-for-sale: U.S. Agency obligations $ 18,176 $ - $ 18,176 $ - Collateralized mortgage obligations 46,542 - 46,542 - Mortgage-backed securities 47,828 - 47,828 - Municipal bonds 63,590 - 63,590 Other 2,470 1,970 - 500 178,606 1,970 176,136 500 Interest rate caps 1,722 - 1,722 - Total assets at fair value $ 180,328 $ 1,970 $ 177,858 $ 500 December 31, 2015 Securities available-for-sale: U.S. Agency obligations $ 19,901 $ - $ 19,901 $ - Collateralized mortgage obligations 60,941 - 60,941 - Mortgage-backed securities 31,310 - 31,310 - Municipal bonds 54,434 - 54,434 Other 2,310 1,810 - 500 168,896 1,810 166,586 500 Interest rate caps 3,910 - 3,910 - Total assets at fair value $ 172,806 $ 1,810 $ 170,496 $ 500
Fair value measurements of investment securities available for sale using Level 3 significant unobservable inputs	Level 3 Investment (in thousands) Securities Balance at December 31, 2015 $ 500 Purchases - Balance at September 30, 2016 $ 500
Fair value measurements for impaired loans and other real estate on a non-recurring basis	Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (in thousands) Total Identical Assets Inputs Inputs September 30, 2016 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 2,694 $ - $ - $ 2,694 Other real estate owned 5,183 - - 5,183 Total $ 7,877 $ - $ - $ 7,877 Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (in thousands) Total Identical Assets Inputs Inputs December 31, 2015 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 3,382 $ - $ - $ 3,382 Other real estate owned 5,453 - - 5,453 Total $ 8,835 $ - $ - $ 8,835
Significant unobservable inputs used in the fair value measurements	September 30, 2016 and December 31, 2015 Valuation Significant Significant Technique Observable Inputs unobservable Inputs Impaired loans Appraisal value Appraisals and/or sales of Appraisals discounted 5% to 10% for comparable properties sales commissions and other holding costs Other real estate owned Appraisal value/ Appraisals and/or sales of Appraisals discounted 5% to 10% for Comparison sale/ comparable properties sales commissions and other holding costs Other estimates
Carrying amount fair value of the Company's financial instruments	September 30, 2016 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 73,706 $ 73,706 $ 73,706 $ - $ - Investment securities available-for- sale 178,606 178,606 1,969 176,137 500 Loans, net 1,157,420 1,158,081 - 1,155,387 2,694 Accrued interest receivable 4,022 4,022 4,022 - - Federal Home Loan Bank stock 5,425 5,425 - - 5,425 Bank-owned life insurance 28,943 28,943 - 28,943 - Interest rate caps 1,722 1,722 - 1,722 - Financial liabilities: Non-maturing deposits 955,522 955,522 - 955,522 - Time deposits 243,563 244,160 - 244,160 - Accrued interest payable 259 259 259 - - Repurchase agreements and federal funds purchased 19,796 19,796 - 19,796 - FHLB Advances and other borrowings 100,000 100,012 - 100,012 - Subordinated debt 18,558 14,203 - 14,203 - December 31, 2015 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 55,530 $ 55,530 $ 55,530 $ - $ - Investment securities available-for- sale 168,896 168,896 1,810 166,586 500 Loans, net 1,008,515 1,013,415 - 1,010,033 3,382 Accrued interest receivable 3,795 3,795 3,795 - - Federal Home Loan Bank stock 8,061 8,061 - - 8,061 Bank-owned life insurance 28,274 28,274 - 28,274 - Interest rate caps 3,910 3,910 - 3,910 - Financial liabilities: Non-maturing deposits 663,066 663,066 - 663,066 - Time deposits 319,781 320,246 - 320,246 - Accrued interest payable 356 356 356 - - Repurchase agreements and federal funds purchased 30,580 30,580 - 30,580 - FHLB Advances and other borrowings 169,800 169,800 - 169,800 - Subordinated debt 18,558 15,591 - 15,591 -

8. SUPPLEMENTAL CASH FLOW DIS26

8. SUPPLEMENTAL CASH FLOW DISCLOSURE (Tables)	9 Months Ended
	Sep. 30, 2016
Supplemental Cash Flow Disclosure Tables
Supplemental cash flow disclosure	For the nine-months ended September 30, (in thousands) 2016 2015 Supplemental Disclosures of Cash Flow Information: Interest paid $ 6,072 $ 5,576 Income taxes paid $ 4,485 $ 3,185 Supplemental Schedule of Noncash Investing and Financing Activites: Change in fair value of securities available-for-sale, net of taxes $ 2,771 $ (934 ) Change in fair value of cash flow hedges, net of taxes $ (1,592 ) $ (2,753 ) Transfer from loans to foreclosed real estate $ - $ 3,300

