Paragon Commercial 10-Q 8 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 08, 2017
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	Jun. 30, 2017
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		5,459,982
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Cash and due from banks:
Interest-earning	$ 13,380	$ 38,384
Noninterest-earning	4,184	4,621
Investment securities - available-for-sale, at fair value	203,544	197,441
Federal Home Loan Bank stock, at cost	12,828	8,400
Loans - net of unearned income and deferred fees	1,339,860	1,191,280
Allowance for loan losses	(8,921)	(7,909)
Net loans	1,330,939	1,183,371
Accrued interest receivable	4,690	4,368
Bank premises and equipment, net	15,233	15,642
Bank owned life insurance	34,703	34,190
Other real estate owned	4,690	4,740
Deferred tax assets	3,882	4,841
Other assets	7,494	7,769
Total assets	1,635,567	1,503,767
Deposits:
Noninterest-bearing demand	200,944	211,202
Interest-bearing checking and money market	794,255	742,046
Time deposits	179,531	219,007
Total deposits	1,174,730	1,172,255
Repurchase agreements and federal funds purchased	21,256	20,174
Federal Home Loan Bank advances	270,000	150,000
Subordinated debentures	18,558	18,558
Other liabilities	5,730	6,679
Total liabilities	1,490,274	1,367,666
Stockholders' equity:
Common stock, $0.008 par value; 20,000,000 shares authorized; 5,458,528 and 5,450,713 issued and outstanding as of June 30, 2017 and December 31, 2016	44	44
Additional paid-in-capital	80,721	80,147
Accumulated other comprehensive loss	(859)	(2,840)
Retained earnings	65,387	58,750
Total stockholders' equity	145,293	136,101
Total liabilities and stockholders' equity	$ 1,635,567	$ 1,503,767

CONSOLIDATED BALANCE SHEETS (U3

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
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)	5,458,528	5,450,713
Common stock, shares outstanding (in shares)	5,458,528	5,450,713

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest income:
Loans and fees on loans	$ 14,014	$ 11,840	$ 27,084	$ 23,030
Investment securities and FHLB stock	1,465	1,369	2,868	2,588
Federal funds and other	71	63	230	121
Total Interest income	15,550	13,272	30,182	25,739
Interest expense:
Interest-bearing checking and money market	1,127	836	2,201	1,693
Time deposits	458	556	969	1,123
Borrowings and repurchase agreements	947	579	1,675	1,071
Total interest expense	2,532	1,971	4,845	3,887
Net interest income	13,018	11,301	25,337	21,852
Provision for loan losses	650	0	809	0
Net interest income after provision for loan losses	12,368	11,301	24,528	21,852
Non-interest income:
Increase in cash surrender value of bank owned life insurance	255	226	513	449
Net gain on sale of securities	0	0	0	85
Service charges and fees	68	56	130	114
Mortgage origination fees and gains on sale of loans	26	33	77	65
Net loss on sale or impairment of foreclosed assets	(22)	(45)	(22)	(257)
Other fees and income	167	111	299	191
Total non-interest income	494	381	997	647
Non-interest expense:
Salaries and employee benefits	4,310	3,742	8,772	7,609
Furniture, equipment and software costs	451	390	953	882
Occupancy	373	342	732	686
Data processing	580	524	1,110	820
Director related fees and expenses	253	219	477	471
Professional fees	244	182	447	419
FDIC and other supervisory assessments	201	217	367	412
Advertising and public relations	297	234	518	422
Unreimbursed loan costs and foreclosure related expenses	104	142	278	211
Merger related costs	368	0	368	0
Other	676	496	1,447	1,156
Total non-interest expense	7,857	6,488	15,469	13,088
Income before income taxes	5,005	5,194	10,056	9,411
Income tax expense	1,722	1,719	3,419	3,098
Net income	$ 3,283	$ 3,475	$ 6,637	$ 6,313
Net income per common share
Basic	$ 0.61	$ 0.76	$ 1.23	$ 1.38
Diluted	$ 0.61	$ 0.75	$ 1.23	$ 1.37

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements Of Comprehensive Income
Net income	$ 3,283	$ 3,475	$ 6,637	$ 6,313
Securities available for sale:
Unrealized gains	2,436	2,920	2,889	3,914
Reclassification of gains recognized in net income	0	0	0	(85)
Other comprehensive income	2,436	2,920	2,889	3,829
Deferred tax expense	940	1,116	1,112	1,462
Other comprehensive income, net of tax	1,496	1,804	1,777	2,367
Cash flow hedges:
Unrealized gains (losses)	(21)	(575)	351	(2,136)
Other comprehensive income (loss)	8	(217)	147	(803)
Deferred tax (benefit) expense	8	(217)	147	(803)
Other comprehensive income (loss), net of tax	(29)	(358)	204	(1,333)
Total other comprehensive income, net of tax	1,467	1,446	1,981	1,034
Comprehensive income	$ 4,750	$ 4,921	$ 8,618	$ 7,347

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, 2015	4,581,334
Beginning Balance, Amount at Dec. 31, 2015	$ 37	$ 53,147	$ (886)	$ 45,360	$ 97,658
Net income				6,313	6,313
Unrealized gain on securities, net of tax expense			2,367		2,367
Unrealized gain (loss) on cash flow hedges, net of tax benefit			(1,333)		(1,333)
Restricted stock expense recognized		205			205
Issuance of stock for public offering, Shares	845,588
Issuance of stock for public offering, Amount	$ 6	26,388			26,394
Issuance of restricted stock awards	19,145
Issuance of stock for employee stock purchase plan, Shares	3,799
Issuance of stock for employee stock purchase plan, Amount		105			105
Ending Balance, Shares at Jun. 30, 2016	5,449,866
Ending Balance, Amount at Jun. 30, 2016	$ 43	79,845	148	51,673	131,709
Beginning Balance, Shares at Dec. 31, 2016	5,450,713
Beginning Balance, Amount at Dec. 31, 2016	$ 44	80,147	(2,840)	58,750	136,101
Net income				6,637	6,637
Unrealized gain on securities, net of tax expense			1,777		1,777
Unrealized gain (loss) on cash flow hedges, net of tax benefit			204		204
Restricted stock expense recognized		240			240
Stock options exercised, Shares	6,313
Stock options exercised, Amount		270			270
Issuance of stock for employee stock purchase plan, Shares	1,502
Issuance of stock for employee stock purchase plan, Amount		64			64
Ending Balance, Shares at Jun. 30, 2017	5,458,528
Ending Balance, Amount at Jun. 30, 2017	$ 44	$ 80,721	$ (859)	$ 65,387	$ 145,293

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income	$ 6,637	$ 6,313
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	704	711
Provision for loan losses	809	0
Net loss on sale or impairment of foreclosed assets	22	257
Increase in cash surrender value of life insurance	(513)	(449)
Accretion of premiums/discounts on securities, net	569	567
Net gain on sale of securities	0	(85)
Loss on disposal of property and equipment	1	0
Deferred tax expense (benefit)	(289)	196
Restricted stock expense	240	205
Changes in assets and liabilities:
Accrued interest receivable and other assets	304	(135)
Accrued interest payable and other liabilities	(949)	(293)
Net cash provided by operating activities	7,535	7,287
Cash flows from investing activities:
Net decrease in Federal Home Loan Bank stock	(4,428)	(552)
Purchase of securities available for sale	(13,526)	(39,434)
Proceeds from maturities and paydowns of securities available for sale	9,732	9,639
Proceeds from sales of securities available for sale	0	15,714
Net increase in loans	(148,377)	(88,843)
Proceeds from sale of foreclosed real estate	28	13
Additions to bank premises and equipment	(296)	(402)
Net cash used in investing activities	(156,867)	(103,865)
Cash flows from financing activities:
Net increase in demand and money market deposit accounts	41,951	170,958
Net decrease in time deposits	(39,476)	(53,604)
Net increase (decrease) in repurchase agreements	1,082	(7,890)
Net increase in FHLB and other borrowings	120,000	5,200
Net proceeds from sale of common stock	0	26,394
Issuance of common stock for employee stock purchase plan and stock options	334	105
Net cash provided by financing activities	123,891	141,163
Net change in cash and cash equivalents	(25,441)	44,585
Cash and cash equivalents at beginning of year	43,005	55,530
Cash and cash equivalents at end of period	$ 17,564	$ 100,115

1. ORGANIZATION AND OPERATIONS

1. ORGANIZATION AND OPERATIONS	6 Months Ended
	Jun. 30, 2017
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, North Carolina, 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	6 Months Ended
	Jun. 30, 2017
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 six month periods ended June 30, 2017 and 2016 is unaudited. Accordingly, it does not include all of the information and footnotes required by U.S. 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, 2016 consolidated balance sheet was derived from the Company’s December 31, 2016 audited consolidated financial statements as of and for the periods ended December 31, 2016. These unaudited interim consolidated financial statements as of and for the three and six month periods ended June 30, 2017 and 2016 should be read in conjunction with the audited consolidated financial statements as of and for the periods ended December 31, 2016 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission on March 21, 2017, as amended on April 28, 2017. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017 or any other future period. 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, 2016, which are included within the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2016. 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 Six months ended June 30, ended June 30, 2017 2016 2017 2016 Shares used in the computation of earnings per share: Weighted average number of shares outstanding - basic 5,398,530 4,581,193 5,394,870 4,563,349 Dilutive effect of restricted shares 14,740 43,133 14,176 44,184 Weighted average number of shares outstanding - diluted 5,413,270 4,624,326 5,409,046 4,607,533 Weighted average anti-dilutive stock options and unvested restricted shares excluded from the computation of diluted earnings per share are as follows: Three months Six months ended June 30, ended June 30, 2017 2016 2017 2016 Anti-dilutive stock options — 80,500 — 80,500 Unvested restricted shares 56,733 45,338 56,733 45,338 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 six-month period ended June 30, 2017 and for the year ended December 31, 2016, respectively is as follows: June 30, December 31, (In thousands) 2017 2016 Unrealized gains (losses) on securities available-for-sale $ 1,113 $ (1,775 ) Deferred tax (benefit) expense (433 ) 678 Other comprehensive income (loss), net of tax 680 (1,097 ) Unrealized losses on cash flow hedges (2,441 ) (2,792 ) Deferred tax benefit 902 1,049 Other comprehensive loss, net of tax (1,539 ) (1,743 ) Total other comprehensive loss $ (859 ) $ (2,840 ) The accumulated balances related to each component of other comprehensive income (loss) are as follows: Unpaid Unrealized Unrealized Gains and Gains and Losses on Losses on Available-for Cash Flow (in thousands) Sale Securities Hedges Total Balance as of December 31, 2016 $ (1,097 ) $ (1,743 ) $ (2,840 ) Other comprehensive income before reclassification 1,777 204 1,981 Net current-period other comprehensive income 1,777 204 1,981 Balance as of June 30, 2017 $ 680 $ (1,539 ) $ (859 ) Balance as of December 31, 2015 $ 848 $ (1,734 ) $ (886 ) Other comprehensive income (loss) before reclassification 2,452 (1,333 ) 1,119 Amounts reclassified from accumulated other comprehensive income (85 ) — (85 ) Net current-period other comprehensive income (loss) 2,367 (1,333 ) 1,034 Balance as of June 30, 2016 $ 3,215 $ (3,067 ) $ 148 Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (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 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 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 designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments became effective January 1, 2017. The amendments did not have a material effect on the Company’s 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 became effective as of January 1, 2017. The amendments did not have a material effect on the Company’s 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. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In March 2017, the FASB amended the requirements in the Receivables—Nonrefundable Fees and Other Costs Topic of the Accounting Standards Codification related to the amortization period for certain purchased callable debt securities held at a premium. The amendments shorten the amortization period for the premium to the earliest call date. The amendments will be effective for the Company for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In May 2017, the FASB amended the requirements in the Compensation—Stock Compensation Topic of the Accounting Standards Codification related to changes to the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. 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 2016 financial statements have been reclassified to conform to the 2017 presentation. The reclassifications had no effect on total assets, net income or stockholders' equity as previously reported.

