Edgar Filing: PARKE BANCORP, INC.

f10q_033115-0343.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2015.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File No. 000-51338

PARKE BANCORP, INC.

(Exact name of registrant as specified in its charter)

New Jersey 65-1241959

(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

601 Delsea Drive, Washington Township, New Jersey 08080

(Address of principal executive offices) (Zip Code)

856-256-2500

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer”, “accelerated filer", and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of May 15, 2015, there were issued and outstanding 6,256,012 shares of the registrant's common stock.

PARKE BANCORP, INC.

FORM 10-Q

FOR THE QUARTER ENDED March 31, 2015

INDEX

		Page
Part I	FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43

SIGNATURES

EXHIBITS and CERTIFICATIONS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Parke Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
(in thousands except share and per share data)
	March 31,			December 31,
	2015			2014
Assets
Cash and due from financial institutions	$	3,260		$	4,033
Federal funds sold and cash equivalents		36,523			32,205
Total cash and cash equivalents		39,783			36,238
Investment securities available for sale, at fair value		47,836			28,208
Investment securities held to maturity (fair value of $2,456 at March 31, 2015 and $2,377 at December 31, 2014)		2,151			2,141
Total investment securities		49,987			30,349
Loans held for sale		905			2,932
Loans, net of unearned income		717,960			713,061
Less: Allowance for loan losses		(16,183	)		(18,043	)
Net loans		701,777			695,018
Accrued interest receivable		2,837			2,827
Premises and equipment, net		4,430			4,490
Other real estate owned (OREO)		22,516			20,931
Restricted stock, at cost		4,072			3,152
Bank owned life insurance (BOLI)		11,552			11,464
Deferred tax asset		10,526			10,518
Other assets		5,245			3,787
Total Assets	$	853,630		$	821,706

Liabilities and Equity
Liabilities
Deposits
Noninterest-bearing deposits	$	45,626		$	42,554
Interest-bearing deposits		613,178			605,379
Total deposits		658,804			647,933
FHLBNY borrowings		69,807			49,352
Subordinated debentures		13,403			13,403
Accrued interest payable		442			445
Other liabilities		6,546			7,523
Total liabilities		749,002			718,656
Equity
Preferred stock, 1,000,000 shares authorized, $1,000 liquidation value Series B - non-cumulative convertible; Issued: 20,000 shares at March 31, 2015 and December 31, 2014		20,000			20,000
Common stock, $.10 par value; authorized 15,000,000 shares; Issued: 6,256,012 shares at March 31, 2015 and 6,208,259 shares at December 31, 2014		626			621
Additional paid-in capital		51,698			51,316
Retained earnings		34,521			32,983
Accumulated other comprehensive income		185			165
Treasury stock, 241,900 shares at March 31, 2015 and 210,900 shares at December 31, 2014, at cost		(2,531	)		(2,180	)
Total shareholders’ equity		104,499			102,905
Noncontrolling interest in consolidated subsidiaries		129			145
Total equity		104,628			103,050
Total liabilities and equity	$	853,630		$	821,706

See accompanying notes to consolidated financial statements

Parke Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
	For the three months ended March 31,
	2015			2014
	(in thousands except share data)
Interest income:
Interest and fees on loans	$	9,139		$	9,290
Interest and dividends on investments		246			293
Interest on federal funds sold and cash equivalents		15			23
Total interest income		9,400			9,606
Interest expense:
Interest on deposits		1,131			1,177
Interest on borrowings		213			221
Total interest expense		1,344			1,398
Net interest income		8,056			8,208
Provision for loan losses		840			1,000
Net interest income after provision for loan losses		7,216			7,208
Noninterest income:
Gain on sale of SBA loans		557			321
Loan fees		316			215
Net income from BOLI		87			88
Service fees on deposit accounts		70			57
Loss on sale and write-down of real estate owned		(169	)		(396	)
Realized gain on sale of AFS securities		—			178
Other		400			497
Total noninterest income		1,261			960
Noninterest expense:
Compensation and benefits		1,990			1,843
Professional services		509			410
Occupancy and equipment		325			296
Data processing		139			117
FDIC insurance		165			241
OREO expense		486			760
Other operating expense		736			876
Total noninterest expense		4,350			4,543
Income before income tax expense		4,127			3,625
Income tax expense		1,521			1,162
Net income attributable to Company and noncontrolling interest		2,606			2,463
Net income attributable to noncontrolling interest		(106	)		(137	)
Net income attributable to Company		2,500			2,326
Preferred stock dividend and discount accretion		300			300
Net income available to common shareholders	$	2,200		$	2,026