2. BASIS OF PRESENTATION (Detai

2. BASIS OF PRESENTATION (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Shares used in the computation of earnings per share:
Weighted average number of shares outstanding - basic	5,406,867	4,520,749	4,846,574	4,502,293
Dilutive effect of restricted shares	32,729	45,214	35,867	47,796
Weighted average number of shares outstanding - diluted	5,439,596	4,565,963	4,882,441	4,550,089

2. BASIS OF PRESENTATION (Det28

2. BASIS OF PRESENTATION (Details 1) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock Options
Anti-dilutive shares excluded from the computation of earnings per share	80,500	91,000	80,500	91,000
Unvested Restricted Shares
Anti-dilutive shares excluded from the computation of earnings per share	38,445	52,284	38,445	52,284

2. BASIS OF PRESENTATION (Det29

2. BASIS OF PRESENTATION (Details 2) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Basis Of Presentation Details 2
Unrealized gains on securities available-for-sale	$ 4,149	$ 1,378
Deferred tax expense	(1,587)	(530)
Other comprehensive income, net of tax	2,562	848
Unrealized losses on cash flow hedges	(4,371)	(2,779)
Deferred tax benefit	1,644	1,045
Other comprehensive loss, net of tax	(2,727)	(1,734)
Total other comprehensive income (loss)	$ (165)	$ (886)	$ (1,134)	$ 1,142

2. BASIS OF PRESENTATION (Det30

2. BASIS OF PRESENTATION (Details 3) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Other comprehensive income (loss), beginning	$ (886)	$ 1,142
Other comprehensive income (loss) before reclassification	806	(1,708)
Amounts reclassified from accumulated other comprehensive income	(85)	(568)
Net current-period other comprehensive income (loss)	721	(2,276)
Other comprehensive income (loss), ending	(165)	(1,134)
Unrealized Gains and Losses on Available-for-Sale Securities
Other comprehensive income (loss), beginning	848	1,645
Other comprehensive income (loss) before reclassification	1,799	(9)
Amounts reclassified from accumulated other comprehensive income	(85)	(568)
Net current-period other comprehensive income (loss)	1,714	(577)
Other comprehensive income (loss), ending	2,562	1,068
Unrealized Gains and Losses on Cash Flow Hedges
Other comprehensive income (loss), beginning	(1,734)	(503)
Other comprehensive income (loss) before reclassification	(993)	(1,699)
Amounts reclassified from accumulated other comprehensive income	0	0
Net current-period other comprehensive income (loss)	(993)	(1,699)
Other comprehensive income (loss), ending	$ (2,727)	$ (2,202)

3. INVESTMENT SECURITIES (Detai

3. INVESTMENT SECURITIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Investment securities available for sale
Gross Unrealized Gains	$ 0	$ 158	$ 136	$ 585
Gross Unrealized Losses	0	$ (13)	(51)	$ (17)
Estimated Fair Value	178,606		178,606		$ 168,896
U.S. Agency obligations
Investment securities available for sale
Amortized Cost	17,673		17,673		19,778
Gross Unrealized Gains			503		196
Gross Unrealized Losses			0		73
Estimated Fair Value	18,176		18,176		19,901
Collateralized mortgage obligations
Investment securities available for sale
Amortized Cost	45,802		45,802		60,826
Gross Unrealized Gains			740		321
Gross Unrealized Losses			0		206
Estimated Fair Value	46,542		46,542		60,941
Mortgage-backed securities
Investment securities available for sale
Amortized Cost	46,999		46,999		31,074
Gross Unrealized Gains			829		326
Gross Unrealized Losses			0		90
Estimated Fair Value	47,828		47,828		31,310
Municipal Bonds
Investment securities available for sale
Amortized Cost	61,304		61,304		53,163
Gross Unrealized Gains			2,286		1,346
Gross Unrealized Losses			0		75
Estimated Fair Value	63,590		63,590		54,434
Other
Investment securities available for sale
Amortized Cost	2,679		2,679		2,677
Gross Unrealized Gains			19		10
Gross Unrealized Losses			228		377
Estimated Fair Value	2,470		2,470		2,310
Total
Investment securities available for sale
Amortized Cost	174,457		174,457		167,518
Gross Unrealized Gains			4,377		2,199
Gross Unrealized Losses			228		821
Estimated Fair Value	$ 178,606		$ 178,606		$ 168,896

