EAGLE FINANCIAL SERVICES INC - FORM 10-Q

EAGLE FINANCIAL SERVICES INC - FORM 10-Q - August 15, 2016

Attached files

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - EAGLE FINANCIAL SERVICES INC	efsi-20160630exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - EAGLE FINANCIAL SERVICES INC	efsi-20160630exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - EAGLE FINANCIAL SERVICES INC	efsi-20160630exhibit311.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, 2016



¨	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 August 3, 2016 was 3,548,574.

TABLE OF CONTENTS




PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Consolidated Balance Sheets at June 30, 2016 and December 31, 2015	1
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2016 and 2015	2
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2016 and 2015	3
	Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2016 and 2015	4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	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	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)



	June 30, 2016			December 31, 2015
	(Unaudited)
Assets
Cash and due from banks	$	9,473		$	11,082
Interest-bearing deposits with other institutions	20,121			12,139
Total cash and cash equivalents	29,594			23,221
Securities available for sale, at fair value	102,782			105,823
Restricted investments	1,918			1,896
Loans	517,407			495,573
Allowance for loan losses	(4,973		)	(4,959		)
Net Loans	512,434			490,614
Bank premises and equipment, net	20,495			20,964
Other real estate owned, net of allowance	524			571
Other assets	9,641			10,183
Total assets	$	677,388		$	653,272
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest bearing demand deposits	$	197,524		$	186,133
Savings and interest bearing demand deposits	284,572			272,214
Time deposits	89,133			92,371
Total deposits	$	571,229		$	550,718
Federal Home Loan Bank advances	20,000			20,000
Other liabilities	4,764			4,333
Total liabilities	$	595,993		$	575,051
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 and outstanding 2016, 3,546,802 including 19,901 shares of unvested restricted stock; issued and outstanding 2015, 3,517,648 including 14,401 shares of unvested restricted stock	8,817			8,758
Surplus	14,129			13,730
Retained earnings	56,405			54,682
Accumulated other comprehensive income	2,044			1,051
Total shareholders’ equity	$	81,395		$	78,221
Total liabilities and shareholders’ equity	$	677,388		$	653,272

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,
	2016		2015		2016		2015
Interest and Dividend Income
Interest and fees on loans	$	5,883	$	5,437	$	11,592	$	10,738
Interest and dividends on securities available for sale:
Taxable interest income	482		406		922		782
Interest income exempt from federal income taxes	232		246		465		489
Dividends	23		26		46		33
Interest on deposits with other institutions	22		6		38		17
Total interest and dividend income	$	6,642	$	6,121	$	13,063	$	12,059
Interest Expense
Interest on deposits	194		182		395		366
Interest on federal funds purchased and securities sold under agreements to repurchase	—		1		—		1
Interest on Federal Home Loan Bank advances	64		66		129		200
Interest on trust preferred capital notes	—		33		—		66
Interest on interest rate swap	39		45		80		91
Total interest expense	$	297	$	327	$	604	$	724
Net interest income	$	6,345	$	5,794	$	12,459	$	11,335
Provision For Loan Losses	—		300		79		433
Net interest income after provision for loan losses	$	6,345	$	5,494	$	12,380	$	10,902
Noninterest Income
Income from fiduciary activities	$	380	$	356	$	708	$	784
Service charges on deposit accounts	290		307		580		597
Other service charges and fees	992		930		1,821		1,686
Gain on sale of securities	—		22		86		96
Other operating income	76		29		178		110
Total noninterest income	$	1,738	$	1,644	$	3,373	$	3,273
Noninterest Expenses
Salaries and employee benefits	$	3,313	$	3,112	$	6,577	$	6,107
Occupancy expenses	367		436		775		782
Equipment expenses	355		260		665		406
Advertising and marketing expenses	185		184		347		303
Stationery and supplies	51		61		101		112
ATM network fees	259		191		436		349
Other real estate owned expense	2		14		2		20
Loss on valuation adjustments and sales of other real estate owned	47		73		47		92
FDIC assessment	99		103		204		211
Computer software expense	131		192		267		413
Bank franchise tax	125		126		251		243
Professional fees	281		261		509		503
Cost to terminate operating lease	—		520		—		520
Other operating expenses	617		598		1,205		1,128
Total noninterest expenses	$	5,832	$	6,131	$	11,386	$	11,189
Income before income taxes	$	2,251	$	1,007	$	4,367	$	2,986
Income Tax Expense	641		209		1,232		733
Net income	$	1,610	$	798	$	3,135	$	2,253
Earnings Per Share
Net income per common share, basic	$	0.46	$	0.23	$	0.89	$	0.65
Net income per common share, diluted	$	0.46	$	0.23	$	0.89	$	0.65

