EAGLE FINANCIAL SERVICES INC - FORM 10-Q

EAGLE FINANCIAL SERVICES INC - FORM 10-Q - August 12, 2014

Attached files

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - EAGLE FINANCIAL SERVICES INC	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - EAGLE FINANCIAL SERVICES INC	efsi-20140630exhibit311.htm
EX-32.1 - EXHIBIT 32.1 - EAGLE FINANCIAL SERVICES INC	efsi-20140630exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - EAGLE FINANCIAL SERVICES INC	efsi-20140630exhibit312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2014



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

For the transition period from to

Commission File Number: 0-20146

EAGLE FINANCIAL SERVICES, INC.

(Exact name of registrant as specified in its charter)



Virginia		54-1601306
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2 East Main Street P.O. Box 391 Berryville, Virginia		22611
(Address of principal executive offices)		(Zip Code)

(540) 955-2510

(Registrant’s telephone number, including area code)

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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date 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 ý 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):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The number of shares of the registrant’s Common Stock ($2.50 par value) outstanding as of July 29, 2014 was 3,446,769.

TABLE OF CONTENTS




PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Consolidated Balance Sheets at June 30, 2014 and December 31, 2013	1
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2014 and 2013	2
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2014 and 2013	3
	Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2014 and 2013	4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	43

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

EAGLE FINANCIAL SERVICES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands, except share amounts)



	June 30, 2014			December 31, 2013
	(Unaudited)
Assets
Cash and due from banks	$	9,454		$	9,295
Interest-bearing deposits with other institutions	2,951			4,948
Total cash and cash equivalents	12,405			14,243
Securities available for sale, at fair value	100,286			102,598
Restricted investments	2,358			2,192
Loans	464,318			444,273
Allowance for loan losses	(5,871		)	(5,488		)
Net Loans	458,447			438,785
Bank premises and equipment, net	17,115			17,214
Other real estate owned, net of allowance	1,959			1,646
Other assets	9,170			9,766
Total assets	$	601,740		$	586,444
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest bearing demand deposits	$	147,992		$	147,698
Savings and interest bearing demand deposits	248,122			240,749
Time deposits	95,931			99,140
Total deposits	$	492,045		$	487,587
Federal Home Loan Bank advances	30,000			22,250
Trust preferred capital notes	7,217			7,217
Other liabilities	2,255			2,984
Total liabilities	$	531,517		$	520,038
Shareholders’ Equity
Preferred stock, $10 par value; 500,000 shares authorized and unissued	$	—		$	—
Common stock, $2.50 par value; authorized 10,000,000 shares; issued 2014, 3,424,576; issued 2013, 3,392,780	8,561			8,482
Surplus	11,995			11,537
Retained earnings	48,105			46,082
Accumulated other comprehensive income	1,562			305
Total shareholders’ equity	$	70,223		$	66,406
Total liabilities and shareholders’ equity	$	601,740		$	586,444

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Income (Unaudited)

(dollars in thousands, except per share amounts)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Interest and Dividend Income
Interest and fees on loans	$	5,589		$	5,343		$	10,920		$	10,674
Interest and dividends on securities available for sale:
Taxable interest income	482			518			989			1,065
Interest income exempt from federal income taxes	278			314			564			638
Dividends	46			42			71			109
Interest on deposits in banks	1			6			2			15
Total interest and dividend income	$	6,396		$	6,223		$	12,546		$	12,501
Interest Expense
Interest on deposits	245			288			489			614
Interest on federal funds purchased and securities sold under agreements to repurchase	7			1			20			29
Interest on Federal Home Loan Bank advances	158			273			317			543
Interest on trust preferred capital notes	32			33			65			67
Interest on interest rate swap	46			45			92			90
Total interest expense	$	488		$	640		$	983		$	1,343
Net interest income	$	5,908		$	5,583		$	11,563		$	11,158
Provision For Loan Losses	(283		)	384			—			767
Net interest income after provision for loan losses	$	6,191		$	5,199		$	11,563		$	10,391
Noninterest Income
Income from fiduciary activities	$	362		$	273		$	661		$	633
Service charges on deposit accounts	319			366			652			709
Other service charges and fees	827			1,443			1,480			2,243
Gain on sale of securities	6			10			6			400
Other operating income	46			377			112			416
Total noninterest income	$	1,560		$	2,469		$	2,911		$	4,401
Noninterest Expenses
Salaries and employee benefits	$	2,926		$	2,910		$	5,751		$	5,551
Occupancy expenses	307			319			644			600
Equipment expenses	167			191			349			346
Advertising and marketing expenses	126			144			258			271
Stationery and supplies	74			68			164			146
ATM network fees	201			143			358			300
Other real estate owned expense	6			20			10			28
Loss (gain) on the sale of other real estate owned	(17		)	(53		)	(17		)	(53		)
FDIC assessment	86			96			167			193
Computer software expense	213			164			412			319
Bank franchise tax	117			101			219			202
Professional fees	254			284			471			525
Other operating expenses	506			565			1,023			1,107
Total noninterest expenses	$	4,966		$	4,952		$	9,809		$	9,535
Income before income taxes	$	2,785		$	2,716		$	4,665		$	5,257
Income Tax Expense	827			715			1,344			1,453
Net income	$	1,958		$	2,001		$	3,321		$	3,804
Earnings Per Share
Net income per common share, basic	$	0.57		$	0.59		$	0.97		$	1.13
Net income per common share, diluted	$	0.57		$	0.59		$	0.97		$	1.12