3. INVESTMENT SECURITIES (Det32

3. INVESTMENT SECURITIES (Details 1) $ in Thousands	Sep. 30, 2016USD ($)
Estimated Fair Value
Due within one year	$ 0
Due after one within five years	1,812
Due after five within ten years	20,508
Due after ten years	154,316
No stated maturity date	1,970
Total	178,606
U.S. Agency obligations
Estimated Fair Value
Due within one year	0
Due after one within five years	0
Due after five within ten years	0
Due after ten years	18,176
No stated maturity date	0
Total	18,176
Collateralized mortgage obligations
Estimated Fair Value
Due within one year	0
Due after one within five years	0
Due after five within ten years	0
Due after ten years	46,542
No stated maturity date	0
Total	46,542
Mortgage-backed securities
Estimated Fair Value
Due within one year	0
Due after one within five years	0
Due after five within ten years	13,666
Due after ten years	34,162
No stated maturity date	0
Total	47,828
Municipal Bonds
Estimated Fair Value
Due within one year	0
Due after one within five years	1,812
Due after five within ten years	6,342
Due after ten years	55,436
No stated maturity date	0
Total	63,590
Other
Estimated Fair Value
Due within one year	0
Due after one within five years	0
Due after five within ten years	500
Due after ten years	0
No stated maturity date	1,970
Total	$ 2,470

3. INVESTMENT SECURITIES (Det33

3. INVESTMENT SECURITIES (Details 2) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Securities available-for-sale:
Less than 12 Months, Fair Value	$ 1,925	$ 53,338
Less than 12 Months, Unrealized Losses	228	632
12 Months or More, Fair Value	0	14,151
12 Months or More, Unrealized Losses	0	189
Total, Fair Value	1,925	67,489
Total, Unrealized Losses	228	821
U.S. Agency obligations
Securities available-for-sale:
Less than 12 Months, Fair Value	0	3,007
Less than 12 Months, Unrealized Losses	0	0
12 Months or More, Fair Value	0	3,178
12 Months or More, Unrealized Losses	0	73
Total, Fair Value	0	6,185
Total, Unrealized Losses	0	73
Collateralized mortgage obligations
Securities available-for-sale:
Less than 12 Months, Fair Value	0	26,086
Less than 12 Months, Unrealized Losses	0	159
12 Months or More, Fair Value	0	2,983
12 Months or More, Unrealized Losses	0	47
Total, Fair Value	0	29,069
Total, Unrealized Losses	0	206
Mortgage-backed securities
Securities available-for-sale:
Less than 12 Months, Fair Value	0	18,575
Less than 12 Months, Unrealized Losses	0	90
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	0	18,575
Total, Unrealized Losses	0	90
Municipal Bonds
Securities available-for-sale:
Less than 12 Months, Fair Value	0	3,896
Less than 12 Months, Unrealized Losses	0	6
12 Months or More, Fair Value	0	7,990
12 Months or More, Unrealized Losses	0	69
Total, Fair Value	0	11,886
Total, Unrealized Losses	0	75
Other
Securities available-for-sale:
Less than 12 Months, Fair Value	1,925	1,774
Less than 12 Months, Unrealized Losses	228	377
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	1,925	1,774
Total, Unrealized Losses	$ 228	$ 377

3. INVESTMENT SECURITIES (Det34

3. INVESTMENT SECURITIES (Details 3) - Integer	Sep. 30, 2016	Dec. 31, 2015
Number of investment securities in an unrealized loss position	1	39
U.S. Agency obligations
Number of investment securities in an unrealized loss position	0	3
Collateralized mortgage obligations
Number of investment securities in an unrealized loss position	0	7
Mortgage-backed securities
Number of investment securities in an unrealized loss position	0	6
Municipal Bonds
Number of investment securities in an unrealized loss position	0	22
Other
Number of investment securities in an unrealized loss position	1	1

3. INVESTMENT SECURITIES (Det35

3. INVESTMENT SECURITIES (Details 4) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Investment Securities Details 4
Gross gains on sales of securities available for sale	$ 0	$ 158	$ 136	$ 585
Gross losses on sales of securities available for sale	0	(13)	(51)	(17)
Total securities gains	$ 0	$ 145	$ 85	$ 568

3. INVESTMENT SECURITIES (Det36

3. INVESTMENT SECURITIES (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Pledged to secure repurchase agreements, lines of credit and other borrowings	$ 52,200	$ 78,400

