Table Of Contents

 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 FORM 10-Q  

 

(Mark One)

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

 

For the Quarterly Period Ended March 31, 2016

 

Or

 

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: 001-33033

 

PORTER BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

  

  

  

Kentucky

  

61-1142247

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

  

  

2500 Eastpoint Parkway, Louisville, Kentucky

  

40223

(Address of principal executive offices)

  

(Zip Code)

 

(502) 499-4800

(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 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      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 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.

 

Large accelerated filer      

Accelerated filer      

Non-accelerated filer  

Smaller reporting company  

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

22,986,177 Common Shares and 7,958,000 Non-Voting Common Shares, no par value, were outstanding at April 30, 2016.


 

 
1

Table Of Contents
 

 


 

INDEX

 

 

  

  

Page

PART I –

FINANCIAL INFORMATION

  

ITEM 1.

FINANCIAL STATEMENTS

3

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  33

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

48

ITEM 4.

CONTROLS AND PROCEDURES

48

  

  

  

PART II –

OTHER INFORMATION

  

ITEM 1.

LEGAL PROCEEDINGS

49

ITEM 1A.

RISK FACTORS

49

ITEM 2.

UNREGISTERED SALES ON EQUITY SECURITIES AND USE OF PROCEEDS

49

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

49

ITEM 4.

MINE SAFETY DISCLOSURES

49

ITEM 5.

OTHER INFORMATION

49

ITEM 6.

EXHIBITS

49

 

 
2

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PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The following consolidated financial statements of Porter Bancorp, Inc. and subsidiary, PBI Bank, Inc. are submitted:

 

Unaudited Consolidated Balance Sheets for March 31, 2016 and December 31, 2015

Unaudited Consolidated Statements of Income for the three months ended March 31, 2016 and 2015

Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015

Unaudited Consolidated Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2016

Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015

Notes to Unaudited Consolidated Financial Statements

 

 
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PORTER BANCORP, INC.

Unaudited Consolidated Balance Sheets

(dollars in thousands except share data)

 

 

   

March 31,

2016

   

December 31,

2015

 

Assets

               

Cash and due from banks

  $ 8,097     $ 8,006  

Interest bearing deposits in banks

    72,209       85,329  

Cash and cash equivalents

    80,306       93,335  

Securities available for sale

    141,525       144,978  

Securities held to maturity (fair value of $44,683 and $44,253, respectively)

    42,011       42,075  

Loans held for sale

    113       186  

Loans, net of allowance of $11,340 and $12,041, respectively

    608,487       606,625  

Premises and equipment, net

    18,751       18,812  

Other real estate owned

    17,861       19,214  

Federal Home Loan Bank stock

    7,323       7,323  

Bank owned life insurance

    14,531       9,441  

Accrued interest receivable and other assets

    7,251       6,733  

Total assets

  $ 938,159     $ 948,722  
                 

Liabilities and Stockholders’ Equity

               

Deposits

               

Non-interest bearing

  $ 120,302     $ 120,043  

Interest bearing

    745,311       757,954  

Total deposits

    865,613       877,997  

Federal Home Loan Bank advances

    2,932       3,081  

Accrued interest payable and other liabilities

    10,181       10,577  

Subordinated capital note

    3,825       4,050  

Junior subordinated debentures

    21,000       21,000  

Total liabilities

    903,551       916,705  

Stockholders’ equity

               

Preferred stock, no par

               

Series E - 6,198 issued and outstanding; Liquidation preference of $6.2 million

    1,644       1,644  

Series F - 4,304 issued and outstanding; Liquidation preference of $4.3 million

    1,127       1,127  

Total preferred stockholders’ equity

    2,771       2,771  

Common stock, no par, 86,000,000 shares authorized, 20,086,177 and 20,089,533 voting, and 6,858,000 and 6,858,000 non-voting shares issued and outstanding, respectively

    120,699       120,699  

Additional paid-in capital

    23,727       23,654  

Retained deficit

    (109,328

)

    (110,808

)

Accumulated other comprehensive loss

    (3,261

)

    (4,299

)

Total common stockholders’ equity

    31,837       29,246  

Total stockholders' equity

    34,608       32,017  

Total liabilities and stockholders’ equity

  $ 938,159     $ 948,722  

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 
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PORTER BANCORP, INC.

Unaudited Consolidated Statements of Income

(dollars in thousands, except per share data)

 

 

   

Three Months Ended

March 31,

 
   

2016

   

2015

 

Interest income

               

Loans, including fees

  $ 7,882     $ 7,755  

Taxable securities

    989       1,126  

Tax exempt securities

    164       203  

Federal funds sold and other

    150       119  
      9,185       9,203  

Interest expense

               

Deposits

    1,308       1,692  

Junior subordinated debentures

    168       152  

Subordinated capital note

    39       42  

Federal Home Loan Bank advances

    19       27  

Federal funds purchased and other

           
      1,534       1,913  

Net interest income

    7,651       7,290  

Provision (negative position) for loan losses

    (550 )      

Net interest income after provision for loan losses

    8,201       7,290  
                 

Non-interest income

               

Service charges on deposit accounts

    429       409  

Bank card interchange fees

    202       203  

Other real estate owned rental income

    256       357  

Net gain on sales of securities

    203       1,497  

Other

    301       230  
      1,391       2,696  

Non-interest expense

               

Salaries and employee benefits

    3,822       3,847  

Occupancy and equipment

    854       870  

Professional fees

    385       979  

FDIC insurance

    523       570  

Data processing expense

    297       304  

State franchise and deposit tax

    255       285  

Other real estate owned expense

    668       733  

Loan collection expense

    82       283  

Other

    1,205       1,521  
      8,091       9,392  

Income before income taxes

    1,501       594  

Income tax expense

    21        

Net income

    1,480       594  

Less:

               

Earnings allocated to participating securities

    51       185  

Net income attributable to common shareholders

  $ 1,429     $ 409  

Basic and diluted earnings per common share

  $ 0.05     $ 0.02  

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 
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PORTER BANCORP, INC.

Unaudited Consolidated Statements of Comprehensive Income

(in thousands)

                                              

 

   

Three Months Ended

March 31,

 
   

2016

   

2015

 

Net income

  $ 1,480     $ 594  

Other comprehensive income (loss):

               

Unrealized gain (loss) on securities:

               

Unrealized gain (loss) arising during the period

    1,209

 

    1,328

 

Amortization during period of net unrealized loss transferred to held to maturity

    32       33  

Reclassification adjustment for losses (gains) included in net income

    (203

)

    (1,497

)

Net unrealized gain/(loss) recognized in comprehensive income

    1,038       (136

)

Tax effect

           

Other comprehensive income (loss)

    1,038       (136

)

                 

Comprehensive income

  $ 2,518     $ 458  

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 
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PORTER BANCORP, INC.

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

For Three Months Ended March 31, 2016

(Dollar amounts in thousands except share and per share data)

 

    Shares    

Amount

         
    Common     Preferred              Preferred      Common           
    Common     Non-Voting Common     Total Common     Series E     Series F     Common and Non-Voting Common    

Series E

    Series F     Additional Paid-In Capital       Retained Deficit     Accumulated Other Compre-hensive Income (Loss)     Total  
                                                                                                   

Balances, January 1, 2016

    20,089,533       6,858,000       26,947,533       6,198       4,304     $ 120,699     $ 1,644     $ 1,127     $ 23,654       $ (110,808

)

  $ (4,299

)

  $ 32,017  

Issuance of unvested stock

                                                                         

Forfeited unvested stock

    (3,356

)

          (3,356

)

                                                       

Stock-based compensation expense

                                                    73                     73  

Net income

                                                            1,480             1,480  

Net change in accumulated other comprehensive income, net of taxes

                                                                  1,038       1,038  

Balances, March 31, 2016

    20,086,177       6,858,000       26,944,177       6,198       4,304     $ 120,699     $ 1,644     $ 1,127     $ 23,727       $ (109,328

)

  $ (3,261

)

  $ 34,608  

 

See accompanying notes.

 

 
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PORTER BANCORP, INC.

Unaudited Consolidated Statements of Cash Flows

For Three Months Ended March 31, 2016 and 2015

(dollars in thousands)

 

   

2016

   

2015

 

Cash flows from operating activities

               

Net income

  $ 1,480     $ 594  

Adjustments to reconcile net loss to net cash from operating activities

               

Depreciation and amortization

    386       422  

Provision (negative provision) for loan losses

    (550

)

     

Net amortization on securities

    309       354  

Stock-based compensation expense

    73       49  

Net loss (gain) on sales of loans held for sale

    (17

)

    281  

Loans originated for sale

    (1,056

)

    (433

)

Proceeds from sales of loans held for sale

    1,146       9,078  

Net (gain) loss on sales of other real estate owned

    (55

)

    (3

)

Net write-down of other real estate owned

    500       300  

Net realized gain on sales of investment securities

    (203

)

    (1,497

)

Earnings on bank owned life insurance, net of premium expense

    (90

)

    (64

)

Net change in accrued interest receivable and other assets

    (617

)

    783  

Net change in accrued interest payable and other liabilities

    (396

)

    118  

Net cash from operating activities

    910       9,982  
                 

Cash flows from investing activities

               

Purchases of available for sale securities

    (4,114

)

    (4,927

)

Sales of available for sale securities

    3,486       34,138  

Maturities and prepayments of available for sale securities

    5,077       5,358  

Proceeds from sale of other real estate owned

    1,349       2,629  

Loan originations and payments, net

    (1,802

)

    (8,618

)

Purchases of premises and equipment, net

    (177

)

    (63

)

Purchase of bank owned life insurance

    (5,000

)

     

Net cash from investing activities

    (1,181

)

    28,517  
                 

Cash flows from financing activities

               

Net change in deposits

    (12,384

)

    3,668  

Net change in repurchase agreements

          (196

)

Repayment of Federal Home Loan Bank advances

    (149

)

    (17,155

)

Advances from Federal Home Loan Bank

          5,000  

Repayment of subordinated capital note

    (225

)

    (225

)

Net cash from financing activities

    (12,758

)

    (8,908

)

Net change in cash and cash equivalents

    (13,029

)

    29,591  

Beginning cash and cash equivalents

    93,335       80,180  

Ending cash and cash equivalents

  $ 80,306     $ 109,771  
                 

Supplemental cash flow information:

               

Interest paid

  $ 4,205     $ 1,906  

Income taxes paid (refunded)

    21        

Supplemental non-cash disclosure:

               

Transfer from loans to other real estate

  $ 441     $ 347  

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 
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PORTER BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

 

 

Note 1 – Basis of Presentation and Summary of Significant Accounting Policies

 

Basis of Presentation – The consolidated financial statements include Porter Bancorp, Inc. (Company) and its subsidiary, PBI Bank (Bank).  The Company owns a 100% interest in the Bank. All significant inter-company transactions and accounts have been eliminated in consolidation.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the entire year.  A description of other significant accounting policies is presented in the notes to the Consolidated Financial Statements for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K.

 

Use of Estimates – To prepare financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ.

 

Reclassifications – Some items in the prior year financial statements were reclassified to conform to the current presentation. The reclassifications did not impact net income or stockholders’ equity.

 

Adoption of New Accounting Standards – In May 2014, FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s financial statements.

 

In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities). The amendments in this update impact public business entities as follows: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. 3) Eliminate the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. 4) Require entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 5) Require an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 6) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. 7) Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

 

Note 2 – Going Concern Considerations and Future Plans

 

Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future. However, the events and circumstances described in this discussion create substantial doubt about the Company’s ability to continue as a going concern.

 

For the three months ended March 31, 2016, we reported net income of $1.5 million compared with net loss of $3.2 million and $11.2 million for the years ended December 31, 2015 and 2014, respectively. Our financial performance has been negatively impacted by the Bank’s elevated level of non-performing assets, although the impact has diminished as we have substantially reduced non-performing assets during recent periods. Non-performing loans were 1.79%, 2.28%, and 7.57% of total loans at March 31, 2016, December 31, 2015, and December 31, 2014, respectively. Non-performing assets were 3.09%, 3.51%, and 9.19% of total assets at March 31, 2016, December 31, 2015, and December 31, 2014, respectively. See “Analysis of Financial Condition,” below.

 

In the fourth quarter of 2011 we began deferring interest payable on the junior subordinated debentures held by our trust subsidiaries, requiring our trust subsidiaries to defer distributions on our trust preferred securities held by investors. On April 15, 2016, we completed a private placement of 2.9 million common shares and 1.1 million non-voting common shares to accredited investors resulting in total proceeds of $5.0 million. The investors in the private placement directed a portion of proceeds to pay all deferred interest payments, bringing our interest payments current through the second quarter of 2016. The remaining proceeds totaled approximately $2.2 million and will be used for general corporate purposes and to support the Bank.

 

 
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We continue to be involved in various legal proceedings. We dispute the material factual allegations made against us, and after conferring with our legal advisors, we believe we have meritorious grounds on which to prevail. If we do not prevail, the ultimate outcome of any one of these matters could have a material adverse effect on our financial condition, results of operations, or cash flows. These matters are more fully described in Note 13 – “Contingencies”.

 

Our Consent Order with the FDIC and KDFI requires the Bank to maintain a minimum Tier 1 leverage ratio of 9% and a minimum total risk based capital ratio of 12%. As of March 31, 2016, the Bank’s Tier 1 leverage ratio and total risk based capital ratio were 6.39% and 10.64%, respectively, both less than the minimum capital ratios required by the Consent Order. If the Bank should be unable to reach the required capital levels, and if directed in writing by the FDIC, the Consent Order requires the Bank to develop, adopt and implement a written plan to sell or merge itself into another federally insured financial institution or otherwise obtain a capital investment into the Bank sufficient to recapitalize the Bank. The Bank has not been directed by the FDIC to implement such a plan.

 

In order to meet the 9.0% Tier 1 leverage ratio and 12.0% total risk based capital ratio requirements of the Consent Order, the Board of Directors and management are continuing to evaluate and implement strategies to achieve the following objectives:

 

 

Continuing to increase capital through the issuance of senior debt, subordinated debt, and equity securities.

 

Continuing to operate the Company and Bank in a safe and sound manner.  We have reduced our lending concentrations and the size of our balance sheet while continuing to remediate non-performing loans.

 

Executing on the sale of OREO and reinvestment in quality income producing assets.

 

Continuing to improve our internal processes and procedures, distribution of labor, and work-flow to ensure we have adequately and appropriately deployed resources in an efficient manner in the current environment.

 

Bank regulatory agencies can exercise discretion when an institution does not meet the terms of a consent order. Based on individual circumstances, the agencies may issue mandatory directives, impose monetary penalties, initiate changes in management, or take more serious adverse actions such as directing a bank to seek a buyer or taking a bank into receivership.

 

The Consent Order requires the Bank to obtain the written consent of both agencies before declaring or paying any future dividends to the Company, which are its principal source of revenue. Since the Bank is unlikely to be in a position to pay dividends to the Company until the Consent Order is satisfied, cash inflows for the Company are limited to the issuance of new debt or the issuance of capital securities. The Company’s liquid assets were $764,000 as of March 31, 2016, and were increased by approximately $2.2 million after the subsequent sale of common shares and non-voting common shares on April 15, 2016. Ongoing operating expenses of the Company are forecast at approximately $1.0 million for the next twelve months. 

 

Our consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.

 

 

Note 3 – Securities

 

The fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

 

   

Amortized

Cost

   

Gross Unrealized

Gains

   

Gross Unrealized

Losses

   

Fair Value

 
   

(in thousands)

 

March 31, 2016

                               

Available for sale

                               

U.S. Government and federal agency

  $ 34,513     $ 321     $ (98

)

  $ 34,736  

Agency mortgage-backed: residential

    99,935       1,570       (143

)

    101,362  

State and municipal

    3,270       67             3,337  

Corporate bonds

    2,325             (235

)

    2,090  

Total available for sale

  $ 140,043     $ 1,958     $ (476

)

  $ 141,525  

 

 
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Amortized

Cost

   

Gross Unrecognized

Gains

   

Gross Unrecognized

Losses

   

Fair Value

 

Held to maturity

                               

State and municipal

  $ 42,011     $ 2,672     $     $ 44,683  

Total held to maturity

  $ 42,011     $ 2,672     $     $ 44,683  

 

December 31, 2015

 

Amortized

Cost

   

Gross Unrealized

Gains

   

Gross Unrealized

Losses

   

Fair Value

 

Available for sale

                               

U.S. Government and federal agency

  $ 33,491     $ 146     $ (375

)

  $ 33,262  

Agency mortgage-backed: residential

    102,135       907       (380

)

    102,662  

State and municipal

    6,555       306             6,861  

Corporate bonds

    2,321             (128

)

    2,193  

Total available for sale

  $ 144,502     $ 1,359     $ (883

)

  $ 144,978  

 

   

Amortized

Cost

   

Gross Unrecognized

Gains

   

Gross Unrecognized

Losses

   

Fair Value

 

Held to maturity

                               

State and municipal

  $ 42,075     $ 2,178     $     $ 44,253  

Total held to maturity

  $ 42,075     $ 2,178     $     $ 44,253  

 

 

Sales and calls of available for sale securities were as follows:

   

Three Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 
                 

Proceeds

  $ 3,486     $ 34,138  

Gross gains

    203       1,551  

Gross losses

          54  

 

 

The amortized cost and fair value of the debt investment securities portfolio are shown by contractual maturity.  Contractual maturities may differ from actual maturities if issuers have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities not due at a single maturity date are detailed separately.

 

   

March 31, 2016

 
   

Amortized

Cost

   

Fair

Value

 
   

(in thousands)

 

Maturity

               

Available for sale

               

Within one year

  $ 6,120     $ 5,941  

One to five years

    7,598       7,790  

Five to ten years

    26,390       26,432  

Agency mortgage-backed: residential

    99,935       101,362  

Total

  $ 140,043     $ 141,525  
                 

Held to maturity

               

One to five years

  $ 17,012     $ 17,800  

Five to ten years

    23,950       25,723  

Beyond ten years

    1,049       1,160  

Total

  $ 42,011     $ 44,683  

 

 
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Table Of Contents
 

                                                                            

Securities pledged at March 31, 2016 and December 31, 2015 had carrying values of approximately $52.9 million and $68.0 million, respectively, and were pledged to secure public deposits.

 

At March 31, 2016 and December 31, 2015, we held securities issued by the Commonwealth of Kentucky or municipalities in the Commonwealth of Kentucky having a book value of $17.6 million and $17.7 million, respectively.  Additionally, at March 31, 2016 and December 31, 2015, we held securities issued by the State of Texas or municipalities in the State of Texas having a book value of $4.3 million at each period end. At March 31, 2016 and December 31, 2015, there were no other holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

 

Securities with unrealized losses at March 31, 2016 and December 31, 2015, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, are as follows:

 

   

Less than 12 Months

   

12 Months or More

   

Total

 

Description of Securities

 

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

 
   

(in thousands)

 

March 31, 2016

                                               

Available for sale

                                               

U.S. Government and federal agency

  $ 3,812     $ (18

)

  $ 10,410     $ (80

)

  $ 14,222     $ (98

)

Agency mortgage-backed: residential

    15,552       (143

)

                15,552       (143

)

Corporate bonds

    691       (76

)

    1,400       (159

)

    2,091       (235

)

Total temporarily impaired

  $ 20,055     $ (237

)

  $ 11,810     $ (239

)

  $ 31,865     $ (476

)

                                                 
                                                 
                                                 

December 31, 2015

                                               

Available for sale

                                               

U.S. Government and federal agency

  $ 7,058     $ (44

)

  $ 14,527     $ (331

)

  $ 21,585     $ (375

)

Agency mortgage-backed: residential

    36,325       (271

)

    3,856       (109

)

    40,181       (380

)

Corporate bonds

    747       (18

)

    1,446       (110

)

    2,193       (128

)

Total temporarily impaired

  $ 44,130     $ (333

)

  $ 19,829     $ (550

)

  $ 63,959     $ (883

)

 

There were no held to maturity securities in an unrecognized loss position at March 31, 2016 or December 31, 2015.

 

The Company evaluates securities for other than temporary impairment (OTTI) on a quarterly basis.  Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, underlying credit quality of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the sector or industry trends and cycles affecting the issuer, and the results of reviews of the issuer’s financial condition.  Management currently intends to hold all securities with unrealized losses until recovery, which for fixed income securities may be at maturity. As of March 31, 2016, management does not believe securities within our portfolio with unrealized losses should be classified as other than temporarily impaired.

 

 
12

Table Of Contents
 

 

Note 4 – Loans

 

Loans were as follows:

 

March 31,

   

December 31,

 
   

2016

   

2015

 
   

(in thousands)

 

Commercial

  $ 83,743     $ 86,176  

Commercial Real Estate:

               

Construction

    34,631       33,154  

Farmland

    73,119       76,412  

Nonfarm nonresidential

    143,767       140,570  

Residential Real Estate:

               

Multi-family

    43,541       44,131  

1-4 Family

    197,983       201,478  

Consumer

    9,929       10,010  

Agriculture

    32,731       26,316  

Other

    383       419  

Subtotal

    619,827       618,666  

Less: Allowance for loan losses

    (11,340

)

    (12,041

)

Loans, net

  $ 608,487     $ 606,625  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2016 and 2015:

 

   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

March 31, 2016:

                                                       

Beginning balance

  $ 818     $ 6,993     $ 3,984     $ 122     $ 122     $ 2     $ 12,041  

Negative provision for loan losses

    (199

)

    (375

)

    129       (33

)

    (65

)

    (7

)

    (550

)

Loans charged off

    (12

)

    (118

)

    (595

)

    (13

)

          (11

)

    (749

)

Recoveries

    35       263       165       39       79       17       598  

Ending balance

  $ 642     $ 6,763     $ 3,683     $ 115     $ 136     $ 1     $ 11,340  
                                                         
                                                         

March 31, 2015:

                                                       

Beginning balance

  $ 2,046     $ 10,931     $ 5,787     $ 274     $ 319     $ 7     $ 19,364  

Provision for loan losses

    269       7       (384

)

    12       104       (8

)

     

Loans charged off

    (375

)

    (369

)

    (482

)

    (68

)

    (33

)

          (1,327

)

Recoveries

    106       111       300       26       1       16       560  

Ending balance

  $ 2,046     $ 10,680     $ 5,221     $ 244     $ 391     $ 15     $ 18,597  

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of March 31, 2016:

 

   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

Allowance for loan losses:

                                                       

Ending allowance balance attributable to loans:

                                                       

Individually evaluated for impairment

  $     $ 39     $ 425     $     $     $     $ 464  

Collectively evaluated for impairment

    642       6,724       3,258       115       136       1       10,876  

Total ending allowance balance

  $ 642     $ 6,763     $ 3,683     $ 115     $ 136     $ 1     $ 11,340  
                                                         
                                                         

Loans:

                                                       

Loans individually evaluated for impairment

  $ 864     $ 11,198     $ 14,089     $ 8     $ 77     $     $ 26,236  

Loans collectively evaluated for impairment

    82,879       240,319       227,435       9,921       32,654       383       593,591  

Total ending loans balance

  $ 83,743     $ 251,517     $ 241,524     $ 9,929     $ 32,731     $ 383     $ 619,827  

 

 
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The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of December 31, 2015:

 

   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

Allowance for loan losses:

                                                       

Ending allowance balance attributable to loans:

                                                       

Individually evaluated for impairment

  $     $ 43     $ 385     $     $     $     $ 428  

Collectively evaluated for impairment

    818       6,950       3,599       122       122       2       11,613  

Total ending allowance balance

  $ 818     $ 6,993     $ 3,984     $ 122     $ 122     $ 2     $ 12,041  
                                                         
                                                         

Loans:

                                                       

Loans individually evaluated for impairment

  $ 1,112     $ 12,819     $ 17,673     $ 20     $ 152     $     $ 31,776  

Loans collectively evaluated for impairment

    85,064       237,317       227,936       9,990       26,164       419       586,890  

Total ending loans balance

  $ 86,176     $ 250,136     $ 245,609     $ 10,010     $ 26,316     $ 419     $ 618,666  

 

 

Impaired Loans

 

Impaired loans include restructured loans and loans on nonaccrual or classified as doubtful, whereby collection of the total amount is improbable, or loss, whereby all or a portion of the loan has been written off or a specific allowance for loss has been provided.

 

The following tables present information related to loans individually evaluated for impairment by class of loans as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015:

 

   

As of March 31, 2016

   

Three Months Ended March 31, 2016

 
   

Unpaid

Principal

Balance

   

Recorded

Investment

   

Allowance

For Loan

Losses

Allocated

   

Average

Recorded

Investment

   

Interest

Income

Recognized

   

Cash

Basis

Income

Recognized

 
   

(in thousands)

         

With No Related Allowance Recorded:

                                               

Commercial

  $ 1,176     $ 864     $     $ 987     $ 1     $ 1  

Commercial real estate:

                                               

Construction

    277       261             261       3        

Farmland

    5,726       4,125             4,194       6       5  

Nonfarm nonresidential

    9,705       6,401             7,116       248       190  

Residential real estate:

                                               

Multi-family

    2,400       2,400             1,216       30       1  

1-4 Family

    7,977       5,834             8,795       58       6  

Consumer

    40       8             14       7       8  

Agriculture

    105       77             115              

Other

                                   

Subtotal

    27,406       19,970             22,698       353       211  
                                                 

With An Allowance Recorded:

                                               

Commercial

                                   

Commercial real estate:

                                               

Construction

                                   

Farmland

                                   

Nonfarm nonresidential

    411       411       39       438       6        

Residential real estate:

                                               

Multi-family

    4,177       4,177       48       4,186       50        

1-4 Family

    1,678       1,678       377       1,684       20        

Consumer

                                   

Agriculture

                                   

Other

                                   

Subtotal

    6,266       6,266       464       6,308       76        

Total

  $ 33,672     $ 26,236     $ 464     $ 29,006     $ 429     $ 211  

 

 
14

Table Of Contents
 

 

   

As of December 31, 2015

   

Three Months Ended March 31, 2015

 
   

Unpaid

Principal

Balance

   

Recorded

Investment

   

Allowance

For Loan

Losses

Allocated

   

Average

Recorded

Investment

   

Interest

Income

Recognized

   

Cash

Basis

Income

Recognized

 
   

(in thousands)

         

With No Related Allowance Recorded:

                                               

Commercial

  $ 1,558     $ 1,112     $     $ 1,821     $     $  

Commercial real estate:

                                               

Construction

    278       262             4,019       4       1  

Farmland

    6,004       4,263             4,804       23       23  

Nonfarm nonresidential

    11,256       7,829             22,920       65        

Residential real estate:

                                               

Multi-family

    32       32             40              

1-4 Family

    14,066       11,756             14,918       134       47  

Consumer

    118       20             27              

Agriculture

    260       152             247              

Other

                      123       2       2  

Subtotal

    33,572       25,426             48,919       228       73  

With An Allowance Recorded:

                                               

Commercial

                      29              

Commercial real estate:

                                               

Construction

                                   

Farmland

                      157              

Nonfarm nonresidential

    574       465       43       8,535       6        

Residential real estate:

                                               

Multi-family

    4,195       4,195       57       4,258       47        

1-4 Family

    1,690       1,690       328       1,727       25        

Consumer

                      20              

Agriculture

                                   

Other

                                   

Subtotal

    6,459       6,350       428       14,726       78        

Total

  $ 40,031     $ 31,776     $ 428     $ 63,645     $ 306     $ 73  

 

 
15

Table Of Contents
 

 

Troubled Debt Restructuring

 

A troubled debt restructuring (TDR) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty.  The majority of the Company’s TDRs involve a reduction in interest rate, a deferral of principal for a stated period of time, or an interest only period.  All TDRs are considered impaired and the Company has allocated reserves for these loans to reflect the present value of the concessionary terms granted to the borrower.

 

The following table presents the types of TDR loan modifications by portfolio segment outstanding as of March 31, 2016 and December 31, 2015:

 

   

TDRs

Performing to

Modified Terms

   

TDRs Not

Performing to

Modified Terms

   

Total

TDRs

 
   

(in thousands)

 

March 31, 2016

                       

Commercial

                       

Rate reduction

  $     $ 68     $ 68  

Principal deferral

          439       439  

Commercial Real Estate:

                       

Construction

                       

Rate reduction

    261             261  

Farmland

                       

Principal deferral

          2,365       2,365  

Nonfarm nonresidential

                       

Rate reduction

    5,593             5,593  

Principal deferral

          607       607  

Residential Real Estate:

                       

Multi-family

                       

Rate reduction

    6,577             6,577  

1-4 Family

                       

Rate reduction

    2,436             2,436  

Total TDRs

  $ 14,867     $ 3,479     $ 18,346  

 

   

TDRs

Performing to

Modified Terms

   

TDRs Not

Performing to

Modified Terms

   

Total

TDRs

 
   

(in thousands)

 

December 31, 2015

                       

Commercial

                       

Rate reduction

  $     $ 68     $ 68  

Principal deferral

          439       439  

Commercial Real Estate:

                       

Construction

                       

Rate reduction

    262             262  

Farmland

                       

Principal deferral

          2,365       2,365  

Nonfarm nonresidential

                       

Rate reduction

    5,637       50       5,687  

Principal deferral

          622       622  

Residential Real Estate:

                       

Multi-family

                       

Rate reduction

    4,195             4,195  

1-4 Family

                       

Rate reduction

    7,346             7,346  

Total TDRs

  $ 17,440     $ 3,544     $ 20,984  

 

At March 31, 2016 and December 31, 2015, 81% and 83%, respectively, of the Company’s TDRs were performing according to their modified terms.  The Company allocated $215,000 and $179,000 in reserves to borrowers whose loan terms have been modified in TDRs as of March 31, 2016, and December 31, 2015, respectively.  The Company has committed to lend no additional amounts as of March 31, 2016 and December 31, 2015 to borrowers with outstanding loans classified as TDRs.

 

 
16

Table Of Contents
 

 

Management periodically reviews renewals/modifications of previously identified TDRs, for which there was no principal forgiveness, to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification did not contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate, the TDR classification is removed as the borrower has complied with the terms of the loan at the date of renewal/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the renewal/modification. In this instance, the TDR was originally considered a restructuring in a prior year as a result of a modification with an interest rate that was not commensurate with the risk of the underlying loan. Additionally, TDR classification can be removed in circumstances in which the Company performs a non-concessionary re-modification of the loan at terms that were considered to be at market for loans with comparable risk. Management expects the borrower will continue to perform under the re-modified terms based on the borrower’s past history of performance.