3. MERGERS AND ACQUISITIONS

3. MERGERS AND ACQUISITIONS	6 Months Ended
	Jun. 30, 2017
Mergers And Acquisitions
MERGERS AND ACQUISITIONS	Proposed Merger with TowneBank On April 26, 2017, the Company entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) with TowneBank and TB Acquisition, LLC (“TB Acquisition”). Pursuant to the terms of the Merger Agreement, the Company will merge with and into TB Acquisition (the “Merger”) and the Bank will subsequently merge with and into TowneBank (the “Bank Merger” and, together with the Merger, the “Transaction”). TB Acquisition will be the surviving entity in the Merger and TowneBank will be the surviving entity in the Bank Merger. Under the terms of the Merger Agreement, the Company’s stockholders will be entitled to receive 1.7250 shares (the “Exchange Ratio”) of TowneBank common stock for each share of the Company’s common stock. Based on TowneBank’s closing price of $34.35 as of April 26, 2017, the day the Transaction was announced, the estimated aggregate purchase price was $323.4 million. The Transaction is expected to close in the first quarter of 2018, subject to stockholder and regulatory approval and other customary closing conditions.

4. INVESTMENT SECURITIES

4. INVESTMENT SECURITIES	6 Months Ended
	Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]
INVESTMENT SECURITIES	The following is a summary of the securities portfolio by major classification at June 30, 2017 and December 31, 2016. Gross Gross Estimated Amortized Unrealized Unrealized Fair (In thousands) Cost Gains Losses Value June 30, 2017 Available-for-sale: U.S. Agency obligations $ 15,715 $ 192 $ 52 $ 15,855 Collateralized mortgage obligations 40,833 322 128 41,027 Mortgage-backed securities 75,777 360 768 75,369 Municipal bonds 66,429 1,424 56 67,797 Other 3,677 62 243 3,496 $ 202,431 $ 2,360 $ 1,247 $ 203,544 December 31, 2016 Available-for-sale: U.S. Agency obligations $ 17,062 $ 44 $ 163 $ 16,943 Collateralized mortgage obligations 42,439 300 242 42,497 Mortgage-backed securities 75,138 213 1,478 73,873 Municipal bonds 60,901 474 698 60,677 Other 3,676 29 254 3,451 $ 199,216 $ 1,060 $ 2,835 $ 197,441 The fair values of securities available-for-sale at June 30, 2017 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 $ — $ — $ — $ 15,855 $ — $ 15,855 Collateralized mortgage obligations — — — 41,027 — 41,027 Mortgage-backed securities — 7,545 7,619 60,205 — 75,369 Municipal bonds — 2,249 8,898 56,650 — 67,797 Other — — 1,527 — 1,969 3,496 $ — $ 9,794 $ 18,044 $ 173,737 $ 1,969 $ 203,544 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 at June 30, 2017 and December 31, 2016. Less Than 12 Months 12 Months or Greater Total (In thousands) Unrealized Unrealized Unrealized June 30, 2017 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ 2,623 $ 52 $ — $ — $ 2,623 $ 52 Collateralized mortgage obligations 17,381 128 — — 17,381 128 Mortgage-backed securities 46,180 768 — — 46,180 768 Municipal bonds 7,116 56 — — 7,116 56 Other — — 1,909 242 1,909 242 Total temporarily impaired securities $ 73,300 $ 1,004 $ 1,909 $ 242 $ 75,209 $ 1,246 Less Than 12 Months 12 Months or Greater Total (In thousands) Unrealized Unrealized Unrealized December 31, 2016 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ 10,334 $ 163 $ — $ — $ 10,334 $ 163 Collateralized mortgage obligations 18,124 242 — — 18,124 242 Mortgage-backed securities 58,825 1,478 — — 58,825 1,478 Municipal bonds 33,110 698 — — 33,110 698 Other 1,897 254 — — 1,897 254 Total temporarily impaired securities $ 122,290 $ 2,835 $ — $ — $ 122,290 $ 2,835 The table below summarizes the number of investment securities in an unrealized loss position: June 30, December 31, Available-for-sale: 2017 2016 U.S. Agency obligations 2 5 Collateralized mortgage obligations 6 6 Mortgage-backed securities 12 13 Municipal bonds 12 53 Other 1 1 33 78 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 2017 or 2016 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 Six months ended June 30, ended June 30, 2017 2016 2017 2016 Gross gains on sales of securities available for sale $ — $ — $ — $ 136 Gross losses on sales of securities available for sale — — — (51 ) Total securities gains $ — $ — $ — $ 85 Securities with a fair value of $71.0 million and $75.8 million were pledged as of June 30, 2017 and December 31, 2016, respectively, to secure repurchase agreements, lines of credit and other borrowings.