4. LOANS AND ALLOWANCE FOR LO37

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Total loans	$ 1,164,815		$ 1,015,526
Deferred loan (fees) costs	530		630
Less allowance for loan losses	(7,925)	$ (7,986)	(7,641)	$ (7,618)	$ (7,569)	$ (6,869)
Total net loans	1,157,420		1,008,515
Commercial Real Estate
Less allowance for loan losses	(3,409)	$ (3,278)	(3,156)	$ (2,721)	$ (2,086)	$ (2,510)
Construction and land development
Total loans	74,605		64,702
Construction and land development | Land
Total loans	15,650		16,026
Construction and land development | Residential
Total loans	31,370		29,864
Construction and land development | Commercial
Total loans	27,585		18,812
Non-farm, non-residential | Commercial Real Estate
Total loans	356,833
Non-farm, non-residential | Commercial Real Estate | Office
Total loans	102,065		92,991
Non-farm, non-residential | Commercial Real Estate | Industrial
Total loans	41,710		38,518
Non-farm, non-residential | Commercial Real Estate | Hotel/Motel
Total loans	21,453		18,935
Non-farm, non-residential | Commercial Real Estate | Retail
Total loans	161,447		135,200
Non-farm, non-residential | Commercial Real Estate | Special purpose/Other
Total loans	30,158		22,078
Commercial Real Estate
Total loans	632,107		533,909
Commercial Real Estate | Owner occupied
Total loans	178,631		147,017
Commercial Real Estate | Owner occupied | Office
Total loans	59,358		51,775
Commercial Real Estate | Owner occupied | Industrial
Total loans	43,027		40,337
Commercial Real Estate | Owner occupied | Retail
Total loans	26,216		12,157
Commercial Real Estate | Owner occupied | Special purpose/Other
Total loans	50,030		42,748
Commercial Real Estate | Multifamily, nonresidential and junior liens
Total loans	96,643		79,170
Commercial Real Estate | Non-farm, non-residential
Total loans			307,722
Consumer Real Estate
Total loans	281,632		249,707
Consumer Real Estate | Home equity lines
Total loans	86,361		78,943
Consumer Real Estate | Secured by 1-4 family residential, secured by first deeds of trust
Total loans	190,913		167,053
Consumer Real Estate | Secured by 1-4 family residential, secured by second deeds of trust
Total loans	4,358		3,711
Commercial and industrial loans (except those secured by real estate)
Total loans	164,913		153,669
Consumer and other
Total loans	$ 11,558		$ 13,539

4. LOANS AND ALLOWANCE FOR LO38

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Allowance for loan losses
Beginning balance	$ 7,986	$ 7,569	$ 7,641	$ 6,869
Provision for loan losses	391	0	391	750
Loans charged off	(682)	(14)	(683)	(290)
Recoveries	230	63	576	289
Net (chargeoffs) recoveries	(452)	49	(107)	(1)
Ending balance	7,925	7,618	7,925	7,618
Construction and land development
Allowance for loan losses
Beginning balance	406	801	509	960
Provision for loan losses	(64)	(230)	(404)	(442)
Loans charged off	0	(14)	0	(14)
Recoveries	58	10	295	63
Net (chargeoffs) recoveries	58	(4)	295	49
Ending balance	400	567	400	567
Commercial Real Estate
Allowance for loan losses
Beginning balance	3,278	2,086	3,156	2,510
Provision for loan losses	128	624	194	476
Loans charged off	0	0	0	(276)
Recoveries	3	11	59	11
Net (chargeoffs) recoveries	3	11	59	(265)
Ending balance	3,409	2,721	3,409	2,721
Consumer Real Estate
Allowance for loan losses
Beginning balance	1,887	2,237	2,046	1,594
Provision for loan losses	204	125	39	768
Loans charged off	0	0	0	0
Recoveries	1	42	7	42
Net (chargeoffs) recoveries	1	42	7	42
Ending balance	2,092	2,404	2,092	2,404
Commercial and industrial loans (except those secured by real estate)
Allowance for loan losses
Beginning balance	2,307	2,388	1,786	1,662
Provision for loan losses	147	(520)	632	33
Loans charged off	(682)	0	(682)	0
Recoveries	168	0	204	173
Net (chargeoffs) recoveries	(514)	0	(478)	173
Ending balance	1,940	1,868	1,940	1,868
Consumer and other
Allowance for loan losses
Beginning balance	108	57	144	143
Provision for loan losses	(24)	1	(70)	(85)
Loans charged off	0	0	(1)	0
Recoveries	0	0	11	0
Net (chargeoffs) recoveries	0	0	10	0
Ending balance	$ 84	$ 58	$ 84	$ 58