Earnings per common share:
Basic	$	0.37		$	0.34
Diluted	$	0.31		$	0.29

Weighted average shares outstanding:
Basic		6,010,792			5,988,742
Diluted		7,939,684			7,912,972
See accompanying notes to consolidated financial statements

Parke Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
	For the three months ended March 31,
	2015				2014
	(in thousands)
Net income attributable to Company		$	2,500			$	2,326
Unrealized gains (losses) on securities:
Non-credit related unrealized gains on securities with OTTI			26				—
Unrealized gains on securities without OTTI			9				416
Less reclassification adjustment for gains on securities included in net income			—				(178	)
Tax impact			(15	)			(95	)
Total unrealized gains on securities			20				143
Gross pension liability adjustments			—				—
Tax Impact			—				—
Total pension liability adjustment			—				—
Total other comprehensive income			20				143
Total comprehensive income		$	2,520			$	2,469
See accompanying notes to consolidated financial statements

Parke Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
	Preferred Stock		Shares of Common Stock		Common Stock			Additional Paid-In Capital			Retained Earnings				Accumulated Other Comprehensive Income			Treasury Stock				Total Shareholders’ Equity				Non-Controlling Interest				Total Equity
	(in thousands except share data)
Balance, December 31, 2014	$	20,000		6,208,259		$	621		$	51,316		$	32,983			$	165		$	(2,180	)		$	102,905			$	145			$	103,050
Capital withdrawals by noncontrolling interest																												(122	)			(122	)
Stock options exercised				47,753			5			382														387								387
Net income													2,500											2,500				106				2,606
Changes in other comprehensive income																	20							20								20
Purchase of treasury stock																				(351	)			(351	)							(351	)
Dividend on preferred stock													(300	)										(300	)							(300	)
Dividend on common stock													(662	)										(662	)							(662	)
Balance, March 31, 2015	$	20,000		6,256,012		$	626		$	51,698		$	34,521			$	185		$	(2,531	)		$	104,499			$	129			$	104,628
See accompanying notes to consolidated financial statements

Parke Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	For the three months ended March 31,
	2015			2014
	(amounts in thousands)
Cash Flows from Operating Activities:
Net income	$	2,606		$	2,463
Adjustments to reconcile net income to net cash provided (used in) operating activities:
Depreciation and amortization		79			86
Provision for loan losses		840			1,000
Net gain from sales of investment securities		—			(178	)
Bank owned life insurance		(87	)		(88	)
Gain on sale of SBA loans		(557	)		(321	)
SBA loans originated for sale		(3,018	)		(8,331	)
Proceeds from sale of SBA loans originated for sale		5,602			3,364
Loss on sale & write down of OREO		169			396
Net accretion of purchase premiums and discounts on securities		(680	)		(22	)
Contribution of OREO property		—			22
Deferred income tax benefit		(8	)		(8,013	)
Changes in operating assets and liabilities:
(Increase) decrease in accrued interest receivable and other assets		(2,143	)		6,356
Decrease in accrued interest payable and other accrued liabilities		(980	)		(608	)
Net cash provided by (used in) operating activities		1,823			(3,874	)
Cash Flows from Investing Activities:
Purchases of investment securities available for sale		(19,976	)		—
(Purchases) redemptions of restricted stock		(920	)		205
Proceeds from sale and call of securities available for sale		—			3,974
Proceeds from maturities and principal payments on mortgage backed securities		1,050			978
Proceeds from sale of OREO		751			241
Advances on OREO		(242	)		(66	)
Net (increase) decrease in loans		(9,862	)		2,315
Purchases of bank premises and equipment		(19	)		(50	)
Net cash (used in) provided by investing activities		(29,218	)		7,597
Cash Flows from Financing Activities:
Payment of dividend on preferred stock		(300	)		(57	)
Purchase of treasury stock		(351	)		—
Minority interest capital withdrawal, net		(122	)		(150	)
Proceeds from exercise of stock options and warrants		387			61
Net increase (decrease) in FHLBNY and short term borrowings		20,455			(4,544	)
Net increase (decrease) in noninterest-bearing deposits		3,072			(1,246	)
Net increase in interest-bearing deposits		7,799			7,931
Net cash provided by financing activities		30,940			1,995
Net increase in cash and cash equivalents		3,545			5,718
Cash and Cash Equivalents, January 1,		36,238			45,661
Cash and Cash Equivalents, March 31,	$	39,783		$	51,379
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest on deposits and borrowed funds	$	1,347		$	1,367
Income taxes	$	2,500		$	1,650
Supplemental Schedule of Noncash Activities:
Real estate acquired in settlement of loans	$	2,263		$	1,324

See accompanying notes to consolidated financial statements

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1. ORGANIZATION

Parke Bancorp, Inc. ("Parke Bancorp” or the "Company") is a bank holding company incorporated under the laws of the State of New Jersey in January 2005 for the sole purpose of becoming the holding company of Parke Bank (the "Bank").