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,
	2016		2015			2016		2015
Net income	$	1,610	$	798		$	3,135	$	2,253
Other comprehensive income (loss):
Unrealized gain (loss) on available for sale securities net of reclassification adjustments, net of deferred income tax of $222 and ($523) for the three months ended, respectively and $511 and ($317) for the six months ended, respectively	430		(1,012		)	993		(615		)
Change in fair value of interest rate swap, net of deferred income tax of $0 and $12 for the three months ended, respectively and $0 and $18 for the six months ended, respectively	—		23			—		34
Total other comprehensive income (loss)	430		(989		)	993		(581		)
Total comprehensive income (loss)	$	2,040	$	(191	)	$	4,128	$	1,672

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(dollars in thousands, except share amounts)



	Common Stock		Surplus			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, December 31, 2014	$	8,621	$	12,618		$	50,578		$	1,315		$	73,132
Net income						2,253						2,253
Other comprehensive (loss)									(581		)	(581		)
Vesting of restricted stock awards, stock incentive plan (6,250 shares)	16		(16		)							—
Income tax benefit on vesting of restricted stock			5									5
Stock-based compensation expense			132									132
Issuance of common stock, dividend investment plan (16,610 shares)	42		332									374
Issuance of common stock, employee benefit plan (875 shares)	2		18									20
Dividends declared ($0.40 per share)						(1,392		)				(1,392		)
Balance, June 30, 2015	$	8,681	$	13,089		$	51,439		$	734		$	73,943

Balance, December 31, 2015	$	8,758	$	13,730		$	54,682		$	1,051		78,221
Net income						3,135						3,135
Other comprehensive income									993			993
Vesting of restricted stock awards, stock incentive plan (8,196 shares)	20		(20		)							—
Stock-based compensation expense			107									107
Issuance of common stock, dividend investment plan (14,810 shares)	37		298									335
Issuance of common stock, employee benefit plan (648 shares)	2		14									16
Dividends declared ($0.40 per share)						(1,412		)				(1,412		)
Balance, June 30, 2016	$	8,817	$	14,129		$	56,405		$	2,044		$	81,395

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)



	Six Months Ended
	June 30,
	2016			2015
Cash Flows from Operating Activities
Net income	$	3,135		$	2,253
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	464			398
Amortization of intangible and other assets	86			110
Provision for loan losses	79			433
Loss on valuation adjustments and sales of other real estate owned	47			92
(Gain) on the sale of premises and equipment	—			(5		)
Loss on the sale of repossessed assets	—			1
(Gain) on the sale of securities	(86		)	(96		)
Fair value adjustment on derivative contract	(71		)	—
Stock-based compensation expense	107			132
Premium amortization on securities, net	115			104
Changes in assets and liabilities:
Decrease (increase) in other assets	60			(1,306		)
Increase (decrease) in other liabilities	502			(574		)
Net cash provided by operating activities	$	4,438		$	1,542
Cash Flows from Investing Activities
Proceeds from maturities, calls, and principal payments of securities available for sale	$	12,593		$	5,131
Proceeds from the sale of securities available for sale	4,314			2,324
Purchases of securities available for sale	(12,391		)	(19,966		)
Proceeds from the sale of restricted investments	—			900
Purchases of restricted investments	(22		)	(38		)
Purchases of bank premises and equipment	(105		)	(2,188		)
Proceeds from the sale of other real estate owned	—			310
Proceeds from the sale of bank premises and equipment	—			5
Proceeds from the sale of repossessed assets	1			8
Net (increase) in loans	(21,905		)	(16,749		)
Net cash (used in) investing activities	$	(17,515	)	$	(30,263	)
Cash Flows from Financing Activities
Net increase in noninterest bearing demand deposits, savings, and interest bearing demand deposits	$	23,749		$	20,286
Net (decrease) in time deposits	(3,238		)	(1,315		)
Net increase in federal funds purchased	—			8,329
Net (decrease) in Federal Home Loan Bank advances	—			(20,000		)
Issuance of common stock, employee benefit plan	16			20
Cash dividends paid	(1,077		)	(1,018		)
Net cash provided by financing activities	$	19,450		$	6,302