4. LOANS AND ALLOWANCE FOR LO39

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Allowance for loan losses
Individually evaluated for impairment	$ 756	$ 509
Collectively evaluated for impairment	7,169	7,132
Total ending allowance	7,925	7,641
Loans
Individually evaluated for impairment	3,450	3,891
Collectively evaluated for impairment	1,161,365	1,011,635
Total ending loans	1,164,815	1,015,526
Construction and land development
Allowance for loan losses
Individually evaluated for impairment	1	4
Collectively evaluated for impairment	399	505
Total ending allowance	400	509
Loans
Individually evaluated for impairment	128	238
Collectively evaluated for impairment	74,477	64,464
Total ending loans	74,605	64,702
Commercial Real Estate
Allowance for loan losses
Individually evaluated for impairment	6	72
Collectively evaluated for impairment	3,403	3,084
Total ending allowance	3,409	3,156
Loans
Individually evaluated for impairment	860	2,619
Collectively evaluated for impairment	631,247	531,290
Total ending loans	632,107	533,909
Consumer Real Estate
Allowance for loan losses
Individually evaluated for impairment	233	115
Collectively evaluated for impairment	1,859	1,931
Total ending allowance	2,092	2,046
Loans
Individually evaluated for impairment	946	411
Collectively evaluated for impairment	280,686	249,296
Total ending loans	281,632	249,707
Commercial and industrial loans (except those secured by real estate)
Allowance for loan losses
Individually evaluated for impairment	516	297
Collectively evaluated for impairment	1,424	1,489
Total ending allowance	1,940	1,786
Loans
Individually evaluated for impairment	1,516	602
Collectively evaluated for impairment	163,397	153,067
Total ending loans	164,913	153,669
Consumer and other
Allowance for loan losses
Individually evaluated for impairment	0	21
Collectively evaluated for impairment	84	123
Total ending allowance	84	144
Loans
Individually evaluated for impairment	0	21
Collectively evaluated for impairment	11,558	13,518
Total ending loans	$ 11,558	$ 13,539

4. LOANS AND ALLOWANCE FOR LO40

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Performing TDRs	$ 872	$ 2,613
Nonperforming TDRs	188	190
Total TDRs	1,060	2,803
Consumer Real Estate
Performing TDRs	339	346
Nonperforming TDRs	60	65
Commercial and industrial loans (except those secured by real estate)
Performing TDRs	0	47
Nonperforming TDRs	0	0
Consumer and other
Nonperforming TDRs		21
Construction and land development
Nonperforming TDRs	128	104
Commercial Real Estate
Performing TDRs	$ 533	$ 2,220

4. LOANS AND ALLOWANCE FOR LO41

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Impaired loans
Recorded Investment in Impaired Loans	$ 3,450	$ 3,891
Unpaid Contractual Principal Balance	3,846	4,620
Allocated Allowance	756	509
Commercial and industrial loans (except those secured by real estate)
Impaired loans
Recorded Investment With No Allowance	91
Recorded Investment With Allowance	1,425	602
Unpaid Contractual Principal Balance With No Allowance	356
Unpaid Contractual Principal Balance With Allowance	1,457	895
Allocated Allowance	516	297
Consumer and other
Impaired loans
Recorded Investment With Allowance		21
Unpaid Contractual Principal Balance With Allowance		26
Allocated Allowance		21
Construction and land development
Impaired loans
Recorded Investment With No Allowance	127	234
Recorded Investment With Allowance	1	4
Unpaid Contractual Principal Balance With No Allowance	166	397
Unpaid Contractual Principal Balance With Allowance	29	29
Allocated Allowance	1	4
Commercial Real Estate
Impaired loans
Recorded Investment With No Allowance	534	2,220
Recorded Investment With Allowance	326	399
Unpaid Contractual Principal Balance With No Allowance	536	2,319
Unpaid Contractual Principal Balance With Allowance	327	480
Allocated Allowance	6	72
Consumer Real Estate
Impaired loans
Recorded Investment With Allowance	946	411
Unpaid Contractual Principal Balance With Allowance	975	474
Allocated Allowance	$ 233	$ 115

4. LOANS AND ALLOWANCE FOR LO42

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Average balance	$ 4,093	$ 5,782	$ 6,400	$ 11,088
Interest income	35	65	100	193
Construction and land development
Average balance	130	252	229	330
Interest income	0	0	0	1
Commercial Real Estate
Average balance	867	4,030	2,398	9,170
Interest income	10	48	37	139
Consumer Real Estate
Average balance	947	820	951	825
Interest income	7	7	15	21
Commercial and industrial loans (except those secured by real estate)
Average balance	2,149	657	2,802	739
Interest income	18	10	48	32
Consumer and other
Average balance	0	23	20	24
Interest income	$ 0	$ 0	$ 0	$ 0

4. LOANS AND ALLOWANCE FOR LO43

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Non-accrual loans
Non-accrual loans	$ 948	$ 513
Consumer Real Estate
Non-accrual loans
Non-accrual loans	604	65
Commercial and industrial loans (except those secured by real estate)
Non-accrual loans
Non-accrual loans	216	189
Construction and land development
Non-accrual loans
Non-accrual loans	128	238
Consumer and other
Non-accrual loans
Non-accrual loans	$ 0	$ 21

