Loans | Loans A summary of the balances of loans follows (in thousands): September 30, 2015 December 31, 2014 Construction and Land Development $ 19,451 $ 18,700 Farmland and Agricultural Production 8,984 9,350 Residential 1-4 Family 126,316 100,773 Multifamily 30,771 24,426 Commercial Real Estate 368,896 353,973 Commercial and Industrial 180,674 171,452 Consumer and other 8,010 10,706 743,102 689,380 Net deferred loan fees (47 ) (187 ) Allowance for loan losses (11,753 ) (13,905 ) $ 731,302 $ 675,288 The following table presents the contractual aging of the recorded investment in past due and non-accrual loans by class of loans as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due and Still Accruing Total Accruing Loans Non-accrual Loans Total Loans Construction and Land Development $ 19,451 $ — $ — — $ 19,451 $ — $ 19,451 Farmland and Agricultural Production 8,984 — — — 8,984 — 8,984 Residential 1-4 Family 126,098 161 — — 126,259 57 126,316 Multifamily 30,771 — — — 30,771 — 30,771 Commercial Real Estate Retail 90,790 — — — 90,790 — 90,790 Office 51,673 — — — 51,673 — 51,673 Industrial and Warehouse 65,937 — — — 65,937 1,486 67,423 Health Care 27,755 — — — 27,755 — 27,755 Other 131,156 — — — 131,156 99 131,255 Commercial and Industrial 179,200 — — — 179,200 1,474 180,674 Consumer and other 8,009 — — — 8,009 1 8,010 Total $ 739,824 $ 161 $ — — $ 739,985 $ 3,117 $ 743,102 December 31, 2014 Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due and Still Accruing Total Accruing Loans Non-accrual Loans Total Loans Construction and Land Development $ 18,619 $ — $ 81 $ — $ 18,700 $ — $ 18,700 Farmland and Agricultural Production 9,350 — — — 9,350 — 9,350 Residential 1-4 Family 100,285 — 109 — 100,394 379 100,773 Multifamily 24,426 — — — 24,426 — 24,426 Commercial Real Estate Retail 91,725 — — — 91,725 — 91,725 Office 44,255 — — — 44,255 — 44,255 Industrial and Warehouse 57,410 — — — 57,410 1,907 59,317 Health Care 26,974 — — — 26,974 — 26,974 Other 128,940 — — — 128,940 2,762 131,702 Commercial and Industrial 169,395 — 118 50 169,563 1,889 171,452 Consumer and other 10,695 1 — — 10,696 10 10,706 Total $ 682,074 $ 1 $ 308 $ 50 $ 682,433 $ 6,947 $ 689,380 As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt and comply with various terms of their loan agreements. The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends. Generally, all sizable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile. Credits classified as watch generally receive a review more frequently than annually. For special mention, substandard, and doubtful credit classifications, the frequency of review is increased to no less than quarterly in order to determine potential impact on credit loss estimates. The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt: Pass - A pass asset is well protected by the current worth and paying capacity of the borrower (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner. Pass assets also include certain assets considered watch, which are still protected by the worth and paying capacity of the borrower but deserve closer attention and a higher level of credit monitoring. Special Mention - A special mention asset, or risk rating of 5, has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard - A substandard asset, or risk rating of 6 or 7, is an asset with a well-defined weakness that jeopardizes repayment, in whole or in part, of the debt. These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These assets are characterized by the distinct possibility that the Company will or has sustained some loss of principal and/or interest if the deficiencies are not corrected. Doubtful - An asset that has all the weaknesses, or risk rating of 8, inherent in the substandard classification, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. These credits have a high probability for loss, yet because certain important and reasonably specific pending factors may work toward the strengthening of the asset, its classification of loss is deferred until its more exact status can be determined. Loss - An asset, or portion thereof, classified as loss, or risk rated 9, is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value but that it is not practical or desirable to defer writing off this basically worthless asset even though a partial recovery may occur in the future. There was no balance to report at September 30, 2015 and December 31, 2014 . Residential 1-4 family, consumer and other loans are assessed for credit quality based on the contractual aging status of the loan and payment activity. In certain cases, based upon payment performance, the loan being related with another commercial type loan or for other reasons, a loan may be