The Bank is a commercial bank which commenced operations on January 28, 1999. The Bank is chartered by the New Jersey Department of Banking and Insurance (the “Department”) and insured by the Federal Deposit Insurance Corporation ("FDIC"). Parke Bancorp and the Bank maintain their principal offices at 601 Delsea Drive, Washington Township, New Jersey. The Bank also conducts business through branches in Galloway Township, Northfield and Washington Township, New Jersey and Philadelphia, Pennsylvania.

The Bank competes with other banking and financial institutions in its primary market areas. Commercial banks, savings banks, savings and loan associations, credit unions and money market funds actively compete for savings and time certificates of deposit and all types of loans. Such institutions, as well as consumer financial and insurance companies, may be considered competitors of the Bank with respect to one or more of the services it renders.

The Bank is subject to the regulations of certain state and federal agencies, and accordingly, the Bank is periodically examined by such regulatory authorities. As a consequence of the regulation of commercial banking activities, the Bank’s business is particularly susceptible to future state and federal legislation and regulations.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation: The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and predominant practices within the banking industry.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary the Bank. Also included are the accounts of 44 Business Capital Partners LLC, a joint venture formed in 2009 to originate and service SBA loans. The Bank has a 51% ownership interest in the joint venture. Parke Capital Trust I, Parke Capital Trust II and Parke Capital Trust III are wholly-owned subsidiaries but are not consolidated because they do not meet the requirements for consolidation under applicable accounting guidance. All significant inter-company balances and transactions have been eliminated.

The accompanying interim financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 since they do not include all of the information and footnotes required by GAAP. The accompanying interim financial statements for the three months ended March 31, 2015 and 2014 are unaudited. The balance sheet as of December 31, 2014, was derived from the audited financial statements. In the opinion of management, these financial statements include all normal and recurring adjustments necessary for a fair statement of the results for such interim periods. Results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results for the full year. Certain reclassifications have been made to prior period amounts to conform to the current year presentation, with no impact on current earnings or shareholders’ equity.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the allowance for loan losses, other than temporary impairment losses on investment securities, the valuation of deferred income taxes, servicing assets and carrying value of OREO.

Recently Issued Accounting Pronouncements:

In January 2014, the FASB issued ASU 2014-04, "Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure." ASU 2014-04 clarifies that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (a) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (b) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, ASU 2014-04 requires interim and annual disclosure of both (a) the amount of foreclosed residential real estate property held by the creditor and (b) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in ASU 2014-04 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. There was no significant impact to amounts reported in the consolidated financial position or results of operations from the adoption of the ASU.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (ASU 2014-09),” which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

In June 2014, the FASB issued ASU No. 2014-11, “Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures,” which changes the accounting for repurchase-to-maturity transactions (repos-to-maturity) and enhances the required disclosures for repurchase agreements and other similar transactions (repos). Repos-to-maturity and the repurchase financings will be accounted for as secured borrowings. In addition, the standard requires new disclosures for repos. ASU No. 2014-11 provisions are effective for the first interim or annual period beginning after December 15, 2014. There was no significant impact to amounts reported in the consolidated financial position or results of operations from the adoption of the ASU.

In August 2014, the FASB issued ASU No. 2014-14, “Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure,” which will require creditors to derecognize certain foreclosed government-guaranteed mortgage loans and to recognize a separate other receivable that is measured at the

amount the creditor expects to recover from the guarantor, and to treat the guarantee and the receivable as a single unit of account. ASU 2014-14 is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. There was no significant impact to amounts reported in the consolidated financial position or results of operations from the adoption of the ASU.