4. LOANS AND ALLOWANCE FOR LO44

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 7) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Past due loans
Loans 30-59 Days Past Due	$ 499	$ 0
Loans 60-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Non-accrual	948	513
Total Past Due Loans	1,447	513
Total Current Loans	1,163,368	1,015,013
Total loans	1,164,815	1,015,526
Commercial Real Estate
Past due loans
Loans 30-59 Days Past Due	0	0
Loans 60-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Non-accrual	0	0
Total Past Due Loans	0	0
Total Current Loans	632,107	533,909
Total loans	632,107	533,909
Consumer Real Estate
Past due loans
Loans 30-59 Days Past Due	194	0
Loans 60-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Non-accrual	604	65
Total Past Due Loans	798	65
Total Current Loans	280,834	249,642
Total loans	281,632	249,707
Commercial and industrial loans (except those secured by real estate)
Past due loans
Loans 30-59 Days Past Due	305	0
Loans 60-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Non-accrual	216	189
Total Past Due Loans	521	189
Total Current Loans	164,392	153,480
Total loans	164,913	153,669
Consumer and other
Past due loans
Loans 30-59 Days Past Due	0	0
Loans 60-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Non-accrual	0	21
Total Past Due Loans	0	21
Total Current Loans	11,558	13,518
Total loans	11,558	13,539
Construction and land development
Past due loans
Loans 30-59 Days Past Due		0
Loans 60-89 Days Past Due		0
Loans 90 or More Days Past Due		0
Non-accrual		238
Total Past Due Loans		238
Total Current Loans		64,464
Total loans	74,605	$ 64,702
Construction and land development
Past due loans
Loans 30-59 Days Past Due	0
Loans 60-89 Days Past Due	0
Loans 90 or More Days Past Due	0
Non-accrual	128
Total Past Due Loans	128
Total Current Loans	74,477
Total loans	$ 74,605

4. LOANS AND ALLOWANCE FOR LO45

4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 8) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Total Loans	$ 1,161,365	$ 1,011,635
Risk Grade 1
Total Loans	3,476	3,227
Risk Grade 2
Total Loans	22,987	14,730
Risk Grade 3
Total Loans	379,935	335,238
Risk Grade 4
Total Loans	528,836	455,508
Risk Grade 5
Total Loans	220,567	197,709
Risk Grade 6
Total Loans	5,564	5,223
Risk Grade 7
Total Loans	0	0
Construction and land development
Total Loans	74,476	64,464
Construction and land development | Risk Grade 1
Total Loans	0	26
Construction and land development | Risk Grade 2
Total Loans	676	200
Construction and land development | Risk Grade 3
Total Loans	714	2,545
Construction and land development | Risk Grade 4
Total Loans	21,173	14,318
Construction and land development | Risk Grade 5
Total Loans	51,708	47,133
Construction and land development | Risk Grade 6
Total Loans	205	242
Construction and land development | Risk Grade 7
Total Loans	0	0
Commercial Real Estate
Total Loans	631,241	531,290
Commercial Real Estate | Risk Grade 1
Total Loans	0	0
Commercial Real Estate | Risk Grade 2
Total Loans	560	619
Commercial Real Estate | Risk Grade 3
Total Loans	219,780	195,935
Commercial Real Estate | Risk Grade 4
Total Loans	302,865	243,771
Commercial Real Estate | Risk Grade 5
Total Loans	104,621	87,492
Commercial Real Estate | Risk Grade 6
Total Loans	3,415	3,473
Commercial Real Estate | Risk Grade 7
Total Loans	0	0
Consumer Real Estate
Total Loans	280,690	249,296
Consumer Real Estate | Risk Grade 1
Total Loans	52	53
Consumer Real Estate | Risk Grade 2
Total Loans	19,926	10,933
Consumer Real Estate | Risk Grade 3
Total Loans	128,522	111,123
Consumer Real Estate | Risk Grade 4
Total Loans	96,324	92,127
Consumer Real Estate | Risk Grade 5
Total Loans	34,574	34,346
Consumer Real Estate | Risk Grade 6
Total Loans	1,292	714
Consumer Real Estate | Risk Grade 7
Total Loans	0	0
Commercial and industrial loans (except those secured by real estate)
Total Loans	163,399	153,066
Commercial and industrial loans (except those secured by real estate) | Risk Grade 1
Total Loans	2,263	2,168
Commercial and industrial loans (except those secured by real estate) | Risk Grade 2
Total Loans	1,340	1,909
Commercial and industrial loans (except those secured by real estate) | Risk Grade 3
Total Loans	29,806	24,675
Commercial and industrial loans (except those secured by real estate) | Risk Grade 4
Total Loans	100,638	96,900
Commercial and industrial loans (except those secured by real estate) | Risk Grade 5
Total Loans	28,700	26,802
Commercial and industrial loans (except those secured by real estate) | Risk Grade 6
Total Loans	652	612
Commercial and industrial loans (except those secured by real estate) | Risk Grade 7
Total Loans	0	0
Consumer and other
Total Loans	11,559	13,519
Consumer and other | Risk Grade 1
Total Loans	1,161	980
Consumer and other | Risk Grade 2
Total Loans	485	1,069
Consumer and other | Risk Grade 3
Total Loans	1,113	960
Consumer and other | Risk Grade 4
Total Loans	7,836	8,392
Consumer and other | Risk Grade 5
Total Loans	964	1,936
Consumer and other | Risk Grade 6
Total Loans	0	182
Consumer and other | Risk Grade 7
Total Loans	$ 0	$ 0