categorized into one of the risk categories noted above. Such assessment is completed at the end of each reporting period. The following tables present the risk category of loans evaluated by internal asset classification based on the most recent analysis performed and the contractual aging as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Pass Special Mention Substandard Doubtful Total Construction and Land Development $ 15,976 $ 3,475 $ — $ — $ 19,451 Farmland and Agricultural Production 8,984 — — — 8,984 Multifamily 30,090 681 — — 30,771 Commercial Real Estate Retail 82,836 7,954 — — 90,790 Office 51,673 — — — 51,673 Industrial and Warehouse 65,089 848 — 1,486 67,423 Health Care 27,755 — — — 27,755 Other 125,439 2,575 3,228 13 131,255 Commercial and Industrial 171,432 7,462 445 1,335 180,674 Total $ 579,274 $ 22,995 $ 3,673 $ 2,834 $ 608,776 September 30, 2015 Performing Non-performing* Total Residential 1-4 Family $ 126,259 $ 57 $ 126,316 Consumer and other 8,009 1 8,010 Total $ 134,268 $ 58 $ 134,326 December 31, 2014 Pass Special Mention Substandard Doubtful Total Construction and Land Development $ 14,900 $ 3,800 $ — — $ 18,700 Farmland and Agricultural Production 9,350 — — — 9,350 Multifamily 24,426 — — — 24,426 Commercial Real Estate Retail 78,258 13,467 — — 91,725 Office 44,255 — — — 44,255 Industrial and Warehouse 56,316 1,094 — 1,907 59,317 Health Care 26,974 — — — 26,974 Other 121,526 4,185 3,329 2,662 131,702 Commercial and Industrial 159,648 8,706 2,116 982 171,452 Total $ 535,653 $ 31,252 $ 5,445 5,551 $ 577,901 December 31, 2014 Performing Non-performing* Total Residential 1-4 Family $ 100,394 $ 379 $ 100,773 Consumer and other 10,696 10 10,706 Total $ 111,090 $ 389 $ 111,479 * Non-performing loans include those on non-accrual status and those past due 90 days or more and still on accrual. The following table provides additional detail of the activity in the allowance for loan losses, by portfolio segment, for the three months ended September 30, 2015 and 2014 (in thousands): September 30, 2015 Construction and Land Development Farmland and Agricultural Production Residential 1-4 Family Multifamily Commercial Real Estate Commercial and Industrial Consumer and other Total Allowance for loan losses: Beginning balance $ 798 $ 27 $ 1,047 $ 95 $ 6,394 $ 3,895 $ 164 $ 12,420 Provision for loan losses (135 ) (2 ) 69 (7 ) (760 ) 31 (9 ) (813 ) Loans charged-off — — — — (444 ) (203 ) (7 ) (654 ) Recoveries of loans previously charged-off 18 — 41 — 709 29 3 800 Ending balance $ 681 $ 25 $ 1,157 $ 88 $ 5,899 $ 3,752 $ 151 $ 11,753 September 30, 2014 Allowance for loan losses: Beginning balance $ 1,139 $ 453 $ 1,191 $ 104 $ 7,606 $ 3,598 $ 292 $ 14,383 Provision for loan losses (281 ) (11 ) 110 (42 ) (776 ) 994 6 — Loans charged-off — — (134 ) — — (517 ) (8 ) (659 ) Recoveries of loans previously charged-off 18 — 8 — 9 112 — 147 Ending balance $ 876 $ 442 $ 1,175 $ 62 $ 6,839 $ 4,187 $ 290 $ 13,871 The following table provides additional detail of the activity in the allowance for loan losses, by portfolio segment, for the nine months ended September 30, 2015 and 2014 (in thousands): September 30, 2015 Construction and Land Development Farmland and Agricultural Production Residential 1-4 Family Multifamily Commercial Real Estate Commercial and Industrial Consumer and other Total Allowance for loan losses: Beginning balance $ 758 $ 459 $ 1,199 $ 67 $ 6,828 $ 4,296 $ 298 $ 13,905 Provision for loan losses (130 ) (434 ) (59 ) 21 (1,108 ) 294 (146 ) (1,562 ) Loans charged-off — — (195 ) — (548 ) (973 ) (10 ) (1,726 ) Recoveries of loans previously charged-off 53 — 212 727 135 9 1,136 Ending balance $ 681 $ 25 $ 1,157 $ 88 $ 5,899 $ 3,752 $ 151 $ 11,753 September 30, 2014 Allowance for loan losses: Beginning balance $ 2,711 $ 427 $ 1,440 $ 97 $ 7,812 $ 3,183 $ 150 $ 15,820 Provision for loan losses (705 ) 15 (136 ) (35 ) 1,005 2,364 159 2,667 Loans charged-off (1,186 ) — (155 ) — (2,812 ) (1,583 ) (25 ) (5,761 ) Recoveries of loans previously charged-off 56 — 26 — 834 223 6 1,145 Ending balance $ 876 $ 442 $ 1,175 $ 62 $ 6,839 $ 4,187 $ 290 $ 13,871 The following table presents the balance in the allowance for loan losses and the unpaid principal balance of loans by portfolio segment and based on impairment method as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Construction and Land Development Farmland and Agricultural Production Residential 1-4 Family Multifamily Commercial Real Estate Commercial and Industrial Consumer and other Total Period-ended amount allocated to: Individually evaluated for impairment $ — $ — $ 23 $ — $ — $ 37 $ — $ 60 Collectively evaluated for impairment 681 25 1,134 88 5,899 3,715 151 11,693 Ending balance $ 681 $ 25 $ 