NOTE 3. INVESTMENT SECURITIES

The following is a summary of the Company's investments in available for sale and held to maturity securities as of March 31, 2015 and December 31, 2014:

As of March 31, 2015	Amortized cost			Gross unrealized gains			Gross unrealized losses			Other-than- temporary impairments in OCI			Fair value
Available for sale:	(amounts in thousands)
Available for sale:
Corporate debt obligations		$	500		$	25		$	—		$	—		$	525
Residential mortgage-backed securities			45,886			816			116			—			46,586
Collateralized mortgage obligations			336			14			—			—			350
Collateralized debt obligations			806			—			—			431			375
Total available for sale		$	47,528		$	855		$	116		$	431		$	47,836

Held to maturity:
States and political subdivisions		$	2,151		$	305		$	—		$	—		$	2,456

As of December 31, 2014	Amortized cost			Gross unrealized gains			Gross unrealized losses			Other-than- temporary impairments in OCI			Fair value
Available for sale:	(amounts in thousands)
Available for sale:
Corporate debt obligations		$	500		$	22		$	—		$	—		$	522
Residential mortgage-backed securities			26,252			754			59			—			26,947
Collateralized mortgage obligations			375			15			—			—			390
Collateralized debt obligations			806			—			—			457			349
Total available for sale		$	27,933		$	791		$	59		$	457		$	28,208

Held to maturity:
States and political subdivisions		$	2,141		$	236		$	—		$	—		$	2,377

The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of March 31, 2015 are as follows:

	Amortized Cost		Fair Value
	(amounts in thousands)
Available for sale:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		1,306		900
Residential mortgage-backed securities and collateralized mortgage obligations		46,222		46,936
Total available for sale	$	47,528	$	47,836

Held to maturity:
Due within one year	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		2,151		2,456
Total held to maturity	$	2,151	$	2,456

Expected maturities will differ from contractual maturities for mortgage related securities because the issuers of certain debt securities do have the right to call or prepay their obligations without any penalty.

There were no securities pledged as collateral for borrowed funds as of March 31, 2015 and December 31, 2014. Securities with a carrying value of $13.9 million and $15.0 million were pledged to secure public deposits at March 31, 2015 and December 31, 2014, respectively.

The following tables show the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other than temporarily impaired (“OTTI”), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2015 and December 31, 2014:

As of March 31, 2015	Less Than 12 Months					12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value			Unrealized Losses		Fair Value		Unrealized Losses
	(amounts in thousands)
Available for sale:
Residential mortgage-backed securities		21,409		83			3,837		33		25,246		116
Total available for sale	$	21,409	$	83	$		3,837	$	33	$	25,246	$	116

As of December 31, 2014	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(amounts in thousands)
Available for sale:
Residential mortgage-backed securities		3,968		59		—		—		3,968		59
Total available for sale	$	3,968	$	59	$	—	$	—	$	3,968	$	59

Residential Mortgage-Backed Securities: The unrealized losses on the Company’s investment in mortgage-backed securities relates to seven securities. The losses were caused by movement in interest rates. The securities were issued by FNMA, a government sponsored entity. Because the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis, which may be maturity, it does not consider the investment in these securities to be OTTI at March 31, 2015.

Other Than Temporarily Impaired Debt Securities

We assess whether we intend to sell or it is more likely than not that we will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered OTTI and that we do not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best estimate of cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate bond cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances including timing, security interests and loss severity.

We have a process in place to identify debt securities that could potentially have a credit impairment that is other than temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. On a quarterly basis, we review all securities to determine whether an OTTI exists and whether losses should be recognized. We consider relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events; and (4) for fixed maturity securities, our intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity.

The following table presents a roll-forward of the credit loss component of the amortized cost of debt securities that we have written down for OTTI and the credit component of the loss that is recognized in earnings. OTTI recognized in earnings for credit-impaired debt securities is presented as additions in two components based upon whether the current period is the first time the debt security was credit-impaired (initial credit impairment) or is not the first time the debt security was credit impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe we will be required to sell previously credit-impaired debt securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we expected to receive over the remaining life of the credit-impaired debt security, the security matures or is fully written down. Changes in the credit loss component of credit-impaired debt securities were as follows for the three month periods ended March 31, 2015 and 2014:

	For the Three Months Ended March 31,
	2015		2014

	(amounts in thousands)
Beginning balance	$	171	$	1,126
Initial credit impairment		—		—
Subsequent credit impairments		—		—
Reductions for amounts recognized in earnings due to intent or requirement to sell		—		—
Reductions for securities sold		—		(955	)
Reductions for securities deemed worthless		—		—
Reductions for increases in cash flows expected to be collected		—		—
Ending balance	$	171	$	171

During the three months ended March 31, 2014, the Bank sold three Trust Preferred securities, which resulted in a $178,000 gain reflected in the income statement.