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(continued)



	Six Months Ended
	June 30,
	2016		2015
Increase (decrease) in cash and cash equivalents	$	6,373	$	(22,419	)
Cash and Cash Equivalents
Beginning	23,221		34,564
Ending	$	29,594	$	12,145
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	612	$	812
Income taxes	$	—	$	583
Supplemental Schedule of Noncash Investing and Financing Activities:
Unrealized gain (loss) on securities available for sale	$	1,504	$	(932	)
Change in fair value of interest rate swap	$	—	$	53
Other real estate and repossessed assets acquired in settlement of loans	$	6	$	564
Issuance of common stock, dividend investment plan	$	335	$	374

EAGLE FINANCIAL SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2016

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, 2016 and December 31, 2015, the results of operations for the three and six months ended June 30, 2016 and 2015, and cash flows for the six months ended June 30, 2016 and 2015. The results of operations for the three and six months ended June 30, 2016 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, 2015 (the “2015 Form 10-K”).

Eagle Financial Services, Inc. (the "Company") owns 100% of Bank of Clarke County (the “Bank”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated.

Certain amounts in the consolidated financial statements have been reclassified to conform to current year presentations. None of the reclassifications were of a material nature.

NOTE 2. Stock-Based Compensation Plan

During 2014, 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 500,000 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 over a 1 year period. The Company recognizes compensation expense over the restricted period. As of June 30, 2016, there was $249 thousand of unrecognized compensation cost related to nonvested restricted stock.

The following table presents Restricted Stock activity for the six months ended June 30, 2016 and 2015:



	Six Months Ended
	June 30,
	2016				2015
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period	14,401		$	22.98	15,151		$	22.27
Granted	14,650		23.07		14,650		23.85
Vested	(8,196	)	22.86		(6,250	)	20.95
Forfeited	(954	)	23.00		—		—
Nonvested, end of period	19,901		23.09		23,551		23.61

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. Nonvested restricted shares are included in the weighted average number of common shares used to compute basic earnings per share because of dividend participation and voting rights. 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.

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, 2016 and 2015 and the effect on the weighted average number of shares of dilutive potential common stock. During 2016 and 2015, there were no potentially dilutive securities outstanding.



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015
Weighted average number of common shares outstanding used to calculate basic earnings per share	3,539,876	3,487,215	3,535,505	3,482,259
Effect of dilutive common stock	—	—	—	—
Weighted average number of common shares outstanding used to calculate diluted earnings per share	3,539,876	3,487,215	3,535,505	3,482,259

NOTE 4. Securities

Amortized costs and fair values of securities available for sale at June 30, 2016 and December 31, 2015 were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	June 30, 2016
	(in thousands)
Obligations of U.S. government corporations and agencies	$	29,883	$	1,016	$	—		$	30,899
Mortgage-backed securities	29,371		523		—			29,894
Obligations of states and political subdivisions	40,489		1,500		—			41,989
	$	99,743	$	3,039	$	—		$	102,782
	December 31, 2015
	(in thousands)
Obligations of U.S. government corporations and agencies	$	37,348	$	475	$	(158	)	$	37,665
Mortgage-backed securities	28,858		293		(220		)	28,931
Obligations of states and political subdivisions	38,082		1,169		(24		)	39,227
	$	104,288	$	1,937	$	(402	)	$	105,823

During the six months ended June 30, 2016, the Company received proceeds of $4.3 million on sales of available for sale securities for a gross gain of $86 thousand. There were no losses on the sale of available for sale securities during the six months ended June 30, 2016. During the six months ended June 30, 2015, the Company sold $2.3 million of available for sale securities for a gross gain of $96 thousand. There were no losses on the sale of available for sale securities during the six months ended June 30, 2015.