5. LOANS AND ALLOWANCE FOR LOAN

5. LOANS AND ALLOWANCE FOR LOAN LOSSES	6 Months Ended
	Jun. 30, 2017
Receivables [Abstract]
LOANS AND ALLOWANCE FOR LOAN LOSSES	Following is a summary of loans at June 30, 2017 and December 31, 2016: June 30, December 31, (In thousands) 2017 2016 Construction and land development $ 70,661 $ 79,738 Commercial real estate: Non-farm, non-residential 433,486 365,569 Owner occupied 202,982 186,892 Multifamily, nonresidential and junior liens 106,106 89,191 Total commercial real estate 742,574 641,652 Consumer real estate: Home equity lines 87,229 87,489 Secured by 1-4 family residential, secured by first deeds of trust 231,903 195,343 Secured by 1-4 family residential, secured by second deeds of trust 4,712 4,289 Total consumer real estate 323,844 287,121 Commercial and industrial loans (except those secured by real estate) 181,643 170,709 Consumer and other 20,840 11,542 Total loans 1,339,562 1,190,762 Deferred loan costs 298 518 Allowance for loan losses (8,921 ) (7,909 ) Net loans $ 1,330,939 $ 1,183,371 A further breakdown of the make-up of the construction and land development and commercial real estate portfolio at June 30, 2017 and December 31, 2016 is as follows: June 30, December 31, (in thousands) 2017 2016 Construction and land development: Land $ 12,115 $ 12,595 Residential 29,684 36,253 Commercial 28,862 30,890 Total construction and land development $ 70,661 $ 79,738 Commercial real estate: Non-farm, non-residential: Office $ 137,771 $ 108,228 Industrial 33,240 36,264 Hotel/motel 32,054 28,453 Retail 193,781 165,434 Special purpose/Other 36,640 27,190 Total commercial real estate 433,486 365,569 Owner occupied : Office 66,448 60,500 Industrial 52,698 46,876 Retail 30,965 31,085 Special purpose/Other 52,871 48,431 Total owner occupied 202,982 186,892 Multifamily, nonresidential and junior liens 106,106 89,191 Total commercial real estate $ 742,574 $ 641,652 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 six months ended June 30, 2017 and 2016 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 June 30, 2017 Beginning balance $ 490 $ 3,968 $ 1,939 $ 1,646 $ 82 $ 8,125 Provision for loan losses (225 ) 273 87 481 34 650 Loans charged off — — — — — — Recoveries 138 — — 8 — 146 Net (chargeoffs) recoveries 138 — — 8 — 146 Ending balance $ 403 $ 4,241 $ 2,026 $ 2,135 $ 116 $ 8,921 Six months ended June 30, 2017 Beginning balance $ 486 $ 3,719 $ 1,900 $ 1,728 $ 76 $ 7,909 Provision for loan losses (230 ) 494 126 366 53 809 Loans charged off — — — (10 ) (13 ) (23 ) Recoveries 147 28 — 51 — 226 Net (chargeoffs) recoveries 147 28 — 41 (13 ) 203 Ending balance $ 403 $ 4,241 $ 2,026 $ 2,135 $ 116 $ 8,921 Three months ended June 30, 2016 Beginning balance $ 523 $ 3,072 $ 1,972 $ 1,790 $ 574 $ 7,931 Provision for loan losses (125 ) 187 (88 ) 492 (466 ) — Loans charged off — — — — (1 ) (1 ) Recoveries 8 19 3 25 1 56 Net recoveries 8 19 3 25 — 55 Ending balance $ 406 $ 3,278 $ 1,887 $ 2,307 $ 108 $ 7,986 Six months ended June 30, 2016 Beginning balance $ 509 $ 3,156 $ 2,046 $ 1,786 $ 144 $ 7,641 Provision for loan losses (340 ) 66 (165 ) 485 (46 ) — Loans charged off — — — — (1 ) (1 ) Recoveries 237 56 6 36 11 346 Net recoveries 237 56 6 36 10 345 Ending balance $ 406 $ 3,278 $ 1,887 $ 2,307 $ 108 $ 7,986 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 June 30, 2017 and December 31, 2016 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 June 30, 2017 Allowance for Loan Losses: Individually evaluated for impairment $ — $ — $ 45 $ 781 $ — $ 826 Collectively evaluated for impairment 403 4,241 1,981 1,354 116 8,095 Total ending allowance $ 403 $ 4,241 $ 2,026 $ 2,135 $ 116 $ 8,921 Loans: Individually evaluated for impairment $ 118 $ 307 $ 374 $ 2,077 $ — $ 2,876 Collectively evaluated for impairment 70,543 742,267 323,470 179,566 20,840 1,336,686 Total ending loans $ 70,661 $ 742,574 $ 323,844 $ 181,643 $ 20,840 $ 1,339,562 (in thousands) December 31, 2016 Allowance for Loan Losses: Individually evaluated for impairment $ — $ — $ 223 $ 286 $ — $ 509 Collectively evaluated for impairment 486 3,719 1,677 1,442 76 7,400 Total ending allowance $ 486 $ 3,719 $ 1,900 $ 1,728 $ 76 $ 7,909 Loans: Individually evaluated for impairment $ 125 $ 836 $ 1,121 $ 1,139 $ — $ 3,221 Collectively evaluated for impairment 79,613 640,816 286,000 169,570 11,542 1,187,541 Total ending loans $ 79,738 $ 641,652 $ 287,121 $ 170,709 $ 11,542 $ 1,190,762 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 $2.9 million and $3.2 million at June 30, 2017 and December 31, 2016, respectively. Included in the $2.9 million at June 30, 2017 is $600,000 of loans classified as troubled debt restructurings (“TDRs”). Included in the $3.2 million at December 31, 2016 is $1.3 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 June 30, 2017 and December 31, 2016: June 30, December 31, (In thousands) 2017 2016 Performing TDRs: Commercial real estate $ 296 $ 520 Consumer real estate — 338 Commercial and industrial loans — 297 Total performing TDRs 296 1,155 Nonperforming TDRs: Construction and land development 118 125 Consumer real estate 186 58 Total nonperformingTDRs 304 183 Total TDRs $ 600 $ 1,338 During the first six months of 2017, two of the six loans that were designated TDRs as of December 31, 2016 totaling $389,000 were paid off. The largest of these for $388,000 was a residential real estate loan. Another commercial real estate loan totaling $125,000 was refinanced and is no longer considered a TDR as the loan was refinanced at market terms. The remaining three loans are all performing as agreed. The Bank added one new TDR loan in February, a $130,000 business loan secured by residential property due to a restructure of the loan payment terms in response to borrower’s financial difficulties. That loan continues to perform as agreed since restructure. In order to quantify the value of any impairment, the Company evaluates loans individually. At June 30, 2017, the Company had $2.9 million of impaired loans. The detail of loans evaluated for impairment as of June 30, 2017 is presented below: Unpaid Contractual (in thousands Recorded Principal Allocated June 30, 2017 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 118 $ 165 $ Commercial real estate 307 307 - Loans with a specific valuation allowance: Consumer real estate 374 432 45 Commercial and industrial loans 2,077 2,108 781 Total $ 2,876 $ 3,012 $ 826 At December 31, 2016, the Company had $3.2 million of impaired loans. The detail of loans evaluated for impairment as of December 31, 2016 is presented below: Unpaid Contractual (in thousands Recorded Principal Allocated December 31, 2016 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 125 $ 195 $ Commercial real estate 836 836 - Loans with a specific valuation allowance: Consumer real estate 1,121 1,152 223 Commercial and industrial loans (except those secured by real estate) 1,139 1,382 286 Total $ 3,221 $ 3,565 $ 509 The average recorded investment balance of impaired loans for the three- and six-month periods ending June 30, 2017 and 2016 are as follows: Three months ended June 30, 2017 2016 Average Interest Average Interest Balance Income Balance Income Construction and land development $ 119 $ — $ 133 $ — Commercial real estate 307 3 1,113 13 Consumer real estate 491 3 404 4 Commercial and industrial loans 1,929 22 2,671 17 Consumer and other — — 13 — Total securities gains $ 2,846 $ 28 $ 4,334 $ 34 Six months ended June 30, 2017 2016 Average Interest Average Interest Balance Income Balance Income Construction and land development $ 121 $ — $ 182 $ — Commercial real estate 570 13 1,633 37 Consumer real estate 611 9 406 9 Commercial and industrial loans 1,504 32 1,618 47 Consumer and other — — 17 — Total securities gains $ 2,806 $ 54 $ 3,856 $ 93 When the Company cannot reasonably expect full and timely repayment of principal and interest 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 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 June 30, 2017 and December 31, 2016: Nonaccrual June 30, December 31, (in thousands) 2017 2016 Construction and land development $ 118 $ 125 Commercial real state — 783 Consumer real estate 374 — Commercial and industrial loans — 60 Total $ 492 $ 968 There were no loans 90 days or more past due and accruing interest at June 30, 2017 or December 31, 2016. The following table presents the aging of the recorded investment in past due loans as of June 30, 2017 and December 31, 2016 by portfolio segment: Greater 30 - 59 60 - 89 than 90 Days Days Days Total (in thousands) Past Past Past Non- Past Total June 30, 2017 Due Due Due Accrual Due Current Loans Construction and land development $ — $ — $ — $ 118 $ 118 $ 70,543 $ 70,661 Commercial real estate — — — — — 742,574 742,574 Consumer real estate — — — 374 374 323,470 323,844 Commercial and industrial loans — — — — — 181,643 181,643 Consumer and other — — — — — 20,840 20,840 Total $ — $ — $ — $ 492 $ 492 $ 1,339,070 $ 1,339,562 Greater 30 - 59 60 - 89 than 90 Days Days Days Total (in thousands) Past Past Past Non- Past Total December 31, 2016 Due Due Due Accrual Due Current Loans Construction and land development $ — $ — $ — $ 125 $ 125 $ 79,613 $ 79,738 Commercial real estate — — — — — 641,652 641,652 Consumer real estate — — — 783 783 286,338 287,121 Commercial and industrial loans — — — 60 60 170,649 170,709 Consumer and other — — — — — 11,542 11,542 Total $ — $ — $ — $ 968 $ 968 $ 1,189,794 $ 1,190,762 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 se o Fatal documentation errors and; o Performing as agreed without documented capacity or collateral protection. ● 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 June 30, 2017 or December 31, 2016. ● Risk Grade 9 – Loss Loans classified Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value but rather that it is not practical or desirable to defer writing off the worthless loan even though partial recovery may be affected in the future. As of June 30, 2017 and December 31, 2016 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Risk Grade (in thousands) 1 2 3 4 5 6 7 Total June 30, 2017 Construction and land development $ — $ 417 $ 1,189 $ 26,200 $ 42,695 $ 42 $ 118 $ 70,661 Commercial real estate — 210 270,566 362,522 92,486 16,790 — 742,574 Consumer real estate 48 27,908 149,905 107,810 36,662 1,137 374 323,844 Commercial and industrial loans 6,899 1,123 25,252 110,526 35,541 229 2,073 181,643 Consumer and other 782 3,466 2,363 13,061 1,168 — — 20,840 Total $ 7,729 $ 33,124 $ 449,275 $ 620,119 $ 208,552 $ 18,198 $ 2,565 $ 1,339,562 Risk Grade (in thousands) 1 2 3 4 5 6 7 Total December 31, 2016 Construction and land development $ — $ 1,005 $ 911 $ 22,901 $ 54,601 $ 195 $ 125 $ 79,738 Commercial real estate — 539 223,549 311,711 87,443 18,500 — 641,652 Consumer real estate 50 19,247 130,748 102,137 33,013 1,143 783 287,121 Commercial and industrial loans 2,133 1,525 32,304 104,019 29,035 556 1,137 170,709 Consumer and other 1,160 730 1,086 7,392 1,174 — — 11,542 Total $ 3,343 $ 23,046 $ 388,598 $ 548,160 $ 205,266 $ 20,394 $ 2,045 $ 1,190,762

6. OFF-BALANCE SHEET RISK

6. OFF-BALANCE SHEET RISK	6 Months Ended
	Jun. 30, 2017
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 June 30, 2017 and December 31, 2016 is as follows: June 30, December 31, (In thousands) 2017 2016 Financial instruments whose contract amounts represent credit risk: Undisbursed lines of credit $ 251,049 $ 216,769 Standby letters of credit 5,048 3,904 Total $ 256,097 $ 220,673

7. DERIVATIVES AND FINANCIAL IN

7. DERIVATIVES AND FINANCIAL INSTRUMENTS	6 Months Ended
	Jun. 30, 2017
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 June 30, 2017 and December 31, 2016: June 30, 2017 December 31, 2016 Notational Fair Notational Fair (In thousands) Amount Value Amount Value Included in other assets: Cap 1 - maturing August 2019 $ 35,000 $ 856 $ 35,000 $ 1,011 Cap 2 - maturing September 2019 35,000 872 35,000 1,045 Cap 3 - maturing October 2019 30,000 812 30,000 929 $ 100,000 $ 2,540 $ 100,000 $ 2,985 Remaining amortization of the premium on the interest rate caps is as follows: (In thousands) 2017 $ 982 2018 2,247 2019 1,752 $ 4,981 The Company recorded $421,000 and $198,000 for the three-month periods ended June 30, 2017 and 2016, respectively, in amortization associated with the interest rate caps. The Company recorded $791,000 and $341,000 for the six-month periods ended June 30, 2017 and 2016, 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) 2017 $ 37 2018 74 Thereafter 147 $ 258 The Company realized $12,000 and $31,000 in gains on the Swaps during the three- and six-month periods ended June 30, 2017, respectively, shown as a reduction of borrowings and repurchase agreements interest expense. These were the first returns from the Swaps. 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.

8. FAIR VALUE OF FINANCIAL INST

8. FAIR VALUE OF FINANCIAL INSTRUMENTS	6 Months Ended
	Jun. 30, 2017
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. agencies, 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 June 30, 2017 and December 31, 2016, 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 June 30, 2017 and December 31, 2016: 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) June 30, 2017 Securities available-for-sale: U.S. Agency obligations $ 15,855 $ — $ 15,855 $ — Collateralized mortgage obligations 41,027 — 41,027 — Mortgage-backed securities 75,369 — 75,369 — Municipal bonds 67,797 — 67,797 — Other 3,496 1,969 — 1,527 203,544 1,969 200,048 1,527 Interest rate caps 2,540 — 2,540 — Total assets at fair value $ 206,084 $ 1,969 $ 202,588 $ 1,527 December 31, 2016 Securities available-for-sale: U.S. Agency obligations $ 16,943 $ — $ 16,943 $ — Collateralized mortgage obligations 42,497 — 42,497 — Mortgage-backed securities 73,873 — 73,873 — Municipal bonds 60,677 — 60,677 — Other 3,451 1,951 — 1,500 197,441 1,951 193,990 1,500 Interest rate caps 2,985 — 2,985 — Total assets at fair value $ 200,426 $ 1,951 $ 196,975 $ 1,500 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 six months ended June 30, 2017. Level 3 Investment (In thousands) Securities Balance at December 31, 2016 $ 1,500 Purchases — Unrealized gain 27 Balance at June 30, 2017 $ 1,527 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 $2.9 million and $3.2 million at June 30, 2017 and December 31, 2016, 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 June 30, 2017 and December 31, 2016: Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (In thousands) Total Identical Assets Inputs Inputs June 30, 2017 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 2,050 $ - $ - $ 2,050 Other real estate owned 4,690 - - 4,690 Total $ 6,740 $ - $ - $ 6,740 Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (In thousands) Total Identical Assets Inputs Inputs December 31, 2016 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 2,712 $ - $ - $ 2,712 Other real estate owned 4,740 - - 4,740 Total $ 7,452 $ - $ - $ 7,452 For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of June 30, 2017 and December 31, 2016, the significant unobservable inputs used in the fair value measurements were as follows: June 30, 2017 and December 31, 2016 Valuation Significant Significant Technique Observable Inputs unobservable Inputs Impaired loans Appraisal value Appraisals and/or sales of comparable properties Appraisals discounted 5% to 10% for sales commissions and other holding costs Other real estate owned Appraisal value/ Comparison sale/ Other estimates Appraisals and/or sales of comparable properties Appraisals discounted 5% to 10% for sales commissions and other holding costs 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 June 30, 2017 and December 31, 2016: June 30, 2017 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 17,564 $ 17,564 $ 17,564 $ — $ — Investment securities available-for- sale 203,544 203,544 1,969 200,048 1,527 Loans, net 1,330,939 1,331,557 — 1,329,507 2,050 Accrued interest receivable 4,690 4,690 4,690 — — Federal Home Loan Bank stock 12,828 12,828 — — 12,828 Bank-owned life insurance 34,703 34,703 — 34,703 — Interest rate caps 2,540 2,540 — 2,540 — Financial liabilities: Non-maturing deposits 995,199 995,199 — 995,199 — Time deposits 179,531 179,731 — 179,731 — Accrued interest payable 451 451 451 — — Repurchase agreements and federal funds purchased 21,256 21,256 — 21,256 — FHLB Advances and other borrowings 270,000 270,005 — 270,005 — Subordinated debt 18,558 14,302 — 14,302 — December 31, 2016 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 43,005 $ 43,005 $ 43,005 $ — $ — Investment securities available-for- sale 197,441 197,441 1,951 193,990 1,500 Loans, net 1,183,371 1,184,621 — 1,181,909 2,712 Accrued interest receivable 4,368 4,368 4,368 — — Federal Home Loan Bank stock 8,400 8,400 — — 8,400 Bank-owned life insurance 34,190 34,190 — 34,190 — Interest rate caps 2,985 2,985 — 2,985 — Financial liabilities: Non-maturing deposits 953,248 953,248 — 953,248 — Time deposits 219,007 219,038 — 219,038 — Accrued interest payable 294 294 294 — — Repurchase agreements and federal funds purchased 20,174 20,174 — 20,174 — FHLB Advances and other borrowings 150,000 149,997 — 149,997 — Subordinated debt 18,558 14,197 — 14,197 —