 

No TDR loan modifications occurred during the three months ended March 31, 2016 or March 31, 2015. During the first three months of 2016 and 2015, no TDRs defaulted on their restructured loan within the 12 month period following the loan modification. A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual.

 

Nonperforming Loans

 

Nonperforming loans include impaired loans not on accrual and smaller balance homogeneous loans, such as residential mortgage and consumer loans, that are collectively evaluated for impairment.

 

The following table presents the recorded investment in nonaccrual and loans past due 90 days and still on accrual by class of loan as of March 31, 2016, and December 31, 2015: 

 

   

Nonaccrual

   

Loans Past Due 90 Days

And Over Still Accruing

 
   

March 31,

2016

   

December 31,

2015

   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 
                                 

Commercial

  $ 864     $ 1,112     $     $  

Commercial Real Estate:

                               

Construction

                       

Farmland

    4,125       4,263              

Nonfarm nonresidential

    1,219       2,657              

Residential Real Estate:

                               

Multi-family

          32              

1-4 Family

    4,827       5,851              

Consumer

    7       20              

Agriculture

    77       152              

Other

                       

Total

  $ 11,119     $ 14,087     $     $  

 

The following table presents the aging of the recorded investment in past due loans as of March 31, 2016 and December 31, 2015: 

 

   

30 – 59

Days

Past Due

   

60 – 89

Days

Past Due

   

90 Days

And Over

Past Due

   

Nonaccrual

   

Total

Past Due

And

Nonaccrual

 
   

(in thousands)

 

March 31, 2016

                                       

Commercial

  $ 34     $     $     $ 864     $ 898  

Commercial Real Estate:

                                       

Construction

    128                         128  

Farmland

    244       4             4,125       4,373  

Nonfarm nonresidential

                      1,219       1,219  

Residential Real Estate:

                                       

Multi-family

                             

1-4 Family

    1,412       12             4,827       6,251  

Consumer

    11       9             7       26  

Agriculture

          37             77       114  

Other

                             

Total

  $ 1,829     $ 62     $     $ 11,119     $ 13,010  

 

 

 
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Table Of Contents
 

 

   

30 – 59

Days

Past Due

   

60 – 89

Days

Past Due

   

90 Days

And Over

Past Due

   

Nonaccrual

   

Total

Past Due

And

Nonaccrual

 
                                         
   

(in thousands)

 

December 31, 2015

                                       

Commercial

  $ 78     $     $     $ 1,112     $ 1,190  

Commercial Real Estate:

                                       

Construction

                             

Farmland

    456                   4,263       4,719  

Nonfarm nonresidential

    326                   2,657       2,983  

Residential Real Estate:

                                       

Multi-family

                      32       32  

1-4 Family

    2,225       241             5,851       8,317  

Consumer

    41                   20       61  

Agriculture

    7                   152       159  

Other

                             

Total

  $ 3,133     $ 241     $     $ 14,087     $ 17,461  

 

Credit Quality Indicators 

 

We categorize all loans into risk categories at origination based upon original underwriting. Thereafter, we categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends.  Additionally, loans are analyzed regularly through our internal and external loan review processes. Borrower relationships in excess of $500,000 are routinely analyzed through our credit administration processes which classify the loans as to credit risk. The following definitions are used for risk ratings:

 

Watch – Loans classified as watch are those loans which have experienced a potentially adverse development which necessitates increased monitoring.

 

Special Mention – Loans classified as special mention do not have all of the characteristics of substandard or doubtful loans. They have one or more deficiencies which warrant special attention and which corrective action, such as accelerated collection practices, may remedy.

 

Substandard – Loans classified as substandard are those loans with clear and defined weaknesses such as a highly leveraged position, unfavorable financial ratios, uncertain repayment sources or poor financial condition which may jeopardize the repayment of the debt as contractually agreed. They are characterized by the distinct possibility we will sustain some losses if the deficiencies are not corrected.

 

Doubtful – Loans classified as doubtful are those loans which have characteristics similar to substandard loans but with an increased risk that collection or liquidation in full is highly questionable and improbable.

 

 
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Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be “Pass” rated loans. As of March 31, 2016, and December 31, 2015, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

 

   

Pass

   

Watch

   

Special

Mention

   

Substandard

   

Doubtful

   

Total

 
   

(in thousands)

 

March 31, 2016

                                               

Commercial

  $ 81,911     $ 436     $     $ 1,396     $     $ 83,743  

Commercial Real Estate:

                                               

Construction

    29,027       5,604                         34,631  

Farmland

    62,573       4,829             5,717             73,119  

Nonfarm nonresidential

    117,964       22,017       1,317       2,469             143,767  

Residential Real Estate:

                                               

Multi-family

    32,648       6,988             3,905             43,541  

1-4 Family

    172,540       14,432       66       10,945             197,983  

Consumer

    9,356       436             137             9,929  

Agriculture

    28,049       4,523             159             32,731  

Other

    383                               383  

Total

  $ 534,451     $ 59,265     $ 1,383     $ 24,728     $     $ 619,827  

 

   

Pass

   

Watch

   

Special

Mention

   

Substandard

   

Doubtful

   

Total

 
                                                 
   

(in thousands)

 
                                                 

December 31, 2015

                                               

Commercial

  $ 81,570     $ 2,953     $     $ 1,653     $     $ 86,176  

Commercial Real Estate:

                                               

Construction

    27,603       5,289             262             33,154  

Farmland

    65,476       4,844             6,092             76,412  

Nonfarm nonresidential

    111,901       22,687       1,328       4,654             140,570  

Residential Real Estate:

                                               

Multi-family

    35,300       4,879             3,952             44,131  

1-4 Family

    164,490       17,636       67       19,285             201,478  

Consumer

    9,323       474             213             10,010  

Agriculture

    21,402       4,601             313             26,316  

Other

    419                               419  

Total

  $ 517,484     $ 63,363     $ 1,395     $ 36,424     $     $ 618,666  

 

Note 5 – Other Real Estate Owned

 

Other real estate owned (OREO) is real estate acquired as a result of foreclosure or by deed in lieu of foreclosure.  It is classified as real estate owned until such time as it is sold.  When property is acquired as a result of foreclosure or by deed in lieu of foreclosure, it is recorded at its fair market value less cost to sell.  Any write-down of the property at the time of acquisition is charged to the allowance for loan losses.  Costs incurred in order to perfect the lien prior to foreclosure may be capitalized if the fair value less the cost to sell exceeds the balance of the loan at the time of transfer to OREO. Examples of eligible costs to be capitalized are payments of delinquent property taxes to clear tax liens or payments to contractors and subcontractors to clear mechanics’ liens. Subsequent reductions in fair value are recorded as non-interest expense. 

 

To determine the fair value of OREO for smaller dollar single family homes, we consult with internal real estate sales staff and external realtors, investors, and appraisers.  If the internally evaluated market price is below our underlying investment in the property, appropriate write-downs are taken. For larger dollar residential and commercial real estate properties, we obtain a new appraisal of the subject property or have staff from our special assets group or in our centralized appraisal department evaluate the latest in-file appraisal in connection with the transfer to other real estate owned.  We typically obtain updated appraisals within five quarters of the anniversary date of ownership unless a sale is imminent. 

 

 
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The following table presents the major categories of OREO at the period-ends indicated:

 

   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 

Commercial Real Estate:

               

Construction, land development, and other land

  $ 12,507     $ 12,749  

Nonfarm nonresidential

    5,802       6,967  

Residential Real Estate:

               

1-4 Family

    440       128  
      18,749       19,844  

Valuation allowance

    (888

)

    (630

)

    $ 17,861     $ 19,214  

 

   

For the Three

Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

OREO Valuation Allowance Activity:

               

Beginning balance

  $ 630     $ 1,066  

Provision to allowance

    500       300  

Write-downs

    (242

)

    (874

)

Ending balance

  $ 888     $ 492  

 

Residential loans secured by 1-4 family residential properties in the process of foreclosure totaled $601,000 and $934,000 at March 31, 2016 and December 31, 2015, respectively.

 

Net activity relating to other real estate owned during the three months ended March 31, 2016 and 2015 is as follows:

 

   

For the Three

Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

OREO Activity

               

OREO as of January 1

  $ 19,214     $ 46,197  

Real estate acquired

    441       347  

Valuation adjustment write-downs

    (500

)

    (300

)

Net gain on sales

    55       3  

Proceeds from sales of properties

    (1,349

)

    (2,629

)

OREO as of March 31

  $ 17,861     $ 43,618  

 

OREO rental income totaled $256,000 and $357,000 for the three months ended March 31, 2016 and 2015 respectively.

 

Expenses related to other real estate owned include:

 

   

For the Three Months Ended March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

Net gain on sales

  $ (55

)

  $ (3

)

Provision to allowance

    500       300  

Operating expense

    223       436  

Total

  $ 668     $ 733  

 

 
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Table Of Contents
 

 

 Note 6 – Deposits

 

The following table shows ending deposit balances by category as of:

 

   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 

Non-interest bearing

  $ 120,302     $ 120,043  

Interest checking

    96,465       97,515  

Money market

    134,684       125,935  

Savings

    35,197       34,677  

Certificates of deposit

    478,965       499,827  

Total

  $ 865,613     $ 877,997  

 

Time deposits of $250,000 or more were $28.1 million and $28.4 million at March 31, 2016 and December 31, 2015, respectively.

 

Scheduled maturities of all time deposits at March 31, 2016 were as follows (in thousands):

 

Year 1

  $ 359,138  

Year 2

    43,553  

Year 3

    12,751  

Year 4

    35,860  

Year 5

    27,663  
    $ 478,965  

 

Note 7 – Advances from the Federal Home Loan Bank

 

Advances from the Federal Home Loan Bank were as follows:

 

   

March

31,

   

December

31,

 
   

2016

   

2015

 
   

(in thousands)

 

Monthly amortizing advances with fixed rates from 0.00% to 5.25% and maturities ranging from 2017 through 2033, averaging 2.58% at March 31, 2016 and 2.65% at December 31, 2015

  $ 2,932     $ 3,081  

 

Each advance is payable based upon the terms of agreement, with a prepayment penalty.  New advances are limited to a one year maturity or less. No prepayment penalties were incurred during 2016 or 2015. The advances are collateralized by first mortgage loans.  The borrowing capacity is based on the market value of the underlying pledged loans. At March 31, 2016, our additional borrowing capacity with the FHLB was $28.6 million. The availability of our borrowing capacity could be affected by our financial condition and the FHLB could require additional collateral or, among other things, exercise its right to deny a funding request, at its discretion.

 

 

Note 8 – Fair Values Measurement

 

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use various valuation techniques to determine fair value, including market, income and cost approaches.  There are three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets an entity has the ability to access as of the measurement date, or observable inputs.

 

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

 
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In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  When that occurs, we classify the fair value hierarchy on the lowest level of input that is significant to the fair value measurement.  We used the following methods and significant assumptions to estimate fair value.

 

Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges, if available. This valuation method is classified as Level 1 in the fair value hierarchy. For securities where quoted prices are not available, fair values are calculated on market prices of similar securities, or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Matrix pricing relies on the securities’ relationship to similarly traded securities, benchmark curves, and the benchmarking of like securities. Matrix pricing utilizes observable market inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events. In instances where broker quotes are used, these quotes are obtained from market makers or broker-dealers recognized to be market participants. This valuation method is classified as Level 2 in the fair value hierarchy. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. This valuation method is classified as Level 3 in the fair value hierarchy. Discounted cash flows are calculated using spread to swap and LIBOR curves that are updated to incorporate loss severities, volatility, credit spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

 

Impaired Loans: An impaired loan is evaluated at the time the loan is identified as impaired and is recorded at fair value less costs to sell. Fair value is measured based on the value of the collateral securing the loan and is classified as Level 3 in the fair value hierarchy. Fair value is determined using several methods. Generally, the fair value of real estate is determined based on appraisals by qualified licensed appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

 

Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. These routine adjustments are made to adjust the value of a specific property relative to comparable properties for variations in qualities such as location, size, and income production capacity relative to the subject property of the appraisal. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

 

We routinely apply an internal discount to the value of appraisals used in the fair value evaluation of our impaired loans. The deductions to the appraisal take into account changing business factors and market conditions, as well as potential value impairment in cases where our appraisal date predates a likely change in market conditions. These deductions range from 10% for routine real estate collateral to 25% for real estate that is determined (1) to have a thin trading market or (2) to be specialized collateral. This is in addition to estimated discounts for cost to sell of six to ten percent.

 

We also apply discounts to the expected fair value of collateral for impaired loans where the likely resolution involves litigation or foreclosure. Resolution of this nature generally results in receiving lower values for real estate collateral in a more aggressive sales environment. We have utilized discounts ranging from 10% to 33% in our impairment evaluations when applicable.

 

Impaired loans are evaluated quarterly for additional impairment. We obtain updated appraisals on properties securing our loans when circumstances are warranted such as at the time of renewal or when market conditions have significantly changed. This determination is made on a property-by-property basis in light of circumstances in the broader economic climate and our assessment of deterioration of real estate values in the market in which the property is located. The first stage of our assessment involves management’s inspection of the property in question. Management also engages in conversations with local real estate professionals, investors, and market participants to determine the likely marketing time and value range for the property. The second stage involves an assessment of current trends in the regional market. After thorough consideration of these factors, management will either internally evaluate fair value or order a new appraisal.

 

Other Real Estate Owned (OREO): OREO is evaluated at the time of acquisition and recorded at fair value as determined by independent appraisal or internal evaluation less cost to sell. Our quarterly evaluations of OREO for impairment are driven by property type. For smaller dollar single family homes, we consult with internal real estate sales staff and external realtors, investors, and appraisers. Based on these consultations, we determine asking prices for OREO properties we are marketing for sale. If the internally evaluated fair value is below our recorded investment in the property, appropriate write-downs are taken.

 

For larger dollar commercial real estate properties, we obtain a new appraisal of the subject property or have staff in our special assets group or centralized appraisal department evaluate the latest in-file appraisal in connection with the transfer to other real estate owned. In some of these circumstances, an appraisal is in process at quarter end, and we must make our best estimate of the fair value of the underlying collateral based on our internal evaluation of the property, review of the most recent appraisal, and discussions with the currently engaged appraiser. We generally obtain updated appraisals within five quarters of the anniversary date of ownership unless a sale is imminent.

 

 
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We routinely apply an internal discount to the value of appraisals used in the fair value evaluation of our OREO. The deductions to the appraisal take into account changing business factors and market conditions, as well as potential value impairment in cases where our appraisal date predates a likely change in market conditions. These deductions range from 10% for routine real estate collateral to 25% for real estate that is determined (1) to have a thin trading market or (2) to be specialized collateral. This is in addition to estimated discounts for cost to sell of six to ten percent.

 

Financial assets measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015 are summarized below:

 

           

Fair Value Measurements at March 31, 2016 Using

 
           

(in thousands)

 

Description

 

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Available for sale securities

                               

U.S. Government and federal agency

  $ 34,736     $     $ 34,736     $  

Agency mortgage-backed: residential

    101,362             101,362        

State and municipal

    3,337             3,337        

Corporate bonds

    2,090             2,090        

Total

  $ 141,525     $     $ 141,525     $  

 

           

Fair Value Measurements at December 31, 2015 Using

 
           

(in thousands)

 

Description

 

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Available for sale securities

                               

U.S. Government and federal agency

  $ 33,262     $     $ 33,262     $  

Agency mortgage-backed: residential

    102,662             102,662        

State and municipal

    6,861             6,861        

Corporate bonds

    2,193             2,193        

Total

  $ 144,978     $     $ 144,978     $  

 

There were no transfers between Level 1 and Level 2 during 2016 or 2015.

 

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods ended March 31, 2016 and 2015:

 

   

Other Debt

Securities

 
   

2016

   

2015

 
   

(in thousands)

 

Balances of recurring Level 3 assets at January 1

  $     $ 658  

Total gain (loss) for the period:

               

Included in other comprehensive income (loss)

          7  

Balance of recurring Level 3 assets at March 31

  $     $ 665  

 

At March 31, 2015, our other debt security valuation was determined internally by calculating discounted cash flows using the security’s coupon rate of 6.5% and an estimated current market rate of 8.0% based upon the current yield curve plus spreads that adjust for volatility, credit risk, and optionality.  We also considered the issuer’s publicly filed financial information as well as assumptions regarding the likelihood of deferrals and defaults. This security was sold during 2015.

 

 
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Table Of Contents
 

 

Financial assets measured at fair value on a non-recurring basis are summarized below: 

 

           

Fair Value Measurements at March 31, 2016 Using

 
           

(in thousands)

 
Description  

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Impaired loans:

                               

Commercial

  $     $     $     $  

Commercial real estate:

                               

Construction

                       

Farmland

                       

Nonfarm nonresidential

    91                   91  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    1,301                   1,301  

Consumer

                       

Other

                       

Other real estate owned, net:

                               

Commercial real estate:

                               

Construction

    11,914                   11,914  

Farmland

                       

Nonfarm nonresidential

    5,528                   5,528  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    419                   419  

 

           

Fair Value Measurements at December 31, 2015 Using

 
           

(in thousands)

 
Description  

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Impaired loans:

                               

Commercial

  $     $     $     $  

Commercial real estate:

                               

Construction

                       

Farmland

                       

Nonfarm nonresidential

    139                   139  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    1,362                   1,362  

Consumer

                       

Other

                       

Other real estate owned, net:

                               

Commercial real estate:

                               

Construction

    12,344                   12,344  

Farmland

                       

Nonfarm nonresidential

    6,746                   6,746  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    124                   124  

 

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $1.8 million at March 31, 2016 with a valuation allowance of $383,000, resulting in an additional provision for loan losses of $46,000 for the three months ended March 31, 2016. Impaired loans had a carrying amount of $1.9 million with a valuation allowance of $131,000, and no additional provision for the three months ended March 31, 2015. At December 31, 2015, impaired loans had a carrying amount of $1.8 million, with a valuation allowance of $337,000.

 

OREO, which is measured at the lower of carrying or fair value less estimated costs to sell, had a net carrying amount of $17.9 million as of March 31, 2016, compared with $43.6 million at March 31, 2015 and $19.2 million at December 31, 2015.  Fair value write-downs of $500,000 and $300,000 were recorded on OREO for the three months ended March 31, 2016 and 2015, respectively.

 

 
24

Table Of Contents
 

 

The following table presents qualitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2016:

 

        Valuation       Range (Weighted  
   

Fair Value

 

Technique(s)

 

Unobservable Input(s)

 

Average)

 
   

(in thousands)

                   
                           

Impaired loans – Residential real estate

  $ 1,301  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  1% - 16% (7%)  
                           

Other real estate owned – Commercial real estate

  $ 17,442  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  0% - 30% (12%)   
                           
          Income approach   Discount or capitalization rate   10%  - 20% (17%)  

 

The following table presents qualitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2015:

 

        Valuation       Range (Weighted  
   

Fair Value

 

Technique(s)

 

Unobservable Input(s)

 

Average)

 
   

(in thousands)

                   
                           

Impaired loans – Residential real estate

  $ 1,362  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  1% - 16% (7%)  
                           

Other real estate owned – Commercial real estate

  $ 19,090  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  0% - 30% (12%)  
                           
         

Income approach

 

Discount or capitalization rate

  10% - 20% (17%)  

 

Carrying amount and estimated fair values of financial instruments were as follows for the periods indicated:

 

           

Fair Value Measurements at March 31, 2016 Using

 
   

Carrying

Amount

   

Level 1

   

Level 2

   

Level 3

   

Total

 
   

(in thousands)

 

Financial assets

                                       

Cash and cash equivalents

  $ 80,306     $ 67,398     $ 12,908     $     $ 80,306  

Securities available for sale

    141,525             141,525             141,525  

Securities held to maturity

    42,011             44,683             44,683  

Federal Home Loan Bank stock

    7,323       N/A       N/A       N/A       N/A  

Loans held for sale

    113             113             113  

Loans, net

    608,487                   615,391       615,391  

Accrued interest receivable

    3,034             1,030       2,004       3,034  

Financial liabilities

                                       

Deposits

  $ 865,613     $ 120,302     $ 734,190     $     $ 854,492  

Federal Home Loan Bank advances

    2,932             2,980             2,980  

Subordinated capital notes

    3,825                   3,726       3,726  

Junior subordinated debentures

    21,000                   12,713       12,713  

Accrued interest payable

    2,936             385       2,551       2,936  

 

 
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Fair Value Measurements at December 31, 2015 Using

 
   

Carrying

Amount

   

Level 1

   

Level 2

   

Level 3

   

Total

 
   

(in thousands)

 

Financial assets

                                       

Cash and cash equivalents

  $ 93,335     $ 79,498     $ 13,837     $     $ 93,335  

Securities available for sale

    144,978             144,978             144,978  

Securities held to maturity

    42,075             44,253             44,253  

Federal Home Loan Bank stock

    7,323       N/A       N/A       N/A       N/A  

Loans held for sale

    186             186             186  

Loans, net

    606,625                   614,162       614,162  

Accrued interest receivable

    3,116             1,111       2,005       3,116  

Financial liabilities

                                       

Deposits

  $ 877,997     $ 120,043     $ 739,152     $     $ 859,195  

Federal Home Loan Bank advances

    3,081             3,076             3,076  

Subordinated capital notes

    4,050                   3,933       3,933  

Junior subordinated debentures

    21,000                   12,810       12,810  

Accrued interest payable

    2,805             422       2,383       2,805  

 

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

 

(a) Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values and are classified as either Level 1 or Level 2. Non-interest bearing deposits are Level 1 whereas interest bearing due from bank accounts and fed funds sold are Level 2.

 

(b) FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

 

(c) Loans, Net

Fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

 

(d) Loans Held for Sale

The fair value of loans held for sale is estimated based upon binding contracts and and/or quotes from third party investors resulting in a Level 2 classification.

 

(e) Deposits

The fair values disclosed for non-interest bearing deposits are, by definition, equal to the amount payable on demand at the reporting date resulting in a Level 1 classification. The carrying amounts of variable rate interest bearing deposits approximate their fair values at the reporting date resulting in a Level 2 classification.  Fair values for fixed rate interest bearing deposits are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

 

(f) Other Borrowings

The fair values of the Company’s FHLB advances are estimated using discounted cash flow analyses based on the current borrowing rates resulting in a Level 2 classification.

 

The fair values of the Company’s subordinated capital notes and junior subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

 

(g) Accrued Interest Receivable/Payable

The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the asset or liability with which the accrual is associated.

 

 
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Note 9 – Income Taxes

 

Deferred tax assets and liabilities were due to the following as of:

 

   

March

31,

   

December

31,

 
   

2016

   

2015

 
   

(in thousands)

 

Deferred tax assets:

               

Net operating loss carry-forward

  $ 38,469     $ 38,085  

Allowance for loan losses

    3,969       4,214  

Other real estate owned write-down

    6,991       7,619  

Alternative minimum tax credit carry-forward

    692       692  

Net assets from acquisitions

    671       671  

Net unrealized loss on securities

          166  

New market tax credit carry-forward

    208       208  

Nonaccrual loan interest

    525       549  

Other

    1,958       1,875  
      53,483       54,079  
                 

Deferred tax liabilities:

               

FHLB stock dividends

    928       928  

Fixed assets

    207       176  

Net unrealized gain on securities

    197        

Other

    854       865  
      2,186       1,969  

Net deferred tax assets before valuation allowance

    51,297       52,110  

Valuation allowance

    (51,297

)

    (52,110

)

Net deferred tax asset

  $     $  

 

Our estimate of our ability to realize the deferred tax asset depends on our estimate of projected future levels of taxable income. In analyzing future taxable income levels, we considered all evidence currently available, both positive and negative. Based on our analysis, we established a valuation allowance for all deferred tax assets as of December 31, 2011. The valuation allowance remains in effect as of March 31, 2016.  

 

The Company does not have any beginning and ending unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. There were no interest and penalties recorded in the income statement or accrued for the three months ended March 31, 2016 or March 31, 2015 related to unrecognized tax benefits.

 

Under Section 382 of the Internal Revenue Code, as amended (“Section 382”), the Company’s its net operating loss carryforwards (“NOLs”) and other deferred tax assets can generally be used to offset future taxable income and therefore reduce federal income tax obligations. However, the Company's ability to use its NOLs would be limited if there was an “ownership change” as defined by Section 382. This would occur if shareholders owning (or deemed to own under the tax rules) 5% or more of the Company's increase their aggregate ownership of the Company by more than 50 percentage points over a defined period of time.

 

In 2015, the Company took two measures to preserve the value of its NOLs. First, we adopted a tax benefits preservation plan designed to reduce the likelihood of an “ownership change” occurring as a result of purchases and sales of the Company's common shares. Upon adoption of plan, the Company declared a dividend of one preferred stock purchase right for each common share outstanding as of the close of business on July 10, 2015. Any shareholder or group that acquires beneficial ownership of 5% or more of the Company (an “acquiring person”) could be subject to significant dilution in its holdings if the Company's Board of Directors does not approve such acquisition. Existing shareholders holding 5% or more of the Company will not be considered acquiring persons unless they acquire additional shares, subject to certain exceptions described in the plan. In addition, the Board of Directors has the discretion to exempt certain transactions and certain persons whose acquisition of securities is determined by the Board not to jeopardize the Company's deferred tax assets. The rights will expire upon the earlier of (i) June 29, 2018, (ii) the beginning of a taxable year with respect to which the Board of Directors determines that no tax benefits may be carried forward, (iii) the repeal or amendment of Section 382 or any successor statute, if the Board of Directors determines that the plan is no longer needed to preserve the tax benefits, and (iv) certain other events as described in the plan.

 

On September 23, 2015, our shareholders approved an amendment to the Company’s articles of incorporation to further help protect the long-term value of the Company’s NOLs. The amendment provides a means to block transfers of our common shares that could result in an ownership change under Section 382. The transfer restrictions will expire on the earlier of (i) September 23, 2018, (ii) the beginning of a taxable year with respect to which the Board of Directors determines that no tax benefit may be carried forward, (iii) the repeal of Section 382 or any successor statute if our Board determines that the transfer restrictions are no longer needed to preserve the tax benefits of our NOLs, or (iv) such date as the Board otherwise determines that the transfer restrictions are no longer necessary.

 

 
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The Company and its subsidiaries are subject to U.S. federal income tax and the Company is subject to income tax in the Commonwealth of Kentucky. The Company is no longer subject to examination by taxing authorities for years before 2012.

 

Note 10 – Stock Plans and Stock Based Compensation 

 

The Company has two stock incentive plans. The Porter Bancorp, Inc. 2006 Stock Incentive Plan (“2006 Employee Plan”) permits the issuance of up to 1,563,050 common shares upon the grant of stock awards.  As of March 31, 2016, the Company had issued and outstanding 917,541 unvested shares net of forfeitures and vesting under the stock incentive plan. Shares issued under the plan vest annually on the anniversary date of the grant over three to ten years. The Company had 307,156 shares remaining available for issue under the 2006 Employee Plan when it expired by its terms on February 23, 2013, the tenth anniversary of its adoption.  

 

The Porter Bancorp, Inc. 2006 Non-Employee Directors Stock Ownership Incentive Plan (“2006 Director Plan”) permits the issuance of up to 700,000 shares of the Company’s voting common stock upon the grant of stock awards. The 2006 Director Plan awards restricted shares having a fair market value of $25,000 annually to each non-employee director. Unvested shares are granted automatically under the plan at fair market value on the date of grant and vest on December 31 in the year of grant. To date during 2016, the Company has not issued any shares to non-employee directors. At March 31, 2016, 185,774 shares remained available for issuance under this plan.

 

The Board of Directors is submitting a proposal to adopt a new 2016 Omnibus Equity Compensation Plan for shareholder approval at the Company’s 2016 annual meeting on May 25, 2016. For administrative convenience, the proposal would authorize a single stock-based incentive plan authorizing a total of 489,366 shares for future equity awards to both employees and directors of the Company and the Bank. This number represents the combined number of shares previously authorized by shareholders and available for issuance under the two 2006 Plans. If the 2016 Plan is approved, the 2006 Director Plan would be terminated.

 

On December 4, 2014, the U.S. Treasury sold our Series A preferred shares at a discount to face amount. As a result, restricted shares previously granted to senior executives became subject to permanent transfer restrictions.  On March 25, 2015, the Compensation Committee modified the equity compensation arrangements with our four named executive officers to restore the incentive that was intended by including equity grants in their employment agreements.  The Compensation Committee and our four named executive officers mutually agreed to terminate 538,479 restricted shares that were subject to permanent restrictions on transfer.  We then awarded 800,000 new service-based restricted shares to those executive officers. The new awards are accounted for as a modification and vest over four years, with one-third of the shares vesting on each of the second, third and fourth anniversaries of the date of grant.  The modification resulted in incremental compensation expense of approximately $233,000, which is being amortized in accordance with the vesting schedule.

 

The Company recorded $73,000 and $49,000 of stock-based compensation during the first three months of 2016 and 2015, respectively, to salaries and employee benefits. We expect substantially all of the unvested shares outstanding at the end of the period will vest according to the vesting schedule. No deferred tax benefit was recognized related to this expense for either period.