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, 2016 and December 31, 2015 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, 2016
	(in thousands)
Obligations of U.S. government corporations and agencies	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—		—		—
Obligations of states and political subdivisions	—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	—
	December 31, 2015
	(in thousands)
Obligations of U.S. government corporations and agencies	$	21,296	$	143	$	1,985	$	15	$	23,281	$	158
Mortgage-backed securities	18,563		194		1,105		26		19,668		220
Obligations of states and political subdivisions	3,414		22		497		2		3,911		24
	$	43,273	$	359	$	3,587	$	43	$	46,860	$	402

Gross unrealized losses on available for sale securities included zero (0) and forty-five (45) debt securities at June 30, 2016 and December 31, 2015, 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. 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 December 31, 2015 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 were deemed to be temporary. The continuing economic recession involving housing, liquidity and credit were also a contributing factor to the unrealized losses on these securities at December 31, 2015. 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. 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 $2.9 million at June 30, 2016 were pledged for various purposes required by law.

The composition of restricted investments at June 30, 2016 and December 31, 2015 was as follows:



	June 30, 2016		December 31, 2015
	(in thousands)
Federal Reserve Bank Stock	$	344	$	344
Federal Home Loan Bank Stock	1,434		1,412
Community Bankers’ Bank Stock	140		140
	$	1,918	$	1,896

NOTE 5. Allowance for Loan Losses

Changes in the allowance for loan losses for the six months ended June 30, 2016 and 2015 and the year ended December 31, 2015 were as follows:



	Six Months Ended			Year Ended			Six Months Ended
	June 30,			December 31,			June 30,
	2016			2015			2015
				(in thousands)
Balance, beginning	$	4,959		$	5,080		$	5,080
Provision for (recovery of) loan losses	79			(227		)	433
Recoveries added to the allowance	90			562			343
Loan losses charged to the allowance	(155		)	(456		)	(320		)
Balance, ending	$	4,973		$	4,959		$	5,536

Nonaccrual and past due loans by class at June 30, 2016 and December 31, 2015 were as follows:



	June 30, 2016
	(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	$	287	$	333	$	—	$	620	$	29,674	$	30,294	$	—	$	114
Commercial Real Estate:
Owner Occupied	451		445		—		896		113,025		113,921		—		1,040
Non-owner occupied	—		575		—		575		87,092		87,667		—		913
Construction and Farmland:
Residential	490		—		—		490		8,367		8,857		—		—
Commercial	2,093		—		—		2,093		28,788		30,881		—		—
Consumer:
Installment	35		8		5		48		13,313		13,361		5		—
Residential:
Equity Lines	101		18		—		119		31,141		31,260		—		142
Single family	959		4,367		1,249		6,575		187,668		194,243		28		1,769
Multifamily	—		—		—		—		3,835		3,835		—		—
All Other Loans	—		—		—		—		3,088		3,088		—		—
Total	$	4,416	$	5,746	$	1,254	$	11,416	$	505,991	$	517,407	$	33	$	3,978



	December 31, 2015
	(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	$	1	$	—	$	—	$	1	$	29,365	$	29,366	$	—	$	475
Commercial Real Estate:
Owner Occupied	623		142		—		765		108,942		109,707		—		1,614
Non-owner occupied	—		55		746		801		64,664		65,465		—		948
Construction and Farmland:
Residential	50		—		—		50		8,509		8,559		—		—
Commercial	356		72		—		428		32,582		33,010		—		310
Consumer:
Installment	43		3		—		46		13,484		13,530		—		—
Residential:
Equity Lines	175		—		—		175		34,246		34,421		—		276
Single family	2,123		209		1,296		3,628		191,602		195,230		307		1,662
Multifamily	—		—		—		—		3,975		3,975		—		—
All Other Loans	—		—		—		—		2,310		2,310		—		—
Total	$	3,371	$	481	$	2,042	$	5,894	$	489,679	$	495,573	$	307	$	5,285