9. SUPPLEMENTAL CASH FLOW DISCL

9. SUPPLEMENTAL CASH FLOW DISCLOSURE	6 Months Ended
	Jun. 30, 2017
Supplemental Cash Flow Disclosure
SUPPLEMENTAL CASH FLOW DISCLOSURE	For the six-months ended June 30, (In thousands) 2017 2016 Supplemental Disclosures of Cash Flow Information: Interest paid $ 4,678 $ 3,907 Income taxes paid $ 3,770 $ 2,635 Supplemental Schedule of Noncash Investing and Financing Activities: Change in fair value of securities available-for-sale, net of taxes $ 1,777 $ 2,367 Change in fair value of cash flow hedges, net of taxes $ 204 $ (1,333 )

10. SUBSEQUENT EVENTS

10. SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2017
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)	6 Months Ended
	Jun. 30, 2017
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 Six months ended June 30, ended June 30, 2017 2016 2017 2016 Shares used in the computation of earnings per share: Weighted average number of shares outstanding - basic 5,398,530 4,581,193 5,394,870 4,563,349 Dilutive effect of restricted shares 14,740 43,133 14,176 44,184 Weighted average number of shares outstanding - diluted 5,413,270 4,624,326 5,409,046 4,607,533 Weighted average anti-dilutive stock options and unvested restricted shares excluded from the computation of diluted earnings per share are as follows: Three months Six months ended June 30, ended June 30, 2017 2016 2017 2016 Anti-dilutive stock options — 80,500 — 80,500 Unvested restricted shares 56,733 45,338 56,733 45,338
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 six-month period ended June 30, 2017 and for the year ended December 31, 2016, respectively is as follows: June 30, December 31, (In thousands) 2017 2016 Unrealized gains (losses) on securities available-for-sale $ 1,113 $ (1,775 ) Deferred tax (benefit) expense (433 ) 678 Other comprehensive income (loss), net of tax 680 (1,097 ) Unrealized losses on cash flow hedges (2,441 ) (2,792 ) Deferred tax benefit 902 1,049 Other comprehensive loss, net of tax (1,539 ) (1,743 ) Total other comprehensive loss $ (859 ) $ (2,840 ) The accumulated balances related to each component of other comprehensive income (loss) are as follows: Unpaid Unrealized Unrealized Gains and Gains and Losses on Losses on Available-for Cash Flow (in thousands) Sale Securities Hedges Total Balance as of December 31, 2016 $ (1,097 ) $ (1,743 ) $ (2,840 ) Other comprehensive income before reclassification 1,777 204 1,981 Net current-period other comprehensive income 1,777 204 1,981 Balance as of June 30, 2017 $ 680 $ (1,539 ) $ (859 ) Balance as of December 31, 2015 $ 848 $ (1,734 ) $ (886 ) Other comprehensive income (loss) before reclassification 2,452 (1,333 ) 1,119 Amounts reclassified from accumulated other comprehensive income (85 ) — (85 ) Net current-period other comprehensive income (loss) 2,367 (1,333 ) 1,034 Balance as of June 30, 2016 $ 3,215 $ (3,067 ) $ 148
Recent Accounting Pronouncements	In May 2014, the Financial Accounting Standards Board (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 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 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 designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments became effective January 1, 2017. The amendments did not have a material effect on the Company’s 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 became effective as of January 1, 2017. The amendments did not have a material effect on the Company’s 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. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In March 2017, the FASB amended the requirements in the Receivables—Nonrefundable Fees and Other Costs Topic of the Accounting Standards Codification related to the amortization period for certain purchased callable debt securities held at a premium. The amendments shorten the amortization period for the premium to the earliest call date. The amendments will be effective for the Company for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In May 2017, the FASB amended the requirements in the Compensation—Stock Compensation Topic of the Accounting Standards Codification related to changes to the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. 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 2016 financial statements have been reclassified to conform to the 2017 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)	6 Months Ended
	Jun. 30, 2017
Basis Of Presentation Tables
Shares used in the computation of earnings per share	Three months Six months ended June 30, ended June 30, 2017 2016 2017 2016 Shares used in the computation of earnings per share: Weighted average number of shares outstanding - basic 5,398,530 4,581,193 5,394,870 4,563,349 Dilutive effect of restricted shares 14,740 43,133 14,176 44,184 Weighted average number of shares outstanding - diluted 5,413,270 4,624,326 5,409,046 4,607,533
Anti-dilutive shares	Three months Six months ended June 30, ended June 30, 2017 2016 2017 2016 Anti-dilutive stock options — 80,500 — 80,500 Unvested restricted shares 56,733 45,338 56,733 45,338
Accumulated other comprehensive income	June 30, December 31, (In thousands) 2017 2016 Unrealized gains (losses) on securities available-for-sale $ 1,113 $ (1,775 ) Deferred tax (benefit) expense (433 ) 678 Other comprehensive income (loss), net of tax 680 (1,097 ) Unrealized losses on cash flow hedges (2,441 ) (2,792 ) Deferred tax benefit 902 1,049 Other comprehensive loss, net of tax (1,539 ) (1,743 ) Total other comprehensive loss $ (859 ) $ (2,840 )
Balances related to each component of other comprehensive income (loss)	Unpaid Unrealized Unrealized Gains and Gains and Losses on Losses on Available-for Cash Flow (in thousands) Sale Securities Hedges Total Balance as of December 31, 2016 $ (1,097 ) $ (1,743 ) $ (2,840 ) Other comprehensive income before reclassification 1,777 204 1,981 Net current-period other comprehensive income 1,777 204 1,981 Balance as of June 30, 2017 $ 680 $ (1,539 ) $ (859 ) Balance as of December 31, 2015 $ 848 $ (1,734 ) $ (886 ) Other comprehensive income (loss) before reclassification 2,452 (1,333 ) 1,119 Amounts reclassified from accumulated other comprehensive income (85 ) — (85 ) Net current-period other comprehensive income (loss) 2,367 (1,333 ) 1,034 Balance as of June 30, 2016 $ 3,215 $ (3,067 ) $ 148

4. INVESTMENT SECURITIES (Table

4. INVESTMENT SECURITIES (Tables)	6 Months Ended
	Jun. 30, 2017
Investment Securities Tables
Summary of available-for-sale securities	Gross Gross Estimated Amortized Unrealized Unrealized Fair (In thousands) Cost Gains Losses Value June 30, 2017 Available-for-sale: U.S. Agency obligations $ 15,715 $ 192 $ 52 $ 15,855 Collateralized mortgage obligations 40,833 322 128 41,027 Mortgage-backed securities 75,777 360 768 75,369 Municipal bonds 66,429 1,424 56 67,797 Other 3,677 62 243 3,496 $ 202,431 $ 2,360 $ 1,247 $ 203,544 December 31, 2016 Available-for-sale: U.S. Agency obligations $ 17,062 $ 44 $ 163 $ 16,943 Collateralized mortgage obligations 42,439 300 242 42,497 Mortgage-backed securities 75,138 213 1,478 73,873 Municipal bonds 60,901 474 698 60,677 Other 3,676 29 254 3,451 $ 199,216 $ 1,060 $ 2,835 $ 197,441
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 $ — $ — $ — $ 15,855 $ — $ 15,855 Collateralized mortgage obligations — — — 41,027 — 41,027 Mortgage-backed securities — 7,545 7,619 60,205 — 75,369 Municipal bonds — 2,249 8,898 56,650 — 67,797 Other — — 1,527 — 1,969 3,496 $ — $ 9,794 $ 18,044 $ 173,737 $ 1,969 $ 203,544
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 June 30, 2017 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ 2,623 $ 52 $ — $ — $ 2,623 $ 52 Collateralized mortgage obligations 17,381 128 — — 17,381 128 Mortgage-backed securities 46,180 768 — — 46,180 768 Municipal bonds 7,116 56 — — 7,116 56 Other — — 1,909 242 1,909 242 Total temporarily impaired securities $ 73,300 $ 1,004 $ 1,909 $ 242 $ 75,209 $ 1,246 Less Than 12 Months 12 Months or Greater Total (In thousands) Unrealized Unrealized Unrealized December 31, 2016 Fair Value Losses Fair Value Losses Fair Value Losses Securities available-for-sale: U.S. Agency obligations $ 10,334 $ 163 $ — $ — $ 10,334 $ 163 Collateralized mortgage obligations 18,124 242 — — 18,124 242 Mortgage-backed securities 58,825 1,478 — — 58,825 1,478 Municipal bonds 33,110 698 — — 33,110 698 Other 1,897 254 — — 1,897 254 Total temporarily impaired securities $ 122,290 $ 2,835 $ — $ — $ 122,290 $ 2,835
Investment securities in an unrealized loss position	June 30, December 31, Available-for-sale: 2017 2016 U.S. Agency obligations 2 5 Collateralized mortgage obligations 6 6 Mortgage-backed securities 12 13 Municipal bonds 12 53 Other 1 1 33 78
Securities gains for the periods	Three months Six months ended June 30, ended June 30, 2017 2016 2017 2016 Gross gains on sales of securities available for sale $ — $ — $ — $ 136 Gross losses on sales of securities available for sale — — — (51 ) Total securities gains $ — $ — $ — $ 85