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(dollars in thousands)



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014		2013			2014		2013
Net income	$	1,958	$	2,001		$	3,321	$	3,804
Other comprehensive income (loss):
Unrealized gain (loss) on available for sale securities, net of deferred income taxes (benefit) of $276 and ($1,149) for the three months ended June 30, 2014 and 2013, respectively and $628 and ($1,292) for the six months ended June 30, 2014 and 2013, respectively	535		(2,230		)	1,219		(2,508		)
Change in fair value of interest rate swap, net of deferred income taxes of $6 and $40 for the three months ended June 30, 2014 and 2013, respectively and $19 and $56 for the six months ended June 30, 2014 and 2013, respectively	12		77			38		108
Total other comprehensive income (loss)	547		(2,153		)	1,257		(2,400		)
Total comprehensive income (loss)	$	2,505	$	(152	)	$	4,578	$	1,404

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)



	Common Stock		Surplus			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, December 31, 2012	$	8,340	$	10,424		$	41,494		$	3,448		$	63,706
Net income						3,804						3,804
Other comprehensive (loss)									(2,400		)	(2,400		)
Restricted stock awards, stock incentive plan (9,699 shares)	24		(24		)							—
Income tax benefit on vesting of restricted stock			18									18
Stock-based compensation expense			116									116
Issuance of common stock, dividend investment plan (15,139 shares)	38		290									328
Issuance of common stock, employee benefit plan (6,094 shares)	15		111									126
Dividends declared ($0.38 per share)						(1,280		)				(1,280		)
Balance, June 30, 2013	$	8,417	$	10,935		$	44,018		$	1,048		$	64,418

Balance, December 31, 2013	$	8,482	$	11,537		$	46,082		$	305		66,406
Net income						3,321						3,321
Other comprehensive income									1,257			1,257
Restricted stock awards, stock incentive plan (10,009 shares)	25		(25		)							—
Income tax benefit on vesting of restricted stock			11									11
Stock-based compensation expense			52									52
Issuance of common stock, dividend investment plan (15,682 shares)	39		298									337
Issuance of common stock, employee benefit plan (6,105 shares)	15		122									137
Dividends declared ($0.38 per share)						(1,298		)				(1,298		)
Balance, June 30, 2014	$	8,561	$	11,995		$	48,105		$	1,562		$	70,223

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)



	Six Months Ended
	June 30,
	2014			2013
Cash Flows from Operating Activities
Net income	$	3,321		$	3,804
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	400			387
Amortization of intangible and other assets	77			76
Provision for loan losses	—			767
(Gain) on the sale of other real estate owned	(17		)	(53		)
Loss on the sale and disposal of assets	4			2
(Gain) on the sale of securities	(6		)	(400		)
Accrual of restricted stock awards	52			116
Premium amortization on securities, net	54			74
Deferred tax benefit	—			876
Changes in assets and liabilities:
(Increase) in other assets	(108		)	(8,243		)
(Decrease) increase in other liabilities	(672		)	23
Net cash provided by (used in) operating activities	$	3,105		$	(2,571	)
Cash Flows from Investing Activities
Proceeds from maturities and principal payments of securities available for sale	$	6,536		$	11,781
Proceeds from the sale of securities available for sale	1,004			2,756
Purchases of securities available for sale	(3,429		)	(21,760		)
Proceeds from the sale of restricted investments	284			136
Purchases of restricted investments	(450		)	—
Purchases of bank premises and equipment	(333		)	(1,130		)
Proceeds from the sale of other real estate owned	34			351
Proceeds from the sale of repossessed assets	19			11
Net (increase) in loans	(19,993		)	(18,632		)
Net cash (used in) investing activities	$	(16,328	)	$	(26,487	)
Cash Flows from Financing Activities
Net increase in demand deposits, money market and savings accounts	$	7,667		$	4,111
Net (decrease) in certificates of deposit	(3,209		)	(7,901		)
Net (decrease) in federal funds purchased and securities sold under agreements to repurchase	—			(4,384		)
Net increase in Federal Home Loan Bank advances	7,750			—
Issuance of common stock, employee benefit plan	137			126
Cash dividends paid	(960		)	(952		)
Net cash provided by (used in) financing activities	$	11,385		$	(9,000	)