NOTE 4. LOANS

The portfolio of loans outstanding consists of the following:

	March 31, 2015					December 31, 2014
	Amount		Percentage of Total Loans			Amount		Percentage of Total Loans
	(amounts in thousands)
Commercial and Industrial	$	29,392		4.1	%	$	30,092		4.2	%
Real Estate Construction:
Residential		5,990		0.8			5,859		0.8
Commercial		46,840		6.5			47,921		6.7
Real Estate Mortgage:
Commercial – Owner Occupied		180,783		25.2			176,649		24.8
Commercial – Non-owner Occupied		240,308		33.5			237,918		33.4
Residential – 1 to 4 Family		177,456		24.7			171,894		24.1
Residential – Multifamily		19,704		2.8			25,173		3.5
Consumer		17,487		2.4			17,555		2.5
Total Loans	$	717,960		100.0	%	$	713,061		100.0	%

Loan Origination/Risk Management: In the normal course of business the Company is exposed to a variety of operational, reputational, legal, regulatory, and credit risks that could adversely affect our financial performance. Most of our asset risk is primarily tied to credit (lending) risk. The Company has lending policies, guidelines and procedures in place that are designed to maximize loan income within an acceptable level of risk. The Board of Directors reviews and approves these policies, guidelines and procedures. When we originate a loan we make certain subjective judgments about the borrower’s ability to meet the loan’s terms and conditions. We also make objective and subjective value assessments on the assets we finance. The borrower’s ability to repay can be adversely affected by economic changes. Likewise, changes in market conditions and other external factors can affect asset valuations. The Company actively monitors the quality of its loan portfolio. A reporting system supplements the credit review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit risk, loan delinquencies, troubled debt restructures, nonperforming and potential problem loans. Diversification in the loan portfolio is another means of managing risk associated with fluctuations in economic conditions.

With respect to construction loans to developers and builders that are secured by non-owner occupied properties, loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analyses of the developers and property owners. Construction loans are also generally underwritten based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. Commercial real estate loans may be riskier than loans for one-to-four family residences and are typically larger in dollar size. These loans are viewed primarily as cash

flow loans and secondarily as loans secured by real estate. The repayment of these loans is generally largely dependent on the successful operation and management of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location within our market area. This diversity helps reduce the Company's exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. The Company also monitors economic conditions and trends affecting market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

The Company originates adjustable and fixed-rate residential mortgage loans. Such mortgage loans are generally originated under terms, conditions and documentation acceptable to the secondary mortgage market. Although the Company has placed all of these loans into its portfolio, a substantial majority of such loans can be sold in the secondary market or pledged for potential borrowings.

Consumer loans may carry a higher degree of repayment risk than residential mortgage loans. Repayment is typically dependent upon the borrower’s financial stability which is more likely to be adversely affected by job loss, illness, or personal bankruptcy. To monitor and manage consumer loan risk, policies and procedures have been developed and modified as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis. Underwriting standards for home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage of 80%, collection remedies, the number of such loans a borrower can have at one time and documentation requirements. Historically the Company’s losses on consumer loans have been negligible.

The Company maintains an outsourced independent loan review program that reviews and validates the credit risk assessment program on a periodic basis. Results of these external independent reviews are presented to management. The external independent loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit risk management personnel.

Nonaccrual and Past Due Loans: Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when a loan is 90 days past due, unless the loan is well secured and in the process of collection, as required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

An age analysis of past due loans by class at March 31, 2015 and December 31, 2014 follows:

March 31, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans
	(amounts in thousands)

Commercial and Industrial	$	—	$	—	$	2,372	$	2,372	$	27,020	$	29,392
Real Estate Construction:
Residential		—		—		—		—		5,990		5,990
Commercial		—		—		7,389		7,389		39,451		46,840
Real Estate Mortgage:
Commercial – Owner Occupied		630		—		106		736		180,047		180,783
Commercial – Non-owner Occupied		177		—		5,424		5,601		234,707		240,308
Residential – 1 to 4 Family		352		—		6,550		6,902		170,554		177,456
Residential – Multifamily		—		362		—		362		19,342		19,704
Consumer		6		—		93		99		17,388		17,487
Total Loans	$	1,165	$	362	$	21,934	$	23,461	$	694,499	$	717,960

December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans
	(amounts in thousands)

Commercial and Industrial	$	—	$	1,874	$	61	$	1,935	$	28,157	$	30,092
Real Estate Construction:
Residential		—		—		238		238		5,621		5,859
Commercial		—		—		10,773		10,773		37,148		47,921
Real Estate Mortgage:
Commercial – Owner Occupied		—		—		735		735		175,914		176,649
Commercial – Non-owner Occupied		—		—		8,624		8,624		229,294		237,918
Residential – 1 to 4 Family		629		20		6,367		7,016		164,878		171,894
Residential – Multifamily		364		—		—		364		24,809		25,173
Consumer		—		—		94		94		17,461		17,555
Total Loans	$	993	$	1,894	$	26,892	$	29,779	$	683,282	$	713,061

Impaired Loans: Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments.