5. LOANS AND ALLOWANCE FOR LO21

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)	6 Months Ended
	Jun. 30, 2017
Loans And Allowance For Loan Losses Tables
Summary of loans	June 30, December 31, (In thousands) 2017 2016 Construction and land development $ 70,661 $ 79,738 Commercial real estate: Non-farm, non-residential 433,486 365,569 Owner occupied 202,982 186,892 Multifamily, nonresidential and junior liens 106,106 89,191 Total commercial real estate 742,574 641,652 Consumer real estate: Home equity lines 87,229 87,489 Secured by 1-4 family residential, secured by first deeds of trust 231,903 195,343 Secured by 1-4 family residential, secured by second deeds of trust 4,712 4,289 Total consumer real estate 323,844 287,121 Commercial and industrial loans (except those secured by real estate) 181,643 170,709 Consumer and other 20,840 11,542 Total loans 1,339,562 1,190,762 Deferred loan costs 298 518 Allowance for loan losses (8,921 ) (7,909 ) Net loans $ 1,330,939 $ 1,183,371 June 30, December 31, (in thousands) 2017 2016 Construction and land development: Land $ 12,115 $ 12,595 Residential 29,684 36,253 Commercial 28,862 30,890 Total construction and land development $ 70,661 $ 79,738 Commercial real estate: Non-farm, non-residential: Office $ 137,771 $ 108,228 Industrial 33,240 36,264 Hotel/motel 32,054 28,453 Retail 193,781 165,434 Special purpose/Other 36,640 27,190 Total commercial real estate 433,486 365,569 Owner occupied : Office 66,448 60,500 Industrial 52,698 46,876 Retail 30,965 31,085 Special purpose/Other 52,871 48,431 Total owner occupied 202,982 186,892 Multifamily, nonresidential and junior liens 106,106 89,191 Total commercial real estate $ 742,574 $ 641,652
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 June 30, 2017 Beginning balance $ 490 $ 3,968 $ 1,939 $ 1,646 $ 82 $ 8,125 Provision for loan losses (225 ) 273 87 481 34 650 Loans charged off — — — — — — Recoveries 138 — — 8 — 146 Net (chargeoffs) recoveries 138 — — 8 — 146 Ending balance $ 403 $ 4,241 $ 2,026 $ 2,135 $ 116 $ 8,921 Six months ended June 30, 2017 Beginning balance $ 486 $ 3,719 $ 1,900 $ 1,728 $ 76 $ 7,909 Provision for loan losses (230 ) 494 126 366 53 809 Loans charged off — — — (10 ) (13 ) (23 ) Recoveries 147 28 — 51 — 226 Net (chargeoffs) recoveries 147 28 — 41 (13 ) 203 Ending balance $ 403 $ 4,241 $ 2,026 $ 2,135 $ 116 $ 8,921 Three months ended June 30, 2016 Beginning balance $ 523 $ 3,072 $ 1,972 $ 1,790 $ 574 $ 7,931 Provision for loan losses (125 ) 187 (88 ) 492 (466 ) — Loans charged off — — — — (1 ) (1 ) Recoveries 8 19 3 25 1 56 Net recoveries 8 19 3 25 — 55 Ending balance $ 406 $ 3,278 $ 1,887 $ 2,307 $ 108 $ 7,986 Six months ended June 30, 2016 Beginning balance $ 509 $ 3,156 $ 2,046 $ 1,786 $ 144 $ 7,641 Provision for loan losses (340 ) 66 (165 ) 485 (46 ) — Loans charged off — — — — (1 ) (1 ) Recoveries 237 56 6 36 11 346 Net recoveries 237 56 6 36 10 345 Ending balance $ 406 $ 3,278 $ 1,887 $ 2,307 $ 108 $ 7,986
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 June 30, 2017 Allowance for Loan Losses: Individually evaluated for impairment $ — $ — $ 45 $ 781 $ — $ 826 Collectively evaluated for impairment 403 4,241 1,981 1,354 116 8,095 Total ending allowance $ 403 $ 4,241 $ 2,026 $ 2,135 $ 116 $ 8,921 Loans: Individually evaluated for impairment $ 118 $ 307 $ 374 $ 2,077 $ — $ 2,876 Collectively evaluated for impairment 70,543 742,267 323,470 179,566 20,840 1,336,686 Total ending loans $ 70,661 $ 742,574 $ 323,844 $ 181,643 $ 20,840 $ 1,339,562 (in thousands) December 31, 2016 Allowance for Loan Losses: Individually evaluated for impairment $ — $ — $ 223 $ 286 $ — $ 509 Collectively evaluated for impairment 486 3,719 1,677 1,442 76 7,400 Total ending allowance $ 486 $ 3,719 $ 1,900 $ 1,728 $ 76 $ 7,909 Loans: Individually evaluated for impairment $ 125 $ 836 $ 1,121 $ 1,139 $ — $ 3,221 Collectively evaluated for impairment 79,613 640,816 286,000 169,570 11,542 1,187,541 Total ending loans $ 79,738 $ 641,652 $ 287,121 $ 170,709 $ 11,542 $ 1,190,762
Performing and nonperforming TDRs	June 30, December 31, (In thousands) 2017 2016 Performing TDRs: Commercial real estate $ 296 $ 520 Consumer real estate — 338 Commercial and industrial loans — 297 Total performing TDRs 296 1,155 Nonperforming TDRs: Construction and land development 118 125 Consumer real estate 186 58 Total nonperformingTDRs 304 183 Total TDRs $ 600 $ 1,338
Impaired loans	Unpaid Contractual (in thousands Recorded Principal Allocated June 30, 2017 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 118 $ 165 $ Commercial real estate 307 307 - Loans with a specific valuation allowance: Consumer real estate 374 432 45 Commercial and industrial loans 2,077 2,108 781 Total $ 2,876 $ 3,012 $ 826 Unpaid Contractual (in thousands Recorded Principal Allocated December 31, 2016 Investment Balance Allowance Loans without a specific valuation allowance: Construction and land development $ 125 $ 195 $ Commercial real estate 836 836 - Loans with a specific valuation allowance: Consumer real estate 1,121 1,152 223 Commercial and industrial loans (except those secured by real estate) 1,139 1,382 286 Total $ 3,221 $ 3,565 $ 509
Average recorded investment balance of impaired loans	Three months ended June 30, 2017 2016 Average Interest Average Interest Balance Income Balance Income Construction and land development $ 119 $ — $ 133 $ — Commercial real estate 307 3 1,113 13 Consumer real estate 491 3 404 4 Commercial and industrial loans 1,929 22 2,671 17 Consumer and other — — 13 — Total securities gains $ 2,846 $ 28 $ 4,334 $ 34 Six months ended June 30, 2017 2016 Average Interest Average Interest Balance Income Balance Income Construction and land development $ 121 $ — $ 182 $ — Commercial real estate 570 13 1,633 37 Consumer real estate 611 9 406 9 Commercial and industrial loans 1,504 32 1,618 47 Consumer and other — — 17 — Total securities gains $ 2,806 $ 54 $ 3,856 $ 93
Non-accrual loans	Nonaccrual June 30, December 31, (in thousands) 2017 2016 Construction and land development $ 118 $ 125 Commercial real state — 783 Consumer real estate 374 — Commercial and industrial loans — 60 Total $ 492 $ 968
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 June 30, 2017 Due Due Due Accrual Due Current Loans Construction and land development $ — $ — $ — $ 118 $ 118 $ 70,543 $ 70,661 Commercial real estate — — — — — 742,574 742,574 Consumer real estate — — — 374 374 323,470 323,844 Commercial and industrial loans — — — — — 181,643 181,643 Consumer and other — — — — — 20,840 20,840 Total $ — $ — $ — $ 492 $ 492 $ 1,339,070 $ 1,339,562 Greater 30 - 59 60 - 89 than 90 Days Days Days Total (in thousands) Past Past Past Non- Past Total December 31, 2016 Due Due Due Accrual Due Current Loans Construction and land development $ — $ — $ — $ 125 $ 125 $ 79,613 $ 79,738 Commercial real estate — — — — — 641,652 641,652 Consumer real estate — — — 783 783 286,338 287,121 Commercial and industrial loans — — — 60 60 170,649 170,709 Consumer and other — — — — — 11,542 11,542 Total $ — $ — $ — $ 968 $ 968 $ 1,189,794 $ 1,190,762
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 June 30, 2017 Construction and land development $ — $ 417 $ 1,189 $ 26,200 $ 42,695 $ 42 $ 118 $ 70,661 Commercial real estate — 210 270,566 362,522 92,486 16,790 — 742,574 Consumer real estate 48 27,908 149,905 107,810 36,662 1,137 374 323,844 Commercial and industrial loans 6,899 1,123 25,252 110,526 35,541 229 2,073 181,643 Consumer and other 782 3,466 2,363 13,061 1,168 — — 20,840 Total $ 7,729 $ 33,124 $ 449,275 $ 620,119 $ 208,552 $ 18,198 $ 2,565 $ 1,339,562 Risk Grade (in thousands) 1 2 3 4 5 6 7 Total December 31, 2016 Construction and land development $ — $ 1,005 $ 911 $ 22,901 $ 54,601 $ 195 $ 125 $ 79,738 Commercial real estate — 539 223,549 311,711 87,443 18,500 — 641,652 Consumer real estate 50 19,247 130,748 102,137 33,013 1,143 783 287,121 Commercial and industrial loans 2,133 1,525 32,304 104,019 29,035 556 1,137 170,709 Consumer and other 1,160 730 1,086 7,392 1,174 — — 11,542 Total $ 3,343 $ 23,046 $ 388,598 $ 548,160 $ 205,266 $ 20,394 $ 2,045 $ 1,190,762

6. OFF-BALANCE SHEET RISK (Tabl

6. OFF-BALANCE SHEET RISK (Tables)	6 Months Ended
	Jun. 30, 2017
Off-balance Sheet Risk Tables
Summary of the contract amounts exposed to off-balance sheet credit risk	June 30, December 31, (In thousands) 2017 2016 Financial instruments whose contract amounts represent credit risk: Undisbursed lines of credit $ 251,049 $ 216,769 Standby letters of credit 5,048 3,904 Total $ 256,097 $ 220,673

7. DERIVATIVES AND FINANCIAL 23

7. DERIVATIVES AND FINANCIAL INSTRUMENTS (Tables)	6 Months Ended
	Jun. 30, 2017
Derivatives And Financial Instruments Tables
Summary of cash flow hedges	June 30, 2017 December 31, 2016 Notational Fair Notational Fair (In thousands) Amount Value Amount Value Included in other assets: Cap 1 - maturing August 2019 $ 35,000 $ 856 $ 35,000 $ 1,011 Cap 2 - maturing September 2019 35,000 872 35,000 1,045 Cap 3 - maturing October 2019 30,000 812 30,000 929 $ 100,000 $ 2,540 $ 100,000 $ 2,985
Amortization of the premium on the interest rate caps	(In thousands) 2017 $ 982 2018 2,247 2019 1,752 $ 4,981
Remaining amortization of the gain associated with the exit of the swaps	(In thousands) 2017 $ 37 2018 74 Thereafter 147 $ 258