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(continued)



	Six Months Ended
	June 30,
	2014			2013
(Decrease) in cash and cash equivalents	$	(1,838	)	$	(38,058	)
Cash and Cash Equivalents
Beginning	14,243			48,690
Ending	$	12,405		$	10,632
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	993		$	1,426
Income taxes	$	705		$	1,622
Supplemental Schedule of Noncash Investing and Financing Activities:
Unrealized gain (loss) on securities available for sale	$	1,847		$	(3,800	)
Change in fair value of interest rate swap	$	57		$	164
Other real estate acquired in settlement of loans	$	330		$	—
Issuance of common stock, dividend investment plan	$	337		$	328

EAGLE FINANCIAL SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

NOTE 1. General

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America.

In the opinion of management, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at June 30, 2014 and December 31, 2013, the results of operations for the three and six months ended June 30, 2014 and 2013, and cash flows for the six months ended June 30, 2014 and 2013. The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”).

The Company owns 100% of Bank of Clarke County (the “Bank”) and Eagle Financial Statutory Trust II. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated. The subordinated debt of Eagle Financial Statutory Trust II is reflected as a liability of the Company.

Certain amounts in the consolidated financial statements have been reclassified to conform to current year presentations.

NOTE 2. Stock-Based Compensation Plan

During 2003, the Company’s shareholders approved a stock incentive plan which allows key employees and directors to increase their personal financial interest in the Company. This plan permits the issuance of incentive stock options and non-qualified stock options and the award of stock appreciation rights, common stock, restricted stock, and phantom stock. The plan authorizes the issuance of up to 300,000 shares of common stock.

The Company periodically grants Restricted Stock to its directors and executive officers. Restricted Stock provides grantees with rights to shares of common stock upon completion of a service period or achievement of Company performance measures. During the restriction period, all shares are considered outstanding and dividends are paid to the grantee. In general, outside directors are periodically granted restricted shares which vest over a period of less than 9 months. Beginning during 2006, executive officers were granted restricted shares which vest over a 3 year service period and restricted shares which vest based on meeting annual performance measures. The Company recognizes compensation expense over the restricted period.

The following table presents Restricted Stock activity for the six months ended June 30, 2014 and 2013:



	Six Months Ended
	June 30,
	2014				2013
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period	17,050		$	19.92	16,500		$	16.53
Granted	14,900		23.50		14,900		22.06
Vested	(10,009	)	19.65		(9,699	)	16.47
Forfeited	(790	)	21.80		(651	)	16.75
Nonvested, end of period	21,151		$	22.50	21,050		$	20.46

NOTE 3. Earnings Per Common Share

Basic earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. The number of potential common shares is determined using the treasury method and relates to outstanding stock options and unvested restricted stock grants.

The following table shows the weighted average number of shares used in computing earnings per share for the three and six months ended June 30, 2014 and 2013 and the effect on the weighted average number of shares of dilutive potential common stock. Potential dilutive common stock had no effect on income available to common shareholders.



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2014	2013	2014	2013
Average number of common shares outstanding	3,428,699	3,378,955	3,421,351	3,373,353
Effect of dilutive common stock	8,204	10,109	7,609	10,395
Average number of common shares outstanding used to calculate diluted earnings per share	3,436,903	3,389,064	3,428,960	3,383,748

NOTE 4. Securities

Amortized costs and fair values of securities available for sale at June 30, 2014 and December 31, 2013 were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	June 30, 2014
	(in thousands)
Obligations of U.S. government corporations and agencies	$	36,913	$	531	$	(739	)	$	36,705
Mortgage-backed securities	13,592		564		(61		)	14,095
Obligations of states and political subdivisions	39,548		1,364		(123		)	40,789
Corporate securities	6,511		996		—			7,507
Equity securities	1,044		146		—			1,190
	$	97,608	$	3,601	$	(923	)	$	100,286
	December 31, 2013
	(in thousands)
Obligations of U.S. government corporations and agencies	$	35,890	$	439	$	(1,585	)	$	34,744
Mortgage-backed securities	14,896		422		(121		)	15,197
Obligations of states and political subdivisions	42,442		969		(295		)	43,116
Corporate securities	7,495		928		—			8,423
Equity securities	1,044		74		—			1,118
	$	101,767	$	2,832	$	(2,001	)	$	102,598

During the six months ended June 30, 2014, the Company sold $1.0 million in available for sale securities for a net gain of $6 thousand. During the six months ended June 30, 2013, the Company sold $2.8 million in available for sale securities for a net gain of $400 thousand.