5. OFF-BALANCE SHEET RISK (Deta

5. OFF-BALANCE SHEET RISK (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Line of credit	$ 205,911	$ 166,760
Undisbursed Lines of Credit
Line of credit	202,012	163,572
Standby Letters of Credit
Line of credit	$ 3,899	$ 3,188

6. DERIVATIVES AND FINANCIAL 47

6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Notational amount	$ 100,000	$ 100,000
Fair value	1,722	3,910
Cap 1 - maturing August 2019
Notational amount	35,000	35,000
Fair value	590	1,334
Cap 2 - maturing September 2019
Notational amount	35,000	35,000
Fair value	603	1,360
Cap 3 - maturing October 2019
Notational amount	30,000	30,000
Fair value	$ 529	$ 1,216

6. DERIVATIVES AND FINANCIAL 48

6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details 1) $ in Thousands	Sep. 30, 2016USD ($)
Derivatives And Financial Instruments Details 1
2016 (remaining quarter)	$ 315
2,017	1,779
2,018	2,247
2,019	1,752
Total	$ 6,093

6. DERIVATIVES AND FINANCIAL 49

6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details 2) $ in Thousands	Sep. 30, 2016USD ($)
Derivatives And Financial Instruments Details 2
2016 (remaining quarter)	$ 19
2,017	74
2,018	74
Thereafter	147
Total	$ 314

6. DERIVATIVES AND FINANCIAL 50

6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Derivatives And Financial Instruments Details Narrative
Amortization associated with the interest rate caps	$ 257	$ 45	$ 598	$ 64
Gains on swaps	$ 19		$ 38

7. FAIR VALUE OF FINANCIAL IN51

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Estimated Fair Value	$ 178,606	$ 168,896
Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	1,970	1,810
Significant Other Observable (Level 2)
Estimated Fair Value	176,136	166,586
Significant Unobservable (Level 3)
Estimated Fair Value	500	500
U.S. Agency obligations
Estimated Fair Value	18,176	19,901
U.S. Agency obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	0	0
U.S. Agency obligations | Significant Other Observable (Level 2)
Estimated Fair Value	18,176	19,901
U.S. Agency obligations | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Collateralized mortgage obligations
Estimated Fair Value	46,542	60,941
Collateralized mortgage obligations | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	0	0
Collateralized mortgage obligations | Significant Other Observable (Level 2)
Estimated Fair Value	46,542	60,941
Collateralized mortgage obligations | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Mortgage-backed securities
Estimated Fair Value	47,828	31,310
Mortgage-backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	0	0
Mortgage-backed securities | Significant Other Observable (Level 2)
Estimated Fair Value	47,828	31,310
Mortgage-backed securities | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Municipal Bonds
Estimated Fair Value	63,590	54,434
Municipal Bonds | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	0	0
Municipal Bonds | Significant Other Observable (Level 2)
Estimated Fair Value	63,590	54,434
Municipal Bonds | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Other
Estimated Fair Value	2,470	2,310
Other | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	1,970	1,810
Other | Significant Other Observable (Level 2)
Estimated Fair Value	0	0
Other | Significant Unobservable (Level 3)
Estimated Fair Value	500	500
Interest Rate Caps
Estimated Fair Value	1,722	3,910
Interest Rate Caps | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	0	0
Interest Rate Caps | Significant Other Observable (Level 2)
Estimated Fair Value	1,722	3,910
Interest Rate Caps | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Total
Estimated Fair Value	180,328	172,806
Total | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	1,970	1,810
Total | Significant Other Observable (Level 2)
Estimated Fair Value	177,858	170,496
Total | Significant Unobservable (Level 3)
Estimated Fair Value	$ 500	$ 500

7. FAIR VALUE OF FINANCIAL IN52

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Significant Unobservable (Level 3) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
Investment Securities Level 3 Valuation
Balance, beginning of period	$ 500
Purchases	0
Balance, end of period	$ 500