8. FAIR VALUE OF FINANCIAL IN24

8. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	6 Months Ended
	Jun. 30, 2017
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) June 30, 2017 Securities available-for-sale: U.S. Agency obligations $ 15,855 $ — $ 15,855 $ — Collateralized mortgage obligations 41,027 — 41,027 — Mortgage-backed securities 75,369 — 75,369 — Municipal bonds 67,797 — 67,797 — Other 3,496 1,969 — 1,527 203,544 1,969 200,048 1,527 Interest rate caps 2,540 — 2,540 — Total assets at fair value $ 206,084 $ 1,969 $ 202,588 $ 1,527 December 31, 2016 Securities available-for-sale: U.S. Agency obligations $ 16,943 $ — $ 16,943 $ — Collateralized mortgage obligations 42,497 — 42,497 — Mortgage-backed securities 73,873 — 73,873 — Municipal bonds 60,677 — 60,677 — Other 3,451 1,951 — 1,500 197,441 1,951 193,990 1,500 Interest rate caps 2,985 — 2,985 — Total assets at fair value $ 200,426 $ 1,951 $ 196,975 $ 1,500
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, 2016 $ 1,500 Purchases — Unrealized gain 27 Balance at June 30, 2017 $ 1,527
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 June 30, 2017 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 2,050 $ - $ - $ 2,050 Other real estate owned 4,690 - - 4,690 Total $ 6,740 $ - $ - $ 6,740 Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable (In thousands) Total Identical Assets Inputs Inputs December 31, 2016 Fair Value (Level 1) (Level 2) (Level 3) Impaired loans $ 2,712 $ - $ - $ 2,712 Other real estate owned 4,740 - - 4,740 Total $ 7,452 $ - $ - $ 7,452
Significant unobservable inputs used in the fair value measurements	June 30, 2017 and December 31, 2016 Valuation Significant Significant Technique Observable Inputs unobservable Inputs Impaired loans Appraisal value Appraisals and/or sales of comparable properties Appraisals discounted 5% to 10% for sales commissions and other holding costs Other real estate owned Appraisal value/ Comparison sale/ Other estimates Appraisals and/or sales of comparable properties Appraisals discounted 5% to 10% for sales commissions and other holding costs
Carrying amount fair value of the Company's financial instruments	June 30, 2017 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 17,564 $ 17,564 $ 17,564 $ — $ — Investment securities available-for- sale 203,544 203,544 1,969 200,048 1,527 Loans, net 1,330,939 1,331,557 — 1,329,507 2,050 Accrued interest receivable 4,690 4,690 4,690 — — Federal Home Loan Bank stock 12,828 12,828 — — 12,828 Bank-owned life insurance 34,703 34,703 — 34,703 — Interest rate caps 2,540 2,540 — 2,540 — Financial liabilities: Non-maturing deposits 995,199 995,199 — 995,199 — Time deposits 179,531 179,731 — 179,731 — Accrued interest payable 451 451 451 — — Repurchase agreements and federal funds purchased 21,256 21,256 — 21,256 — FHLB Advances and other borrowings 270,000 270,005 — 270,005 — Subordinated debt 18,558 14,302 — 14,302 — December 31, 2016 Carrying Fair Value (in thousands) Amount Total Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 43,005 $ 43,005 $ 43,005 $ — $ — Investment securities available-for- sale 197,441 197,441 1,951 193,990 1,500 Loans, net 1,183,371 1,184,621 — 1,181,909 2,712 Accrued interest receivable 4,368 4,368 4,368 — — Federal Home Loan Bank stock 8,400 8,400 — — 8,400 Bank-owned life insurance 34,190 34,190 — 34,190 — Interest rate caps 2,985 2,985 — 2,985 — Financial liabilities: Non-maturing deposits 953,248 953,248 — 953,248 — Time deposits 219,007 219,038 — 219,038 — Accrued interest payable 294 294 294 — — Repurchase agreements and federal funds purchased 20,174 20,174 — 20,174 — FHLB Advances and other borrowings 150,000 149,997 — 149,997 — Subordinated debt 18,558 14,197 — 14,197 —

9. SUPPLEMENTAL CASH FLOW DIS25

9. SUPPLEMENTAL CASH FLOW DISCLOSURE (Tables)	6 Months Ended
	Jun. 30, 2017
Supplemental Cash Flow Disclosure Tables
Supplemental cash flow disclosure	For the six-months ended June 30, (In thousands) 2017 2016 Supplemental Disclosures of Cash Flow Information: Interest paid $ 4,678 $ 3,907 Income taxes paid $ 3,770 $ 2,635 Supplemental Schedule of Noncash Investing and Financing Activities: Change in fair value of securities available-for-sale, net of taxes $ 1,777 $ 2,367 Change in fair value of cash flow hedges, net of taxes $ 204 $ (1,333 )

2. BASIS OF PRESENTATION (Detai

2. BASIS OF PRESENTATION (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Shares used in the computation of earnings per share:
Weighted average number of shares outstanding - basic	5,398,530	4,581,193	5,394,870	4,563,349
Dilutive effect of restricted shares	14,740	43,133	14,176	44,184
Weighted average number of shares outstanding - diluted	5,413,270	4,624,326	5,409,046	4,607,533

2. BASIS OF PRESENTATION (Det27

2. BASIS OF PRESENTATION (Details 1) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Stock Options
Anti-dilutive shares excluded from the computation of earnings per share	0	80,500	0	80,500
Unvested Restricted Shares
Anti-dilutive shares excluded from the computation of earnings per share	56,733	45,338	56,733	45,338

2. BASIS OF PRESENTATION (Det28

2. BASIS OF PRESENTATION (Details 2) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Basis Of Presentation Details 2
Unrealized gains on securities available-for-sale	$ 1,113	$ (1,775)
Deferred tax expense	(4,333)	678
Other comprehensive income (loss), net of tax	680	(1,097)
Unrealized losses on cash flow hedges	(2,441)	(2,792)
Deferred tax benefit	902	1,049
Other comprehensive loss, net of tax	(1,539)	(1,743)
Total other comprehensive income (loss)	$ (859)	$ (2,840)	$ 148	$ (886)

2. BASIS OF PRESENTATION (Det29

2. BASIS OF PRESENTATION (Details 3) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Other comprehensive income (loss), beginning	$ (2,840)	$ (886)
Other comprehensive income (loss) before reclassification	1,981	1,119
Amounts reclassified from accumulated other comprehensive income		(85)
Net current-period other comprehensive income (loss)	1,981	1,034
Other comprehensive income (loss), ending	(859)	148
Unrealized Gains and Losses on Available-for-Sale Securities
Other comprehensive income (loss), beginning	(1,097)	848
Other comprehensive income (loss) before reclassification	1,777	2,452
Amounts reclassified from accumulated other comprehensive income		(85)
Net current-period other comprehensive income (loss)	1,777	2,367
Other comprehensive income (loss), ending	680	3,215
Unrealized Gains and Losses on Cash Flow Hedges
Other comprehensive income (loss), beginning	(1,743)	(1,734)
Other comprehensive income (loss) before reclassification	204	(1,333)
Amounts reclassified from accumulated other comprehensive income		0
Net current-period other comprehensive income (loss)	204	(1,333)
Other comprehensive income (loss), ending	$ (1,539)	$ (3,067)

4. INVESTMENT SECURITIES (Detai

4. INVESTMENT SECURITIES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Investment securities available for sale
Gross Unrealized Gains	$ 0	$ 0	$ 0	$ 136
Gross Unrealized Losses	0	$ 0	0	$ (51)
Estimated Fair Value	203,544		203,544		$ 197,441
U.S. Agency obligations
Investment securities available for sale
Amortized Cost	15,715		15,715		17,062
Gross Unrealized Gains			192		44
Gross Unrealized Losses			52		163
Estimated Fair Value	15,855		15,855		16,943
Collateralized mortgage obligations
Investment securities available for sale
Amortized Cost	40,833		40,833		42,439
Gross Unrealized Gains			322		300
Gross Unrealized Losses			128		242
Estimated Fair Value	41,027		41,027		42,497
Mortgage-backed securities
Investment securities available for sale
Amortized Cost	75,777		75,777		75,138
Gross Unrealized Gains			360		213
Gross Unrealized Losses			768		1,478
Estimated Fair Value	75,369		75,369		73,873
Municipal Bonds
Investment securities available for sale
Amortized Cost	66,429		66,429		60,901
Gross Unrealized Gains			1,424		474
Gross Unrealized Losses			56		698
Estimated Fair Value	67,797		67,797		60,677
Other
Investment securities available for sale
Amortized Cost	3,677		3,677		3,676
Gross Unrealized Gains			62		29
Gross Unrealized Losses			243		254
Estimated Fair Value	3,496		3,496		3,451
Total
Investment securities available for sale
Amortized Cost	202,431		202,431		199,216
Gross Unrealized Gains			2,360		1,060
Gross Unrealized Losses			1,247		2,835
Estimated Fair Value	$ 203,544		$ 203,544		$ 197,441

4. INVESTMENT SECURITIES (Det31

4. INVESTMENT SECURITIES (Details 1) $ in Thousands	Jun. 30, 2017USD ($)
Estimated Fair Value
Due within one year	$ 0
Due after one within five years	9,794
Due after five within ten years	18,044
Due after ten years	173,737
No stated maturity date	1,969
Total	203,544
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	15,855
No stated maturity date	0
Total	15,855
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	41,027
No stated maturity date	0
Total	41,027
Mortgage-backed securities
Estimated Fair Value
Due within one year	0
Due after one within five years	7,545
Due after five within ten years	7,619
Due after ten years	60,205
No stated maturity date	0
Total	75,369
Municipal Bonds
Estimated Fair Value
Due within one year	0
Due after one within five years	2,249
Due after five within ten years	8,898
Due after ten years	56,650
No stated maturity date	0
Total	67,797
Other
Estimated Fair Value
Due within one year	0
Due after one within five years	0
Due after five within ten years	1,527
Due after ten years	0
No stated maturity date	1,969
Total	$ 3,496

4. INVESTMENT SECURITIES (Det32

4. INVESTMENT SECURITIES (Details 2) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Securities available-for-sale:
Less than 12 Months, Fair Value	$ 73,300	$ 122,290
Less than 12 Months, Unrealized Losses	1,004	2,835
12 Months or More, Fair Value	1,909	0
12 Months or More, Unrealized Losses	242	0
Total, Fair Value	75,209	122,290
Total, Unrealized Losses	1,246	2,835
U.S. Agency obligations
Securities available-for-sale:
Less than 12 Months, Fair Value	2,623	10,334
Less than 12 Months, Unrealized Losses	52	163
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	2,623	10,334
Total, Unrealized Losses	52	163
Collateralized mortgage obligations
Securities available-for-sale:
Less than 12 Months, Fair Value	17,381	18,124
Less than 12 Months, Unrealized Losses	128	242
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	17,381	18,124
Total, Unrealized Losses	128	242
Mortgage-backed securities
Securities available-for-sale:
Less than 12 Months, Fair Value	46,180	58,825
Less than 12 Months, Unrealized Losses	768	1,478
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	46,180	58,825
Total, Unrealized Losses	768	1,478
Municipal Bonds
Securities available-for-sale:
Less than 12 Months, Fair Value	7,116	33,110
Less than 12 Months, Unrealized Losses	56	698
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	7,116	33,110
Total, Unrealized Losses	56	698
Other
Securities available-for-sale:
Less than 12 Months, Fair Value	0	1,897
Less than 12 Months, Unrealized Losses	0	254
12 Months or More, Fair Value	1,909	0
12 Months or More, Unrealized Losses	242	0
Total, Fair Value	1,909	1,897
Total, Unrealized Losses	$ 242	$ 254