 

The following table summarizes unvested share activity as of and for the periods indicated for the Stock Incentive Plan:

 

   

Three Months Ended

   

Twelve Months Ended

 
   

March 31, 2016

   

December 31, 2015

 
           

Weighted

           

Weighted

 
           

Average

           

Average

 
           

Grant

           

Grant

 
   

Shares

   

Price

   

Shares

   

Price

 

Outstanding, beginning

    922,419     $ 0.96       770,440     $ 1.33  

Granted

                800,000       0.89  

Vested

    (1,522

)

    21.87       (165,185

)

    1.50  

Terminated

                (450,994

)

    1.25  

Forfeited

    (3,356

)

    1.35       (31,842

)

    1.13  

Outstanding, ending

    917,541     $ 0.93       922,419     $ 0.96  

 

 
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The following table summarizes unvested share activity as of and for the periods indicated for the Non-Employee Directors Stock Ownership Incentive Plan:

 

   

Three Months Ended

   

Twelve Months Ended

 
   

March 31, 2016

   

December 31, 2015

 
           

Weighted

           

Weighted

 
           

Average

           

Average

 
           

Grant

           

Grant

 
   

Shares

   

Price

   

Shares

   

Price

 

Outstanding, beginning

        $       5,052     $ 1.65  

Granted

                115,740       1.08  

Vested

                (120,792

)

    1.10  

Forfeited

                       

Outstanding, ending

        $           $  

 

 

 

Unrecognized stock based compensation expense related to unvested shares for the remainder of 2016 and beyond is estimated as follows (in thousands):

 

April 2016 – December 2016

  $ 175  

2017

    156  

2018

    149  

2019 & thereafter

     

 

 

Note 11 – Earnings (Loss) per Share

 

The factors used in the basic and diluted earnings per share computations follow:

 

   

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 
   

(in thousands, except

share and per share data)

 
                 

Net income

  $ 1,480     $ 594  

Less:

               

Earnings allocated to unvested shares

    51       21  

Earnings attributable to participating preferred shares

          164  

Net income attributable to common shareholders, basic and diluted

  $ 1,429     $ 409  
                 

Basic

               

Weighted average common shares including unvested common shares outstanding

    26,945,307       25,419,523  

Less:

               

Weighted average unvested common shares

    919,980       918,393  

Weighted average Series B preferred shares

          2,702,400  

Weighted average Series D preferred shares

          4,305,333  

Weighted average common shares outstanding

    26,025,327       17,493,397  

Basic income per common share

  $ 0.05     $ 0.02  
                 

Diluted

               

Add: Dilutive effects of assumed exercises of common stock warrants

           

Weighted average common shares and potential common shares

    26,025,327       17,493,397  

Diluted income per common share

  $ 0.05     $ 0.02  

 

 
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Table Of Contents
 

 

 

The Company had no outstanding stock options at March 31, 2016 or 2015.  A warrant for the purchase of 330,561 shares of the Company’s common stock at an exercise price of $15.88 was outstanding at March 31, 2016 and 2015 but was not included in the diluted EPS computation as inclusion would have been anti-dilutive. Additionally, warrants for the purchase of 650,544 shares of non-voting common stock at an exercise price of $10.95 per share were outstanding at March 31, 2015, but were not included in the diluted EPS computation as inclusion would have been anti-dilutive. The 650,544 warrants outstanding as of March 31, 2015 expired in September 2015.

 

Note 12 – Capital Requirements and Restrictions on Retained Earnings

 

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

 

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective for the Company and Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The final rules allowed banks and their holding companies with less than $250 billion in assets a one-time opportunity to opt-out of a requirement to include unrealized gains and losses in accumulated other comprehensive income in their capital calculation. The Company and the Bank opted out of this requirement.

 

In its Consent Order with the FDIC and the KDFI, the Bank has agreed to maintain a minimum Tier 1 leverage ratio of 9% and a minimum total risk based capital ratio of 12%. The Consent Order is described in greater detail in Note 2 – “Going Concern and Future Plans”. As of December 31, 2015, the Bank’s Tier 1 leverage ratio and total risk based capital ratio were both less than the minimum capital ratios required by the Consent Order. The Bank cannot be considered well-capitalized while subject to the Consent Order. We are also restricted from accepting, renewing, or rolling-over brokered deposits without the prior receipt of a waiver on a case-by-case basis from our regulators.

 

On September 21, 2011, we entered into a Written Agreement with the Federal Reserve Bank of St. Louis. In the Agreement, we made formal commitments to use our financial and management resources to serve as a source of strength for the Bank and to assist the Bank in addressing weaknesses identified by the FDIC and the KDFI, to pay no dividends without prior written approval, to pay no interest or principal on subordinated debentures or trust preferred securities without prior written approval, and to submit an acceptable plan to maintain sufficient capital.

 

The following table shows the ratios and amounts of Common Equity Tier 1, Tier 1 capital and total capital to risk-adjusted assets and the leverage ratios for Porter Bancorp, Inc. and the Bank at the dates indicated (dollars in thousands):

 

   

Actual

   

For Capital Adequacy Purposes

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 

As of March 31, 2016:

                               

Total risk-based capital (to risk-weighted assets)

                               

Consolidated

  $ 69,981       10.46

%

  $ 53,537       8.00

%

Bank

    71,108       10.64       53,479       8.00  

Total common equity Tier I risk-based capital (to risk-weighted assets)

                               

Consolidated

    34,883       5.21       30,114       4.50  

Bank

    59,790       8.94       30,082       4.50  

Tier I capital (to risk-weighted assets)

                               

Consolidated

    47,068       7.03       40,152       6.00  

Bank

    59,790       8.94       40,109       6.00  

Tier I capital (to average assets)

                               

Consolidated

    47,068       5.03       37,434       4.00  

Bank

    59,790       6.39       37,406       4.00  

 

 
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Actual

   

For Capital Adequacy Purposes

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 

As of December 31, 2015:

                               

Total risk-based capital (to risk-weighted assets)

                               

Consolidated

  $ 68,530       10.46

%

  $ 52,436       8.00

%

Bank

    69,250       10.58       52,347       8.00  

Total common equity Tier 1risk-based capital (to risk weighted assets)

                               

Consolidated

  $ 33,368       5.09

%

  $ 29,495       4.50

%

Bank

    57,873       8.84       29,445       4.50  

Tier I capital (to risk-weighted assets)

                               

Consolidated

    45,174       6.89       39,327       6.00  

Bank

    57,873       8.84       39,260       6.00  

Tier I capital (to average assets)

                               

Consolidated

    45,174       4.74       38,131       4.00  

Bank

    57,873       6.08       38,085       4.00  

 

The Consent Order requires the Bank to achieve the minimum capital ratios presented below:

 

   

Actual as of March 31, 2016

   

Ratio Required by Consent Order

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 
                                 

Total capital to risk-weighted assets

  $ 71,108       10.64

%

  $ 80,218       12.00

%

Tier I capital to average assets

    59,790       6.39       84,164       9.00  

 

Bank regulatory agencies can exercise discretion when an institution does not meet the terms of a Consent Order. Based on individual circumstances, the agencies may issue mandatory directives, impose monetary penalties, initiate changes in management, or take more serious adverse actions.

 

Kentucky banking laws limit the amount of dividends that may be paid to a holding company by its subsidiary banks without prior approval. These laws limit the amount of dividends that may be paid in any calendar year to current year’s net income, as defined in the laws, combined with the retained net income of the preceding two years, less any dividends declared during those periods. The Bank has agreed with its primary regulators to obtain their written consent prior to declaring or paying any future dividends. As a practical matter, the Bank cannot pay dividends to the Company until the Consent Order is satisfied.

 

Note 13 – Contingencies

 

We are defendants in various legal proceedings. Litigation is subject to inherent uncertainties and unfavorable rulings could occur. We record contingent liabilities resulting from claims against us when a loss is assessed to be probable and the amount of the loss is reasonably estimable. Assessing probability of loss and estimating probable losses requires analysis of multiple factors, including in some cases judgments about the potential actions of third party claimants and courts. Recorded contingent liabilities are based on the best information available and actual losses in any future period are inherently uncertain.   Currently, we have accrued approximately $2.2 million related to ongoing litigation matters for which we believe liability is probable and reasonably estimable. Accruals are not made in cases where liability is not probable or the amount cannot be reasonably estimated. We disclose legal matters when we believe liability is reasonably possible and may be material to our consolidated financial statements.

 

Signature Point Litigation. On June 18, 2010, three real estate development companies filed suit in Kentucky state court against the Bank and Managed Assets of Kentucky (“MAKY”). Signature Point Condominiums LLC, et al. v. PBI Bank, et al., Jefferson Circuit Court, Case No 10-CI-04295. On July 16, 2013, a jury in Louisville, Kentucky returned a verdict against the Bank, awarding the plaintiffs compensatory damages of $1,515,000 and punitive damages of $5,500,000. The case arose from a settlement in which the Bank agreed to release the plaintiffs and guarantors from obligations of more than $26 million related to a real estate project in Louisville. The plaintiffs were granted a right of first refusal to repurchase a tract of land within the project. In exchange, the plaintiffs conveyed the real estate securing the loans to the Bank. After plaintiffs declined to exercise their right of first refusal, the Bank sold the tract to the third party. Plaintiffs alleged the Bank had knowledge of the third party offer before the conveyance of the land by the Plaintiffs to the Bank. Plaintiffs asserted claims of fraud, breach of fiduciary duty, breach of the duty of good faith and fair dealing, tortious interference with prospective business advantage and conspiracy to commit fraud, negligence, and conspiracy against the Bank.

 

 
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After conferring with its legal advisors, the Bank believes the findings and damages are excessive and contrary to law, and that it has meritorious grounds on which it has moved to appeal. The Bank’s Notice of Appeal was filed on October 25, 2013. After a number of procedural issues were resolved, the Bank filed its appellate brief on September 30, 2014. Appellee’s brief was filed on December 1, 2014. The Appellate Court heard oral arguments on November 16, 2015. We await the Appellate Court’s ruling. We will continue to defend this matter vigorously.

 

In accordance with the guidance provided in ASC 450-20-25, and after consultation with its legal counsel engaged for the appeal of the verdict, the Company concluded that it was not probable the full amount of the compensatory damages awarded by the jury would be overturned. Therefore, a liability was accrued for the full $1.5 million of compensatory damages awarded, plus statutory interest. After conferring with its legal counsel for the appeal, the Company concluded that the jury verdict for punitive damages was contrary to law, unsupported, excessive, and otherwise inappropriate. Based on this advice, the Company concluded it was probable that the verdict amount for $5.5 million in punitive damages would be overturned by the appeals court, and therefore it was not probable that the $5.5 million in punitive damages would become an actual liability. The ultimate outcome of this self-insured matter could have a material adverse effect on our financial condition, results of operations or cash flows.

 

AIT Laboratories Employee Stock Ownership Plan. On August 29, 2014, the United States Department of Labor (“DOL”) filed a lawsuit against the Bank and Michael A. Evans in the U.S. District Court for the Southern District of Indiana. Thomas E. Perez, Secretary of the United States Department of Labor v. PBI Bank, Inc. and Michael A. Evans (Case No. 1:14-CV-01429-SEB-MJD). The complaint alleges that in 2009, the Bank, in the capacity of trustee for the AIT Laboratories Employee Stock Ownership Plan, authorized the alleged imprudent and disloyal purchase of the stock of AIT Holdings, Inc. in 2009 for $90 million, a price allegedly far in excess of the stock’s fair market value. The Bank's responsive pleading was filed on November 4, 2014, disputing the material factual allegations that have been made by the DOL. A settlement conference was held November 19, 2015, at which the parties agreed to the terms of a settlement subject to final documentation. The settlement of this litigation is not expected to materially exceed amounts accrued or to have a material adverse effect on the Company’s financial condition or results of operation.

 

United States Department of Justice Investigation. On October 17, 2014, the United States Department of Justice (the “DOJ”) notified the Bank that the Bank was the subject of an investigation into possible violations of federal laws, including, among other things, possible violations related to false bank entries, bank fraud and securities fraud.  The investigation concerns allegations that Bank personnel engaged in practices intended to delay or avoid disclosure of the Bank’s asset quality at the time of and following the United States Treasury’s purchase of Preferred Shares from the Company in November 2008.  The Bank will respond to and cooperate with any requests for information from DOJ. At this time the investigation is ongoing, and DOJ has made no determination whether to pursue any action in the matter.

 

Note 14Subsequent Events 

 

On April 15, 2016, the Company completed a private placement of common stock to accredited investors. In the transaction, the Company issued 2.9 million common shares and 1.1 million non-voting common shares resulting in total proceeds of $5.0 million. Approximately $2.8 million of the proceeds were directed by investors to make interest payments and bring current the Company’s trust preferred securities which had been in deferral since 2011. The balance of the proceeds will be used for general corporate purposes and to support the Bank.

 

Among the accredited investors participating in the transaction were John T. Taylor, our CEO, and Directors Bradford T. Ray and James M. Parsons. After the transaction, the Company had issued and outstanding 22,986,177 common shares and 7,958,000 non-voting common shares.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This item analyzes our financial condition, change in financial condition and results of operations. It should be read in conjunction with the unaudited consolidated financial statements and accompanying notes presented in Part I, Item 1 of this report.

 

Cautionary Note Regarding Forward-Looking Statements

 

This report contains statements about the future expectations, activities and events that constitute forward-looking statements. Forward-looking statements express our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account information currently available to us. These statements are not statements of historical fact. The words “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “plan,” “strive” or similar words, or the negatives of these words, identify forward-looking statements.

 

Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we expressed or implied in any forward-looking statements. These risks and uncertainties can be difficult to predict and may be out of our control. Factors that could contribute to differences in our results include, but are not limited to the following:

 

 

Our inability to increase our capital to the levels required by our agreements with bank regulators could have a material adverse effect on our business.

 

 

A significant percentage of our loan portfolio is comprised of non-owner occupied commercial real estate loans, real estate construction and development loans, and multi-family residential real estate loans, all of which carry a higher degree of risk.

 

 

We continue to hold and acquire a significant amount of other real estate owned ("OREO") properties, which could increase operating expenses and result in future losses.

 

 

Our decisions regarding credit risk may not be accurate, and our allowance for loan losses may not be sufficient to cover actual losses.

 

 

Our ability to pay cash dividends on our common and preferred shares and pay interest on the junior subordinated debentures that relate to our trust preferred securities is currently restricted. Our inability to resume paying interest on our trust preferred securities could adversely affect our common and preferred shareholders.

 

 

While we believe our provision for legal contingencies is adequate, the outcome of legal proceedings is difficult to predict and we may settle legal claims or be subject to judgments for amounts that exceed our estimates.

 

We also refer you to Part II, Item 1A – Risk Factors in this report and to the risks identified and the cautionary statements discussed in greater detail in our December 31, 2015 Annual Report on Form 10-K.

 

Forward-looking statements are not guarantees of performance or results. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. The Company believes it has chosen these assumptions or bases in good faith and they are reasonable. We caution you however, forward looking statements relying upon such assumptions or bases almost always vary from actual results, and the differences between those statements and actual results can be material. The forward-looking statements included in this report speak only as of the date of the report.  We have no duty, and do not intend to, update these statements unless applicable laws require us to do so.

 

Overview

 

Porter Bancorp, Inc. (the “Company”) is a bank holding company headquartered in Louisville, Kentucky. Our wholly owned subsidiary PBI Bank (“the Bank”) is the tenth largest bank domiciled in the Commonwealth of Kentucky based on total assets. We operate banking offices in twelve counties in Kentucky. Our markets include metropolitan Louisville in Jefferson County and the surrounding counties of Henry and Bullitt. We serve south central Kentucky and southern Kentucky from banking offices in Butler, Green, Hart, Edmonson, Barren, Warren, Ohio, and Daviess Counties. We also have an office in Lexington, the second largest city in Kentucky. The Bank is a community bank with a wide range of commercial and personal banking products. As of March 31, 2016, we had total assets of $938.2 million, total loans of $619.8 million, total deposits of $865.6 million and stockholders’ equity of $34.6 million.

 

The Company reported net income of $1.5 million for the three months ended March 31, 2016, compared with $594,000 for the first quarter of 2015.  After deductions for earnings allocated to participating securities, net income attributable to common shareholders was $1.4 million for the three months ended March 31, 2016, compared with $409,000 for the three months ended March 31, 2015. Basic and diluted net income per common share were $0.05 for the three months ended March 31, 2016 compared with $0.02 for the three months ended March 31, 2015.

 

 
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We note the following significant items during the three months ended March 31, 2016:

 

 

We recorded negative provision for loan losses expense of $550,000 in the first quarter of 2016, compared to no provision for loan losses expense in the first quarter of 2015, because of declining historical loss rates, improvements in asset quality, and management’s assessment of risk in the loan portfolio. Net loan charge-offs were $151,000 for the first quarter of 2016, compared to $767,000 for the first quarter of 2015. In the following paragraphs we discuss our improving trends in non-performing loans, past due loans, and loan risk categories during the period, the factors that led to the negative provision expense.

 

 

Non-performing loans decreased $3.0 million to $11.1 million at March 31, 2016, compared with $14.1 million at December 31, 2015. The decrease in non-performing loans was primarily due to $2.7 million in paydowns, as well as a decrease in loans moved to nonaccrual during the quarter compared to the previous quarter.

 

 

Loans past due 30-59 days decreased from $3.1 million at December 31, 2015 to $1.8 million at March 31, 2016, and loans past due 60-89 days decreased from $241,000 at December 31, 2015 to $62,000 at March 31, 2016. Total loans past due and nonaccrual loans decreased to $13.0 million at March 31, 2016, from $17.5 million at December 31, 2015.

 

 

All loan risk categories (other than pass loans) have decreased since December 31, 2015. Pass loans represent 86.2% of the portfolio at March 31, 2016, compared to 83.6% at December 31, 2015. During the three months ended March 31, 2016, the pass category increased approximately $17.0 million, the watch category declined approximately $4.1 million, the special mention category declined approximately $12,000, and the substandard category declined approximately $11.7 million. The $11.7 million decrease in loans classified as substandard was primarily driven by $5.8 million in principal payments received and $6.3 million in loans upgraded from substandard during the three months ended March 31, 2016.

 

 

Foreclosed properties were $17.9 million at March 31, 2016, compared with $19.2 million at December 31, 2015, and $43.6 million at March 31, 2015.  During the first three months of 2016, the Company acquired $441,000 and sold $1.3 million of OREO. We incurred OREO losses totaling $445,000 in the first quarter of 2016 compared to $297,000 in the first quarter of 2015, reflecting gains and losses on sales and fair value write-downs for reductions in listing prices for certain properties and updated appraisals.

 

 

Our ratio of non-performing assets to total assets decreased to 3.09% at March 31, 2016, compared with 3.51% at December 31, 2015, and 7.94% at March 31, 2015.

 

 

Net interest margin increased 32 basis points to 3.53% in the first three months of 2016 compared with 3.21% in the first three months of 2015. The increase in margin between periods was due to an increase in the yield on earning assets from 4.03% for the first three months of 2015 to 4.23% for the first three months of 2016, coupled with a decrease in the cost of interest bearing liabilities from 0.91% in the first quarter of 2015 to 0.79% in the first quarter of 2016.

 

 

Average loans receivable declined approximately $22.9 million or 3.6% to 620.1 million for the quarter ended March 31, 2016, compared with $643.0 million for the first quarter of 2015. This resulted in an in interest revenue volume decline of approximately $282,000 which was offset by interest recoveries and rate improvements aggregating $409,000 for the quarter ended March 31, 2016, compared with the first quarter of 2015. The decrease in the cost of interest bearing liabilities was primarily driven by the continued repricing of certificates of deposit at lower rates and the declining volume of certificates of deposit.

 

 

Non-interest income decreased $1.3 million to $1.4 million for the first quarter of 2016, compared with $2.7 million for the first quarter of 2015. The decrease was driven primarily by gains on the sales of securities totaling $203,000 in the first quarter of 2016, compared to $1.5 million in the first quarter of 2015. Non-interest expense decreased $1.3 million to $8.1 million for the first quarter of 2016 compared with $9.4 million for the first quarter of 2015, primarily due to professional fees totaling $385,000 in the first quarter of 2016, compared to $979,000 in the first quarter of 2015 as well as lower loan collection expenses.

 

 

Deposits decreased 1.4% to $865.6 million at March 31, 2016, compared with $878.0 million at December 31, 2015. Certificate of deposit balances decreased $20.9 million during the first three months of 2016 to $479.0 million at March 31, 2016, from $499.8 million at December 31, 2015. Money market deposits increased 6.9% at March 31, 2016 compared with December 31, 2015.

 

 
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Going Concern Considerations and Future Plans

 

As described in Note 2 – “Going Concern Considerations and Future Plans,” our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future.

 

For the three months ended March 31, 2016, we reported net income of $1.5 million compared with net loss of $3.2 million and $11.2 million for the years ended December 31, 2015 and 2014, respectively. Our financial performance has been negatively impacted by the Bank’s elevated level of non-performing assets, although the impact has diminished as we have substantially reduced our non-performing assets during recent periods. Non-performing loans were 1.79%, 2.28%, and 7.57% of total loans at March 31, 2016, December 31, 2015, and December 31, 2014, respectively. Non-performing assets were 3.09%, 3.51%, and 9.19% of total assets at March 31, 2016, December 31, 2015, and December 31, 2014, respectively. See “Analysis of Financial Condition,” below.

 

In the fourth quarter of 2011 we began deferring interest payable on the junior subordinated debentures held by our trust subsidiaries, requiring our trust subsidiaries to defer distributions on our trust preferred securities held by investors. On April 15, 2016, we completed the private placement of 2.9 million common shares and 1.1 million non-voting common shares to accredited investors resulting in total proceeds of $5.0 million. The investors in the private placement directed a portion of proceeds to pay all deferred interest payments, bringing our interest payments current through the second quarter of 2016. The remaining proceeds totaled approximately $2.2 million and will be used for general corporate purposes and to support the Bank. 

 

We continue to be involved in various legal proceedings. We dispute the material factual allegations made against us, and after conferring with our legal advisors, we believe we have meritorious grounds on which to prevail. If we do not prevail, the ultimate outcome of any one of these matters could have a material adverse effect on our financial condition, results of operations, or cash flows. These matters are more fully described in Note 13 – “Contingencies”.

 

Our Consent Order with the FDIC and KDFI requires the Bank to maintain a minimum Tier 1 leverage ratio of 9% and a minimum total risk based capital ratio of 12%. As of March 31, 2016, the Bank’s Tier 1 leverage ratio and total risk based capital ratio were 6.39% and 10.64%, respectively, both less than the minimum capital ratios required by the Consent Order. If the Bank should be unable to reach the required capital levels, and if directed in writing by the FDIC, the Consent Order requires the Bank to develop, adopt and implement a written plan to sell or merge itself into another federally insured financial institution or otherwise obtain a capital investment into the Bank sufficient to recapitalize the Bank. The Bank has not been directed by the FDIC to implement such a plan.

 

In order to meet the 9.0% Tier 1 leverage ratio and 12.0% total risk based capital ratio requirements of the Consent Order, the Board of Directors and management are continuing to evaluate and implement strategies to achieve the following objectives:

 

 

Continuing to increase capital through the issuance of senior debt, subordinated debt, and equity securities.
 

Continuing to operate the Company and Bank in a safe and sound manner.  We have reduced our lending concentrations and the size of our balance sheet while continuing to remediate non-performing loans.

 

Executing on the sale of OREO and reinvestment in quality income producing assets.

 

Continuing to improve our internal processes and procedures, distribution of labor, and work-flow to ensure we have adequately and appropriately deployed resources in an efficient manner in the current environment.

  

Bank regulatory agencies can exercise discretion when an institution does not meet the terms of a consent order. Based on individual circumstances, the agencies may issue mandatory directives, impose monetary penalties, initiate changes in management, or take more serious adverse actions.

 

The Consent Order requires the Bank to obtain the written consent of both agencies before declaring or paying any future dividends to the Company, which are its principal source of revenue. Since the Bank is unlikely to be in a position to pay dividends to the Company until the Consent Order is satisfied, cash inflows for the Company are limited to the issuance of new debt or the issuance of capital securities. The Company’s liquid assets were $764,000 at March 31, 2016 and were increased by approximately $2.2 million after the sale of common shares and non-voting common shares on April 15, 2016. Ongoing operating expenses of the Company are forecast at approximately $1.0 million for the next twelve months.

 

Our consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.

 

 

Application of Critical Accounting Policies

 

We continually review our accounting policies and financial information disclosures. Our more significant accounting policies that require the use of estimates and judgments in preparing the financial statements are summarized in “Application of Critical Accounting Policies” in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation of our Annual Report on Form 10-K for the calendar year ended December 31, 2015. Management has discussed the development, selection, and application of our critical accounting policies with our Audit Committee. During the first three months of 2016, there were no material changes in the critical accounting policies and assumptions.

 

 
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Results of Operations

 

The following table summarizes components of income and expense and the change in those components for the three months ended March 31, 2016, compared with the same period of 2015:

 

   

For the Three Months

   

Change from

 
   

Ended March 31,

   

Prior Period

 
   

2016

   

2015

   

Amount

   

Percent

 
   

(dollars in thousands)

 
                                 

Gross interest income

  $ 9,185     $ 9,203     $ (18

)

    (0.2

)%

Gross interest expense

    1,534       1,913       (379

)

    (19.8

)

Net interest income

    7,651       7,290       361       5.0  

Provision (negative provision) for loan losses

    (550

)

          (550

)

    100.0  

Non-interest income

    1,391       2,696       (1,305

)

    (48.4

)

Non-interest expense

    8,091       9,392       (1,301

)

    (13.9

)

Net income before taxes

    1,501       594       907       152.7  

Income tax expense

    21             21       100.0  

Net income

    1,480       594       886       149.2  

 

Net income for the three months ended March 31, 2016 totaled $1.5 million, compared with $594,000 for the comparable period of 2015. Net interest income increased $361,000 from the 2015 first quarter as a result of a decrease in earning assets, offset by an increase in net interest margin. Net interest margin increased 32 basis points to 3.53% in the first three months of 2016 compared with 3.21% in the first three months of 2015. The increase in margin between periods was due to an increase in the yield on earning assets from 4.03% for the first three months of 2015 to 4.23% for the first three months of 2016, coupled with a decrease in the cost of interest bearing liabilities from 0.91% in the first quarter of 2015 to 0.79% in the first quarter of 2016. Average earning assets decreased from $936.0 million for the first quarter of 2015 to $881.6 for the first quarter of 2016. Non-interest income decreased by $1.3 million to $1.4 million from $2.7 million in the first quarter of 2015 primarily due to a decrease in gains on sales of securities of $1.3 million. Non-interest expense decreased from $9.4 million in the first quarter of 2015 to $8.1 million in the first quarter of 2016 primarily due to decreased professional fees of $594,000, a $201,000 decline in loan collection expenses, and a decline in other expenses.

 

Net Interest Income – Our net interest income was $7.7 million for the three months ended March 31, 2016, an increase of $361,000, or 5.0%, compared with $7.3 million for the same period in 2015.  Net interest spread and margin were 3.44% and 3.53%, respectively, for the first quarter of 2016, compared with 3.12% and 3.21%, respectively, for the first quarter of 2015. Net average non-accrual loans were $13.1 million and $43.6 million for the first quarters of 2016 and 2015, respectively.

 

Average loans receivable declined approximately $22.9 million for the first quarter of 2016 compared with the first quarter of 2015.  This resulted in an in interest revenue volume decline of approximately $282,000 which was offset by interest recoveries and rate improvements aggregating $409,000 for the quarter ended March 31, 2016 compared with the prior year period. Interest foregone on non-accrual loans totaled $215,000 in the first quarter of 2016, compared with $240,000 in the fourth quarter of 2015, and $601,000 in the first quarter of 2015.

 

Net interest margin increased 32 basis points from our margin of 3.21% in the prior year first quarter to 3.53% for the first quarter of 2016.  The yield on earning assets increased 20 basis points and rates paid on interest-bearing liabilities declined 12 basis points from the first quarter of 2015. The reduction in the cost of interest bearing liabilities was primarily driven by declines in the average rates paid on and volume declines in certificates of deposit between periods.

 

 
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Average Balance Sheets

 

The following table presents the average balance sheets for the three month periods ended March 31, 2016 and 2015, along with the related calculations of tax-equivalent net interest income, net interest margin and net interest spread for the related periods.

 

   

Three Months Ended March 31,

 
   

2016

   

2015

 
   

Average

Balance

   

Interest

Earned/Paid

   

Average

Yield/Cost

   

Average

Balance

   

Interest

Earned/Paid

   

Average

Yield/Cost

 
   

(dollars in thousands)

 

ASSETS

                                               

Interest-earning assets:

                                               

Loan receivables (1)(2)

  $ 620,077     $ 7,882       5.11

%

  $ 642,959     $ 7,755       4.89

%

Securities

                                               

Taxable

    161,459       989       2.46       178,723       1,126       2.56  

Tax-exempt (3)

    22,052       164       4.60       26,756       203       4.73  

FHLB stock

    7,323       74       4.06       7,323       74       4.10  

Federal funds sold and other

    70,724       76       0.43       80,276       45       0.23  

Total interest-earning assets

    881,635       9,185       4.23

%

    936,037       9,203       4.03

%

Less: Allowance for loan losses

    (12,033

)

                    (19,264

)

               

Non-interest earning assets

    67,776                       94,788                  

Total assets

  $ 937,378                     $ 1,011,561                  
                                                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

                                               

Interest-bearing liabilities:

                                               

Certificates of deposit and other time deposits

  $ 488,523     $ 1,069       0.88

%

  $ 588,907     $ 1,496       1.03

%

NOW and money market deposits

    228,226       223       0.39       194,129       176       0.37  

Savings accounts

    34,656       16       0.19       36,456       20       0.22  

Repurchase agreements

                      1,029              

FHLB advances

    2,985       19       2.56       3,954       27       2.77  

Junior subordinated debentures

    25,048       207       3.32       29,948       194       2.63  

Total interest-bearing liabilities

    779,438       1,534       0.79

%

    854,423       1,913       0.91

%

                                                 

Non-interest-bearing liabilities:

                                               

Non-interest-bearing deposits

    113,720                       112,206                  

Other liabilities

    10,674                       10,961                  

Total liabilities

    903,832                       977,590                  

Stockholders’ equity

    33,546                       33,971                  

Total liabilities and stockholders’ equity

  $ 937,378                     $ 1,011,561                  
                                                 

Net interest income

          $ 7,651                     $ 7,290          
                                                 

Net interest spread

                    3.44

%

                    3.12

%

                                                 

Net interest margin

                    3.53

%

                    3.21

%

 

 

(1)

Includes loan fees in both interest income and the calculation of yield on loans.

(2)

Calculations include non-accruing loans averaging $13.1 million and $43.6 million, respectively, in average loan amounts outstanding.

(3)

Taxable equivalent yields are calculated assuming a 35% federal income tax rate.

 

 
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Rate/Volume Analysis

 

The table below sets forth certain information regarding changes in interest income and interest expense for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate (changes in rate multiplied by old volume); (2) changes in volume (changes in volume multiplied by old rate); and (3) changes in rate-volume (change in rate multiplied by change in volume). Changes in rate-volume are proportionately allocated between rate and volume variance.