The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at June 30, 2014 and December 31, 2013 were as follows:



	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	June 30, 2014
	(in thousands)
Obligations of U.S. government corporations and agencies	$	1,999	$	9	$	23,154	$	730	$	25,153	$	739
Mortgage-backed securities	—		—		1,582		61		1,582		61
Obligations of states and political subdivisions	801		1		4,198		122		4,999		123
Corporate securities	—		—		—		—		—		—
Equity securities	—		—		—		—		—		—
	$	2,800	$	10	$	28,934	$	913	$	31,734	$	923
	December 31, 2013
	(in thousands)
Obligations of U.S. government corporations and agencies	$	23,235	$	1,551	$	1,967	$	34	$	25,202	$	1,585
Mortgage-backed securities	2,828		121		—		—		2,828		121
Obligations of states and political subdivisions	8,439		252		466		43		8,905		295
Corporate securities	—		—		—		—		—		—
Equity securities	—		—		—		—		—		—
	$	34,502	$	1,924	$	2,433	$	77	$	36,935	$	2,001

Gross unrealized losses on available for sale securities included thirty-nine (39) and fifty-one (51) debt securities at June 30, 2014 and December 31, 2013, respectively. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company’s mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages. Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value. The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer. Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa. The primary cause of the unrealized losses at June 30, 2014 and December 31, 2013 was changes in market interest rates. Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer’s financial condition, the unrealized losses are deemed to be temporary. The continuing economic downturn involving housing, liquidity and credit were also a contributing factor to the unrealized losses on these securities at June 30, 2014 and December 31, 2013. The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

The Company’s securities are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements. In addition, recent economic uncertainty and market events have led to unprecedented volatility in currency, commodity, credit and equity markets culminating in failures of some banking and financial services firms and government intervention to solidify others. These events underscore the level of investment risk associated with the current economic environment, and accordingly the level of risk in the Company’s securities.

Securities having a carrying value of $3.8 million at June 30, 2014 were pledged to secure securities sold under agreements to repurchase and other purposes required by law.

The composition of restricted investments at June 30, 2014 and December 31, 2013 was as follows:



	June 30, 2014		December 31, 2013
	(in thousands)
Federal Reserve Bank Stock	$	344	$	344
Federal Home Loan Bank Stock	1,874		1,708
Community Bankers’ Bank Stock	140		140
	$	2,358	$	2,192

NOTE 5. Allowance for Loan Losses

Changes in the allowance for loan losses for the six months ended June 30, 2014 and 2013 and the year ended December 31, 2013 were as follows:



	Six Months Ended			Year Ended			Six Months Ended
	June 30,			December 31,			June 30,
	2014			2013			2013
				(in thousands)
Balance, beginning	$	5,488		$	6,577		$	6,577
Provision charged to operating expense	—			—			767
Recoveries added to the allowance	588			233			80
Loan losses charged to the allowance	(205		)	(1,322		)	(446		)
Balance, ending	$	5,871		$	5,488		$	6,978

Nonaccrual and past due loans by class at June 30, 2014 and December 31, 2013 were as follows:



	June 30, 2014
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Days Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	4	$	—	$	121	$	125	$	26,219	$	26,344	$	—	$	1,740
Commercial Real Estate:
Owner Occupied	856		162		634		1,652		98,801		100,453		—		1,424
Non-owner occupied	821		173		—		994		59,049		60,043		—		1,263
Construction and Farmland:
Residential	—		—		—		—		4,618		4,618		—		—
Commercial	367		—		—		367		32,353		32,720		—		268
Consumer:
Installment	75		8		—		83		13,577		13,660		—		—
Residential:
Equity Lines	372		—		—		372		31,068		31,440		—		155
Single family	1,127		683		205		2,015		187,488		189,503				1,503
Multifamily	—		—		—		—		3,082		3,082		—		—
All Other Loans	—		—		—		—		2,455		2,455		—		—
Total	$	3,622	$	1,026	$	960	$	5,608	$	458,710	$	464,318	$	—	$	6,353