All impaired loans have are assessed for recoverability based on an independent third-party full appraisal to determine the net realizable value (“NRV”) based on the fair value of the underlying collateral, less cost to sell and other costs, such as unpaid real estate taxes, that have been identified, or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent. The appraisal will be based on an "as-is" valuation and will follow a reasonable valuation method that addresses the direct sales comparison, income, and cost approaches to market value, reconciles those approaches, and explains the elimination of each approach not used. Appraisals are generally updated every 12 months or sooner if we have identified possible further deterioration in value. Prior to receiving the updated appraisal, we will establish a specific reserve for any estimated deterioration, based upon our assessment of market conditions, adjusted for estimated costs to sell and other identified costs. If the NRV is greater than the loan amount, then no impairment loss exists. If the NRV is less than the loan amount, the shortfall is recognized by a specific reserve. If the borrower fails to pledge additional collateral in the ninety day period, a charge-off equal to the difference between the loan’s carrying value and NRV will occur. In certain circumstances, however, a direct charge-off may be taken at the time that the NRV calculation reveals a shortfall. All impaired loans are evaluated based on the criteria stated above on a quarterly basis and any change in the reserve requirements are recorded in the period identified. All partially charged-off loans remain on nonaccrual status until they are brought current as to both principal and interest and have at least nine months of payment history and future collectability of principal and interest is assured.

Impaired loans at March 31, 2015 and December 31, 2014 are set forth in the following tables.

March 31, 2015	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	130	$	130	$	—
Real Estate Construction:
Residential		—		—		—
Commercial		2,978		3,056		—
Real Estate Mortgage:
Commercial – Owner Occupied		106		106		—
Commercial – Non-owner Occupied		5,424		6,913		—
Residential – 1 to 4 Family		3,024		3,819		—
Residential – Multifamily		—		—		—
Consumer		93		93		—
		11,775		14,117		—

With an allowance recorded:
Commercial and Industrial		2,708		2,709		1,276
Real Estate Construction:
Residential		—		—		—
Commercial		7,635		10,089		478
Real Estate Mortgage:
Commercial – Owner Occupied		5,147		5,177		94
Commercial – Non-owner Occupied		21,099		21,098		454
Residential – 1 to 4 Family		4,909		5,084		401
Residential – Multifamily		362		362		5
Consumer		—		—		—
		41,860		44,519		2,708

Total:
Commercial and Industrial		2,838		2,839		1,276
Real Estate Construction:
Residential		—		—		—
Commercial		10,613		13,145		478
Real Estate Mortgage:
Commercial – Owner Occupied		5,253		5,283		94
Commercial – Non-owner Occupied		26,523		28,011		454
Residential – 1 to 4 Family		7,933		8,903		401
Residential – Multifamily		362		362		5
Consumer		93		93		—
	$	53,615	$	58,636	$	2,708

December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(amounts in thousands)
With no related allowance recorded:
Commercial and Industrial	$	61	$	401	$	—
Real Estate Construction:
Residential		—		—		—
Commercial		4,033		4,161		—
Real Estate Mortgage:
Commercial – Owner Occupied		735		1,132		—
Commercial – Non-owner Occupied		8,175		10,616		—
Residential – 1 to 4 Family		2,548		3,291		—
Residential – Multifamily		—		—		—
Consumer		94		94		—
		15,646		19,695		—

With an allowance recorded:
Commercial and Industrial		2,346		2,346		1,040
Real Estate Construction:
Residential		238		979		238
Commercial		10,025		10,025		2,535
Real Estate Mortgage:
Commercial – Owner Occupied		5,216		5,245		114
Commercial – Non-owner Occupied		22,232		22,232		828
Residential – 1 to 4 Family		5,412		5,575		573
Residential – Multifamily		364		364		5
Consumer		—		—		—
		45,833		46,766		5,333

Total:
Commercial and Industrial		2,407		2,747		1,040
Real Estate Construction:
Residential		238		979		238
Commercial		14,058		14,186		2,535
Real Estate Mortgage:
Commercial – Owner Occupied		5,951		6,377		114
Commercial – Non-owner Occupied		30,407		32,848		828
Residential – 1 to 4 Family		7,960		8,866		573
Residential – Multifamily		364		364		5
Consumer		94		94		—
	$	61,479	$	66,461	$	5,333