 

   

Three Months Ended March 31,

2016 vs. 2015

 
   

Increase (decrease)

due to change in

   

Net

 
   

Rate

   

Volume

    Change  
   

(in thousands)

 

Interest-earning assets:

                       

Loan receivables

  $ 409     $ (282

)

  $ 127  

Securities

    (37

)

    (139

)

    (176

)

FHLB stock

                 

Federal funds sold and other

    37       (6

)

    31  

Total increase (decrease) in interest income

    409       (427

)

    (18

)

                         

Interest-bearing liabilities:

                       

Certificates of deposit and other time deposits

    (191

)

    (236

)

    (427

)

NOW and money market accounts

    15       32       47  

Savings accounts

    (3

)

    (1

)

    (4

)

Federal funds purchased and repurchased agreements

                 

FHLB advances

    (2

)

    (6

)

    (8

)

Junior subordinated debentures

    48       (35

)

    13  

Total decrease in interest expense

    (133

)

    (246

)

    (379

)

Increase (decrease) in net interest income

  $ 542     $ (181

)

  $ 361  

 

Non-Interest Income – The following table presents the major categories of non-interest income for the three months ended March 31, 2016 and 2015:

 

   

For the Three Months

 
   

Ended March 31,

 
   

2016

   

2015

 
   

(in thousands)

 
                 

Service charges on deposit accounts

  $ 429     $ 409  

Bank card interchange fees

    202       203  

Other real estate owned rental income

    256       357  

Net gain on sales of securities

    203       1,497  

Other

    301       230  

Total non-interest income

  $ 1,391     $ 2,696  

 

Non-interest income for the first quarter of 2016 decreased by $1.3 million, or 48.4%, compared with the first quarter of 2015. The decrease in non-interest income was primarily driven by gains on sales of securities totaling $203,000 in the first quarter of 2016, compared to $1.5 million in the first quarter of 2015, and decreased OREO income totaling $256,000 in the first quarter of 2016 compared to $357,000 in the first quarter of 2015.

 

 
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Non-interest ExpenseThe following table presents the major categories of non-interest expense for the three months ended March 31, 2016 and 2015:

 

   

For the Three Months

 
   

Ended March 31,

 
   

2016

   

2015

 
   

(in thousands)

 
                 

Salary and employee benefits

  $ 3,822     $ 3,847  

Occupancy and equipment

    854       870  

Professional fees

    385       979  

FDIC insurance

    523       570  

Data processing expense

    297       304  

State franchise and deposit tax

    255       285  

Other real estate owned expense

    668       733  

Loan collection expense

    82       283  

Other

    1,205       1,521  

Total non-interest expense

  $ 8,091     $ 9,392  

 

Non-interest expense for the first quarter ended March 31, 2016 decreased $1.3 million, or 13.9%, compared with the first quarter of 2015. This decrease from the first quarter of 2015 was primarily due to a decrease in professional fees of $594,000 as well as a decreases in loan collection expenses.     

 

Income Tax Expense 

 

Effective tax rates differ from the federal statutory rate of 35% applied to income before income taxes due to the following:

 

   

For the Three Months

 
   

Ended March 21,

 
   

2016

   

2015

 
   

(in thousands)

 
                 

Federal statutory rate times financial statement income

  $ 525     $ 208  

Effect of:

               

Valuation allowance

    (450

)

    (294

)

Tax-exempt income

    (56

)

    (70

)

Non-taxable life insurance income

    (33

)

    (24

)

Other, net

    35       180  

Total

  $ 21     $  

 

Analysis of Financial Condition

 

Total assets decreased $10.6 million, or 1.1%, to $938.2 million at March 31, 2016, from $948.7 million at December 31, 2015.  This decrease was primarily attributable to a decrease in cash and cash equivalents of $13.0 million, a decrease in securities available for sale of $3.5 million, and a decrease in OREO of $1.4 million, offset by an increase in bank owned life insurance of $5.1 million and an increase of $1.9 million in net loans receivable.

 

Loans ReceivableLoans receivable increased $1.2 million, or 0.2%, during the three months ended March 31, 2016 to $619.8 million. Loans were relatively flat over the period as new loan funding slightly outpaced paydowns.

 

Loan Portfolio CompositionThe following table presents a summary of the loan portfolio at the dates indicated, net of deferred loan fees, by type. There are no foreign loans in our portfolio. Except for commercial real estate and 1-4 family residential real estate, there is no concentration of loans in any industry exceeding 10% of total loans, with the exception of loans for retail facilities (included in nonfarm nonresidential commercial real estate below). Those loans totaled $62.1 million at March 31, 2016 and $59.1 million at December 31, 2015.

 

 
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As of March 31,

   

As of December 31,

 
   

2016

   

2015

 
   

Amount

   

Percent

   

Amount

   

Percent

 
           

(dollars in thousands)

         
                                 

Commercial

  $ 83,743       13.52

%

  $ 86,176       13.93

%

Commercial Real Estate

                               

Construction

    34,631       5.59       33,154       5.36  

Farmland

    73,119       11.80       76,412       12.35  

Nonfarm nonresidential

    143,767       23.19       140,570       22.72  

Residential Real Estate

                               

Multi-family

    43,541       7.02       44,131       7.13  

1-4 Family

    197,983       31.94       201,478       32.57  

Consumer

    9,929       1.60       10,010       1.62  

Agriculture

    32,731       5.28       26,316       4.25  

Other

    383       0.06       419       0.07  

Total loans

  $ 619,827       100.00

%

  $ 618,666       100.0

%

 

Loan Portfolio by Risk Category – The following table presents a summary of the loan portfolio at the dates indicated, by risk category.

 

    March 31, 2016     December 31, 2015  
   

Loans

   

% to Total

   

Loans

   

% to Total

 
   

(dollars in thousands)

 
                                 

Pass

  $ 534,451       86.2

%

  $ 517,484       83.7

%

Watch

    59,265       9.6       63,363       10.2  

Special Mention

    1,383       0.2       1,395       0.2  

Substandard

    24,728       4.0       36,424       5.9  

Doubtful

                       

Total

  $ 619,827       100.0

%

  $ 618,666       100.0

%

 

Our loans receivable have increased $1.2 million, or 0.2%, during the three months ended March 31, 2016. All loan risk categories have decreased since December 31, 2015, with the exception of pass loans. The pass category increased approximately $17.0 million, the watch category decreased approximately $4.1 million, the special mention category declined approximately $12,000, and the substandard category declined approximately $11.7 million. The $11.7 million decrease in loans classified as substandard was primarily driven by $6.3 million in loans upgraded from substandard, $5.8 million in principal payments received, $441,000 in migration to OREO, and $686,000 in charge-offs, offset by $1.5 million in loans moved to substandard during the quarter.

 

Loan Delinquency – The following table presents a summary of loan delinquencies at the dates indicated.

 

   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 

Past Due Loans:

               

30-59 Days

  $ 1,829     $ 3,133  

60-89 Days

    62       241  

90 Days and Over

           

Total Loans Past Due 30-90+ Days

    1,891       3,374  
                 

Nonaccrual Loans

    11,119       14,087  

Total Past Due and Nonaccrual Loans

  $ 13,010     $ 17,461  

 

During the three months ended March 31, 2016, nonaccrual loans decreased by $3.0 million to $11.1 million. This decrease was due primarily to $2.7 million in paydowns and $644,000 in charge downs, offset by $913,000 in loans moved to nonaccrual status. During the three months ended March 31, 2016, loans past due 30-59 days decreased from $3.1 million at December 31, 2015 to $1.8 million at March 31, 2016.  Loans past due 60-89 days decreased from $241,000 at December 31, 2015 to $62,000 at March 31, 2016. This represents a $1.5 million increase from December 31, 2015 to March 31, 2016, in loans past due 30-89 days.  We considered this trend in delinquency levels during the evaluation of qualitative trends in the portfolio when establishing the general component of our allowance for loan losses.

 

 
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Non-Performing AssetsNon-performing assets consist of loans past due 90 days or more still on accrual, loans on which interest is no longer accrued, real estate acquired through foreclosure, and repossessed assets. The following table sets forth information with respect to non-performing assets as of March 31, 2016 and December 31, 2015.

 

   

March

31,

2016

   

December

31,

2015

 
   

(dollars in thousands)

 
                 

Loans past due 90 days or more still on accrual

  $     $  

Nonaccrual loans

    11,119       14,087  

Total non-performing loans

    11,119       14,087  

Real estate acquired through foreclosure

    17,861       19,214  

Other repossessed assets

           

Total non-performing assets

  $ 28,980     $ 33,301  
                 

Non-performing loans to total loans

    1.79

%

    2.28

%

Non-performing assets to total assets

    3.09

%

    3.51

%

Allowance for non-performing loans

  $ 245     $ 295  

Allowance for non-performing loans to non-performing loans

    2.20

%

    2.09

%

 

Nonperforming loans at March 31, 2016, were $11.1 million, or 1.79% of total loans, compared with $14.1 million, or 2.28% of total loans at December 31, 2015, and $36.5 million, or 5.77% of total loans at March 31, 2015. Net loan charge-offs in the first three months of 2016 totaled $151,000 compared to $767,000 for the first three months of 2015.

 

Troubled Debt Restructuring - A troubled debt restructuring (TDR) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty.  The majority of the Company’s TDRs involve a reduction in interest rate, a deferral of principal for a stated period of time, or an interest only period.  All TDRs are considered impaired, and the Company has allocated reserves for these loans to reflect the present value of the concessionary terms granted to the borrower. If the loan is considered collateral dependent, it is reported net of allocated reserves, at the fair value of the collateral less cost to sell.

 

We do not have a formal loan modification program. Rather, we work with individual borrowers on a case-by-case basis to facilitate the orderly collection of our principal and interest before a loan becomes a non-performing loan. If a borrower is unable to make contractual payments, we review the particular circumstances of the borrower’s situation and negotiate a revised payment stream. In other words, we identify performing borrowers experiencing financial difficulties, and through negotiations, we lower their interest rate, most typically on a short-term basis for three to six months. Our goal when restructuring a credit is to afford the borrower a reasonable period of time to remedy the issue causing cash flow constraints within their business so they can return to performing status over time.

 

Our loan modifications have taken the form of reduction in interest rate and/or curtailment of scheduled principal payments for a short-term period, usually three to six months, but in some cases until maturity of the loan. In some circumstances we restructure real estate secured loans in a bifurcated fashion whereby we have a fully amortizing “A” loan at a market interest rate and an interest-only “B” loan at a reduced interest rate. Our restructured loans are all collateral secured loans. If a borrower fails to perform under the modified terms, we place the loan(s) on nonaccrual status and begin the process of working with the borrower to liquidate the underlying collateral to satisfy the debt.

 

We consider any loan that is restructured for a borrower experiencing financial difficulties due to a borrower’s potential inability to pay in accordance with contractual terms to be a troubled debt restructure.  Specifically, we consider a concession involving a modification of the loan terms, such as (i) a reduction of the stated interest rate, (ii) reduction or deferral of principal, or (iii) reduction or deferral of accrued interest at a stated interest rate lower than the current market rate for new debt with similar risk all to be troubled debt restructurings.  When a modification of terms is made for a competitive reason, we do not consider that to be a troubled debt restructuring.  A primary example of a competitive modification would be an interest rate reduction for a performing borrower’s loan to a market rate as the result of a market decline in rates.

 

Management periodically reviews renewals/modifications of previously identified TDRs for which there was no principal forgiveness, to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification did not contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate, the TDR classification is removed as the borrower has complied with the terms of the loan at the date of renewal/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan after the date of the renewal/modification. In this instance, the TDR was originally considered a restructuring in a prior year as a result of a modification with an interest rate that was not commensurate with the risk of the underlying loan. Additionally, TDR classification can be removed in circumstances in which the Company performs a non-concessionary re-modification of the loan at terms that were considered to be at market for loans with comparable risk. Management expects the borrower will continue to perform under the re-modified terms based on the borrower’s past history of performance.

 

 
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If the borrower fails to perform, we place the loan on nonaccrual status and seek to liquidate the underlying collateral for these loans. Our nonaccrual policy for restructured loans is identical to our nonaccrual policy for all loans. Our policy calls for a loan to be reported as nonaccrual if it is maintained on a cash basis because of deterioration in the financial condition of the borrower, payment in full of principal and interest is not expected, or principal or interest has been in default for a period of 90 days or more unless the assets are both well secured and in the process of collection. Changes in value for impairment, including the amount attributed to the passage of time, are recorded entirely within the provision for loan losses. Upon determination that a loan is collateral dependent, the loan is charged down to the fair value of collateral less estimated costs to sell.

 

At March 31, 2016, we had 29 restructured loans totaling $18.3 million with borrowers who experienced deterioration in financial condition compared with 30 loans totaling $21.0 million at December 31, 2015. In general, these loans were granted interest rate reductions to provide cash flow relief to borrowers experiencing cash flow difficulties.  Of these loans, three loans totaling approximately $3.4 million were also granted principal payment deferrals until maturity. There were no concessions made to forgive principal relative to these loans, although we have recorded partial charge-offs for certain restructured loans. In general, these loans are secured by first liens on 1-4 residential or commercial real estate properties, or farmland.  Restructured loans also include $507,000 of commercial loans. At March 31, 2016, $14.9 million of our restructured loans were accruing and $3.5 million were on nonaccrual compared with $17.4 million and $3.5 million, respectively, at December 31, 2015. There were no new TDRs during the first three months of 2016 or 2015. During the three months ended March 31, 2016, TDRs were reduced as a result of $2.6 million in payments.

 

The following table sets forth information with respect to TDRs, non-performing loans, real estate acquired through foreclosure, and other repossessed assets.

 

   

March

31,

2016

   

December

31,

2015

 
   

(dollars in thousands)

 
                 

Total non-performing loans

  $ 11,119     $ 14,087  

TDRs on accrual

    14,867       17,440  

Total non-performing loans and TDRs on accrual

  $ 25,986     $ 31,527  

Real estate acquired through foreclosure

    17,861       19,214  

Other repossessed assets

           

Total non-performing assets and TDRs on accrual

  $ 43,847     $ 50,741  
                 

Total non-performing loans and TDRs on accrual to total loans

    4.19

%

    5.10

%

Total non-performing assets and TDRs on accrual to total assets

    4.67

%

    5.35

%

 

See “Note 4 - Loans,” of the notes to the financial statements for additional disclosure related to troubled debt restructuring.

 

Allowance for Loan LossesThe allowance for loan losses is based on management’s continuing review and evaluation of individual loans, loss experience, current economic conditions, risk characteristics of various categories of loans and such other factors that, in management’s judgment, require consideration in estimating loan losses.

 

Management has established loan grading procedures that result in specific allowance allocations for any estimated inherent risk of loss.  For loans not individually evaluated, a general allowance allocation is computed using factors developed over time based on actual loss experience.  The specific and general allocations plus consideration of qualitative factors represent management’s best estimate of probable losses contained in the loan portfolio at the evaluation date.  Although the allowance for loan losses is comprised of specific and general allocations, the entire allowance is available to absorb any credit losses.

 

 
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An analysis of changes in the allowance for loan losses and selected ratios for the three month periods ended March 31, 2016 and 2015, and for the year ended December 31, 2015 follows: 

 

   

Three Months Ended

March 31,

   

Year Ended

December 31,

 
   

2016

   

2015

    2015   
   

(dollars in thousands)

 

Balances at beginning of period

  $ 12,041     $ 19,364     $ 19,364  
                         

Loans charged-off:

                       

Real estate

    713       851       5,050  

Commercial

    12       375       696  

Consumer

    13       68       268  

Agriculture

          33       118  

Other

    11              

Total charge-offs

    749       1,327       6,132  
                         

Recoveries:

                       

Real estate

    428       411       2,338  

Commercial

    35       106       723  

Consumer

    39       26       240  

Agriculture

    79       1       8  

Other

    17       16        

Total recoveries

    598       560       3,309  

Net charge-offs

    151       767       2,823  

Provision (negative provision) for loan losses

    (550

)

          (4,500

)

Balance at end of period

  $ 11,340     $ 18,597     $ 12,041  
                         

Allowance for loan losses to period-end loans

    1.83

%

    2.94

%

    1.95

%

Net charge-offs to average loans

    0.10

%

    0.48

%

    0.44

%

Allowance for loan losses to non-performing loans

    101.99

%

    50.93

%

    85.48

%

                         

Allowance for loan losses for loans individually evaluated for impairment

  $ 464     $ 254     $ 428  

Loans individually evaluated for impairment

    26,236       55,299       31,776  

Allowance for loan losses to loans individually evaluated for impairment

    1.77

%

    0.46

%

    1.35

%

                         

Allowance for loan losses for loans collectively evaluated for impairment

  $ 10,876     $ 18,343     $ 11,613  

Loans collectively evaluated for impairment

    593,591       577,129       586,890  

Allowance for loan losses to loans collectively evaluated for impairment

    1.83

%

    3.18

%

    1.98

%

 

Our loan loss reserve, as a percentage of total loans at March 31, 2016, decreased to 1.83% from 1.95% at December 31, 2015 and from 2.94% at March 31, 2015. The change in our loan loss reserve as a percentage of total loans between periods is attributable to the fluctuation in historical loss experience, qualitative factors, fewer loans migrating downward in risk grade classifications, improved charge-off levels, and negative provision expense.  Our allowance for loan losses to non-performing loans was 101.99% at March 31, 2016, compared with 85.48% at December 31, 2015, and 50.93% at March 31, 2015. Net charge-offs in the first three months of 2016 totaled $151,000 compared to $767,000 in the first three months of 2015.   

 

 
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The following table sets forth the net charge-offs (recoveries) for the periods indicated: 

 

   

Three Months Ended

March 31,

2016

   

Year Ended

December 31,

2015

   

Year Ended

December 31,

2014

 
   

(in thousands)

 

Commercial

  $ (23

)

  $ (27

)

  $ 485  

Commercial Real Estate

    (145

)

    1,225       11,878  

Residential Real Estate

    430       1,487       3,339  

Consumer

    (26

)

    37       167  

Agriculture

    (79

)

    110       17  

Other

    (6

)

    (9

)

    (26

)

Total net charge-offs

  $ 151     $ 2,823     $ 15,860  

 

The majority of our nonperforming loans are secured by real estate collateral, and the underlying collateral coverage for nonperforming loans supports the likelihood of collection of our principal. We have assessed these loans for collectability and considered, among other things, the borrower’s ability to repay, the value of the underlying collateral, and other market conditions to ensure the allowance for loan losses is adequate to absorb probable incurred losses. Our allowance for non-performing loans to non-performing loans was 2.20% at March 31, 2016 compared with 2.09% at December 31, 2015, and 2.14% at March 31, 2015. The increase in this ratio from December 31, 2015 to March 31, 2016 was primarily attributable to the improving non-performing loan trends during the period.

 

The following table presents the unpaid principal balance, recorded investment and allocated allowance related to loans individually evaluated for impairment in the commercial real estate and residential real estate portfolios as of March 31, 2016 and December 31, 2015.

 

   

March 31, 2016

   

December 31, 2015

 
   

Commercial

Real Estate

   

Residential

Real Estate

   

Commercial

Real Estate

   

Residential

Real Estate

 
   

(in thousands)

 

Unpaid principal balance

  $ 16,119     $ 16,232     $ 18,112     $ 19,983  

Prior charge-offs

    (4,921

)

    (2,143

)

    (5,293

)

    (2,310

)

                                 

Recorded investment

    11,198       14,089       12,819       17,673  

Allocated allowance

    (39

)

    (425

)

    (43

)

    (385

)

                                 

Recorded investment, less allocated allowance

  $ 11,159     $ 13,664     $ 12,776     $ 17,288  
                                 

Recorded investment, less allocated allowance/ Unpaid principal balance

    69.23

%

    84.18

%

    70.54

%

    86.51

%

 

Based on prior charge-offs, our current recorded investment in the commercial real estate and residential real estate segments is significantly below the unpaid principal balance for these loans. The recorded investment net of the allocated allowance were 69.23% and 84.18% of the unpaid principal balance in the commercial real estate and residential real estate segments of the portfolio, respectively, at March 31, 2016.

 

 
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The following table illustrates recent trends in loans collectively evaluated for impairment and the related allowance for loan losses by portfolio segment:

 

    March 31, 2016     December 31, 2015  
   

Loans

   

Allowance

   

% to Total

   

Loans

   

Allowance

   

% to Total

 
                                                 

Commercial

  $ 82,879     $ 642       0.77

%

  $ 85,064     $ 818       0.96

%

Commercial real estate

    240,319       6,724       2.80       237,317       6,950       2.93  

Residential real estate:

    227,435       3,258       1.43       227,936       3,599       1.58  

Consumer

    9,921       115       1.16       9,990       122       1.22  

Agriculture

    32,654       136       0.42       26,164       122       0.47  
Other     383       1       0.26       419       2       0.48  

Total

  $ 593,591     $ 10,876       1.83

%

  $ 586,890     $ 11,613       1.98

%

 

Our allowance for loan losses for loans collectively evaluated for impairment declined to 1.83% at March 31, 2016 from 3.18% at March 31, 2015 and 1.98% at December 31, 2015. This decline was driven primarily by declining historical loss trends, the negative provision for loan losses, and an improving loan risk category classification mix and volume which are key factors for estimating general reserves. Other factors include the consideration of growth, composition and diversification of our loan portfolio, current delinquency levels, the results of recent regulatory communications and general economic conditions.

 

Provision for Loan LossesA negative provision for loan losses of $550,000 was recorded for the first quarter of 2016, compared to no provision for loan losses for the first quarter of 2015. The negative provision for the first quarter of 2016 was driven by declining historical loss rates, improvements in asset quality, and management’s assessment of risk within the portfolio. All loan risk categories have decreased since December 31, 2015, with the exception of pass loans. The pass category increased approximately $17.0 million, the watch category decreased approximately $4.1 million, the special mention category declined approximately $12,000, and the substandard category declined approximately $11.7 million. Net charge-offs were $151,000 for the three months ended March 31, 2016, compared with $767,000 for March 31, 2015. We consider the size and volume of our portfolio as well as the credit quality of our loan portfolio based upon risk category classification when determining the loan loss provision for each period and the allowance for loan losses at period end.

 

Foreclosed Properties – Foreclosed properties at March 31, 2016 were $17.9 million compared with $43.6 million at March 31, 2015 and $19.2 million at December 31, 2015.  See “Note 5 - Other Real Estate Owned,” of the notes to the financial statements. During the first three months of 2016, we acquired $441,000 of OREO properties, and sold properties totaling approximately $1.3 million. We value foreclosed properties at fair value less estimated costs to sell when acquired and expect to liquidate these properties to recover our investment in the due course of business.

 

OREO is recorded at fair market value less estimated cost to sell at time of acquisition.  Any write-down of the property at the time of acquisition is charged to the allowance for loan losses.  Subsequent reductions in fair value are recorded as non-interest expense.  To determine the fair value of OREO for smaller dollar single family homes, we consult with internal real estate sales staff and external realtors, investors, and appraisers.  If the internally evaluated market price is below our underlying investment in the property, appropriate write-downs are recorded. 

 

For larger dollar commercial real estate properties, we obtain a new appraisal of the subject property or have staff in our special assets group or centralized appraisal department evaluate the latest in-file appraisal in connection with the transfer to OREO.  In some of these circumstances, an appraisal is in process at quarter end and we must make our best estimate of the fair value of the underlying collateral based on our internal evaluation of the property, our review of the most recent appraisal, and discussions with the currently engaged appraiser.  We typically obtain updated appraisals on the anniversary date of ownership unless a sale is imminent.

 

Net gain (loss) on sales, write-downs, and operating expenses for OREO totaled $668,000 for the three months ended March 31, 2016, compared with $733,000 for the same period of 2015. During the three months ended March 31, 2016, fair value write-downs of $500,000 were recorded to reflect declines in fair value driven by reductions in listing prices and new appraisals compared with $300,000 for the three months ended March 31, 2015.

 

LiabilitiesTotal liabilities at March 31, 2016 were $903.6 million compared with $916.7 million at December 31, 2015, a decrease of $13.2 million, or 1.4%. This decrease was primarily attributable to a decrease in deposits of $12.4 million from $878.0 million at December 31, 2015 to $865.6 million at March 31, 2016.

 

 
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Deposits are our primary source of funds. The following table sets forth the average daily balances and weighted average rates paid for our deposits for the periods indicated:

 

   

For the Three Months

   

For the Year

 
   

Ended March 31,

   

Ended December 31,

 
   

2016

   

2015

 
   

Average

   

Average

   

Average

   

Average

 
   

Balance

   

Rate

   

Balance

   

Rate

 
   

(dollars in thousands)

 

Demand

  $ 113,720             $ 113,576          

Interest checking

    99,060       0.13

%

    88,814       0.13

%

Money market

    129,166       0.59       112,350       0.57  

Savings

    34,656       0.19       35,604       0.21  

Certificates of deposit

    488,523       0.88       557,441       0.96  

Total deposits

  $ 865,125       0.61

%

  $ 907,785       0.68

%

 

The following table sets forth the average daily balances and weighted average rates paid for our certificates of deposit for the periods indicated:

 

   

For the Three Months

   

For the Year

 
   

Ended March 31,

   

Ended December 31,

 
   

2016

   

2015

 
   

Average

   

Average

   

Average

   

Average

 
   

Balance

   

Rate

   

Balance

   

Rate

 
   

(dollars in thousands)

 

Less than $100,000

  $ 276,788       0.85

%

  $ 306,941       0.93

%

$100,000 or more

    211,735       0.91

%

    250,500       0.99

%

Total

  $ 488,523       0.88

%

  $ 557,441       0.96

%

 

The following table shows at March 31, 2016 the amount of our time deposits of $100,000 or more by time remaining until maturity (in thousands):

  

Maturity Period

 
         

Three months or less

  $ 36,082  

Three months through six months

    49,897  

Six months through twelve months

    75,086  

Over twelve months

    48,256  

Total

  $ 209,321  

 

Liquidity

 

Liquidity risk arises from the possibility we may not be able to satisfy current or future financial commitments, or may become unduly reliant on alternative funding sources. The objective of liquidity risk management is to ensure that we meet the cash flow requirements of depositors and borrowers, as well as our operating cash needs, taking into account all on- and off-balance sheet funding demands. Liquidity risk management also involves ensuring that we meet our cash flow needs at a reasonable cost. We maintain an investment and funds management policy, which identifies the primary sources of liquidity, establishes procedures for monitoring and measuring liquidity, and establishes minimum liquidity requirements in compliance with regulatory guidance. Our Asset Liability Committee regularly monitors and reviews our liquidity position.

 

Funds are available from a number of sources, including the sale of securities in the available for sale investment portfolio, principal pay-downs on loans and mortgage-backed securities, customer deposit inflows, and other wholesale funding. Historically, we also utilized brokered and wholesale deposits to supplement our funding strategy. We are currently restricted from accepting, renewing, or rolling-over brokered deposits without the prior receipt of a waiver on a case-by-case basis from our regulators. At March 31, 2016, we had no brokered deposits.

 

Traditionally, we have borrowed from the FHLB to supplement our funding requirements. At March 31, 2016, we had an unused borrowing capacity with the FHLB of $28.6 million. Our borrowing capacity is under a detailed loan listing requirement and is based on the market value of the underlying pledged loans. Any new advances are limited to a one year maturity or less.

 

We also have available, on a secured basis, federal funds borrowing lines from a correspondent bank totaling $5.0 million. Management believes our sources of liquidity are adequate to meet expected cash needs for the foreseeable future. However, the availability of these lines could be affected by our financial position. We are also subject to FDIC interest rate restrictions for deposits. As such, we are permitted to offer up to the “national rate” plus 75 basis points as published weekly by the FDIC.

  

 
46

Table Of Contents
 

 

Capital

 

Stockholders’ equity increased $2.6 million to $34.6 million at March 31, 2016, compared with $32.0 million at December 31, 2015 due to current year net income of $1.5 million and an increase in the fair value of our available for sale securities portfolio of $1.0 million.

 

The following table shows the ratios of Tier 1 capital and total capital to risk-adjusted assets and the leverage ratios for the Company and the Bank at the dates indicated:

 

                           

March 31, 2016

   

December 31, 2015

 
   

Regulatory

Minimums

   

Well-Capitalized

Minimums

   

Minimum Capital

Ratios Under

Consent Order

   

Porter

Bancorp

   

PBI

Bank

   

Porter

Bancorp

   

PBI

Bank

 
                                                         

Tier 1 Capital

    6.0 %     8.0 %     N/A       7.03 %     8.94 %     6.89 %     8.84 %

Common equity Tier I capital

    4.5       6.5       N/A       5.21       8.94       5.09       8.84  

Total risk-based capital

    8.0       10.0       12.0 %     10.46       10.64       10.46       10.58  

Tier 1 leverage ratio

    4.0       5.0       9.0       5.03       6.39       4.74       6.08  

 

Failure to meet minimum capital requirements could result in additional discretionary actions by regulators that, if undertaken, could have a materially adverse effect on our financial condition.

 

Each of the federal bank regulatory agencies has established risk-based capital requirements for banking organizations. The Basel III regulatory capital reforms became effective for the Company and Bank on January 1, 2015, and include new minimum risk-based capital and leverage ratios.  These rules refine the definition of what constitutes “capital” for purposes of calculating those ratios, including the definitions of Tier 1 capital and Tier 2 capital. The final rules allow banks and their holding companies with less than $250 billion in assets a one-time opportunity to opt-out of a requirement to include unrealized gains and losses in accumulated other comprehensive income in their capital calculation. The Company and the Bank opted out of this requirement. The rules also establish a “capital conservation buffer” of 2.5%, to be phased in over three years, above the regulatory minimum risk-based capital ratios. Once the capital conservation buffer is fully phased in, the minimum ratios are a common equity Tier 1 risk-based capital ratio of 7.0%, a Tier 1 risk-based capital ratio of 8.5%, and a total risk-based capital ratio of 10.5%.  The phase-in of the capital conservation buffer requirement begins in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019. An institution is subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if capital levels fall below minimum levels plus the buffer amounts. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions. In addition, the Bank has agreed with its primary regulators to maintain a ratio of total capital to total risk-weighted assets (“total risk-based capital ratio”) of at least 12.0%, and a ratio of Tier 1 capital to total assets (“leverage ratio”) of 9.0%.

 

 
47

Table Of Contents
 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Given a 100 basis point increase in interest rates sustained for one year, base net interest income would decrease by an estimated 0.66% at March 31, 2016, compared with an increase of 0.6% at December 31, 2015, and is within the risk tolerance parameters of our risk management policy. Given a 200 basis point increase in interest rates sustained for one year, base net interest income would decrease by an estimated 0.87% at March 31, 2016, compared with an increase of 1.6% at December 31, 2015, and is within the risk tolerance parameters of our risk management policy.