	December 31, 2013
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	143	$	—	$	1,162	$	1,305	$	19,560	$	20,865	$	—	$	1,288
Commercial Real Estate:
Owner Occupied	364		—		1,270		1,634		90,811		92,445		—		1,269
Non-owner occupied	99		185		—		284		55,437		55,721		—		185
Construction and Farmland:
Residential	—		—		—		—		7,860		7,860		—		—
Commercial	—		—		—		—		29,073		29,073		—		157
Consumer:
Installment	95		9		11		115		13,670		13,785		11		6
Residential:
Equity Lines	202		25		—		227		31,997		32,224		—		179
Single family	1,995		180		693		2,868		183,541		186,409		—		1,328
Multifamily	—		—		—		—		2,850		2,850		—		—
All Other Loans	—		—		—		—		3,041		3,041		—		—
Total	$	2,898	$	399	$	3,136	$	6,433	$	437,840	$	444,273	$	11	$	4,412

Allowance for loan losses by segment at June 30, 2014 and December 31, 2013 were as follows:



	As of and For the Six Months Ended
	June 30, 2014
	(in thousands)
	Construction and Farmland			Residential Real Estate			Commercial Real Estate			Commercial		Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	1,032		$	2,225		$	1,337		$	555	$	102		$	82		$	155	$	5,488
Charge-Offs	—			(133		)	—			—		(62		)	(10		)	—		(205		)
Recoveries	3			7			377			146		53			2			—		588
Provision	(259		)	(197		)	(294		)	388		(13		)	(8		)	383		—
Ending balance	$	776		$	1,902		$	1,420		$	1,089	$	80		$	66		$	538	$	5,871
Ending balance: Individually evaluated for impairment	$	135		$	274		$	471		$	879	$	—		$	—		$	—	$	1,759
Ending balance: collectively evaluated for impairment	$	641		$	1,628		$	949		$	210	$	80		$	66		$	538	$	4,112
Financing receivables:
Ending balance	$	37,338		$	224,025		$	160,496		$	26,344	$	13,660		$	2,455		$	—	$	464,318
Ending balance individually evaluated for impairment	$	2,643		$	3,055		$	4,489		$	1,740	$	—		$	—		$	—	$	11,927
Ending balance collectively evaluated for impairment	$	34,695		$	220,970		$	156,007		$	24,604	$	13,660		$	2,455		$	—	$	452,391



	As of and for the Twelve Months Ended
	December 31, 2013
	(in thousands)
	Construction and Farmland			Residential Real Estate			Commercial Real Estate			Commercial			Consumer			All Other Loans			Unallocated			Total
Allowance for credit losses:
Beginning Balance	$	1,280		$	2,820		$	1,182		$	880		$	107		$	122		$	186		$	6,577
Charge-Offs	(20		)	(507		)	(289		)	(403		)	(85		)	(18		)	—			(1,322		)
Recoveries	5			109			7			47			54			11			—			233
Provision	(233		)	(197		)	437			31			26			(33		)	(31		)	—
Ending balance	$	1,032		$	2,225		$	1,337		$	555		$	102		$	82		$	155		$	5,488
Ending balance: Individually evaluated for impairment	$	218		$	627		$	299		$	334		$	—		$	—		$	—		$	1,478
Ending balance: collectively evaluated for impairment	$	814		$	1,598		$	1,038		$	221		$	102		$	82		$	155		$	4,010
Financing receivables:
Ending balance	$	36,933		$	221,483		$	148,166		$	20,865		$	13,785		$	3,041		$	—		$	444,273
Ending balance individually evaluated for impairment	$	2,674		$	4,922		$	4,750		$	1,347		$	—		$	6		$	—		$	13,699
Ending balance collectively evaluated for impairment	$	34,259		$	216,561		$	143,416		$	19,518		$	13,785		$	3,035		$	—		$	430,574

Impaired loans by class at June 30, 2014 and December 31, 2013 were as follows:



	As of
	June 30, 2014
	(in thousands)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate:
Owner Occupied	2,063		2,068		—		2,336		18
Non-owner occupied	1,138		1,141		—		1,234		26
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	2,277		2,288		—		2,296		43
Residential:
Equity lines	84		84		—		253		—
Single family	1,839		1,844		—		2,217		19
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	7,401	$	7,425	$	—	$	8,336	$	106
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	1,740	$	1,740	$	880	$	2,037	$	8
Commercial Real Estate:
Owner Occupied	198		198		198		195		2
Non-owner occupied	1,090		1,090		273		1,107		12
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	367		367		135		398		2
Residential:
Equity lines	71		71		71		218		—
Single family	1,060		1,062		202		1,081		16
Multifamily	—		—		—		—		—

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