4. INVESTMENT SECURITIES (Det33

4. INVESTMENT SECURITIES (Details 3) - Integer	Jun. 30, 2017	Dec. 31, 2016
Number of investment securities in an unrealized loss position	33	78
U.S. Agency obligations
Number of investment securities in an unrealized loss position	2	5
Collateralized mortgage obligations
Number of investment securities in an unrealized loss position	6	6
Mortgage-backed securities
Number of investment securities in an unrealized loss position	12	13
Municipal Bonds
Number of investment securities in an unrealized loss position	12	53
Other
Number of investment securities in an unrealized loss position	1	1

4. INVESTMENT SECURITIES (Det34

4. INVESTMENT SECURITIES (Details 4) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Investment Securities Details 4
Gross gains on sales of securities available for sale	$ 0	$ 0	$ 0	$ 136
Gross losses on sales of securities available for sale	0	0	0	(51)
Total securities gains	$ 0	$ 0	$ 0	$ 85

4. INVESTMENT SECURITIES (Det35

4. INVESTMENT SECURITIES (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Pledged to secure repurchase agreements, lines of credit and other borrowings	$ 71,000	$ 75,800

5. LOANS AND ALLOWANCE FOR LO36

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Total loans	$ 1,339,562		$ 1,190,762
Deferred loan (fees) costs	298		518
Less allowance for loan losses	(8,921)	$ (8,125)	(7,909)	$ (7,986)	$ (7,931)	$ (7,641)
Total net loans	1,330,939		1,183,371
Commercial Real Estate
Less allowance for loan losses	(4,241)	$ (3,968)	(3,719)	$ (3,278)	$ (3,072)	$ (3,156)
Construction and land development
Total loans	70,661		79,738
Construction and land development | Land
Total loans	12,115		12,595
Construction and land development | Residential
Total loans	29,684		36,253
Construction and land development | Commercial
Total loans	28,862		30,890
Non-farm, non-residential | Commercial Real Estate
Total loans	433,486
Non-farm, non-residential | Commercial Real Estate | Office
Total loans	137,771		108,228
Non-farm, non-residential | Commercial Real Estate | Industrial
Total loans	33,240		36,264
Non-farm, non-residential | Commercial Real Estate | Hotel/Motel
Total loans	32,054		28,453
Non-farm, non-residential | Commercial Real Estate | Retail
Total loans	193,781		165,434
Non-farm, non-residential | Commercial Real Estate | Special purpose/Other
Total loans	36,640		27,190
Commercial Real Estate
Total loans	742,574		641,652
Commercial Real Estate | Owner occupied
Total loans	202,982		186,892
Commercial Real Estate | Owner occupied | Office
Total loans	66,448		60,500
Commercial Real Estate | Owner occupied | Industrial
Total loans	52,698		46,876
Commercial Real Estate | Owner occupied | Retail
Total loans	30,965		31,085
Commercial Real Estate | Owner occupied | Special purpose/Other
Total loans	52,871		48,431
Commercial Real Estate | Multifamily, nonresidential and junior liens
Total loans	106,106		89,191
Commercial Real Estate | Non-farm, non-residential
Total loans			365,569
Commercial Real Estate | Multifamily, nonresidential and junior liens
Total loans	106,106		89,191
Consumer Real Estate
Total loans	323,844		287,121
Consumer Real Estate | Home equity lines
Total loans	87,229		87,489
Consumer Real Estate | Secured by 1-4 family residential, secured by first deeds of trust
Total loans	231,903		195,343
Consumer Real Estate | Secured by 1-4 family residential, secured by second deeds of trust
Total loans	4,712		4,289
Commercial and industrial loans (except those secured by real estate)
Total loans	181,643		170,709
Consumer and other
Total loans	$ 20,840		$ 11,542

5. LOANS AND ALLOWANCE FOR LO37

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Allowance for loan losses
Beginning balance	$ 8,125	$ 7,931	$ 7,909	$ 7,641
Provision for loan losses	650	0	809	0
Loans charged off	0	(1)	(23)	(1)
Recoveries	0	56	226	346
Net (chargeoffs) recoveries	146	55	203	345
Ending balance	8,921	7,986	8,921	7,986
Construction and land development
Allowance for loan losses
Beginning balance	490	523	486	509
Provision for loan losses	(225)	(125)	(230)	(340)
Loans charged off	0	0	0	0
Recoveries	138	8	147	237
Net (chargeoffs) recoveries	138	8	147	237
Ending balance	403	406	403	406
Commercial Real Estate
Allowance for loan losses
Beginning balance	3,968	3,072	3,719	3,156
Provision for loan losses	273	187	494	66
Loans charged off	0	0	0	0
Recoveries	0	19	28	56
Net (chargeoffs) recoveries	0	19	28	56
Ending balance	4,241	3,278	4,241	3,278
Consumer Real Estate
Allowance for loan losses
Beginning balance	1,939	1,972	1,900	2,046
Provision for loan losses	87	(88)	126	(165)
Loans charged off	0	0	0	0
Recoveries	0	3	0	6
Net (chargeoffs) recoveries	0	3	0	6
Ending balance	2,026	1,887	2,026	1,887
Commercial and industrial loans (except those secured by real estate)
Allowance for loan losses
Beginning balance	1,646	1,790	1,728	1,786
Provision for loan losses	481	492	366	485
Loans charged off	0	0	(10)	0
Recoveries	8	25	51	36
Net (chargeoffs) recoveries	8	25	41	36
Ending balance	2,135	2,307	2,135	2,307
Consumer and other
Allowance for loan losses
Beginning balance	82	574	76	144
Provision for loan losses	34	(466)	53	(46)
Loans charged off	0	(1)	(13)	(1)
Recoveries	0	1	0	11
Net (chargeoffs) recoveries	0	0	(13)	10
Ending balance	$ 116	$ 108	$ 116	$ 108

5. LOANS AND ALLOWANCE FOR LO38

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Allowance for loan losses
Individually evaluated for impairment	$ 826	$ 509
Collectively evaluated for impairment	8,095	7,400
Total ending allowance	8,921	7,909
Loans
Individually evaluated for impairment	2,876	3,221
Collectively evaluated for impairment	1,336,686	1,187,541
Total ending loans	1,339,562	1,190,762
Construction and land development
Allowance for loan losses
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	403	486
Total ending allowance	403	486
Loans
Individually evaluated for impairment	118	125
Collectively evaluated for impairment	70,543	79,613
Total ending loans	70,661	79,738
Commercial Real Estate
Allowance for loan losses
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	4,241	3,719
Total ending allowance	4,241	3,719
Loans
Individually evaluated for impairment	307	836
Collectively evaluated for impairment	742,267	640,816
Total ending loans	742,574	641,652
Consumer Real Estate
Allowance for loan losses
Individually evaluated for impairment	45	223
Collectively evaluated for impairment	1,981	1,678
Total ending allowance	2,026	1,901
Loans
Individually evaluated for impairment	374	1,121
Collectively evaluated for impairment	323,470	286,000
Total ending loans	323,844	287,121
Commercial and industrial loans (except those secured by real estate)
Allowance for loan losses
Individually evaluated for impairment	781	286
Collectively evaluated for impairment	1,354	1,441
Total ending allowance	2,135	1,727
Loans
Individually evaluated for impairment	2,077	1,139
Collectively evaluated for impairment	179,566	169,570
Total ending loans	181,643	170,709
Consumer and other
Allowance for loan losses
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	116	76
Total ending allowance	116	76
Loans
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	20,840	11,542
Total ending loans	$ 20,840	$ 11,542

5. LOANS AND ALLOWANCE FOR LO39

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Performing TDRs	$ 296	$ 1,155
Nonperforming TDRs	304	183
Total TDRs	600	1,338
Consumer Real Estate
Performing TDRs	0	338
Nonperforming TDRs	186	58
Commercial and industrial loans (except those secured by real estate)
Performing TDRs	0	297
Construction and land development
Nonperforming TDRs	118	125
Commercial Real Estate
Performing TDRs	$ 296	$ 520

5. LOANS AND ALLOWANCE FOR LO40

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Impaired loans
Recorded Investment in Impaired Loans	$ 2,876	$ 3,221
Unpaid Contractual Principal Balance	3,012	3,565
Allocated Allowance	826	509
Commercial and industrial loans (except those secured by real estate)
Impaired loans
Recorded Investment With Allowance	2,077	1,139
Unpaid Contractual Principal Balance With Allowance	2,108	1,382
Allocated Allowance	781	286
Construction and land development
Impaired loans
Recorded Investment With No Allowance	118	125
Unpaid Contractual Principal Balance With No Allowance	165	195
Commercial Real Estate
Impaired loans
Recorded Investment With No Allowance	307	836
Unpaid Contractual Principal Balance With No Allowance	307	836
Consumer Real Estate
Impaired loans
Recorded Investment With Allowance	374	1,121
Unpaid Contractual Principal Balance With Allowance	432	1,152
Allocated Allowance	$ 45	$ 223

5. LOANS AND ALLOWANCE FOR LO41

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Average balance	$ 2,846	$ 4,334	$ 2,806	$ 3,856
Interest income	28	34	54	93
Construction and land development
Average balance	119	133	121	182
Interest income	0	0	0	0
Commercial Real Estate
Average balance	307	1,113	570	1,633
Interest income	3	13	13	37
Consumer Real Estate
Average balance	491	404	611	406
Interest income	3	4	9	9
Commercial and industrial loans (except those secured by real estate)
Average balance	1,929	2,671	1,504	1,618
Interest income	22	17	32	47
Consumer and other
Average balance	0	13	0	17
Interest income	$ 0	$ 0	$ 0	$ 0

5. LOANS AND ALLOWANCE FOR LO42

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Non-accrual loans
Non-accrual loans	$ 492	$ 968
Commercial Real Estate
Non-accrual loans
Non-accrual loans	0	783
Consumer Real Estate
Non-accrual loans
Non-accrual loans	374	0
Commercial and industrial loans (except those secured by real estate)
Non-accrual loans
Non-accrual loans	0	60
Construction and land development
Non-accrual loans
Non-accrual loans	$ 118	$ 125