 

The following table indicates the estimated impact on net interest income under various interest rate scenarios for the twelve months following March 31, 2016, as calculated using the static shock model approach:

 

   

Change in Future

Net Interest Income

 
   

Dollar Change

   

Percentage Change

 
   

(dollars in thousands)

 

+ 200 basis points

  $ (241

)

    (0.87

)%

+ 100 basis points

    (183

)

    (0.66

)

- 100 basis points

    (1,244

)

    (4.50

)

- 200 basis points

    (2,990

)

    (10.82

)

  

Item 4. Controls and Procedures

 

As of the end of the quarterly period covered by this report, an evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were, to the best of their knowledge, effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms as of such date.

 

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
48

Table Of Contents
 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are defendants in various legal proceedings.  Litigation is subject to inherent uncertainties and unfavorable outcomes could occur. See Footnote 13, “Contingencies” in the Notes to our consolidated financial statements for additional detail regarding ongoing legal proceedings.

 

Item 1A. Risk Factors

 

We refer you to the detailed cautionary statements and discussion of risks that affect our Company and its business in “Item 1A – Risk Factors” of our December 31, 2015 Annual Report on Form 10-K. There have been no material changes from the risk factors previously discussed in those reports.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Not applicable.

 

Item 3. Default Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Porter Bancorp, Inc. completed a sale of 4,000,000 common shares and nonvoting common shares in a private placement to accredited investors at 10:00 a.m. on April 15, 2016.  The purchase price was $1.25 per share.  The investors included John T. Taylor, the Company’s CEO and a director, and James M. Parsons and Bradford T. Ray, both directors.  On April 27, 2016, the NASDAQ Stock Exchange notified the Company that, as a result of the closing bid price of the Company’s common shares increasing from $1.22 per share on April 13, 2016 to $1.30 per share on April 14, 2016, on which date of a total of 2,847 the Company’s common shares traded, a violation of the NASDAQ Corporate Governance Rules had occurred. Specifically, the purchase of shares by three insiders in a private placement for less than the market price, defined as the closing bid price on the day preceding the signing of a stock purchase agreement, represents “equity compensation,” requiring prior approval of the Company’s shareholders pursuant to Listing Rule 5635(c).  To remedy the violation, Mr. Taylor, Mr. Parsons, and Mr. Ray each paid an additional $0.05 per share to the Company on May 3, 2016, increasing the effective purchase price for the 600,000 shares they collectively purchased to $1.30 per share, consistent with requirements of the NASDAQ rule. In a letter to the Company, dated May 5, 2016, NASDAQ stated that the Company has regained compliance with the Rule and this matter is now closed.

 

Item 6. Exhibits

 

(a)           Exhibits

The following exhibits are filed or furnished as part of this report:

 

Exhibit Number

Description of Exhibit

  

10.1

Porter Bancorp, Inc. 2016 Incentive Compensation Bonus Plan incorporated by reference in the Definitive Proxy Statement filed April 25, 2016.

   
10.2 Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Form 8-K filed April 20, 2016).
   
10.3 Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Form 8-K filed April 20, 2016).
   

31.1

Certification of Principal Executive Officer, pursuant to Rule 13a - 14(a).

  

31.2

Certification of Principal Financial Officer, pursuant to Rule 13a - 14(a).

  

32.1

Certification of Principal Executive Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

  

32.2

Certification of Principal Financial Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

101

The following financial statements from the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2016, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statement of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements.

 

 
49

Table Of Contents
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act if 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

  

PORTER BANCORP, INC.

  

(Registrant)

  

May 5, 2016

By:

/s/ John T. Taylor

  

  

John T. Taylor

  

  

Chief Executive Officer 

  

May 5, 2016

By:

/s/ Phillip W. Barnhouse

 

 

Phillip W. Barnhouse 

  

  

Chief Financial Officer

  

  

 

 

 

    

 50

 

 

 

 

 

 

 


ex31-1.htm

Exhibit 31.1

 

Porter Bancorp, Inc.

 

Rule 13a-14(a) Certification

 

of Chief Executive Officer

 

 

 

 

 

I, John T. Taylor, Chief Executive Officer of Porter Bancorp, Inc. (the “Company”), certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q of the Company;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.      The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

 

 

Dated:  May 5, 2016

 

/s/ John T. Taylor

 

 

 

John T. Taylor

 

 

Chief Executive Officer 

 

 

 

 

 

 


ex31-2.htm

Exhibit 31.2

 

Porter Bancorp, Inc.

 

Rule 13a-14(a) Certification

 

of Chief Financial Officer

 

 

 

 

 

I, Phillip W. Barnhouse, Chief Financial Officer of Porter Bancorp, Inc. (the “Company”), certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q of the Company;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.      The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

 

 

Dated:  May 5, 2016

 

/s/ Phillip W. Barnhouse

 

 

 

 Phillip W. Barnhouse

 

 

 Chief Financial Officer

 

 

 

 

 

 

 


ex32-1.htm

Exhibit 32.1

 

SECTION 906 CERTIFICATION

 

 

In connection with the Quarterly Report on Form 10-Q of Porter Bancorp, Inc. (the “Company”) for the quarterly period ended March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John T. Taylor, Chief Executive Officer of the Company, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

PORTER BANCORP, INC.

 

 

 

 

 

 

Dated:  May 5, 2016

By:

/s/ John T. Taylor

 

 

 

 John T. Taylor

 

 

 Chief Executive Officer 

 

 

 

 

 


ex32-2.htm

 

Exhibit 32.2

 

SECTION 906 CERTIFICATION

 

 

In connection with the Quarterly Report on Form 10-Q of Porter Bancorp, Inc. (the “Company”) for the quarterly period ended March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Phillip W. Barnhouse, Chief Financial Officer of the Company, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

PORTER BANCORP, INC.

 

 

 

 

 

 

Dated:  May 5, 2016

By:

/s/ Phillip W. Barnhouse

 

 

 

 Phillip W. Barnhouse

 

 

 Chief Financial Officer

 

 

 

 


pbib-20160331.xml
Attachment: EXHIBIT 101.INS


pbib-20160331.xsd
Attachment: EXHIBIT 101.SCH


pbib-20160331_cal.xml
Attachment: EXHIBIT 101.CAL


pbib-20160331_def.xml
Attachment: EXHIBIT 101.DEF


pbib-20160331_lab.xml
Attachment: EXHIBIT 101.LAB


pbib-20160331_pre.xml
Attachment: EXHIBIT 101.PRE


v3.4.0.3
Document And Entity Information - shares
3 Months Ended
Mar. 31, 2016
Apr. 30, 2016
Document Information [Line Items]    
Entity Registrant Name PORTER BANCORP, INC.  
Trading Symbol pbib  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Amendment Flag false  
Entity Central Index Key 0001358356  
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Filer Category Smaller Reporting Company  
Entity Well-known Seasoned Issuer No  
Document Period End Date Mar. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Common Stock [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   22,986,177
Nonvoting Common Stock [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   7,958,000

v3.4.0.3
Unaudited Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Assets    
Cash and due from banks $ 8,097 $ 8,006
Interest bearing deposits in banks 72,209 85,329
Cash and cash equivalents 80,306 93,335
Securities available for sale 141,525 144,978
Securities held to maturity (fair value of $44,683 and $44,253, respectively) 42,011 42,075
Loans held for sale 113 186
Loans, net of allowance of $11,340 and $12,041, respectively 608,487 606,625
Premises and equipment, net 18,751 18,812
Other real estate owned 17,861 19,214
Federal Home Loan Bank stock 7,323 7,323
Bank owned life insurance 14,531 9,441
Accrued interest receivable and other assets 7,251 6,733
Total assets 938,159 948,722
Deposits    
Non-interest bearing 120,302 120,043
Interest bearing 745,311 757,954
Total deposits 865,613 877,997
Federal Home Loan Bank advances 2,932 3,081
Accrued interest payable and other liabilities 10,181 10,577
Subordinated capital note 3,825 4,050
Junior subordinated debentures 21,000 21,000
Total liabilities 903,551 916,705
Preferred stock, no par    
Preferred stock 2,771 2,771
Common stock, no par, 86,000,000 shares authorized, 20,086,177 and 20,089,533 voting, and 6,858,000 and 6,858,000 non-voting shares issued and outstanding, respectively 120,699 120,699
Additional paid-in capital 23,727 23,654
Retained deficit (109,328) (110,808)
Accumulated other comprehensive loss (3,261) (4,299)
Total common stockholders’ equity 31,837 29,246
Total stockholders' equity 34,608 32,017
Total liabilities and stockholders’ equity 938,159 948,722
Series E Preferred Stock [Member]    
Preferred stock, no par    
Preferred stock 1,644 1,644
Series F Preferred Stock [Member]    
Preferred stock, no par    
Preferred stock $ 1,127 $ 1,127

v3.4.0.3
Unaudited Consolidated Balance Sheets (Parentheticals) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Securities held to maturity, fair value (in Dollars) $ 44,683 $ 44,253
Loans, allowance (in Dollars) $ 11,340 $ 12,041
Common stock, par value (in Dollars per share) $ 0 $ 0
Common stock, shares authorized 86,000,000 86,000,000
Series E Preferred Stock [Member]    
Preferred stock, issued 6,198 6,198
Preferred stock, outstanding 6,198 6,198
Preferred stock, liquidation preference (in Dollars) $ 6,200 $ 6,200
Preferred stock, no par (in Dollars per share) $ 0 $ 0
Series F Preferred Stock [Member]    
Preferred stock, issued 4,304 4,304
Preferred stock, outstanding 4,304 4,304
Preferred stock, liquidation preference (in Dollars) $ 4,300 $ 4,300
Preferred stock, no par (in Dollars per share) $ 0 $ 0
Voting Common Stock [Member]    
Common stock, shares issued 20,086,177 20,089,533
Common stock, shares outstanding 20,086,177 20,089,533
Nonvoting Common Stock [Member]    
Common stock, shares issued 6,858,000 6,858,000
Common stock, shares outstanding 6,858,000 6,858,000

v3.4.0.3
Unaudited Consolidated Statements of Income - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Interest income    
Loans, including fees $ 7,882,000 $ 7,755,000
Taxable securities 989,000 1,126,000
Tax exempt securities 164,000 203,000
Federal funds sold and other 150,000 119,000
9,185,000 9,203,000
Interest expense    
Deposits 1,308,000 1,692,000
Junior subordinated debentures 168,000 152,000
Subordinated capital note 39,000 42,000
Federal Home Loan Bank advances 19,000 27,000
1,534,000 1,913,000
Net interest income 7,651,000 7,290,000
Provision (negative position) for loan losses (550,000)  
Net interest income after provision for loan losses 8,201,000 7,290,000
Non-interest income    
Service charges on deposit accounts 429,000 409,000
Bank card interchange fees 202,000 203,000
Other real estate owned rental income 256,000 357,000
Net gain on sales of securities 203,000 1,497,000
Other 301,000 230,000
1,391,000 2,696,000
Non-interest expense    
Salaries and employee benefits 3,822,000 3,847,000
Occupancy and equipment 854,000 870,000
Professional fees 385,000 979,000
FDIC insurance 523,000 570,000
Data processing expense 297,000 304,000
State franchise and deposit tax 255,000 285,000
Other real estate owned expense 668,000 733,000
Loan collection expense 82,000 283,000
Other 1,205,000 1,521,000
8,091,000 9,392,000
Income before income taxes 1,501,000 594,000
Income tax expense 21,000  
Net income 1,480,000 594,000
Less:    
Earnings allocated to participating securities 51,000 185,000
Net income attributable to common shareholders $ 1,429,000 $ 409,000
Basic and diluted earnings per common share (in Dollars per share) $ 0.05 $ 0.02

v3.4.0.3
Unaudited Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Net income $ 1,480 $ 594
Unrealized gain (loss) on securities:    
Unrealized gain (loss) arising during the period 1,209 1,328
Amortization during period of net unrealized loss transferred to held to maturity 32 33
Reclassification adjustment for losses (gains) included in net income (203) (1,497)
Net unrealized gain/(loss) recognized in comprehensive income $ 1,038 $ (136)
Tax effect
Other comprehensive income (loss) $ 1,038 $ (136)
Comprehensive income $ 2,518 $ 458

v3.4.0.3
Unaudited Consolidated Statements of Changes in Stockholders' Equity - 3 months ended Mar. 31, 2016 - USD ($)
$ in Thousands
Voting Common Stock [Member]
Common Stock [Member]
Nonvoting Common Stock [Member]
Common Stock [Member]
Common Stock [Member]
Series E Preferred Stock [Member]
Series F Preferred Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Total
Balances at Dec. 31, 2015     $ 120,699 $ 1,644 $ 1,127 $ 23,654 $ (110,808) $ (4,299) $ 32,017
Balances (in Shares) at Dec. 31, 2015 20,089,533 6,858,000 26,947,533 6,198 4,304        
Forfeited unvested stock (in Shares) (3,356)   (3,356)            
Stock-based compensation expense           73     73
Net income             1,480   1,480
Net change in accumulated other comprehensive income, net of taxes               1,038 1,038
Balances at Mar. 31, 2016     $ 120,699 $ 1,644 $ 1,127 $ 23,727 $ (109,328) $ (3,261) $ 34,608
Balances (in Shares) at Mar. 31, 2016 20,086,177 6,858,000 26,944,177 6,198 4,304        

v3.4.0.3
Unaudited Consolidated Statements of Cash Flows - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash flows from operating activities    
Net income $ 1,480,000 $ 594,000
Adjustments to reconcile net loss to net cash from operating activities    
Depreciation and amortization 386,000 422,000
Provision (negative provision) for loan losses (550,000)  
Net amortization on securities 309,000 354,000
Stock-based compensation expense 73,000 49,000
Net loss (gain) on sales of loans held for sale (17,000) 281,000
Loans originated for sale (1,056,000) (433,000)
Proceeds from sales of loans held for sale 1,146,000 9,078,000
Net (gain) loss on sales of other real estate owned (55,000) (3,000)
Net write-down of other real estate owned 500,000 300,000
Net realized gain on sales of investment securities (203,000) (1,497,000)
Earnings on bank owned life insurance, net of premium expense (90,000) (64,000)
Net change in accrued interest receivable and other assets (617,000) 783,000
Net change in accrued interest payable and other liabilities (396,000) 118,000
Net cash from operating activities 910,000 9,982,000
Cash flows from investing activities    
Purchases of available for sale securities (4,114,000) (4,927,000)
Sales of available for sale securities 3,486,000 34,138,000
Maturities and prepayments of available for sale securities 5,077,000 5,358,000
Proceeds from sale of other real estate owned 1,349,000 2,629,000
Loan originations and payments, net (1,802,000) (8,618,000)
Purchases of premises and equipment, net (177,000) (63,000)
Purchase of bank owned life insurance (5,000,000)  
Net cash from investing activities (1,181,000) 28,517,000
Cash flows from financing activities    
Net change in deposits (12,384,000) 3,668,000
Net change in repurchase agreements   (196,000)
Repayment of Federal Home Loan Bank advances (149,000) (17,155,000)
Advances from Federal Home Loan Bank   5,000,000
Repayment of subordinated capital note (225,000) (225,000)
Net cash from financing activities (12,758,000) (8,908,000)
Net change in cash and cash equivalents (13,029,000) 29,591,000
Beginning cash and cash equivalents 93,335,000 80,180,000
Ending cash and cash equivalents 80,306,000 109,771,000
Supplemental cash flow information:    
Interest paid 4,205,000 1,906,000
Income taxes paid (refunded) 21,000 0
Supplemental non-cash disclosure:    
Transfer from loans to other real estate $ 441,000 $ 347,000

v3.4.0.3
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Basis of Presentation and Significant Accounting Policies [Text Block]

Note 1 – Basis of Presentation and Summary of Significant Accounting Policies


Basis of Presentation – The consolidated financial statements include Porter Bancorp, Inc. (Company) and its subsidiary, PBI Bank (Bank).  The Company owns a 100% interest in the Bank. All significant inter-company transactions and accounts have been eliminated in consolidation.


The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the entire year.  A description of other significant accounting policies is presented in the notes to the Consolidated Financial Statements for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K.


Use of Estimates – To prepare financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ.


Reclassifications – Some items in the prior year financial statements were reclassified to conform to the current presentation. The reclassifications did not impact net income or stockholders’ equity.


Adoption of New Accounting Standards – In May 2014, FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s financial statements.


In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities). The amendments in this update impact public business entities as follows: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. 3) Eliminate the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. 4) Require entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 5) Require an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 6) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. 7) Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.



v3.4.0.3
Note 2 - Going Concern Considerations and Future Plans
3 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Substantial Doubt about Going Concern [Text Block]

Note 2 – Going Concern Considerations and Future Plans


Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future. However, the events and circumstances described in this discussion create substantial doubt about the Company’s ability to continue as a going concern.


For the three months ended March 31, 2016, we reported net income of $1.5 million compared with net loss of $3.2 million and $11.2 million for the years ended December 31, 2015 and 2014, respectively. Our financial performance has been negatively impacted by the Bank’s elevated level of non-performing assets, although the impact has diminished as we have substantially reduced non-performing assets during recent periods. Non-performing loans were 1.79%, 2.28%, and 7.57% of total loans at March 31, 2016, December 31, 2015, and December 31, 2014, respectively. Non-performing assets were 3.09%, 3.51%, and 9.19% of total assets at March 31, 2016, December 31, 2015, and December 31, 2014, respectively. See “Analysis of Financial Condition,” below.


In the fourth quarter of 2011 we began deferring interest payable on the junior subordinated debentures held by our trust subsidiaries, requiring our trust subsidiaries to defer distributions on our trust preferred securities held by investors. On April 15, 2016, we completed a private placement of 2.9 million common shares and 1.1 million non-voting common shares to accredited investors resulting in total proceeds of $5.0 million. The investors in the private placement directed a portion of proceeds to pay all deferred interest payments, bringing our interest payments current through the second quarter of 2016. The remaining proceeds totaled approximately $2.2 million and will be used for general corporate purposes and to support the Bank.


We continue to be involved in various legal proceedings. We dispute the material factual allegations made against us, and after conferring with our legal advisors, we believe we have meritorious grounds on which to prevail. If we do not prevail, the ultimate outcome of any one of these matters could have a material adverse effect on our financial condition, results of operations, or cash flows. These matters are more fully described in Note 13 – “Contingencies”.


Our Consent Order with the FDIC and KDFI requires the Bank to maintain a minimum Tier 1 leverage ratio of 9% and a minimum total risk based capital ratio of 12%. As of March 31, 2016, the Bank’s Tier 1 leverage ratio and total risk based capital ratio were 6.39% and 10.64%, respectively, both less than the minimum capital ratios required by the Consent Order. If the Bank should be unable to reach the required capital levels, and if directed in writing by the FDIC, the Consent Order requires the Bank to develop, adopt and implement a written plan to sell or merge itself into another federally insured financial institution or otherwise obtain a capital investment into the Bank sufficient to recapitalize the Bank. The Bank has not been directed by the FDIC to implement such a plan.


In order to meet the 9.0% Tier 1 leverage ratio and 12.0% total risk based capital ratio requirements of the Consent Order, the Board of Directors and management are continuing to evaluate and implement strategies to achieve the following objectives:


 

Continuing to increase capital through the issuance of senior debt, subordinated debt, and equity securities.


 

Continuing to operate the Company and Bank in a safe and sound manner.  We have reduced our lending concentrations and the size of our balance sheet while continuing to remediate non-performing loans. 1


 

Executing on the sale of OREO and reinvestment in quality income producing assets.


 

Continuing to improve our internal processes and procedures, distribution of labor, and work-flow to ensure we have adequately and appropriately deployed resources in an efficient manner in the current environment.


Bank regulatory agencies can exercise discretion when an institution does not meet the terms of a consent order. Based on individual circumstances, the agencies may issue mandatory directives, impose monetary penalties, initiate changes in management, or take more serious adverse actions such as directing a bank to seek a buyer or taking a bank into receivership.


The Consent Order requires the Bank to obtain the written consent of both agencies before declaring or paying any future dividends to the Company, which are its principal source of revenue. Since the Bank is unlikely to be in a position to pay dividends to the Company until the Consent Order is satisfied, cash inflows for the Company are limited to the issuance of new debt or the issuance of capital securities. The Company’s liquid assets were $764,000 as of March 31, 2016, and were increased by approximately $2.2 million after the subsequent sale of common shares and non-voting common shares on April 15, 2016. Ongoing operating expenses of the Company are forecast at approximately $1.0 million for the next twelve months. 


Our consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.



v3.4.0.3
Note 3 - Securities
3 Months Ended
Mar. 31, 2016
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3 – Securities


The fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:


   

Amortized

Cost

   

Gross Unrealized

Gains

   

Gross Unrealized

Losses

   

Fair Value

 
   

(in thousands)

 

March 31, 2016

                               

Available for sale

                               

U.S. Government and federal agency

  $ 34,513     $ 321     $ (98

)

  $ 34,736  

Agency mortgage-backed: residential

    99,935       1,570       (143

)

    101,362  

State and municipal

    3,270       67             3,337  

Corporate bonds

    2,325             (235

)

    2,090  

Total available for sale

  $ 140,043     $ 1,958     $ (476

)

  $ 141,525  

   

Amortized

Cost

   

Gross Unrecognized

Gains

   

Gross Unrecognized

Losses

   

Fair Value

 

Held to maturity

                               

State and municipal

  $ 42,011     $ 2,672     $     $ 44,683  

Total held to maturity

  $ 42,011     $ 2,672     $     $ 44,683  

December 31, 2015

 

Amortized

Cost

   

Gross Unrealized

Gains

   

Gross Unrealized

Losses

   

Fair Value

 

Available for sale

                               

U.S. Government and federal agency

  $ 33,491     $ 146     $ (375

)

  $ 33,262  

Agency mortgage-backed: residential

    102,135       907       (380

)

    102,662  

State and municipal

    6,555       306             6,861  

Corporate bonds

    2,321             (128

)

    2,193  

Total available for sale

  $ 144,502     $ 1,359     $ (883

)

  $ 144,978  

   

Amortized

Cost

   

Gross Unrecognized

Gains

   

Gross Unrecognized

Losses

   

Fair Value

 

Held to maturity

                               

State and municipal

  $ 42,075     $ 2,178     $     $ 44,253  

Total held to maturity

  $ 42,075     $ 2,178     $     $ 44,253  

Sales and calls of available for sale securities were as follows:


   

Three Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 
                 

Proceeds

  $ 3,486     $ 34,138  

Gross gains

    203       1,551  

Gross losses

          54  

The amortized cost and fair value of the debt investment securities portfolio are shown by contractual maturity.  Contractual maturities may differ from actual maturities if issuers have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities not due at a single maturity date are detailed separately.


   

March 31, 2016

 
   

Amortized

Cost

   

Fair

Value

 
   

(in thousands)

 

Maturity

               

Available for sale

               

Within one year

  $ 6,120     $ 5,941  

One to five years

    7,598       7,790  

Five to ten years

    26,390       26,432  

Agency mortgage-backed: residential

    99,935       101,362  

Total

  $ 140,043     $ 141,525  
                 

Held to maturity

               

One to five years

  $ 17,012     $ 17,800  

Five to ten years

    23,950       25,723  

Beyond ten years

    1,049       1,160  

Total

  $ 42,011     $ 44,683  

Securities pledged at March 31, 2016 and December 31, 2015 had carrying values of approximately $52.9 million and $68.0 million, respectively, and were pledged to secure public deposits.


At March 31, 2016 and December 31, 2015, we held securities issued by the Commonwealth of Kentucky or municipalities in the Commonwealth of Kentucky having a book value of $17.6 million and $17.7 million, respectively.  Additionally, at March 31, 2016 and December 31, 2015, we held securities issued by the State of Texas or municipalities in the State of Texas having a book value of $4.3 million at each period end. At March 31, 2016 and December 31, 2015, there were no other holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.


Securities with unrealized losses at March 31, 2016 and December 31, 2015, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, are as follows:


   

Less than 12 Months

   

12 Months or More

   

Total

 

Description of Securities

 

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

 
   

(in thousands)

 

March 31, 2016

                                               

Available for sale

                                               

U.S. Government and federal agency

  $ 3,812     $ (18

)

  $ 10,410     $ (80

)

  $ 14,222     $ (98

)

Agency mortgage-backed: residential

    15,552       (143

)

                15,552       (143

)

Corporate bonds

    691       (76

)

    1,400       (159

)

    2,091       (235

)

Total temporarily impaired

  $ 20,055     $ (237

)

  $ 11,810     $ (239

)

  $ 31,865     $ (476

)

                                                 
                                                 
                                                 

December 31, 2015

                                               

Available for sale

                                               

U.S. Government and federal agency

  $ 7,058     $ (44

)

  $ 14,527     $ (331

)

  $ 21,585     $ (375

)

Agency mortgage-backed: residential

    36,325       (271

)

    3,856       (109

)

    40,181       (380

)

Corporate bonds

    747       (18

)

    1,446       (110

)

    2,193       (128

)

Total temporarily impaired

  $ 44,130     $ (333

)

  $ 19,829     $ (550

)

  $ 63,959     $ (883

)


There were no held to maturity securities in an unrecognized loss position at March 31, 2016 or December 31, 2015.


The Company evaluates securities for other than temporary impairment (OTTI) on a quarterly basis.  Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, underlying credit quality of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the sector or industry trends and cycles affecting the issuer, and the results of reviews of the issuer’s financial condition.  Management currently intends to hold all securities with unrealized losses until recovery, which for fixed income securities may be at maturity. As of March 31, 2016, management does not believe securities within our portfolio with unrealized losses should be classified as other than temporarily impaired.



v3.4.0.3
Note 4 - Loans
3 Months Ended
Mar. 31, 2016
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 4 – Loans


Loans were as follows:

 

March 31,

   

December 31,

 
   

2016

   

2015

 
   

(in thousands)

 

Commercial

  $ 83,743     $ 86,176  

Commercial Real Estate:

               

Construction

    34,631       33,154  

Farmland

    73,119       76,412  

Nonfarm nonresidential

    143,767       140,570  

Residential Real Estate:

               

Multi-family

    43,541       44,131  

1-4 Family

    197,983       201,478  

Consumer

    9,929       10,010  

Agriculture

    32,731       26,316  

Other

    383       419  

Subtotal

    619,827       618,666  

Less: Allowance for loan losses

    (11,340

)

    (12,041

)

Loans, net

  $ 608,487     $ 606,625  

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2016 and 2015:


   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

March 31, 2016:

                                                       

Beginning balance

  $ 818     $ 6,993     $ 3,984     $ 122     $ 122     $ 2     $ 12,041  

Negative provision for loan losses

    (199

)

    (375

)

    129       (33

)

    (65

)

    (7

)

    (550

)

Loans charged off

    (12

)

    (118

)

    (595

)

    (13

)

          (11

)

    (749

)

Recoveries

    35       263       165       39       79       17       598  

Ending balance

  $ 642     $ 6,763     $ 3,683     $ 115     $ 136     $ 1     $ 11,340  
                                                         
                                                         

March 31, 2015:

                                                       

Beginning balance

  $ 2,046     $ 10,931     $ 5,787     $ 274     $ 319     $ 7     $ 19,364  

Provision for loan losses

    269       7       (384

)

    12       104       (8

)

     

Loans charged off

    (375

)

    (369

)

    (482

)

    (68

)

    (33

)

          (1,327

)

Recoveries

    106       111       300       26       1       16       560  

Ending balance

  $ 2,046     $ 10,680     $ 5,221     $ 244     $ 391     $ 15     $ 18,597  

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of March 31, 2016:


   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

Allowance for loan losses:

                                                       

Ending allowance balance attributable to loans:

                                                       

Individually evaluated for impairment

  $     $ 39     $ 425     $     $     $     $ 464  

Collectively evaluated for impairment

    642       6,724       3,258       115       136       1       10,876  

Total ending allowance balance

  $ 642     $ 6,763     $ 3,683     $ 115     $ 136     $ 1     $ 11,340  
                                                         
                                                         

Loans:

                                                       

Loans individually evaluated for impairment

  $ 864     $ 11,198     $ 14,089     $ 8     $ 77     $     $ 26,236  

Loans collectively evaluated for impairment

    82,879       240,319       227,435       9,921       32,654       383       593,591  

Total ending loans balance

  $ 83,743     $ 251,517     $ 241,524     $ 9,929     $ 32,731     $ 383     $ 619,827  

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of December 31, 2015:


   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

Allowance for loan losses:

                                                       

Ending allowance balance attributable to loans:

                                                       

Individually evaluated for impairment

  $     $ 43     $ 385     $     $     $     $ 428  

Collectively evaluated for impairment

    818       6,950       3,599       122       122       2       11,613  

Total ending allowance balance

  $ 818     $ 6,993     $ 3,984     $ 122     $ 122     $ 2     $ 12,041  
                                                         
                                                         

Loans:

                                                       

Loans individually evaluated for impairment

  $ 1,112     $ 12,819     $ 17,673     $ 20     $ 152     $     $ 31,776  

Loans collectively evaluated for impairment

    85,064       237,317       227,936       9,990       26,164       419       586,890  

Total ending loans balance

  $ 86,176     $ 250,136     $ 245,609     $ 10,010     $ 26,316     $ 419     $ 618,666  

Impaired Loans


Impaired loans include restructured loans and loans on nonaccrual or classified as doubtful, whereby collection of the total amount is improbable, or loss, whereby all or a portion of the loan has been written off or a specific allowance for loss has been provided.