1,157 $ 88 $ 5,899 $ 3,752 $ 151 $ 11,753 Loans: Individually evaluated for impairment $ — $ — $ 1,676 $ — $ 5,905 $ 4,010 $ 1 $ 11,592 Collectively evaluated for impairment 19,451 8,984 124,640 30,771 362,991 176,664 8,009 731,510 Ending balance $ 19,451 $ 8,984 $ 126,316 $ 30,771 $ 368,896 $ 180,674 $ 8,010 $ 743,102 December 31, 2014 Period-ended amount allocated to: Individually evaluated for impairment $ — — $ 29 $ — $ — $ 561 $ — $ 590 Collectively evaluated for impairment 758 459 1,170 67 6,828 3,735 298 13,315 Ending balance $ 758 $ 459 $ 1,199 $ 67 $ 6,828 $ 4,296 $ 298 $ 13,905 Loans: Individually evaluated for impairment $ — — $ 2,020 $ — $ 9,084 $ 4,495 $ 11 $ 15,610 Collectively evaluated for impairment 18,700 9,350 98,753 24,426 344,889 166,957 10,695 673,770 Ending balance $ 18,700 $ 9,350 $ 100,773 $ 24,426 $ 353,973 $ 171,452 $ 10,706 $ 689,380 The following tables present additional detail regarding impaired loans, segregated by class, as of and for the three and nine months ended September 30, 2015 and year ended December 31, 2014 (dollars in thousands). The unpaid principal balance represents the recorded balance prior to any partial charge-offs. The recorded investment represents customer balances net of any partial charge-offs recognized on the loans. The interest income recognized column represents all interest income reported after the loan became impaired. September 30, 2015 Three Months Ended Nine Months Ended Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Construction and Land Development $ — $ — $ — $ — $ — $ — $ — Farmland and Agricultural Production — — — — — — — Residential 1-4 Family 1,244 1,205 — 1,211 15 1,302 46 Multifamily — — — — — — — Commercial Real Estate Retail — — — — — — — Office 498 498 — 500 6 504 19 Industrial and Warehouse 2,017 1,486 — 1,696 — 1,802 — Health Care — — — — — — Other 5,893 3,921 — 4,130 32 5,297 96 Commercial and Industrial 4,709 3,910 — 4,047 34 3,766 101 Consumer and other 3 1 — 2 — 5 — With an allowance recorded: Construction and Land Development — — — — — — — Farmland and Agricultural Production — — — — — — — Residential 1-4 Family 471 471 23 472 6 473 17 Multifamily — — — — — — — Commercial Real Estate Retail — — — — — — — Office — — — — — — — Industrial and Warehouse — — — — — — — Health Care — — — — — — — Other — — — — — 107 — Commercial and Industrial 100 100 37 100 — 283 — Consumer and other — — — — — — — Total $ 14,935 $ 11,592 $ 60 $ 12,158 $ 93 $ 13,539 $ 279 December 31, 2014 Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Income Recognized With no related allowance recorded: Construction and Land Development $ — $ — $ — $ — $ — Farmland and Agricultural Production — — — — — Residential 1-4 Family 1,732 1,543 — 1,298 63 Multifamily — — — 119 — Commercial Real Estate Retail — — — 707 — Office 511 510 — 779 25 Industrial and Warehouse 1,994 1,907 — 1,550 — Health Care — — — — Other 9,658 6,667 — 6,126 — Commercial and Industrial 3,733 3,534 — 4,147 — Consumer and other 20 11 — 14 — With an allowance recorded: Construction and Land Development — — — 887 — Farmland and Agricultural Production — — — — — Residential 1-4 Family 477 477 29 637 31 Multifamily — — — — — Commercial Real Estate Retail — — — 1,907 — Office — — — — — Industrial and Warehouse — — — — — Health Care — — — — — Other — — — 1,084 — Commercial and Industrial 1,312 961 561 453 — Consumer and other — — — — — Total $ 19,437 $ 15,610 $ 590 $ 19,708 $ 119 During the nine months ended September 30, 2015 , there were no troubled debt restructurings added. During the nine months ended September 30, 2014 , there were four contracts totaling $3.2 million in troubled debt restructurings added, three of which were the result of the payment of real estate taxes by the Bank on the behalf of the customer and the fourth was the result of a payment concession. Troubled debt restructurings that were accruing were $2.8 million as of September 30, 2015 and December 31, 2014 . Troubled debt restructurings that were non-accruing were $1.6 million and $2.8 million as of September 30, 2015 and December 31, 2014 . The following presents a rollfoward activity of troubled debt restructurings (in thousands, except number of loans): Nine months ended September 30, 2015 Recorded Investment Number of Loans Balance, beginning $ 5,621 10 Additions to troubled debt restructurings — — Removal of troubled debt restructurings (309 ) (1 ) Charge-off related to troubled debt restructurings — — Transfers to other real estate owned — — Repayments and other reductions (969 ) (2 ) Balance, ending $ 4,343 7 Restructured loans are evaluated for impairment at each reporting date as part of the Company’s determination of the allowance for loan losses. |