5. LOANS AND ALLOWANCE FOR LO43

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 7) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
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	492	968
Total Past Due Loans	492	968
Total Current Loans	1,339,070	1,189,794
Total loans	1,339,562	1,190,762
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	742,574	641,652
Total loans	742,574	641,652
Consumer 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	374	783
Total Past Due Loans	374	783
Total Current Loans	323,470	286,338
Total loans	323,844	287,121
Commercial and industrial loans (except those secured by 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	60
Total Past Due Loans	0	60
Total Current Loans	181,643	170,649
Total loans	181,643	170,709
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	0
Total Past Due Loans	0	0
Total Current Loans	20,840	11,542
Total loans	20,840	11,542
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		125
Total Past Due Loans		125
Total Current Loans		79,613
Total loans	70,661	$ 79,738
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	118
Total Past Due Loans	118
Total Current Loans	70,543
Total loans	$ 70,661

5. LOANS AND ALLOWANCE FOR LO44

5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 8) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Total Loans	$ 1,339,562	$ 1,190,762
Risk Grade 1
Total Loans	7,729	3,343
Risk Grade 2
Total Loans	33,124	23,046
Risk Grade 3
Total Loans	449,275	388,508
Risk Grade 4
Total Loans	620,119	548,160
Risk Grade 5
Total Loans	208,552	205,266
Risk Grade 6
Total Loans	18,198	20,394
Risk Grade 7
Total Loans	2,565	2,045
Construction and land development
Total Loans	70,661	79,738
Construction and land development | Risk Grade 1
Total Loans	0	0
Construction and land development | Risk Grade 2
Total Loans	417	1,005
Construction and land development | Risk Grade 3
Total Loans	1,189	911
Construction and land development | Risk Grade 4
Total Loans	26,200	22,901
Construction and land development | Risk Grade 5
Total Loans	42,695	54,601
Construction and land development | Risk Grade 6
Total Loans	42	195
Construction and land development | Risk Grade 7
Total Loans	118	125
Commercial Real Estate
Total Loans	742,574	641,652
Commercial Real Estate | Risk Grade 1
Total Loans	0	0
Commercial Real Estate | Risk Grade 2
Total Loans	210	539
Commercial Real Estate | Risk Grade 3
Total Loans	270,566	223,459
Commercial Real Estate | Risk Grade 4
Total Loans	362,522	311,711
Commercial Real Estate | Risk Grade 5
Total Loans	92,486	87,443
Commercial Real Estate | Risk Grade 6
Total Loans	16,790	18,500
Commercial Real Estate | Risk Grade 7
Total Loans	0	0
Consumer Real Estate
Total Loans	323,844	287,121
Consumer Real Estate | Risk Grade 1
Total Loans	48	50
Consumer Real Estate | Risk Grade 2
Total Loans	27,908	19,247
Consumer Real Estate | Risk Grade 3
Total Loans	149,905	130,748
Consumer Real Estate | Risk Grade 4
Total Loans	107,810	102,137
Consumer Real Estate | Risk Grade 5
Total Loans	36,662	33,013
Consumer Real Estate | Risk Grade 6
Total Loans	1,137	1,143
Consumer Real Estate | Risk Grade 7
Total Loans	374	783
Commercial and industrial loans (except those secured by real estate)
Total Loans	181,643	170,709
Commercial and industrial loans (except those secured by real estate) | Risk Grade 1
Total Loans	6,899	2,133
Commercial and industrial loans (except those secured by real estate) | Risk Grade 2
Total Loans	1,123	1,525
Commercial and industrial loans (except those secured by real estate) | Risk Grade 3
Total Loans	25,252	32,304
Commercial and industrial loans (except those secured by real estate) | Risk Grade 4
Total Loans	110,526	104,019
Commercial and industrial loans (except those secured by real estate) | Risk Grade 5
Total Loans	35,541	29,035
Commercial and industrial loans (except those secured by real estate) | Risk Grade 6
Total Loans	229	556
Commercial and industrial loans (except those secured by real estate) | Risk Grade 7
Total Loans	2,073	1,137
Consumer and other
Total Loans	20,840	11,542
Consumer and other | Risk Grade 1
Total Loans	782	1,160
Consumer and other | Risk Grade 2
Total Loans	3,466	730
Consumer and other | Risk Grade 3
Total Loans	2,363	1,086
Consumer and other | Risk Grade 4
Total Loans	13,061	7,392
Consumer and other | Risk Grade 5
Total Loans	1,168	1,174
Consumer and other | Risk Grade 6
Total Loans	0	0
Consumer and other | Risk Grade 7
Total Loans	$ 0	$ 0

6. OFF-BALANCE SHEET RISK (Deta

6. OFF-BALANCE SHEET RISK (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Line of credit	$ 256,097	$ 220,673
Undisbursed Lines of Credit
Line of credit	251,049	216,769
Standby Letters of Credit
Line of credit	$ 5,048	$ 3,904

7. DERIVATIVES AND FINANCIAL 46

7. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Notational amount	$ 100,000	$ 100,000
Fair value	2,540	2,985
Cap 1 - maturing August 2019
Notational amount	35,000	35,000
Fair value	856	1,011
Cap 2 - maturing September 2019
Notational amount	35,000	35,000
Fair value	872	1,045
Cap 3 - maturing October 2019
Notational amount	30,000	30,000
Fair value	$ 812	$ 929

7. DERIVATIVES AND FINANCIAL 47

7. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details 1) $ in Thousands	Jun. 30, 2017USD ($)
Derivatives And Financial Instruments Details 1
2,017	$ 982
2,018	2,247
2,019	1,752
Total	$ 4,981

7. DERIVATIVES AND FINANCIAL 48

7. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details 2) $ in Thousands	Jun. 30, 2017USD ($)
Derivatives And Financial Instruments Details 2
2,017	$ 37
2,018	74
Thereafter	147
Total	$ 258

7. DERIVATIVES AND FINANCIAL 49

7. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivatives And Financial Instruments Details Narrative
Amortization associated with the interest rate caps	$ 421	$ 198	$ 791	$ 341
Gains on swaps	$ 12		$ 31

8. FAIR VALUE OF FINANCIAL IN50

8. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Estimated Fair Value	$ 203,544	$ 197,441
Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	1,969	1,951
Significant Other Observable (Level 2)
Estimated Fair Value	200,048	193,990
Significant Unobservable (Level 3)
Estimated Fair Value	1,527	1,500
U.S. Agency obligations
Estimated Fair Value	15,855	16,943
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	15,855	16,943
U.S. Agency obligations | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Collateralized mortgage obligations
Estimated Fair Value	41,027	42,497
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	41,027	42,497
Collateralized mortgage obligations | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Mortgage-backed securities
Estimated Fair Value	75,369	73,873
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	75,369	73,873
Mortgage-backed securities | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Municipal Bonds
Estimated Fair Value	67,797	60,677
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	67,797	60,677
Municipal Bonds | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Other
Estimated Fair Value	3,496	3,451
Other | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	1,969	1,951
Other | Significant Other Observable (Level 2)
Estimated Fair Value	0	0
Other | Significant Unobservable (Level 3)
Estimated Fair Value	1,527	1,500
Interest Rate Caps
Estimated Fair Value	2,540	2,985
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	2,540	2,985
Interest Rate Caps | Significant Unobservable (Level 3)
Estimated Fair Value	0	0
Total
Estimated Fair Value	206,084	200,426
Total | Quoted Prices in Active Markets for Identical Assets (Level 1)
Estimated Fair Value	1,969	1,951
Total | Significant Other Observable (Level 2)
Estimated Fair Value	202,588	196,975
Total | Significant Unobservable (Level 3)
Estimated Fair Value	$ 1,527	$ 1,500

8. FAIR VALUE OF FINANCIAL IN51

8. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Significant Unobservable (Level 3) $ in Thousands	6 Months Ended
	Jun. 30, 2017USD ($)
Investment Securities Level 3 Valuation
Balance, beginning of period	$ 1,500
Purchases	0
Unrealized gain	27
Balance, end of period	$ 1,527

8. FAIR VALUE OF FINANCIAL IN52

8. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Impaired loans	$ 2,050	$ 2,712
Other real estate	4,690	4,740
Total	$ 6,740	7,452
Impaired loans [Member]
Valuation Technique	Appraisal value
Significant Observable 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
Significant Observable 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	2,050	2,712
Other real estate	4,690	2,740
Total	$ 6,740	$ 7,452

8. FAIR VALUE OF FINANCIAL IN53

8. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financial Assets:
Cash and due from banks	$ 17,564	$ 43,005
Investment securities available-for-sale	203,544	197,441
Loans, net	1,330,939	1,183,371
Accrued interest receivable	4,690	4,368
Federal Home Loan Bank stock	12,828	8,400
Bank owned life insurance	34,703	34,190
Interest rate caps	2,540	2,985
Financial Liabilities:
Non-maturing deposits	995,199	953,248
Time deposits	179,531	219,007
Accrued interest payable	451	294
Repurchase agreements and federal funds purchased	21,256	20,174
FHLB Advances and other borrowings	270,000	150,000
Subordinated debentures	18,558	18,558
Estimated Fair Value
Financial Assets:
Cash and due from banks	17,564	43,005
Investment securities available-for-sale	203,544	197,441
Loans, net	1,331,557	1,184,621
Accrued interest receivable	4,690	4,368
Federal Home Loan Bank stock	12,828	8,400
Bank owned life insurance	34,703	34,190
Interest rate caps	2,540	2,985
Financial Liabilities:
Non-maturing deposits	995,199	953,248
Time deposits	179,731	219,038
Accrued interest payable	451	294
Repurchase agreements and federal funds purchased	21,256	20,174
FHLB Advances and other borrowings	270,005	149,997
Subordinated debentures	14,302	14,197
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Assets:
Cash and due from banks	17,564	43,005
Investment securities available-for-sale	1,969	1,951
Loans, net	0	0
Accrued interest receivable	4,690	4,368
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	451	294
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	200,048	193,990
Loans, net	1,329,507	1,181,909
Accrued interest receivable	0	0
Federal Home Loan Bank stock	0	0
Bank owned life insurance	34,703	34,190
Interest rate caps	2,540	2,985
Financial Liabilities:
Non-maturing deposits	995,199	953,248
Time deposits	179,731	219,038
Accrued interest payable	0	0
Repurchase agreements and federal funds purchased	21,256	20,174
FHLB Advances and other borrowings	270,005	149,997
Subordinated debentures	14,302	14,197
Significant Unobservable (Level 3)
Financial Assets:
Cash and due from banks	0	0
Investment securities available-for-sale	1,527	1,500
Loans, net	2,050	2,712
Accrued interest receivable	0	0
Federal Home Loan Bank stock	12,828	8,400
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

9. SUPPLEMENTAL CASH FLOW DIS54

9. SUPPLEMENTAL CASH FLOW DISCLOSURE (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Supplemental Disclosures of Cash Flow Information:
Interest paid	$ 4,678	$ 3,907
Income taxes paid	3,770	2,635
Supplemental Schedule of Noncash Investing and Financing Activites:
Change in fair value of securities available-for-sale, net of taxes	1,777	2,367
Change in fair value of cash flow hedges, net of taxes	$ 204	$ (1,333)