The following tables present information related to loans individually evaluated for impairment by class of loans as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015:


   

As of March 31, 2016

   

Three Months Ended March 31, 2016

 
   

Unpaid

Principal

Balance

   

Recorded

Investment

   

Allowance

For Loan

Losses

Allocated

   

Average

Recorded

Investment

   

Interest

Income

Recognized

   

Cash

Basis

Income

Recognized

 
   

(in thousands)

         

With No Related Allowance Recorded:

                                               

Commercial

  $ 1,176     $ 864     $     $ 987     $ 1     $ 1  

Commercial real estate:

                                               

Construction

    277       261             261       3        

Farmland

    5,726       4,125             4,194       6       5  

Nonfarm nonresidential

    9,705       6,401             7,116       248       190  

Residential real estate:

                                               

Multi-family

    2,400       2,400             1,216       30       1  

1-4 Family

    7,977       5,834             8,795       58       6  

Consumer

    40       8             14       7       8  

Agriculture

    105       77             115              

Other

                                   

Subtotal

    27,406       19,970             22,698       353       211  
                                                 

With An Allowance Recorded:

                                               

Commercial

                                   

Commercial real estate:

                                               

Construction

                                   

Farmland

                                   

Nonfarm nonresidential

    411       411       39       438       6        

Residential real estate:

                                               

Multi-family

    4,177       4,177       48       4,186       50        

1-4 Family

    1,678       1,678       377       1,684       20        

Consumer

                                   

Agriculture

                                   

Other

                                   

Subtotal

    6,266       6,266       464       6,308       76        

Total

  $ 33,672     $ 26,236     $ 464     $ 29,006     $ 429     $ 211  

   

As of December 31, 2015

   

Three Months Ended March 31, 2015

 
   

Unpaid

Principal

Balance

   

Recorded

Investment

   

Allowance

For Loan

Losses

Allocated

   

Average

Recorded

Investment

   

Interest

Income

Recognized

   

Cash

Basis

Income

Recognized

 
   

(in thousands)

         

With No Related Allowance Recorded:

                                               

Commercial

  $ 1,558     $ 1,112     $     $ 1,821     $     $  

Commercial real estate:

                                               

Construction

    278       262             4,019       4       1  

Farmland

    6,004       4,263             4,804       23       23  

Nonfarm nonresidential

    11,256       7,829             22,920       65        

Residential real estate:

                                               

Multi-family

    32       32             40              

1-4 Family

    14,066       11,756             14,918       134       47  

Consumer

    118       20             27              

Agriculture

    260       152             247              

Other

                      123       2       2  

Subtotal

    33,572       25,426             48,919       228       73  

With An Allowance Recorded:

                                               

Commercial

                      29              

Commercial real estate:

                                               

Construction

                                   

Farmland

                      157              

Nonfarm nonresidential

    574       465       43       8,535       6        

Residential real estate:

                                               

Multi-family

    4,195       4,195       57       4,258       47        

1-4 Family

    1,690       1,690       328       1,727       25        

Consumer

                      20              

Agriculture

                                   

Other

                                   

Subtotal

    6,459       6,350       428       14,726       78        

Total

  $ 40,031     $ 31,776     $ 428     $ 63,645     $ 306     $ 73  

Troubled Debt Restructuring


A troubled debt restructuring (TDR) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty.  The majority of the Company’s TDRs involve a reduction in interest rate, a deferral of principal for a stated period of time, or an interest only period.  All TDRs are considered impaired and the Company has allocated reserves for these loans to reflect the present value of the concessionary terms granted to the borrower.


The following table presents the types of TDR loan modifications by portfolio segment outstanding as of March 31, 2016 and December 31, 2015:


   

TDRs

Performing to

Modified Terms

   

TDRs Not

Performing to

Modified Terms

   

Total

TDRs

 
   

(in thousands)

 

March 31, 2016

                       

Commercial

                       

Rate reduction

  $     $ 68     $ 68  

Principal deferral

          439       439  

Commercial Real Estate:

                       

Construction

                       

Rate reduction

    261             261  

Farmland

                       

Principal deferral

          2,365       2,365  

Nonfarm nonresidential

                       

Rate reduction

    5,593             5,593  

Principal deferral

          607       607  

Residential Real Estate:

                       

Multi-family

                       

Rate reduction

    6,577             6,577  

1-4 Family

                       

Rate reduction

    2,436             2,436  

Total TDRs

  $ 14,867     $ 3,479     $ 18,346  

   

TDRs

Performing to

Modified Terms

   

TDRs Not

Performing to

Modified Terms

   

Total

TDRs

 
   

(in thousands)

 

December 31, 2015

                       

Commercial

                       

Rate reduction

  $     $ 68     $ 68  

Principal deferral

          439       439  

Commercial Real Estate:

                       

Construction

                       

Rate reduction

    262             262  

Farmland

                       

Principal deferral

          2,365       2,365  

Nonfarm nonresidential

                       

Rate reduction

    5,637       50       5,687  

Principal deferral

          622       622  

Residential Real Estate:

                       

Multi-family

                       

Rate reduction

    4,195             4,195  

1-4 Family

                       

Rate reduction

    7,346             7,346  

Total TDRs

  $ 17,440     $ 3,544     $ 20,984  

At March 31, 2016 and December 31, 2015, 81% and 83%, respectively, of the Company’s TDRs were performing according to their modified terms.  The Company allocated $215,000 and $179,000 in reserves to borrowers whose loan terms have been modified in TDRs as of March 31, 2016, and December 31, 2015, respectively.  The Company has committed to lend no additional amounts as of March 31, 2016 and December 31, 2015 to borrowers with outstanding loans classified as TDRs.


Management periodically reviews renewals/modifications of previously identified TDRs, for which there was no principal forgiveness, to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification did not contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate, the TDR classification is removed as the borrower has complied with the terms of the loan at the date of renewal/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the renewal/modification. In this instance, the TDR was originally considered a restructuring in a prior year as a result of a modification with an interest rate that was not commensurate with the risk of the underlying loan. Additionally, TDR classification can be removed in circumstances in which the Company performs a non-concessionary re-modification of the loan at terms that were considered to be at market for loans with comparable risk. Management expects the borrower will continue to perform under the re-modified terms based on the borrower’s past history of performance.


No TDR loan modifications occurred during the three months ended March 31, 2016 or March 31, 2015. During the first three months of 2016 and 2015, no TDRs defaulted on their restructured loan within the 12 month period following the loan modification. A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual.


Nonperforming Loans


Nonperforming loans include impaired loans not on accrual and smaller balance homogeneous loans, such as residential mortgage and consumer loans, that are collectively evaluated for impairment.


The following table presents the recorded investment in nonaccrual and loans past due 90 days and still on accrual by class of loan as of March 31, 2016, and December 31, 2015: 


   

Nonaccrual

   

Loans Past Due 90 Days

And Over Still Accruing

 
   

March 31,

2016

   

December 31,

2015

   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 
                                 

Commercial

  $ 864     $ 1,112     $     $  

Commercial Real Estate:

                               

Construction

                       

Farmland

    4,125       4,263              

Nonfarm nonresidential

    1,219       2,657              

Residential Real Estate:

                               

Multi-family

          32              

1-4 Family

    4,827       5,851              

Consumer

    7       20              

Agriculture

    77       152              

Other

                       

Total

  $ 11,119     $ 14,087     $     $  

The following table presents the aging of the recorded investment in past due loans as of March 31, 2016 and December 31, 2015: 


   

30 – 59

Days

Past Due

   

60 – 89

Days

Past Due

   

90 Days

And Over

Past Due

   

Nonaccrual

   

Total

Past Due

And

Nonaccrual

 
   

(in thousands)

 

March 31, 2016

                                       

Commercial

  $ 34     $     $     $ 864     $ 898  

Commercial Real Estate:

                                       

Construction

    128                         128  

Farmland

    244       4             4,125       4,373  

Nonfarm nonresidential

                      1,219       1,219  

Residential Real Estate:

                                       

Multi-family

                             

1-4 Family

    1,412       12             4,827       6,251  

Consumer

    11       9             7       26  

Agriculture

          37             77       114  

Other

                             

Total

  $ 1,829     $ 62     $     $ 11,119     $ 13,010  

   

30 – 59

Days

Past Due

   

60 – 89

Days

Past Due

   

90 Days

And Over

Past Due

   

Nonaccrual

   

Total

Past Due

And

Nonaccrual

 
                                         
   

(in thousands)

 

December 31, 2015

                                       

Commercial

  $ 78     $     $     $ 1,112     $ 1,190  

Commercial Real Estate:

                                       

Construction

                             

Farmland

    456                   4,263       4,719  

Nonfarm nonresidential

    326                   2,657       2,983  

Residential Real Estate:

                                       

Multi-family

                      32       32  

1-4 Family

    2,225       241             5,851       8,317  

Consumer

    41                   20       61  

Agriculture

    7                   152       159  

Other

                             

Total

  $ 3,133     $ 241     $     $ 14,087     $ 17,461  

Credit Quality Indicators 


We categorize all loans into risk categories at origination based upon original underwriting. Thereafter, we categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends.  Additionally, loans are analyzed regularly through our internal and external loan review processes. Borrower relationships in excess of $500,000 are routinely analyzed through our credit administration processes which classify the loans as to credit risk. The following definitions are used for risk ratings:


Watch – Loans classified as watch are those loans which have experienced a potentially adverse development which necessitates increased monitoring.


Special Mention – Loans classified as special mention do not have all of the characteristics of substandard or doubtful loans. They have one or more deficiencies which warrant special attention and which corrective action, such as accelerated collection practices, may remedy.


Substandard – Loans classified as substandard are those loans with clear and defined weaknesses such as a highly leveraged position, unfavorable financial ratios, uncertain repayment sources or poor financial condition which may jeopardize the repayment of the debt as contractually agreed. They are characterized by the distinct possibility we will sustain some losses if the deficiencies are not corrected.


Doubtful – Loans classified as doubtful are those loans which have characteristics similar to substandard loans but with an increased risk that collection or liquidation in full is highly questionable and improbable.


Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be “Pass” rated loans. As of March 31, 2016, and December 31, 2015, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:


   

Pass

   

Watch

   

Special

Mention

   

Substandard

   

Doubtful

   

Total

 
   

(in thousands)

 

March 31, 2016

                                               

Commercial

  $ 81,911     $ 436     $     $ 1,396     $     $ 83,743  

Commercial Real Estate:

                                               

Construction

    29,027       5,604                         34,631  

Farmland

    62,573       4,829             5,717             73,119  

Nonfarm nonresidential

    117,964       22,017       1,317       2,469             143,767  

Residential Real Estate:

                                               

Multi-family

    32,648       6,988             3,905             43,541  

1-4 Family

    172,540       14,432       66       10,945             197,983  

Consumer

    9,356       436             137             9,929  

Agriculture

    28,049       4,523             159             32,731  

Other

    383                               383  

Total

  $ 534,451     $ 59,265     $ 1,383     $ 24,728     $     $ 619,827  

   

Pass

   

Watch

   

Special

Mention

   

Substandard

   

Doubtful

   

Total

 
                                                 
   

(in thousands)

 
                                                 

December 31, 2015

                                               

Commercial

  $ 81,570     $ 2,953     $     $ 1,653     $     $ 86,176  

Commercial Real Estate:

                                               

Construction

    27,603       5,289             262             33,154  

Farmland

    65,476       4,844             6,092             76,412  

Nonfarm nonresidential

    111,901       22,687       1,328       4,654             140,570  

Residential Real Estate:

                                               

Multi-family

    35,300       4,879             3,952             44,131  

1-4 Family

    164,490       17,636       67       19,285             201,478  

Consumer

    9,323       474             213             10,010  

Agriculture

    21,402       4,601             313             26,316  

Other

    419                               419  

Total

  $ 517,484     $ 63,363     $ 1,395     $ 36,424     $     $ 618,666  


v3.4.0.3
Note 5 - Other Real Estate Owned
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Real Estate Owned [Text Block]

Note 5 – Other Real Estate Owned


Other real estate owned (OREO) is real estate acquired as a result of foreclosure or by deed in lieu of foreclosure.  It is classified as real estate owned until such time as it is sold.  When property is acquired as a result of foreclosure or by deed in lieu of foreclosure, it is recorded at its fair market value less cost to sell.  Any write-down of the property at the time of acquisition is charged to the allowance for loan losses.  Costs incurred in order to perfect the lien prior to foreclosure may be capitalized if the fair value less the cost to sell exceeds the balance of the loan at the time of transfer to OREO. Examples of eligible costs to be capitalized are payments of delinquent property taxes to clear tax liens or payments to contractors and subcontractors to clear mechanics’ liens. Subsequent reductions in fair value are recorded as non-interest expense. 


To determine the fair value of OREO for smaller dollar single family homes, we consult with internal real estate sales staff and external realtors, investors, and appraisers.  If the internally evaluated market price is below our underlying investment in the property, appropriate write-downs are taken. For larger dollar residential and commercial real estate properties, we obtain a new appraisal of the subject property or have staff from our special assets group or in our centralized appraisal department evaluate the latest in-file appraisal in connection with the transfer to other real estate owned.  We typically obtain updated appraisals within five quarters of the anniversary date of ownership unless a sale is imminent. 


The following table presents the major categories of OREO at the period-ends indicated:


   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 

Commercial Real Estate:

               

Construction, land development, and other land

  $ 12,507     $ 12,749  

Nonfarm nonresidential

    5,802       6,967  

Residential Real Estate:

               

1-4 Family

    440       128  
      18,749       19,844  

Valuation allowance

    (888

)

    (630

)

    $ 17,861     $ 19,214  

   

For the Three

Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

OREO Valuation Allowance Activity:

               

Beginning balance

  $ 630     $ 1,066  

Provision to allowance

    500       300  

Write-downs

    (242

)

    (874

)

Ending balance

  $ 888     $ 492  

Residential loans secured by 1-4 family residential properties in the process of foreclosure totaled $601,000 and $934,000 at March 31, 2016 and December 31, 2015, respectively.


Net activity relating to other real estate owned during the three months ended March 31, 2016 and 2015 is as follows:


   

For the Three

Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

OREO Activity

               

OREO as of January 1

  $ 19,214     $ 46,197  

Real estate acquired

    441       347  

Valuation adjustment write-downs

    (500

)

    (300

)

Net gain on sales

    55       3  

Proceeds from sales of properties

    (1,349

)

    (2,629

)

OREO as of March 31

  $ 17,861     $ 43,618  

OREO rental income totaled $256,000 and $357,000 for the three months ended March 31, 2016 and 2015 respectively.


Expenses related to other real estate owned include:


   

For the Three Months Ended March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

Net gain on sales

  $ (55

)

  $ (3

)

Provision to allowance

    500       300  

Operating expense

    223       436  

Total

  $ 668     $ 733  


v3.4.0.3
Note 6 - Deposits
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Deposit Liabilities Disclosures [Text Block]

 Note 6 – Deposits


The following table shows ending deposit balances by category as of:


   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 

Non-interest bearing

  $ 120,302     $ 120,043  

Interest checking

    96,465       97,515  

Money market

    134,684       125,935  

Savings

    35,197       34,677  

Certificates of deposit

    478,965       499,827  

Total

  $ 865,613     $ 877,997  

Time deposits of $250,000 or more were $28.1 million and $28.4 million at March 31, 2016 and December 31, 2015, respectively.


Scheduled maturities of all time deposits at March 31, 2016 were as follows (in thousands):


Year 1

  $ 359,138  

Year 2

    43,553  

Year 3

    12,751  

Year 4

    35,860  

Year 5

    27,663  
    $ 478,965  


v3.4.0.3
Note 7 - Advances from Federal Home Loan Bank
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Federal Home Loan Bank Advances, Disclosure [Text Block]

Note 7 – Advances from the Federal Home Loan Bank


Advances from the Federal Home Loan Bank were as follows:


   

March

31,

   

December

31,

 
   

2016

   

2015

 
   

(in thousands)

 

Monthly amortizing advances with fixed rates from 0.00% to 5.25% and maturities ranging from 2017 through 2033, averaging 2.58% at March 31, 2016 and 2.65% at December 31, 2015

  $ 2,932     $ 3,081  

Each advance is payable based upon the terms of agreement, with a prepayment penalty.  New advances are limited to a one year maturity or less. No prepayment penalties were incurred during 2016 or 2015. The advances are collateralized by first mortgage loans.  The borrowing capacity is based on the market value of the underlying pledged loans. At March 31, 2016, our additional borrowing capacity with the FHLB was $28.6 million. The availability of our borrowing capacity could be affected by our financial condition and the FHLB could require additional collateral or, among other things, exercise its right to deny a funding request, at its discretion.



v3.4.0.3
Note 8 - Fair Values Measurement
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]

Note 8 – Fair Values Measurement


Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use various valuation techniques to determine fair value, including market, income and cost approaches.  There are three levels of inputs that may be used to measure fair values:


Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets an entity has the ability to access as of the measurement date, or observable inputs.


Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.


Level 3: Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.


In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  When that occurs, we classify the fair value hierarchy on the lowest level of input that is significant to the fair value measurement.  We used the following methods and significant assumptions to estimate fair value.


Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges, if available. This valuation method is classified as Level 1 in the fair value hierarchy. For securities where quoted prices are not available, fair values are calculated on market prices of similar securities, or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Matrix pricing relies on the securities’ relationship to similarly traded securities, benchmark curves, and the benchmarking of like securities. Matrix pricing utilizes observable market inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events. In instances where broker quotes are used, these quotes are obtained from market makers or broker-dealers recognized to be market participants. This valuation method is classified as Level 2 in the fair value hierarchy. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. This valuation method is classified as Level 3 in the fair value hierarchy. Discounted cash flows are calculated using spread to swap and LIBOR curves that are updated to incorporate loss severities, volatility, credit spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.


Impaired Loans: An impaired loan is evaluated at the time the loan is identified as impaired and is recorded at fair value less costs to sell. Fair value is measured based on the value of the collateral securing the loan and is classified as Level 3 in the fair value hierarchy. Fair value is determined using several methods. Generally, the fair value of real estate is determined based on appraisals by qualified licensed appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.


Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. These routine adjustments are made to adjust the value of a specific property relative to comparable properties for variations in qualities such as location, size, and income production capacity relative to the subject property of the appraisal. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.


We routinely apply an internal discount to the value of appraisals used in the fair value evaluation of our impaired loans. The deductions to the appraisal take into account changing business factors and market conditions, as well as potential value impairment in cases where our appraisal date predates a likely change in market conditions. These deductions range from 10% for routine real estate collateral to 25% for real estate that is determined (1) to have a thin trading market or (2) to be specialized collateral. This is in addition to estimated discounts for cost to sell of six to ten percent.


We also apply discounts to the expected fair value of collateral for impaired loans where the likely resolution involves litigation or foreclosure. Resolution of this nature generally results in receiving lower values for real estate collateral in a more aggressive sales environment. We have utilized discounts ranging from 10% to 33% in our impairment evaluations when applicable.


Impaired loans are evaluated quarterly for additional impairment. We obtain updated appraisals on properties securing our loans when circumstances are warranted such as at the time of renewal or when market conditions have significantly changed. This determination is made on a property-by-property basis in light of circumstances in the broader economic climate and our assessment of deterioration of real estate values in the market in which the property is located. The first stage of our assessment involves management’s inspection of the property in question. Management also engages in conversations with local real estate professionals, investors, and market participants to determine the likely marketing time and value range for the property. The second stage involves an assessment of current trends in the regional market. After thorough consideration of these factors, management will either internally evaluate fair value or order a new appraisal.


Other Real Estate Owned (OREO): OREO is evaluated at the time of acquisition and recorded at fair value as determined by independent appraisal or internal evaluation less cost to sell. Our quarterly evaluations of OREO for impairment are driven by property type. For smaller dollar single family homes, we consult with internal real estate sales staff and external realtors, investors, and appraisers. Based on these consultations, we determine asking prices for OREO properties we are marketing for sale. If the internally evaluated fair value is below our recorded investment in the property, appropriate write-downs are taken.


For larger dollar commercial real estate properties, we obtain a new appraisal of the subject property or have staff in our special assets group or centralized appraisal department evaluate the latest in-file appraisal in connection with the transfer to other real estate owned. In some of these circumstances, an appraisal is in process at quarter end, and we must make our best estimate of the fair value of the underlying collateral based on our internal evaluation of the property, review of the most recent appraisal, and discussions with the currently engaged appraiser. We generally obtain updated appraisals within five quarters of the anniversary date of ownership unless a sale is imminent.


We routinely apply an internal discount to the value of appraisals used in the fair value evaluation of our OREO. The deductions to the appraisal take into account changing business factors and market conditions, as well as potential value impairment in cases where our appraisal date predates a likely change in market conditions. These deductions range from 10% for routine real estate collateral to 25% for real estate that is determined (1) to have a thin trading market or (2) to be specialized collateral. This is in addition to estimated discounts for cost to sell of six to ten percent.


Financial assets measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015 are summarized below:


           

Fair Value Measurements at March 31, 2016 Using

 
           

(in thousands)

 

Description

 

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Available for sale securities

                               

U.S. Government and federal agency

  $ 34,736     $     $ 34,736     $  

Agency mortgage-backed: residential

    101,362             101,362        

State and municipal

    3,337             3,337        

Corporate bonds

    2,090             2,090        

Total

  $ 141,525     $     $ 141,525     $  

           

Fair Value Measurements at December 31, 2015 Using

 
           

(in thousands)

 

Description

 

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Available for sale securities

                               

U.S. Government and federal agency

  $ 33,262     $     $ 33,262     $  

Agency mortgage-backed: residential

    102,662             102,662        

State and municipal

    6,861             6,861        

Corporate bonds

    2,193             2,193        

Total

  $ 144,978     $     $ 144,978     $  

There were no transfers between Level 1 and Level 2 during 2016 or 2015.


The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods ended March 31, 2016 and 2015:


   

Other Debt

Securities

 
   

2016

   

2015

 
   

(in thousands)

 

Balances of recurring Level 3 assets at January 1

  $     $ 658  

Total gain (loss) for the period:

               

Included in other comprehensive income (loss)

          7  

Balance of recurring Level 3 assets at March 31

  $     $ 665  

At March 31, 2015, our other debt security valuation was determined internally by calculating discounted cash flows using the security’s coupon rate of 6.5% and an estimated current market rate of 8.0% based upon the current yield curve plus spreads that adjust for volatility, credit risk, and optionality.  We also considered the issuer’s publicly filed financial information as well as assumptions regarding the likelihood of deferrals and defaults. This security was sold during 2015.


Financial assets measured at fair value on a non-recurring basis are summarized below: 


           

Fair Value Measurements at March 31, 2016 Using

 
           

(in thousands)

 
Description  

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Impaired loans:

                               

Commercial

  $     $     $     $  

Commercial real estate:

                               

Construction

                       

Farmland

                       

Nonfarm nonresidential

    91                   91  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    1,301                   1,301  

Consumer

                       

Other

                       

Other real estate owned, net:

                               

Commercial real estate:

                               

Construction

    11,914                   11,914  

Farmland

                       

Nonfarm nonresidential

    5,528                   5,528  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    419                   419  

           

Fair Value Measurements at December 31, 2015 Using

 
           

(in thousands)

 
Description  

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Impaired loans:

                               

Commercial

  $     $     $     $  

Commercial real estate:

                               

Construction

                       

Farmland

                       

Nonfarm nonresidential

    139                   139  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    1,362                   1,362  

Consumer

                       

Other

                       

Other real estate owned, net:

                               

Commercial real estate:

                               

Construction

    12,344                   12,344  

Farmland

                       

Nonfarm nonresidential

    6,746                   6,746  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    124                   124  

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $1.8 million at March 31, 2016 with a valuation allowance of $383,000, resulting in an additional provision for loan losses of $46,000 for the three months ended March 31, 2016. Impaired loans had a carrying amount of $1.9 million with a valuation allowance of $131,000, and no additional provision for the three months ended March 31, 2015. At December 31, 2015, impaired loans had a carrying amount of $1.8 million, with a valuation allowance of $337,000.


OREO, which is measured at the lower of carrying or fair value less estimated costs to sell, had a net carrying amount of $17.9 million as of March 31, 2016, compared with $43.6 million at March 31, 2015 and $19.2 million at December 31, 2015.  Fair value write-downs of $500,000 and $300,000 were recorded on OREO for the three months ended March 31, 2016 and 2015, respectively.


The following table presents qualitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2016:


        Valuation       Range (Weighted  
   

Fair Value

 

Technique(s)

 

Unobservable Input(s)

 

Average)

 
   

(in thousands)

                   
                           

Impaired loans – Residential real estate

  $ 1,301  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  1% - 16% (7%)  
                           

Other real estate owned – Commercial real estate

  $ 17,442  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  0% - 30% (12%)   
                           
          Income approach   Discount or capitalization rate   10%  - 20% (17%)  

The following table presents qualitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2015:


        Valuation       Range (Weighted  
   

Fair Value

 

Technique(s)

 

Unobservable Input(s)

 

Average)

 
   

(in thousands)

                   
                           

Impaired loans – Residential real estate

  $ 1,362  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  1% - 16% (7%)  
                           

Other real estate owned – Commercial real estate

  $ 19,090  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  0% - 30% (12%)  
                           
         

Income approach

 

Discount or capitalization rate

  10% - 20% (17%)  

Carrying amount and estimated fair values of financial instruments were as follows for the periods indicated:


           

Fair Value Measurements at March 31, 2016 Using

 
   

Carrying

Amount

   

Level 1

   

Level 2

   

Level 3

   

Total

 
   

(in thousands)

 

Financial assets

                                       

Cash and cash equivalents

  $ 80,306     $ 67,398     $ 12,908     $     $ 80,306  

Securities available for sale

    141,525             141,525             141,525  

Securities held to maturity

    42,011             44,683             44,683  

Federal Home Loan Bank stock

    7,323       N/A       N/A       N/A       N/A  

Loans held for sale

    113             113             113  

Loans, net

    608,487                   615,391       615,391  

Accrued interest receivable

    3,034             1,030       2,004       3,034  

Financial liabilities

                                       

Deposits

  $ 865,613     $ 120,302     $ 734,190     $     $ 854,492  

Federal Home Loan Bank advances

    2,932             2,980             2,980  

Subordinated capital notes

    3,825                   3,726       3,726  

Junior subordinated debentures

    21,000                   12,713       12,713  

Accrued interest payable

    2,936             385       2,551       2,936  

           

Fair Value Measurements at December 31, 2015 Using

 
   

Carrying

Amount

   

Level 1

   

Level 2

   

Level 3

   

Total

 
   

(in thousands)

 

Financial assets

                                       

Cash and cash equivalents

  $ 93,335     $ 79,498     $ 13,837     $     $ 93,335  

Securities available for sale

    144,978             144,978             144,978  

Securities held to maturity

    42,075             44,253             44,253  

Federal Home Loan Bank stock

    7,323       N/A       N/A       N/A       N/A  

Loans held for sale

    186             186             186  

Loans, net

    606,625                   614,162       614,162  

Accrued interest receivable

    3,116             1,111       2,005       3,116  

Financial liabilities

                                       

Deposits

  $ 877,997     $ 120,043     $ 739,152     $     $ 859,195  

Federal Home Loan Bank advances

    3,081             3,076             3,076  

Subordinated capital notes

    4,050                   3,933       3,933  

Junior subordinated debentures

    21,000                   12,810       12,810  

Accrued interest payable

    2,805             422       2,383       2,805  

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:


(a) Cash and Cash Equivalents


The carrying amounts of cash and short-term instruments approximate fair values and are classified as either Level 1 or Level 2. Non-interest bearing deposits are Level 1 whereas interest bearing due from bank accounts and fed funds sold are Level 2.


(b) FHLB Stock


It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.


(c) Loans, Net


Fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.


(d) Loans Held for Sale


The fair value of loans held for sale is estimated based upon binding contracts and and/or quotes from third party investors resulting in a Level 2 classification.


(e) Deposits


The fair values disclosed for non-interest bearing deposits are, by definition, equal to the amount payable on demand at the reporting date resulting in a Level 1 classification. The carrying amounts of variable rate interest bearing deposits approximate their fair values at the reporting date resulting in a Level 2 classification.  Fair values for fixed rate interest bearing deposits are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.


(f) Other Borrowings


The fair values of the Company’s FHLB advances are estimated using discounted cash flow analyses based on the current borrowing rates resulting in a Level 2 classification.


The fair values of the Company’s subordinated capital notes and junior subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.


(g) Accrued Interest Receivable/Payable


The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the asset or liability with which the accrual is associated.



v3.4.0.3
Note 9 - Income Taxes
3 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

Note 9 – Income Taxes


Deferred tax assets and liabilities were due to the following as of:


   

March

31,

   

December

31,

 
   

2016

   

2015

 
   

(in thousands)

 

Deferred tax assets:

               

Net operating loss carry-forward

  $ 38,469     $ 38,085  

Allowance for loan losses

    3,969       4,214  

Other real estate owned write-down

    6,991       7,619  

Alternative minimum tax credit carry-forward

    692       692  

Net assets from acquisitions

    671       671  

Net unrealized loss on securities

          166  

New market tax credit carry-forward

    208       208  

Nonaccrual loan interest

    525       549  

Other

    1,958       1,875  
      53,483       54,079  
                 

Deferred tax liabilities:

               

FHLB stock dividends

    928       928  

Fixed assets

    207       176  

Net unrealized gain on securities

    197        

Other

    854       865  
      2,186       1,969  

Net deferred tax assets before valuation allowance

    51,297       52,110  

Valuation allowance

    (51,297

)

    (52,110

)

Net deferred tax asset

  $     $  

Our estimate of our ability to realize the deferred tax asset depends on our estimate of projected future levels of taxable income. In analyzing future taxable income levels, we considered all evidence currently available, both positive and negative. Based on our analysis, we established a valuation allowance for all deferred tax assets as of December 31, 2011. The valuation allowance remains in effect as of March 31, 2016.  


The Company does not have any beginning and ending unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. There were no interest and penalties recorded in the income statement or accrued for the three months ended March 31, 2016 or March 31, 2015 related to unrecognized tax benefits.


Under Section 382 of the Internal Revenue Code, as amended (“Section 382”), the Company’s its net operating loss carryforwards (“NOLs”) and other deferred tax assets can generally be used to offset future taxable income and therefore reduce federal income tax obligations. However, the Company's ability to use its NOLs would be limited if there was an “ownership change” as defined by Section 382. This would occur if shareholders owning (or deemed to own under the tax rules) 5% or more of the Company's increase their aggregate ownership of the Company by more than 50 percentage points over a defined period of time.


In 2015, the Company took two measures to preserve the value of its NOLs. First, we adopted a tax benefits preservation plan designed to reduce the likelihood of an “ownership change” occurring as a result of purchases and sales of the Company's common shares. Upon adoption of plan, the Company declared a dividend of one preferred stock purchase right for each common share outstanding as of the close of business on July 10, 2015. Any shareholder or group that acquires beneficial ownership of 5% or more of the Company (an “acquiring person”) could be subject to significant dilution in its holdings if the Company's Board of Directors does not approve such acquisition. Existing shareholders holding 5% or more of the Company will not be considered acquiring persons unless they acquire additional shares, subject to certain exceptions described in the plan. In addition, the Board of Directors has the discretion to exempt certain transactions and certain persons whose acquisition of securities is determined by the Board not to jeopardize the Company's deferred tax assets. The rights will expire upon the earlier of (i) June 29, 2018, (ii) the beginning of a taxable year with respect to which the Board of Directors determines that no tax benefits may be carried forward, (iii) the repeal or amendment of Section 382 or any successor statute, if the Board of Directors determines that the plan is no longer needed to preserve the tax benefits, and (iv) certain other events as described in the plan.