The following tables present by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(amounts in thousands)
Commercial and Industrial	$	4,187	$	26	$	957	$	4
Real Estate Construction:
Residential		—		—		851		—
Commercial		13,175		72		11,723		48
Real Estate Mortgage:
Commercial – Owner Occupied		6,268		55		6,944		74
Commercial – Non-owner Occupied		28,162		229		32,426		319
Residential – 1 to 4 Family		8,918		54		14,632		64
Residential – Multifamily		363		6		368		6
Consumer		93		—		94		—
Total	$	61,166	$	442	$	67,995	$	515

Troubled debt restructurings: Periodically management evaluates our loans in order to determine the appropriate risk rating, interest accrual status and potential classification as a troubled debt restructuring (TDR), some of which are performing and accruing interest. A TDR is a loan on which we have granted a concession due to a borrower’s financial difficulty. These are concessions that would not otherwise be considered. The terms of these modified loans may include extension of maturity, renewals, changes in interest rate, additional collateral requirements or infusion of additional capital into the project by the borrower to reduce debt or to support future debt service. On construction and land development loans we may modify the loan as a result of delays or other project issues such as slower than anticipated sell-outs, insufficient leasing activity and/or a decline in the value of the underlying collateral securing the loan. Management believes that working with a borrower to restructure a loan provides us with a better likelihood of collecting our loan. It is our policy not to renegotiate the terms of a commercial loan simply because of a delinquency status. However, we will use our Troubled Debt Restructuring Program to work with delinquent borrowers when the delinquency is temporary. We consider all loans modified in a troubled debt restructuring to be impaired.

At the time a loan is modified in a TDR, we consider the following factors to determine whether the loan should accrue interest:

·	Whether there is a period of current payment history under the current terms, typically 6 months;

·	Whether the loan is current at the time of restructuring; and

·	Whether we expect the loan to continue to perform under the restructured terms with a debt coverage ratio that complies with the Bank’s credit underwriting policy of 1.25 times debt service.

We also review the financial performance of the borrower over the past year to be reasonably assured of repayment and performance according to the modified terms. This review consists of an analysis of the borrower’s historical results; the borrower’s projected results over the next four quarters; current financial information of the borrower and any guarantors. The projected repayment source needs to be reliable, verifiable, quantifiable and sustainable. In addition, all TDRs are reviewed quarterly to determine the amount

of any impairment. At the time of restructuring, the amount of the loan principal for which we are not reasonably assured of repayment is charged-off, but not forgiven.

A borrower with a restructured loan must make a minimum of six consecutive monthly payments at the restructured level and be current as to both interest and principal to be returned to accrual status.

Performing TDRs (not reported as non-accrual loans) totaled $31.7 million and $32.7 million with related allowances of $727,000 and $812,000 as of March 31, 2015 and December 31, 2014, respectively. Nonperforming TDRs totaled $7.5 million and $9.5 million with related allowances of $248,000 and $293,000 as of March 31, 2015 and December 31, 2014, respectively. All TDRs are classified as impaired loans and are included in the impaired loan disclosures above.

There were no new loans modified as a TDR during the three months ended March 31, 2015 and 2014.

There were no loans that were modified and deemed TDRs that subsequently defaulted during the three months ended March 31, 2015. Some loans classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and result in potential incremental losses. These potential incremental losses have been factored into our overall allowance for loan losses estimate. The level of any re-defaults will likely be affected by future economic conditions. Once a loan becomes a TDR, it will continue to be reported as a TDR until it is repaid in full, foreclosed, sold or it meets the criteria to be removed from TDR status.

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grades of loans, the level of classified loans, net charge-offs, nonperforming loans (see details above) and the general economic conditions in the region.

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 7. Grades 1 through 4 are considered “Pass”. A description of the general characteristics of the seven risk grades is as follows:

1.	Good: Borrower exhibits the strongest overall financial condition and represents the most creditworthy profile.

2.	Satisfactory (A): Borrower reflects a well-balanced financial condition, demonstrates a high level of creditworthiness and typically will have a strong banking relationship with the Bank.

3.	Satisfactory (B): Borrower exhibits a balanced financial condition and does not expose the Bank to more than a normal or average overall amount of risk. Loans are considered fully collectable.