Allowance for loan losses by segment at June 30, 2016 and December 31, 2015 were as follows:



	As of and For the Six Months Ended
	June 30, 2016
	(in thousands)
	Construction and Farmland			Residential			Commercial Real Estate		Commercial - Non Real Estate			Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	775		$	2,322		$	1,268	$	211		$	109		$	53		$	221	$	4,959
Charge-Offs	—			(127		)	—		—			(11		)	(17		)	—		(155		)
Recoveries	28			13			5		8			33			3			—		90
Provision	(198		)	2			271		(26		)	(46		)	47			29		79
Ending balance	$	605		$	2,210		$	1,544	$	193		$	85		$	86		$	250	$	4,973
Ending balance: Individually evaluated for impairment	$	20		$	368		$	137	$	5		$	—		$	—		$	—	$	530
Ending balance: collectively evaluated for impairment	$	585		$	1,842		$	1,407	$	188		$	85		$	86		$	250	$	4,443
Loans:
Ending balance	$	39,738		$	229,338		$	201,588	$	30,294		$	13,361		$	3,088		$	—	$	517,407
Ending balance individually evaluated for impairment	$	1,362		$	6,382		$	3,913	$	452		$	—		$	—		$	—	$	12,109
Ending balance collectively evaluated for impairment	$	38,376		$	222,956		$	197,675	$	29,842		$	13,361		$	3,088		$	—	$	505,298



	As of and for the Twelve Months Ended
	December 31, 2015
	(in thousands)
	Construction and Farmland			Residential			Commercial Real Estate			Commercial - Non Real Estate			Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	951		$	1,977		$	1,347		$	464		$	103		$	42		$	196	$	5,080
Charge-Offs	(166		)	(152		)	(47		)	—			(66		)	(25		)	—		(456		)
Recoveries	75			142			115			181			33			16			—		562
Provision	(85		)	355			(147		)	(434		)	39			20			25		(227		)
Ending balance	$	775		$	2,322		$	1,268		$	211		$	109		$	53		$	221	$	4,959
Ending balance: Individually evaluated for impairment	$	10		$	423		$	141		$	2		$	—		$	—		$	—	$	576
Ending balance: collectively evaluated for impairment	$	765		$	1,899		$	1,127		$	209		$	109		$	53		$	221	$	4,383
Loans:
Ending balance	$	41,569		$	233,626		$	175,172		$	29,366		$	13,530		$	2,310		$	—	$	495,573
Ending balance individually evaluated for impairment	$	1,392		$	7,209		$	4,555		$	847		$	—		$	—		$	—	$	14,003
Ending balance collectively evaluated for impairment	$	40,177		$	226,417		$	170,617		$	28,519		$	13,530		$	2,310		$	—	$	481,570

Impaired loans by class as of and for the periods ended June 30, 2016 and December 31, 2015 were as follows:



	As of and for the Six Months Ended
	June 30, 2016
	(in thousands)
	Unpaid Principal Balance		Recorded Investment (1)		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	192	$	156	$	—	$	184	$	6
Commercial Real Estate:
Owner Occupied	1,513		1,385		—		1,399		8
Non-owner occupied	1,153		1,050		—		1,060		7
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	360		361		—		367		16
Residential:
Equity lines	—		—		—		—		—
Single family	3,835		3,650		—		3,730		58
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	7,053	$	6,602	$	—	$	6,740	$	95
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	298	$	298	$	5	$	306	$	7
Commercial Real Estate:
Owner Occupied	205		206		38		207		5
Non-owner occupied	1,273		1,277		99		1,285		32
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	1,002		1,006		20		1,009		21
Residential:
Equity lines	545		207		78		210		2
Single family	2,573		2,541		290		2,556		39
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	5,896	$	5,535	$	530	$	5,573	$	106
Total:
Commercial	$	490	$	454	$	5	$	490	$	13
Commercial Real Estate	4,144		3,918		137		3,951		52
Construction and Farmland	1,362		1,367		20		1,376		37
Residential	6,953		6,398		368		6,496		99
Other	—

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