On September 23, 2015, our shareholders approved an amendment to the Company’s articles of incorporation to further help protect the long-term value of the Company’s NOLs. The amendment provides a means to block transfers of our common shares that could result in an ownership change under Section 382. The transfer restrictions will expire on the earlier of (i) September 23, 2018, (ii) the beginning of a taxable year with respect to which the Board of Directors determines that no tax benefit may be carried forward, (iii) the repeal of Section 382 or any successor statute if our Board determines that the transfer restrictions are no longer needed to preserve the tax benefits of our NOLs, or (iv) such date as the Board otherwise determines that the transfer restrictions are no longer necessary.


The Company and its subsidiaries are subject to U.S. federal income tax and the Company is subject to income tax in the Commonwealth of Kentucky. The Company is no longer subject to examination by taxing authorities for years before 2012.



v3.4.0.3
Note 10 - Stock Plans and Stock Based Compensation
3 Months Ended
Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 10 – Stock Plans and Stock Based Compensation 


The Company has two stock incentive plans. The Porter Bancorp, Inc. 2006 Stock Incentive Plan (“2006 Employee Plan”) permits the issuance of up to 1,563,050 common shares upon the grant of stock awards.  As of March 31, 2016, the Company had issued and outstanding 917,541 unvested shares net of forfeitures and vesting under the stock incentive plan. Shares issued under the plan vest annually on the anniversary date of the grant over three to ten years. The Company had 307,156 shares remaining available for issue under the 2006 Employee Plan when it expired by its terms on February 23, 2013, the tenth anniversary of its adoption.  


The Porter Bancorp, Inc. 2006 Non-Employee Directors Stock Ownership Incentive Plan (“2006 Director Plan”) permits the issuance of up to 700,000 shares of the Company’s voting common stock upon the grant of stock awards. The 2006 Director Plan awards restricted shares having a fair market value of $25,000 annually to each non-employee director. Unvested shares are granted automatically under the plan at fair market value on the date of grant and vest on December 31 in the year of grant. To date during 2016, the Company has not issued any shares to non-employee directors. At March 31, 2016, 185,774 shares remained available for issuance under this plan.


The Board of Directors is submitting a proposal to adopt a new 2016 Omnibus Equity Compensation Plan for shareholder approval at the Company’s 2016 annual meeting on May 25, 2016. For administrative convenience, the proposal would authorize a single stock-based incentive plan authorizing a total of 489,366 shares for future equity awards to both employees and directors of the Company and the Bank. This number represents the combined number of shares previously authorized by shareholders and available for issuance under the two 2006 Plans. If the 2016 Plan is approved, the 2006 Director Plan would be terminated.


On December 4, 2014, the U.S. Treasury sold our Series A preferred shares at a discount to face amount. As a result, restricted shares previously granted to senior executives became subject to permanent transfer restrictions.  On March 25, 2015, the Compensation Committee modified the equity compensation arrangements with our four named executive officers to restore the incentive that was intended by including equity grants in their employment agreements.  The Compensation Committee and our four named executive officers mutually agreed to terminate 538,479 restricted shares that were subject to permanent restrictions on transfer.  We then awarded 800,000 new service-based restricted shares to those executive officers. The new awards are accounted for as a modification and vest over four years, with one-third of the shares vesting on each of the second, third and fourth anniversaries of the date of grant.  The modification resulted in incremental compensation expense of approximately $233,000, which is being amortized in accordance with the vesting schedule.


The Company recorded $73,000 and $49,000 of stock-based compensation during the first three months of 2016 and 2015, respectively, to salaries and employee benefits. We expect substantially all of the unvested shares outstanding at the end of the period will vest according to the vesting schedule. No deferred tax benefit was recognized related to this expense for either period.


The following table summarizes unvested share activity as of and for the periods indicated for the Stock Incentive Plan:


   

Three Months Ended

   

Twelve Months Ended

 
   

March 31, 2016

   

December 31, 2015

 
           

Weighted

           

Weighted

 
           

Average

           

Average

 
           

Grant

           

Grant

 
   

Shares

   

Price

   

Shares

   

Price

 

Outstanding, beginning

    922,419     $ 0.96       770,440     $ 1.33  

Granted

                800,000       0.89  

Vested

    (1,522

)

    21.87       (165,185

)

    1.50  

Terminated

                (450,994

)

    1.25  

Forfeited

    (3,356

)

    1.35       (31,842

)

    1.13  

Outstanding, ending

    917,541     $ 0.93       922,419     $ 0.96  

The following table summarizes unvested share activity as of and for the periods indicated for the Non-Employee Directors Stock Ownership Incentive Plan:


   

Three Months Ended

   

Twelve Months Ended

 
   

March 31, 2016

   

December 31, 2015

 
           

Weighted

           

Weighted

 
           

Average

           

Average

 
           

Grant

           

Grant

 
   

Shares

   

Price

   

Shares

   

Price

 

Outstanding, beginning

        $       5,052     $ 1.65  

Granted

                115,740       1.08  

Vested

                (120,792

)

    1.10  

Forfeited

                       

Outstanding, ending

        $           $  

Unrecognized stock based compensation expense related to unvested shares for the remainder of 2016 and beyond is estimated as follows (in thousands):


April 2016 – December 2016

  $ 175  

2017

    156  

2018

    149  

2019 & thereafter

     


v3.4.0.3
Note 11 - Earnings (Loss) Per Share
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]

Note 11 – Earnings (Loss) per Share


The factors used in the basic and diluted earnings per share computations follow:


   

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 
   

(in thousands, except

share and per share data)

 
                 

Net income

  $ 1,480     $ 594  

Less:

               

Earnings allocated to unvested shares

    51       21  

Earnings attributable to participating preferred shares

          164  

Net income attributable to common shareholders, basic and diluted

  $ 1,429     $ 409  
                 

Basic

               

Weighted average common shares including unvested common shares outstanding

    26,945,307       25,419,523  

Less:

               

Weighted average unvested common shares

    919,980       918,393  

Weighted average Series B preferred shares

          2,702,400  

Weighted average Series D preferred shares

          4,305,333  

Weighted average common shares outstanding

    26,025,327       17,493,397  

Basic income per common share

  $ 0.05     $ 0.02  
                 

Diluted

               

Add: Dilutive effects of assumed exercises of common stock warrants

           

Weighted average common shares and potential common shares

    26,025,327       17,493,397  

Diluted income per common share

  $ 0.05     $ 0.02  

The Company had no outstanding stock options at March 31, 2016 or 2015.  A warrant for the purchase of 330,561 shares of the Company’s common stock at an exercise price of $15.88 was outstanding at March 31, 2016 and 2015 but was not included in the diluted EPS computation as inclusion would have been anti-dilutive. Additionally, warrants for the purchase of 650,544 shares of non-voting common stock at an exercise price of $10.95 per share were outstanding at March 31, 2015, but were not included in the diluted EPS computation as inclusion would have been anti-dilutive. The 650,544 warrants outstanding as of March 31, 2015 expired in September 2015.



v3.4.0.3
Note 12 - Capital Requirements and Restrictions on Retained Earnings
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Regulatory Capital Requirements under Banking Regulations [Text Block]

Note 12 – Capital Requirements and Restrictions on Retained Earnings


Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.


The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective for the Company and Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The final rules allowed banks and their holding companies with less than $250 billion in assets a one-time opportunity to opt-out of a requirement to include unrealized gains and losses in accumulated other comprehensive income in their capital calculation. The Company and the Bank opted out of this requirement.


In its Consent Order with the FDIC and the KDFI, the Bank has agreed to maintain a minimum Tier 1 leverage ratio of 9% and a minimum total risk based capital ratio of 12%. The Consent Order is described in greater detail in Note 2 – “Going Concern and Future Plans”. As of December 31, 2015, the Bank’s Tier 1 leverage ratio and total risk based capital ratio were both less than the minimum capital ratios required by the Consent Order. The Bank cannot be considered well-capitalized while subject to the Consent Order. We are also restricted from accepting, renewing, or rolling-over brokered deposits without the prior receipt of a waiver on a case-by-case basis from our regulators.


On September 21, 2011, we entered into a Written Agreement with the Federal Reserve Bank of St. Louis. In the Agreement, we made formal commitments to use our financial and management resources to serve as a source of strength for the Bank and to assist the Bank in addressing weaknesses identified by the FDIC and the KDFI, to pay no dividends without prior written approval, to pay no interest or principal on subordinated debentures or trust preferred securities without prior written approval, and to submit an acceptable plan to maintain sufficient capital.


The following table shows the ratios and amounts of Common Equity Tier 1, Tier 1 capital and total capital to risk-adjusted assets and the leverage ratios for Porter Bancorp, Inc. and the Bank at the dates indicated (dollars in thousands):


   

Actual

   

For Capital Adequacy Purposes

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 

As of March 31, 2016:

                               

Total risk-based capital (to risk-weighted assets)

                               

Consolidated

  $ 69,981       10.46

%

  $ 53,537       8.00

%

Bank

    71,108       10.64       53,479       8.00  

Total common equity Tier I risk-based capital (to risk-weighted assets)

                               

Consolidated

    34,883       5.21       30,114       4.50  

Bank

    59,790       8.94       30,082       4.50  

Tier I capital (to risk-weighted assets)

                               

Consolidated

    47,068       7.03       40,152       6.00  

Bank

    59,790       8.94       40,109       6.00  

Tier I capital (to average assets)

                               

Consolidated

    47,068       5.03       37,434       4.00  

Bank

    59,790       6.39       37,406       4.00  

   

Actual

   

For Capital Adequacy Purposes

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 

As of December 31, 2015:

                               

Total risk-based capital (to risk-weighted assets)

                               

Consolidated

  $ 68,530       10.46

%

  $ 52,436       8.00

%

Bank

    69,250       10.58       52,347       8.00  

Total common equity Tier 1risk-based capital (to risk weighted assets)

                               

Consolidated

  $ 33,368       5.09

%

  $ 29,495       4.50

%

Bank

    57,873       8.84       29,445       4.50  

Tier I capital (to risk-weighted assets)

                               

Consolidated

    45,174       6.89       39,327       6.00  

Bank

    57,873       8.84       39,260       6.00  

Tier I capital (to average assets)

                               

Consolidated

    45,174       4.74       38,131       4.00  

Bank

    57,873       6.08       38,085       4.00  

The Consent Order requires the Bank to achieve the minimum capital ratios presented below:


   

Actual as of March 31, 2016

   

Ratio Required by Consent Order

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 
                                 

Total capital to risk-weighted assets

  $ 71,108       10.64

%

  $ 80,218       12.00

%

Tier I capital to average assets

    59,790       6.39       84,164       9.00  

Bank regulatory agencies can exercise discretion when an institution does not meet the terms of a Consent Order. Based on individual circumstances, the agencies may issue mandatory directives, impose monetary penalties, initiate changes in management, or take more serious adverse actions.


Kentucky banking laws limit the amount of dividends that may be paid to a holding company by its subsidiary banks without prior approval. These laws limit the amount of dividends that may be paid in any calendar year to current year’s net income, as defined in the laws, combined with the retained net income of the preceding two years, less any dividends declared during those periods. The Bank has agreed with its primary regulators to obtain their written consent prior to declaring or paying any future dividends. As a practical matter, the Bank cannot pay dividends to the Company until the Consent Order is satisfied.



v3.4.0.3
Note 13 - Contingencies
3 Months Ended
Mar. 31, 2016
Loss Contingency [Abstract]  
Contingencies Disclosure [Text Block]

Note 13 – Contingencies


We are defendants in various legal proceedings. Litigation is subject to inherent uncertainties and unfavorable rulings could occur. We record contingent liabilities resulting from claims against us when a loss is assessed to be probable and the amount of the loss is reasonably estimable. Assessing probability of loss and estimating probable losses requires analysis of multiple factors, including in some cases judgments about the potential actions of third party claimants and courts. Recorded contingent liabilities are based on the best information available and actual losses in any future period are inherently uncertain.   Currently, we have accrued approximately $2.2 million related to ongoing litigation matters for which we believe liability is probable and reasonably estimable. Accruals are not made in cases where liability is not probable or the amount cannot be reasonably estimated. We disclose legal matters when we believe liability is reasonably possible and may be material to our consolidated financial statements.


Signature Point Litigation. On June 18, 2010, three real estate development companies filed suit in Kentucky state court against the Bank and Managed Assets of Kentucky (“MAKY”). Signature Point Condominiums LLC, et al. v. PBI Bank, et al., Jefferson Circuit Court, Case No 10-CI-04295. On July 16, 2013, a jury in Louisville, Kentucky returned a verdict against the Bank, awarding the plaintiffs compensatory damages of $1,515,000 and punitive damages of $5,500,000. The case arose from a settlement in which the Bank agreed to release the plaintiffs and guarantors from obligations of more than $26 million related to a real estate project in Louisville. The plaintiffs were granted a right of first refusal to repurchase a tract of land within the project. In exchange, the plaintiffs conveyed the real estate securing the loans to the Bank. After plaintiffs declined to exercise their right of first refusal, the Bank sold the tract to the third party. Plaintiffs alleged the Bank had knowledge of the third party offer before the conveyance of the land by the Plaintiffs to the Bank. Plaintiffs asserted claims of fraud, breach of fiduciary duty, breach of the duty of good faith and fair dealing, tortious interference with prospective business advantage and conspiracy to commit fraud, negligence, and conspiracy against the Bank.


After conferring with its legal advisors, the Bank believes the findings and damages are excessive and contrary to law, and that it has meritorious grounds on which it has moved to appeal. The Bank’s Notice of Appeal was filed on October 25, 2013. After a number of procedural issues were resolved, the Bank filed its appellate brief on September 30, 2014. Appellee’s brief was filed on December 1, 2014. The Appellate Court heard oral arguments on November 16, 2015. We await the Appellate Court’s ruling. We will continue to defend this matter vigorously.


In accordance with the guidance provided in ASC 450-20-25, and after consultation with its legal counsel engaged for the appeal of the verdict, the Company concluded that it was not probable the full amount of the compensatory damages awarded by the jury would be overturned. Therefore, a liability was accrued for the full $1.5 million of compensatory damages awarded, plus statutory interest. After conferring with its legal counsel for the appeal, the Company concluded that the jury verdict for punitive damages was contrary to law, unsupported, excessive, and otherwise inappropriate. Based on this advice, the Company concluded it was probable that the verdict amount for $5.5 million in punitive damages would be overturned by the appeals court, and therefore it was not probable that the $5.5 million in punitive damages would become an actual liability. The ultimate outcome of this self-insured matter could have a material adverse effect on our financial condition, results of operations or cash flows.


AIT Laboratories Employee Stock Ownership Plan. On August 29, 2014, the United States Department of Labor (“DOL”) filed a lawsuit against the Bank and Michael A. Evans in the U.S. District Court for the Southern District of Indiana. Thomas E. Perez, Secretary of the United States Department of Labor v. PBI Bank, Inc. and Michael A. Evans (Case No. 1:14-CV-01429-SEB-MJD). The complaint alleges that in 2009, the Bank, in the capacity of trustee for the AIT Laboratories Employee Stock Ownership Plan, authorized the alleged imprudent and disloyal purchase of the stock of AIT Holdings, Inc. in 2009 for $90 million, a price allegedly far in excess of the stock’s fair market value. The Bank's responsive pleading was filed on November 4, 2014, disputing the material factual allegations that have been made by the DOL. A settlement conference was held November 19, 2015, at which the parties agreed to the terms of a settlement subject to final documentation. The settlement of this litigation is not expected to materially exceed amounts accrued or to have a material adverse effect on the Company’s financial condition or results of operation.


United States Department of Justice Investigation. On October 17, 2014, the United States Department of Justice (the “DOJ”) notified the Bank that the Bank was the subject of an investigation into possible violations of federal laws, including, among other things, possible violations related to false bank entries, bank fraud and securities fraud.  The investigation concerns allegations that Bank personnel engaged in practices intended to delay or avoid disclosure of the Bank’s asset quality at the time of and following the United States Treasury’s purchase of Preferred Shares from the Company in November 2008.  The Bank will respond to and cooperate with any requests for information from DOJ. At this time the investigation is ongoing, and DOJ has made no determination whether to pursue any action in the matter.



v3.4.0.3
Note 14 - Subsequent Events
3 Months Ended
Mar. 31, 2016
Subsequent Events [Abstract]  
Subsequent Events [Text Block]

Note 14Subsequent Events 


On April 15, 2016, the Company completed a private placement of common stock to accredited investors. In the transaction, the Company issued 2.9 million common shares and 1.1 million non-voting common shares resulting in total proceeds of $5.0 million. Approximately $2.8 million of the proceeds were directed by investors to make interest payments and bring current the Company’s trust preferred securities which had been in deferral since 2011. The balance of the proceeds will be used for general corporate purposes and to support the Bank.


Among the accredited investors participating in the transaction were John T. Taylor, our CEO, and Directors Bradford T. Ray and James M. Parsons. After the transaction, the Company had issued and outstanding 22,986,177 common shares and 7,958,000 non-voting common shares.



v3.4.0.3
Accounting Policies, by Policy (Policies)
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation – The consolidated financial statements include Porter Bancorp, Inc. (Company) and its subsidiary, PBI Bank (Bank).  The Company owns a 100% interest in the Bank. All significant inter-company transactions and accounts have been eliminated in consolidation.


The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the entire year.  A description of other significant accounting policies is presented in the notes to the Consolidated Financial Statements for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates – To prepare financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ.

Reclassification, Policy [Policy Text Block]

Reclassifications – Some items in the prior year financial statements were reclassified to conform to the current presentation. The reclassifications did not impact net income or stockholders’ equity.

New Accounting Pronouncements, Policy [Policy Text Block]

Adoption of New Accounting Standards – In May 2014, FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s financial statements.


In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities). The amendments in this update impact public business entities as follows: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. 3) Eliminate the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. 4) Require entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 5) Require an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 6) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. 7) Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.


v3.4.0.3
Note 3 - Securities (Tables)
3 Months Ended
Mar. 31, 2016
Investments, Debt and Equity Securities [Abstract]  
Marketable Securities [Table Text Block]
   

Amortized

Cost

   

Gross Unrealized

Gains

   

Gross Unrealized

Losses

   

Fair Value

 
   

(in thousands)

 

March 31, 2016

                               

Available for sale

                               

U.S. Government and federal agency

  $ 34,513     $ 321     $ (98

)

  $ 34,736  

Agency mortgage-backed: residential

    99,935       1,570       (143

)

    101,362  

State and municipal

    3,270       67             3,337  

Corporate bonds

    2,325             (235

)

    2,090  

Total available for sale

  $ 140,043     $ 1,958     $ (476

)

  $ 141,525  
   

Amortized

Cost

   

Gross Unrecognized

Gains

   

Gross Unrecognized

Losses

   

Fair Value

 

Held to maturity

                               

State and municipal

  $ 42,011     $ 2,672     $     $ 44,683  

Total held to maturity

  $ 42,011     $ 2,672     $     $ 44,683  

December 31, 2015

 

Amortized

Cost

   

Gross Unrealized

Gains

   

Gross Unrealized

Losses

   

Fair Value

 

Available for sale

                               

U.S. Government and federal agency

  $ 33,491     $ 146     $ (375

)

  $ 33,262  

Agency mortgage-backed: residential

    102,135       907       (380

)

    102,662  

State and municipal

    6,555       306             6,861  

Corporate bonds

    2,321             (128

)

    2,193  

Total available for sale

  $ 144,502     $ 1,359     $ (883

)

  $ 144,978  
   

Amortized

Cost

   

Gross Unrecognized

Gains

   

Gross Unrecognized

Losses

   

Fair Value

 

Held to maturity

                               

State and municipal

  $ 42,075     $ 2,178     $     $ 44,253  

Total held to maturity

  $ 42,075     $ 2,178     $     $ 44,253  
Schedule of Realized Gain (Loss) [Table Text Block]
   

Three Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 
                 

Proceeds

  $ 3,486     $ 34,138  

Gross gains

    203       1,551  

Gross losses

          54  
Investments Classified by Contractual Maturity Date [Table Text Block]
   

March 31, 2016

 
   

Amortized

Cost

   

Fair

Value

 
   

(in thousands)

 

Maturity

               

Available for sale

               

Within one year

  $ 6,120     $ 5,941  

One to five years

    7,598       7,790  

Five to ten years

    26,390       26,432  

Agency mortgage-backed: residential

    99,935       101,362  

Total

  $ 140,043     $ 141,525  
                 

Held to maturity

               

One to five years

  $ 17,012     $ 17,800  

Five to ten years

    23,950       25,723  

Beyond ten years

    1,049       1,160  

Total

  $ 42,011     $ 44,683  
Schedule of Unrealized Loss on Investments [Table Text Block]
   

Less than 12 Months

   

12 Months or More

   

Total

 

Description of Securities

 

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

 
   

(in thousands)

 

March 31, 2016

                                               

Available for sale

                                               

U.S. Government and federal agency

  $ 3,812     $ (18

)

  $ 10,410     $ (80

)

  $ 14,222     $ (98

)

Agency mortgage-backed: residential

    15,552       (143

)

                15,552       (143

)

Corporate bonds

    691       (76

)

    1,400       (159

)

    2,091       (235

)

Total temporarily impaired

  $ 20,055     $ (237

)

  $ 11,810     $ (239

)

  $ 31,865     $ (476

)

                                                 
                                                 
                                                 

December 31, 2015

                                               

Available for sale

                                               

U.S. Government and federal agency

  $ 7,058     $ (44

)

  $ 14,527     $ (331

)

  $ 21,585     $ (375

)

Agency mortgage-backed: residential

    36,325       (271

)

    3,856       (109

)

    40,181       (380

)

Corporate bonds

    747       (18

)

    1,446       (110

)

    2,193       (128

)

Total temporarily impaired

  $ 44,130     $ (333

)

  $ 19,829     $ (550

)

  $ 63,959     $ (883

)


v3.4.0.3
Note 4 - Loans (Tables)
3 Months Ended
Mar. 31, 2016
Receivables [Abstract]  
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans were as follows:

 

March 31,

   

December 31,

 
   

2016

   

2015

 
   

(in thousands)

 

Commercial

  $ 83,743     $ 86,176  

Commercial Real Estate:

               

Construction

    34,631       33,154  

Farmland

    73,119       76,412  

Nonfarm nonresidential

    143,767       140,570  

Residential Real Estate:

               

Multi-family

    43,541       44,131  

1-4 Family

    197,983       201,478  

Consumer

    9,929       10,010  

Agriculture

    32,731       26,316  

Other

    383       419  

Subtotal

    619,827       618,666  

Less: Allowance for loan losses

    (11,340

)

    (12,041

)

Loans, net

  $ 608,487     $ 606,625  
Allowance for Credit Losses on Financing Receivables [Table Text Block]
   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

March 31, 2016:

                                                       

Beginning balance

  $ 818     $ 6,993     $ 3,984     $ 122     $ 122     $ 2     $ 12,041  

Negative provision for loan losses

    (199

)

    (375

)

    129       (33

)

    (65

)

    (7

)

    (550

)

Loans charged off

    (12

)

    (118

)

    (595

)

    (13

)

          (11

)

    (749

)

Recoveries

    35       263       165       39       79       17       598  

Ending balance

  $ 642     $ 6,763     $ 3,683     $ 115     $ 136     $ 1     $ 11,340  
                                                         
                                                         

March 31, 2015:

                                                       

Beginning balance

  $ 2,046     $ 10,931     $ 5,787     $ 274     $ 319     $ 7     $ 19,364  

Provision for loan losses

    269       7       (384

)

    12       104       (8

)

     

Loans charged off

    (375

)

    (369

)

    (482

)

    (68

)

    (33

)

          (1,327

)

Recoveries

    106       111       300       26       1       16       560  

Ending balance

  $ 2,046     $ 10,680     $ 5,221     $ 244     $ 391     $ 15     $ 18,597  
Impairment Evaluation of Financing Receivables [Table Text Block]
   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

Allowance for loan losses:

                                                       

Ending allowance balance attributable to loans:

                                                       

Individually evaluated for impairment

  $     $ 39     $ 425     $     $     $     $ 464  

Collectively evaluated for impairment

    642       6,724       3,258       115       136       1       10,876  

Total ending allowance balance

  $ 642     $ 6,763     $ 3,683     $ 115     $ 136     $ 1     $ 11,340  
                                                         
                                                         

Loans:

                                                       

Loans individually evaluated for impairment

  $ 864     $ 11,198     $ 14,089     $ 8     $ 77     $     $ 26,236  

Loans collectively evaluated for impairment

    82,879       240,319       227,435       9,921       32,654       383       593,591  

Total ending loans balance

  $ 83,743     $ 251,517     $ 241,524     $ 9,929     $ 32,731     $ 383     $ 619,827  
   

Commercial

   

Commercial

Real Estate

   

Residential

Real Estate

   

Consumer

   

Agriculture

   

Other

   

Total

 
   

(in thousands)

 

Allowance for loan losses:

                                                       

Ending allowance balance attributable to loans:

                                                       

Individually evaluated for impairment

  $     $ 43     $ 385     $     $     $     $ 428  

Collectively evaluated for impairment

    818       6,950       3,599       122       122       2       11,613  

Total ending allowance balance

  $ 818     $ 6,993     $ 3,984     $ 122     $ 122     $ 2     $ 12,041  
                                                         
                                                         

Loans:

                                                       

Loans individually evaluated for impairment

  $ 1,112     $ 12,819     $ 17,673     $ 20     $ 152     $     $ 31,776  

Loans collectively evaluated for impairment

    85,064       237,317       227,936       9,990       26,164       419       586,890  

Total ending loans balance

  $ 86,176     $ 250,136     $ 245,609     $ 10,010     $ 26,316     $ 419     $ 618,666  
Impaired Financing Receivables [Table Text Block]
   

As of March 31, 2016

   

Three Months Ended March 31, 2016

 
   

Unpaid

Principal

Balance

   

Recorded

Investment

   

Allowance

For Loan

Losses

Allocated

   

Average

Recorded

Investment

   

Interest

Income

Recognized

   

Cash

Basis

Income

Recognized

 
   

(in thousands)

         

With No Related Allowance Recorded:

                                               

Commercial

  $ 1,176     $ 864     $     $ 987     $ 1     $ 1  

Commercial real estate:

                                               

Construction

    277       261             261       3        

Farmland

    5,726       4,125             4,194       6       5  

Nonfarm nonresidential

    9,705       6,401             7,116       248       190  

Residential real estate:

                                               

Multi-family

    2,400       2,400             1,216       30       1  

1-4 Family

    7,977       5,834             8,795       58       6  

Consumer

    40       8             14       7       8  

Agriculture

    105       77             115              

Other

                                   

Subtotal

    27,406       19,970             22,698       353       211  
                                                 

With An Allowance Recorded:

                                               

Commercial

                                   

Commercial real estate:

                                               

Construction

                                   

Farmland

                                   

Nonfarm nonresidential

    411       411       39       438       6        

Residential real estate:

                                               

Multi-family

    4,177       4,177       48       4,186       50        

1-4 Family

    1,678       1,678       377       1,684       20        

Consumer

                                   

Agriculture

                                   

Other

                                   

Subtotal

    6,266       6,266       464       6,308       76        

Total

  $ 33,672     $ 26,236     $ 464     $ 29,006     $ 429     $ 211  
   

As of December 31, 2015

   

Three Months Ended March 31, 2015

 
   

Unpaid

Principal

Balance

   

Recorded

Investment

   

Allowance

For Loan

Losses

Allocated

   

Average

Recorded

Investment

   

Interest

Income

Recognized

   

Cash

Basis

Income

Recognized

 
   

(in thousands)

         

With No Related Allowance Recorded:

                                               

Commercial

  $ 1,558     $ 1,112     $     $ 1,821     $     $  

Commercial real estate:

                                               

Construction

    278       262             4,019       4       1  

Farmland

    6,004       4,263             4,804       23       23  

Nonfarm nonresidential

    11,256       7,829             22,920       65        

Residential real estate:

                                               

Multi-family

    32       32             40              

1-4 Family

    14,066       11,756             14,918       134       47  

Consumer

    118       20             27              

Agriculture

    260       152             247              

Other

                      123       2       2  

Subtotal

    33,572       25,426             48,919       228       73  

With An Allowance Recorded:

                                               

Commercial

                      29              

Commercial real estate:

                                               

Construction

                                   

Farmland

                      157              

Nonfarm nonresidential

    574       465       43       8,535       6        

Residential real estate:

                                               

Multi-family

    4,195       4,195       57       4,258       47        

1-4 Family

    1,690       1,690       328       1,727       25        

Consumer

                      20              

Agriculture

                                   

Other

                                   

Subtotal

    6,459       6,350       428       14,726       78        

Total

  $ 40,031     $ 31,776     $ 428     $ 63,645     $ 306     $ 73  
Troubled Debt Restructurings on Financing Receivables [Table Text Block]
   

TDRs

Performing to

Modified Terms

   

TDRs Not

Performing to

Modified Terms

   

Total

TDRs

 
   

(in thousands)

 

March 31, 2016

                       

Commercial

                       

Rate reduction

  $     $ 68     $ 68  

Principal deferral

          439       439  

Commercial Real Estate:

                       

Construction

                       

Rate reduction

    261             261  

Farmland

                       

Principal deferral

          2,365       2,365  

Nonfarm nonresidential

                       

Rate reduction

    5,593             5,593  

Principal deferral

          607       607  

Residential Real Estate:

                       

Multi-family

                       

Rate reduction

    6,577             6,577  

1-4 Family

                       

Rate reduction

    2,436             2,436  

Total TDRs

  $ 14,867     $ 3,479     $ 18,346  
   

TDRs

Performing to

Modified Terms

   

TDRs Not

Performing to

Modified Terms

   

Total

TDRs

 
   

(in thousands)

 

December 31, 2015

                       

Commercial

                       

Rate reduction

  $     $ 68     $ 68  

Principal deferral

          439       439  

Commercial Real Estate:

                       