4.	Watch List: Borrower reflects a fair financial condition, but there exists an overall greater than average risk. Risk is deemed acceptable by virtue of increased monitoring and control over borrowings. Probability of timely repayment is present.

Other Assets Especially Mentioned (OAEM): Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently impaired. The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure. Includes loans which require an increased degree of monitoring or servicing as a result of internal or external changes.

6.	Substandard: This classification represents more severe cases of #5 (OAEM) characteristics that require increased monitoring. Assets are characterized by the distinct possibility that the Bank will sustain

some loss if the deficiencies are not corrected. Assets are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral. Asset has a well-defined weakness or weaknesses that impairs the ability to repay debt and jeopardizes the timely liquidation or realization of the collateral at the asset’s net book value.

Doubtful: Assets which have all the weaknesses inherent in those assets classified #6 (Substandard) but the risks are more severe relative to financial deterioration in capital and/or asset value; accounting/evaluation techniques may be questionable and the overall possibility for collection in full is highly improbable. Borrowers in this category require constant monitoring, are considered work-out loans and present the potential for future loss to the Bank.

An analysis of the credit risk profile by internally assigned grades as of March 31, 2015 and December 31, 2014 is as follows:

At March 31, 2015	Pass		OAEM		Substandard		Doubtful		Total
	(amounts in thousands)
Commercial and Industrial	$	26,335	$	629	$	2,428	$	—	$	29,392
Real Estate Construction:
Residential		5,990		—		—		—		5,990
Commercial		35,451		4,000		7,389		—		46,840
Real Estate Mortgage:
Commercial – Owner Occupied		176,269		3,246		1,268		—		180,783
Commercial – Non-owner Occupied		224,420		5,223		10,665		—		240,308
Residential – 1 to 4 Family		168,389		743		8,324		—		177,456
Residential – Multifamily		19,342		—		362		—		19,704
Consumer		17,394		—		93		—		17,487
Total	$	673,590	$	13,841	$	30,529	$	—	$	717,960

At December 31, 2014	Pass		OAEM		Substandard		Doubtful		Total
	(amounts in thousands)
Commercial and Industrial	$	27,104	$	642	$	2,346	$	—	$	30,092
Real Estate Construction:
Residential		5,621		—		238		—		5,859
Commercial		34,255		2,893		10,773		—		47,921
Real Estate Mortgage:
Commercial – Owner Occupied		170,685		4,051		1,913		—		176,649
Commercial – Non-owner Occupied		218,230		5,791		13,897		—		237,918
Residential – 1 to 4 Family		162,787		613		8,494		—		171,894
Residential – Multifamily		24,809		—		364		—		25,173
Consumer		17,461		—		94		—		17,555
Total	$	660,952	$	13,990	$	38,119	$	—	$	713,061

NOTE 5. ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management's best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The Company's allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, "Receivables" and allowance allocations calculated in accordance with ASC Topic 450, "Contingencies." Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company's process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of, and trends related to, nonaccrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision for possible loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance reflects management's continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management's judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company's loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor's ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial loans. When a loan has a grade of 6 or higher, the loan is analyzed to determine whether the loan is impaired and, if impaired, whether there is a need to specifically allocate a portion of the allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower's ability to repay amounts owed, any collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool. The Company's pools of similar loans include similarly risk-graded groups of commercial loans, commercial real estate loans, consumer real estate loans and consumer and other loans.

General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank's lending management and staff; (ii) the effectiveness of the Bank's loan policies, procedures and internal controls; (iii)

changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, high-moderate, moderate, low-moderate or low degree of risk. The results are then input into a "general allocation matrix" to determine an appropriate general valuation allowance.

An analysis of the allowance for loan losses for the three month periods ended March 31, 2015 and 2014 is as follows:

Allowance for Loan Losses:	For the three months ended March 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provisions (Credits)			Ending Balance
	(amounts in thousands)
Commercial and Industrial	$	1,679	$	—		$	19	$	171		$	1,869
Real Estate Construction:
Residential		316		(238	)		—		108			186
Commercial		3,015		(2,380	)		—		983			1,618
Real Estate Mortgage:
Commercial – Owner Occupied		3,296		—			10		38			3,344
Commercial – Non-owner Occupied		4,962		(381	)		398		(398	)		4,581
Residential – 1 to 4 Family		4,156		(128	)		—		17			4,045
Residential – Multifamily		357		—			—		(78	)		279
Consumer		262		—			—		(1	)		261
Unallocated		—		—			—		—			—
Total	$	18,043	$	(3,127	)	$	427