7. FAIR VALUE OF FINANCIAL IN53

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Impaired loans	$ 2,694	$ 3,382
Other real estate	5,183	5,453
Total	$ 7,877	8,835
Impaired loans [Member]
Valuation Technique	Appraisal value
Significant Unobservable Inputs	Appraisals and/or sales of comparable properties
Significant Unobservable Inputs	Appraisals discounted 5% to 10% for sales commissions and other holding costs
Other real estate [Member]
Valuation Technique	Appraisal value/Comparison sale/Other estimates
Significant Unobservable Inputs	Appraisals and/or sales of comparable properties
Significant Unobservable Inputs	Appraisals discounted 5% to 10% for sales commissions and other holding costs
Level 1
Impaired loans	$ 0	0
Other real estate	0	0
Total	0	0
Level 2
Impaired loans	0	0
Other real estate	0	0
Total	0	0
Level 3
Impaired loans	2,694	3,382
Other real estate	5,183	5,453
Total	$ 7,877	$ 8,835

7. FAIR VALUE OF FINANCIAL IN54

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financial Assets:
Cash and due from banks	$ 73,706	$ 55,530
Investment securities available-for-sale	178,606	168,896
Loans, net	1,157,420	1,008,515
Accrued interest receivable	4,022	3,795
Federal Home Loan Bank stock	5,425	8,061
Bank owned life insurance	28,943	28,274
Interest rate caps	1,722	3,910
Financial Liabilities:
Non-maturing deposits	955,522	663,066
Time deposits	243,563	319,781
Accrued interest payable	259	356
Repurchase agreements and federal funds purchased	19,796	30,580
FHLB Advances and other borrowings	100,000	169,800
Subordinated debentures	18,558	18,558
Estimated Fair Value
Financial Assets:
Cash and due from banks	73,706	55,530
Investment securities available-for-sale	178,606	168,896
Loans, net	1,158,081	1,013,415
Accrued interest receivable	4,022	3,795
Federal Home Loan Bank stock	5,425	8,061
Bank owned life insurance	28,943	28,274
Interest rate caps	1,722	3,910
Financial Liabilities:
Non-maturing deposits	955,522	663,066
Time deposits	244,160	320,246
Accrued interest payable	259	356
Repurchase agreements and federal funds purchased	19,796	30,580
FHLB Advances and other borrowings	100,012	169,800
Subordinated debentures	14,203	15,591
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Assets:
Cash and due from banks	73,706	55,530
Investment securities available-for-sale	1,970	1,810
Loans, net	0	0
Accrued interest receivable	4,022	3,795
Federal Home Loan Bank stock	0	0
Bank owned life insurance	0	0
Interest rate caps	0	0
Financial Liabilities:
Non-maturing deposits	0	0
Time deposits	0	0
Accrued interest payable	259	356
Repurchase agreements and federal funds purchased	0	0
FHLB Advances and other borrowings	0	0
Subordinated debentures	0	0
Significant Other Observable (Level 2)
Financial Assets:
Cash and due from banks	0	0
Investment securities available-for-sale	176,136	166,586
Loans, net	1,155,387	1,010,033
Accrued interest receivable	0	0
Federal Home Loan Bank stock	0	0
Bank owned life insurance	28,943	28,274
Interest rate caps	1,722	3,910
Financial Liabilities:
Non-maturing deposits	955,522	663,066
Time deposits	244,160	320,246
Accrued interest payable	0	0
Repurchase agreements and federal funds purchased	19,796	30,580
FHLB Advances and other borrowings	100,012	169,800
Subordinated debentures	14,203	15,591
Significant Unobservable (Level 3)
Financial Assets:
Cash and due from banks	0	0
Investment securities available-for-sale	500	500
Loans, net	2,694	3,382
Accrued interest receivable	0	0
Federal Home Loan Bank stock	5,425	8,061
Bank owned life insurance	0	0
Interest rate caps	0	0
Financial Liabilities:
Non-maturing deposits	0	0
Time deposits	0	0
Accrued interest payable	0	0
Repurchase agreements and federal funds purchased	0	0
FHLB Advances and other borrowings	0	0
Subordinated debentures	$ 0	$ 0

8. SUPPLEMENTAL CASH FLOW DIS55

8. SUPPLEMENTAL CASH FLOW DISCLOSURE (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Supplemental Disclosures of Cash Flow Information:
Interest paid	$ 6,072	$ 5,576
Income taxes paid	4,485	3,185
Supplemental Schedule of Noncash Investing and Financing Activites:
Change in fair value of securities available-for-sale, net of taxes	2,771	(934)
Change in fair value of cash flow hedges, net of taxes	(1,592)	(2,753)
Transfer from loans to foreclosed real estate	$ 0	$ 3,300

10. ISSUANCE OF COMMON STOCK (D

10. ISSUANCE OF COMMON STOCK (Details Narrative) - shares	Sep. 30, 2016	Dec. 31, 2015
Common stock issued	5,450,042	4,581,334
Long-Term Stock Based Compensation Plan
Common stock issued	19,145
Employee Stock Purchase Plan
Common stock issued	1,352