Construction

                       

Rate reduction

    262             262  

Farmland

                       

Principal deferral

          2,365       2,365  

Nonfarm nonresidential

                       

Rate reduction

    5,637       50       5,687  

Principal deferral

          622       622  

Residential Real Estate:

                       

Multi-family

                       

Rate reduction

    4,195             4,195  

1-4 Family

                       

Rate reduction

    7,346             7,346  

Total TDRs

  $ 17,440     $ 3,544     $ 20,984  
Schedule of Financing Receivables, Non Accrual Status [Table Text Block]
   

Nonaccrual

   

Loans Past Due 90 Days

And Over Still Accruing

 
   

March 31,

2016

   

December 31,

2015

   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 
                                 

Commercial

  $ 864     $ 1,112     $     $  

Commercial Real Estate:

                               

Construction

                       

Farmland

    4,125       4,263              

Nonfarm nonresidential

    1,219       2,657              

Residential Real Estate:

                               

Multi-family

          32              

1-4 Family

    4,827       5,851              

Consumer

    7       20              

Agriculture

    77       152              

Other

                       

Total

  $ 11,119     $ 14,087     $     $  
Past Due Financing Receivables [Table Text Block]
   

30 – 59

Days

Past Due

   

60 – 89

Days

Past Due

   

90 Days

And Over

Past Due

   

Nonaccrual

   

Total

Past Due

And

Nonaccrual

 
   

(in thousands)

 

March 31, 2016

                                       

Commercial

  $ 34     $     $     $ 864     $ 898  

Commercial Real Estate:

                                       

Construction

    128                         128  

Farmland

    244       4             4,125       4,373  

Nonfarm nonresidential

                      1,219       1,219  

Residential Real Estate:

                                       

Multi-family

                             

1-4 Family

    1,412       12             4,827       6,251  

Consumer

    11       9             7       26  

Agriculture

          37             77       114  

Other

                             

Total

  $ 1,829     $ 62     $     $ 11,119     $ 13,010  
   

30 – 59

Days

Past Due

   

60 – 89

Days

Past Due

   

90 Days

And Over

Past Due

   

Nonaccrual

   

Total

Past Due

And

Nonaccrual

 
                                         
   

(in thousands)

 

December 31, 2015

                                       

Commercial

  $ 78     $     $     $ 1,112     $ 1,190  

Commercial Real Estate:

                                       

Construction

                             

Farmland

    456                   4,263       4,719  

Nonfarm nonresidential

    326                   2,657       2,983  

Residential Real Estate:

                                       

Multi-family

                      32       32  

1-4 Family

    2,225       241             5,851       8,317  

Consumer

    41                   20       61  

Agriculture

    7                   152       159  

Other

                             

Total

  $ 3,133     $ 241     $     $ 14,087     $ 17,461  
Financing Receivable Credit Quality Indicators [Table Text Block]
   

Pass

   

Watch

   

Special

Mention

   

Substandard

   

Doubtful

   

Total

 
   

(in thousands)

 

March 31, 2016

                                               

Commercial

  $ 81,911     $ 436     $     $ 1,396     $     $ 83,743  

Commercial Real Estate:

                                               

Construction

    29,027       5,604                         34,631  

Farmland

    62,573       4,829             5,717             73,119  

Nonfarm nonresidential

    117,964       22,017       1,317       2,469             143,767  

Residential Real Estate:

                                               

Multi-family

    32,648       6,988             3,905             43,541  

1-4 Family

    172,540       14,432       66       10,945             197,983  

Consumer

    9,356       436             137             9,929  

Agriculture

    28,049       4,523             159             32,731  

Other

    383                               383  

Total

  $ 534,451     $ 59,265     $ 1,383     $ 24,728     $     $ 619,827  
   

Pass

   

Watch

   

Special

Mention

   

Substandard

   

Doubtful

   

Total

 
                                                 
   

(in thousands)

 
                                                 

December 31, 2015

                                               

Commercial

  $ 81,570     $ 2,953     $     $ 1,653     $     $ 86,176  

Commercial Real Estate:

                                               

Construction

    27,603       5,289             262             33,154  

Farmland

    65,476       4,844             6,092             76,412  

Nonfarm nonresidential

    111,901       22,687       1,328       4,654             140,570  

Residential Real Estate:

                                               

Multi-family

    35,300       4,879             3,952             44,131  

1-4 Family

    164,490       17,636       67       19,285             201,478  

Consumer

    9,323       474             213             10,010  

Agriculture

    21,402       4,601             313             26,316  

Other

    419                               419  

Total

  $ 517,484     $ 63,363     $ 1,395     $ 36,424     $     $ 618,666  

v3.4.0.3
Note 5 - Other Real Estate Owned (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Schedule of Real Estate Properties [Table Text Block]
   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 

Commercial Real Estate:

               

Construction, land development, and other land

  $ 12,507     $ 12,749  

Nonfarm nonresidential

    5,802       6,967  

Residential Real Estate:

               

1-4 Family

    440       128  
      18,749       19,844  

Valuation allowance

    (888

)

    (630

)

    $ 17,861     $ 19,214  
Schedule of Valuation Allowance and Activity Related to Foreclosed Real Estate [Table Text Block]
   

For the Three

Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

OREO Valuation Allowance Activity:

               

Beginning balance

  $ 630     $ 1,066  

Provision to allowance

    500       300  

Write-downs

    (242

)

    (874

)

Ending balance

  $ 888     $ 492  
Schedule of Expenses Related to Foreclosed Real Estate [Table Text Block]
   

For the Three

Months Ended

March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

OREO Activity

               

OREO as of January 1

  $ 19,214     $ 46,197  

Real estate acquired

    441       347  

Valuation adjustment write-downs

    (500

)

    (300

)

Net gain on sales

    55       3  

Proceeds from sales of properties

    (1,349

)

    (2,629

)

OREO as of March 31

  $ 17,861     $ 43,618  
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]
   

For the Three Months Ended March 31,

 
   

2016

   

2015

 
   

(in thousands)

 

Net gain on sales

  $ (55

)

  $ (3

)

Provision to allowance

    500       300  

Operating expense

    223       436  

Total

  $ 668     $ 733  

v3.4.0.3
Note 6 - Deposits (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Schedule of Deposits [Table Text Block]
   

March 31,

2016

   

December 31,

2015

 
   

(in thousands)

 

Non-interest bearing

  $ 120,302     $ 120,043  

Interest checking

    96,465       97,515  

Money market

    134,684       125,935  

Savings

    35,197       34,677  

Certificates of deposit

    478,965       499,827  

Total

  $ 865,613     $ 877,997  
Schedule of Maturities of Time Deposits [Table Text Block]

Year 1

  $ 359,138  

Year 2

    43,553  

Year 3

    12,751  

Year 4

    35,860  

Year 5

    27,663  
    $ 478,965  

v3.4.0.3
Note 7 - Advances from Federal Home Loan Bank (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank [Table Text Block]
   

March

31,

   

December

31,

 
   

2016

   

2015

 
   

(in thousands)

 

Monthly amortizing advances with fixed rates from 0.00% to 5.25% and maturities ranging from 2017 through 2033, averaging 2.58% at March 31, 2016 and 2.65% at December 31, 2015

  $ 2,932     $ 3,081  

v3.4.0.3
Note 8 - Fair Values Measurement (Tables)
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block]
           

Fair Value Measurements at March 31, 2016 Using

 
           

(in thousands)

 

Description

 

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Available for sale securities

                               

U.S. Government and federal agency

  $ 34,736     $     $ 34,736     $  

Agency mortgage-backed: residential

    101,362             101,362        

State and municipal

    3,337             3,337        

Corporate bonds

    2,090             2,090        

Total

  $ 141,525     $     $ 141,525     $  
           

Fair Value Measurements at December 31, 2015 Using

 
           

(in thousands)

 

Description

 

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Available for sale securities

                               

U.S. Government and federal agency

  $ 33,262     $     $ 33,262     $  

Agency mortgage-backed: residential

    102,662             102,662        

State and municipal

    6,861             6,861        

Corporate bonds

    2,193             2,193        

Total

  $ 144,978     $     $ 144,978     $  
           

Fair Value Measurements at March 31, 2016 Using

 
           

(in thousands)

 
Description  

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Impaired loans:

                               

Commercial

  $     $     $     $  

Commercial real estate:

                               

Construction

                       

Farmland

                       

Nonfarm nonresidential

    91                   91  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    1,301                   1,301  

Consumer

                       

Other

                       

Other real estate owned, net:

                               

Commercial real estate:

                               

Construction

    11,914                   11,914  

Farmland

                       

Nonfarm nonresidential

    5,528                   5,528  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    419                   419  
           

Fair Value Measurements at December 31, 2015 Using

 
           

(in thousands)

 
Description  

Carrying

Value

   

Quoted Prices In

Active Markets for

Identical Assets

(Level 1)

   

Significant Other

Observable Inputs

(Level 2)

   

Significant

Unobservable

Inputs

(Level 3)

 

Impaired loans:

                               

Commercial

  $     $     $     $  

Commercial real estate:

                               

Construction

                       

Farmland

                       

Nonfarm nonresidential

    139                   139  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    1,362                   1,362  

Consumer

                       

Other

                       

Other real estate owned, net:

                               

Commercial real estate:

                               

Construction

    12,344                   12,344  

Farmland

                       

Nonfarm nonresidential

    6,746                   6,746  

Residential real estate:

                               

Multi-family

                       

1-4 Family

    124                   124  
Fairvalue Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Table Text Block]
   

Other Debt

Securities

 
   

2016

   

2015

 
   

(in thousands)

 

Balances of recurring Level 3 assets at January 1

  $     $ 658  

Total gain (loss) for the period:

               

Included in other comprehensive income (loss)

          7  

Balance of recurring Level 3 assets at March 31

  $     $ 665  
Fair Value Assets Measured on Nonrecurring Basis Unobservable Input Reconciliation [Table Text Block]
        Valuation       Range (Weighted  
   

Fair Value

 

Technique(s)

 

Unobservable Input(s)

 

Average)

 
   

(in thousands)

                   
                           

Impaired loans – Residential real estate

  $ 1,301  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  1% - 16% (7%)  
                           

Other real estate owned – Commercial real estate

  $ 17,442  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  0% - 30% (12%)   
                           
          Income approach   Discount or capitalization rate   10%  - 20% (17%)  
        Valuation       Range (Weighted  
   

Fair Value

 

Technique(s)

 

Unobservable Input(s)

 

Average)

 
   

(in thousands)

                   
                           

Impaired loans – Residential real estate

  $ 1,362  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  1% - 16% (7%)  
                           

Other real estate owned – Commercial real estate

  $ 19,090  

Sales comparison approach

 

Adjustment for differences between the comparable sales

  0% - 30% (12%)  
                           
         

Income approach

 

Discount or capitalization rate

  10% - 20% (17%)  
Fair Value, by Balance Sheet Grouping [Table Text Block]
           

Fair Value Measurements at March 31, 2016 Using

 
   

Carrying

Amount

   

Level 1

   

Level 2

   

Level 3

   

Total

 
   

(in thousands)

 

Financial assets

                                       

Cash and cash equivalents

  $ 80,306     $ 67,398     $ 12,908     $     $ 80,306  

Securities available for sale

    141,525             141,525             141,525  

Securities held to maturity

    42,011             44,683             44,683  

Federal Home Loan Bank stock

    7,323       N/A       N/A       N/A       N/A  

Loans held for sale

    113             113             113  

Loans, net

    608,487                   615,391       615,391  

Accrued interest receivable

    3,034             1,030       2,004       3,034  

Financial liabilities

                                       

Deposits

  $ 865,613     $ 120,302     $ 734,190     $     $ 854,492  

Federal Home Loan Bank advances

    2,932             2,980             2,980  

Subordinated capital notes

    3,825                   3,726       3,726  

Junior subordinated debentures

    21,000                   12,713       12,713  

Accrued interest payable

    2,936             385       2,551       2,936  
           

Fair Value Measurements at December 31, 2015 Using

 
   

Carrying

Amount

   

Level 1

   

Level 2

   

Level 3

   

Total

 
   

(in thousands)

 

Financial assets

                                       

Cash and cash equivalents

  $ 93,335     $ 79,498     $ 13,837     $     $ 93,335  

Securities available for sale

    144,978             144,978             144,978  

Securities held to maturity

    42,075             44,253             44,253  

Federal Home Loan Bank stock

    7,323       N/A       N/A       N/A       N/A  

Loans held for sale

    186             186             186  

Loans, net

    606,625                   614,162       614,162  

Accrued interest receivable

    3,116             1,111       2,005       3,116  

Financial liabilities

                                       

Deposits

  $ 877,997     $ 120,043     $ 739,152     $     $ 859,195  

Federal Home Loan Bank advances

    3,081             3,076             3,076  

Subordinated capital notes

    4,050                   3,933       3,933  

Junior subordinated debentures

    21,000                   12,810       12,810  

Accrued interest payable

    2,805             422       2,383       2,805  

v3.4.0.3
Note 9 - Income Taxes (Tables)
3 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
   

March

31,

   

December

31,

 
   

2016

   

2015

 
   

(in thousands)

 

Deferred tax assets:

               

Net operating loss carry-forward

  $ 38,469     $ 38,085  

Allowance for loan losses

    3,969       4,214  

Other real estate owned write-down

    6,991       7,619  

Alternative minimum tax credit carry-forward

    692       692  

Net assets from acquisitions

    671       671  

Net unrealized loss on securities

          166  

New market tax credit carry-forward

    208       208  

Nonaccrual loan interest

    525       549  

Other

    1,958       1,875  
      53,483       54,079  
                 

Deferred tax liabilities:

               

FHLB stock dividends

    928       928  

Fixed assets

    207       176  

Net unrealized gain on securities

    197        

Other

    854       865  
      2,186       1,969  

Net deferred tax assets before valuation allowance

    51,297       52,110  

Valuation allowance

    (51,297

)

    (52,110

)

Net deferred tax asset

  $     $  

v3.4.0.3
Note 10 - Stock Plans and Stock Based Compensation (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Nonvested Share Activity [Table Text Block]
   

Three Months Ended

   

Twelve Months Ended

 
   

March 31, 2016

   

December 31, 2015

 
           

Weighted

           

Weighted

 
           

Average

           

Average

 
           

Grant

           

Grant

 
   

Shares

   

Price

   

Shares

   

Price

 

Outstanding, beginning

    922,419     $ 0.96       770,440     $ 1.33  

Granted

                800,000       0.89  

Vested

    (1,522

)

    21.87       (165,185

)

    1.50  

Terminated

                (450,994

)

    1.25  

Forfeited

    (3,356

)

    1.35       (31,842

)

    1.13  

Outstanding, ending

    917,541     $ 0.93       922,419     $ 0.96  
Schedule of Share-based Compensation, Nonemployee Director Stock Award Plan, Activity [Table Text Block]
   

Three Months Ended

   

Twelve Months Ended

 
   

March 31, 2016

   

December 31, 2015

 
           

Weighted

           

Weighted

 
           

Average

           

Average

 
           

Grant

           

Grant

 
   

Shares

   

Price

   

Shares

   

Price

 

Outstanding, beginning

        $       5,052     $ 1.65  

Granted

                115,740       1.08  

Vested

                (120,792

)

    1.10  

Forfeited

                       

Outstanding, ending

        $           $  
Schedule of Unrecognized Compensation Cost, Nonvested Awards [Table Text Block]

April 2016 – December 2016

  $ 175  

2017

    156  

2018

    149  

2019 & thereafter

     

v3.4.0.3
Note 11 - Earnings (Loss) Per Share (Tables)
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
   

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 
   

(in thousands, except

share and per share data)

 
                 

Net income

  $ 1,480     $ 594  

Less:

               

Earnings allocated to unvested shares

    51       21  

Earnings attributable to participating preferred shares

          164  

Net income attributable to common shareholders, basic and diluted

  $ 1,429     $ 409  
                 

Basic

               

Weighted average common shares including unvested common shares outstanding

    26,945,307       25,419,523  

Less:

               

Weighted average unvested common shares

    919,980       918,393  

Weighted average Series B preferred shares

          2,702,400  

Weighted average Series D preferred shares

          4,305,333  

Weighted average common shares outstanding

    26,025,327       17,493,397  

Basic income per common share

  $ 0.05     $ 0.02  
                 

Diluted

               

Add: Dilutive effects of assumed exercises of common stock warrants

           

Weighted average common shares and potential common shares

    26,025,327       17,493,397  

Diluted income per common share

  $ 0.05     $ 0.02  

v3.4.0.3
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]
   

Actual

   

For Capital Adequacy Purposes

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 

As of March 31, 2016:

                               

Total risk-based capital (to risk-weighted assets)

                               

Consolidated

  $ 69,981       10.46

%

  $ 53,537       8.00

%

Bank

    71,108       10.64       53,479       8.00  

Total common equity Tier I risk-based capital (to risk-weighted assets)

                               

Consolidated

    34,883       5.21       30,114       4.50  

Bank

    59,790       8.94       30,082       4.50  

Tier I capital (to risk-weighted assets)

                               

Consolidated

    47,068       7.03       40,152       6.00  

Bank

    59,790       8.94       40,109       6.00  

Tier I capital (to average assets)

                               

Consolidated

    47,068       5.03       37,434       4.00  

Bank

    59,790       6.39       37,406       4.00  
   

Actual

   

For Capital Adequacy Purposes

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 

As of December 31, 2015:

                               

Total risk-based capital (to risk-weighted assets)

                               

Consolidated

  $ 68,530       10.46

%

  $ 52,436       8.00

%

Bank

    69,250       10.58       52,347       8.00  

Total common equity Tier 1risk-based capital (to risk weighted assets)

                               

Consolidated

  $ 33,368       5.09

%

  $ 29,495       4.50

%

Bank

    57,873       8.84       29,445       4.50  

Tier I capital (to risk-weighted assets)

                               

Consolidated

    45,174       6.89       39,327       6.00  

Bank

    57,873       8.84       39,260       6.00  

Tier I capital (to average assets)

                               

Consolidated

    45,174       4.74       38,131       4.00  

Bank

    57,873       6.08       38,085       4.00  
Banker's Acceptance Disclosures [Table Text Block]
   

Actual as of March 31, 2016

   

Ratio Required by Consent Order

 
   

Amount

   

Ratio

   

Amount

   

Ratio

 
                                 

Total capital to risk-weighted assets

  $ 71,108       10.64

%

  $ 80,218       12.00

%

Tier I capital to average assets

    59,790       6.39       84,164       9.00  

v3.4.0.3
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (Details)
Mar. 31, 2016
Disclosure Text Block [Abstract]  
Noncontrolling Interest, Ownership Percentage by Parent 100.00%

v3.4.0.3
Note 2 - Going Concern Considerations and Future Plans (Details) - USD ($)
shares in Millions
3 Months Ended 12 Months Ended
Apr. 15, 2016
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2017
Dec. 31, 2015
Dec. 31, 2014
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Net Income (Loss) Attributable to Parent (in Dollars)   $ 1,480,000 $ 594,000   $ (3,200,000) $ (11,200,000)
Tier One Leverage Capital Required for Capital Adequacy to Average Assets   4.00%     4.00%  
Capital Required for Capital Adequacy to Risk Weighted Assets   8.00%     8.00%  
Tier One Leverage Capital to Average Assets   5.03%     4.74%  
Capital to Risk Weighted Assets   10.46%     10.46%  
Cash (in Dollars)   $ 764,000        
Subsequent Event [Member] | Private Placement [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Sale of Stock, Consideration Received on Transaction (in Dollars) $ 5,000,000          
Proceeds from Issuance of Shares Used for General Corporate Purposes (in Dollars) $ 2,200,000          
Subsequent Event [Member] | Voting Common Stock [Member] | Private Placement [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Stock Issued During Period, Shares, New Issues (in Shares) 2.9          
Subsequent Event [Member] | Nonvoting Common Stock [Member] | Private Placement [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Stock Issued During Period, Shares, New Issues (in Shares) 1.1          
Sale of Stock, Consideration Received on Transaction (in Dollars) $ 5,000,000          
Parent [Member] | Scenario, Forecast [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Operating Expenses (in Dollars)       $ 1,000,000    
PBI Bank [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Tier One Leverage Capital Required for Capital Adequacy to Average Assets   4.00%     4.00%  
Capital Required for Capital Adequacy to Risk Weighted Assets   8.00%     8.00%  
Tier One Leverage Capital to Average Assets   6.39%     6.08%  
Capital to Risk Weighted Assets   10.64%     10.58%  
PBI Bank [Member] | Consent Order [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Tier One Leverage Capital Required for Capital Adequacy to Average Assets   9.00%        
Capital Required for Capital Adequacy to Risk Weighted Assets   12.00%        
Loans, Total [Member] | Credit Concentration Risk [Member] | Nonperforming Financial Instruments [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Concentration Risk, Percentage   1.79%     2.28% 7.57%
Assets, Total [Member] | Credit Concentration Risk [Member] | Nonperforming Financial Instruments [Member]            
Note 2 - Going Concern Considerations and Future Plans (Details) [Line Items]            
Concentration Risk, Percentage   3.09%     3.51% 9.19%

v3.4.0.3
Note 3 - Securities (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Note 3 - Securities (Details) [Line Items]    
Available-for-sale Securities Pledged as Collateral $ 52,900,000 $ 68,000,000
Available-for-sale Securities $ 141,525,000 $ 144,978,000
Concentration Risk, Number 0 0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss $ 0 $ 0
Other than Temporary Impairment Losses, Investments 0  
KENTUCKY    
Note 3 - Securities (Details) [Line Items]    
Available-for-sale Securities 17,600,000 $ 17,700,000
TEXAS    
Note 3 - Securities (Details) [Line Items]    
Available-for-sale Securities $ 4,300,000  

v3.4.0.3
Note 3 - Securities (Details) - Amortized Cost, Gross Unrealized Gains or Losses, and Fair Value of Investment Securities - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Available for sale    
Available for sale securities, amortized cost $ 140,043 $ 144,502
Available for sale securities, gross unrealized gains 1,958 1,359
Available for sale securities, gross unrealized losses (476) (883)
Securities available for sale 141,525 144,978
Held to maturity    
Held to maturity securities, amortized cost 42,011 42,075
Held to maturity securities, gross unrecognized gains 2,672 2,178
Held to maturity securities, fair value 44,683 44,253
US Treasury and Government [Member]    
Available for sale    
Available for sale securities, amortized cost 34,513 33,491
Available for sale securities, gross unrealized gains 321 146
Available for sale securities, gross unrealized losses (98) (375)
Securities available for sale 34,736 33,262
Residential Mortgage Backed Securities [Member]    
Available for sale    
Available for sale securities, amortized cost 99,935 102,135
Available for sale securities, gross unrealized gains 1,570 907
Available for sale securities, gross unrealized losses (143) (380)
Securities available for sale 101,362 102,662
US States and Political Subdivisions Debt Securities [Member]    
Available for sale    
Available for sale securities, amortized cost 3,270 6,555
Available for sale securities, gross unrealized gains 67 306
Securities available for sale 3,337 6,861
Held to maturity    
Held to maturity securities, amortized cost 42,011 42,075
Held to maturity securities, gross unrecognized gains 2,672 2,178
Held to maturity securities, fair value 44,683 44,253
Corporate Debt Securities [Member]    
Available for sale    
Available for sale securities, amortized cost 2,325 2,321
Available for sale securities, gross unrealized losses (235) (128)
Securities available for sale $ 2,090 $ 2,193

v3.4.0.3
Note 3 - Securities (Details) - Sales and Calls of Available for Sale Securities - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Sales and Calls of Available for Sale Securities [Abstract]    
Proceeds $ 3,486 $ 34,138
Gross gains $ 203 1,551
Gross losses   $ 54

v3.4.0.3
Note 3 - Securities (Details) - Amortized Cost and Fair Value of Debt Investment Securities Portfolio by Contractual Maturity - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Available for sale    
Within one year $ 6,120  
Within one year 5,941  
One to five years 7,598  
One to five years 7,790  
Five to ten years 26,390  
Five to ten years 26,432  
Agency mortgage-backed: residential 99,935  
Agency mortgage-backed: residential 101,362  
Total 140,043  
Total 141,525  
Held to maturity    
One to five years 17,012  
One to five years 17,800  
Five to ten years 23,950  
Five to ten years 25,723  
Beyond ten years 1,049  
Beyond ten years 1,160  
Total 42,011 $ 42,075
Total $ 44,683 $ 44,253

v3.4.0.3
Note 3 - Securities (Details) - Securities with Unrealized Losses - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Available for sale    
Available for sale, fair value, less than 12 months $ 20,055 $ 44,130
Available for sale, unrealized loss, less than 12 months (237) (333)
Available for sale, fair value, 12 months or more 11,810 19,829
Available for sale, unrealized loss, 12 months or more (239) (550)
Available for sale, fair value 31,865 63,959
Available for sale, unrealized loss (476) (883)
US Treasury and Government [Member]    
Available for sale    
Available for sale, fair value, less than 12 months 3,812  
Available for sale, unrealized loss, less than 12 months (18)  
Available for sale, fair value, 12 months or more 10,410  
Available for sale, unrealized loss, 12 months or more (80)  
Available for sale, fair value 14,222  
Available for sale, unrealized loss (98)  
Residential Mortgage Backed Securities [Member]    
Available for sale    
Available for sale, fair value, less than 12 months 15,552 36,325
Available for sale, unrealized loss, less than 12 months (143) (271)
Available for sale, fair value, 12 months or more   3,856
Available for sale, unrealized loss, 12 months or more   (109)
Available for sale, fair value 15,552 40,181
Available for sale, unrealized loss (143) (380)
Corporate Debt Securities [Member]    
Available for sale    
Available for sale, fair value, less than 12 months 691 747
Available for sale, unrealized loss, less than 12 months (76) (18)
Available for sale, fair value, 12 months or more 1,400 1,446
Available for sale, unrealized loss, 12 months or more (159) (110)
Available for sale, fair value 2,091 2,193
Available for sale, unrealized loss $ (235) (128)
US States and Political Subdivisions Debt Securities [Member]    
Available for sale    
Available for sale, fair value, less than 12 months   7,058
Available for sale, unrealized loss, less than 12 months   (44)
Available for sale, fair value, 12 months or more   14,527
Available for sale, unrealized loss, 12 months or more   (331)
Available for sale, fair value   21,585
Available for sale, unrealized loss   $ (375)

v3.4.0.3
Note 4 - Loans (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2016
USD ($)
Mar. 31, 2015
Dec. 31, 2015
USD ($)
Receivables [Abstract]      
Financing Receivable, Modifications, Percentage of Performing TDR's to Total TDR's 81.00%   83.00%
Troubled Debt Restructuring Reserve (in Dollars) $ 215,000   $ 179,000
Loans and Leases Receivable, Impaired, Commitment to Lend (in Dollars) $ 0   $ 0
Financing Receivable, Modifications, Number of Contracts 0   0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts 0 0  
Minimum Outstanding Balance for Loans to Be Qualified for Credit Risk Analysis (in Dollars) $ 500,000    

v3.4.0.3
Note 4 - Loans (Details) - Loans - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans $ 619,827 $ 618,666
Less: Allowance for loan losses (11,340) (12,041)
Loans, net 608,487 606,625
Commercial Portfolio Segment [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 83,743 86,176
Less: Allowance for loan losses (642) (818)
Commercial Real Estate Portfolio Segment [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 251,517 250,136
Less: Allowance for loan losses (6,763) (6,993)
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 34,631 33,154
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 73,119 76,412
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 143,767 140,570
Residential Portfolio Segment [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 241,524 245,609
Less: Allowance for loan losses (3,683) (3,984)
Residential Portfolio Segment [Member] | Multifamily Loans [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 43,541 44,131
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 197,983 201,478
Consumer Portfolio Segment [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 9,929 10,010
Less: Allowance for loan losses (115) (122)
Agriculture Portfolio Segment [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 32,731 26,316
Less: Allowance for loan losses (136) (122)
Other Portfolio Segment [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Gross loans 383 419
Less: Allowance for loan losses $ (1) $ (2)

v3.4.0.3
Note 4 - Loans (Details) - Activity in Allowance for Loan Losses by Portfolio Segment - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]    
Beginning balance $ 12,041 $ 19,364
Provision for loan losses (550)  
Loans charged off (749) (1,327)
Recoveries 598 560
Ending balance 11,340 18,597
Commercial Portfolio Segment [Member]    
Financing Receivable, Allowance for Credit Losses [Line Items]    
Beginning balance 818 2,046
Provision for loan losses (199) 269
Loans charged off (12) (375)
Recoveries 35 106
Ending balance 642 2,046
Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Allowance for Credit Losses [Line Items]    
Beginning balance 6,993 10,931
Provision for loan losses (375) 7
Loans charged off (118) (369)
Recoveries 263 111
Ending balance 6,763 10,680
Residential Portfolio Segment [Member]    
Financing Receivable, Allowance for Credit Losses [Line Items]    
Beginning balance 3,984 5,787
Provision for loan losses 129 (384)
Loans charged off (595) (482)
Recoveries 165 300
Ending balance 3,683 5,221
Consumer Portfolio Segment [Member]    
Financing Receivable, Allowance for Credit Losses [Line Items]    
Beginning balance 122 274
Provision for loan losses (33) 12
Loans charged off (13) (68)
Recoveries 39 26
Ending balance 115 244
Agriculture Portfolio Segment [Member]    
Financing Receivable, Allowance for Credit Losses [Line Items]    
Beginning balance 122 319
Provision for loan losses (65) 104
Loans charged off   (33)
Recoveries 79 1
Ending balance 136 391
Other Portfolio Segment [Member]    
Financing Receivable, Allowance for Credit Losses [Line Items]    
Beginning balance 2 7
Provision for loan losses (7) (8)
Loans charged off (11)  
Recoveries 17 16
Ending balance $ 1 $ 15

v3.4.0.3
Note 4 - Loans (Details) - Balance in Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Bases on Impairment Method - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Ending allowance balance attributable to loans:    
Individually evaluated for impairment $ 464 $ 428
Collectively evaluated for impairment 10,876 11,613
Total ending allowance balance 11,340 12,041
Loans:    
Loans individually evaluated for impairment 26,236 31,776
Loans collectively evaluated for impairment 593,591 586,890
Total ending loans balance 619,827 618,666
Commercial Portfolio Segment [Member]    
Ending allowance balance attributable to loans:    
Individually evaluated for impairment 0 0
Collectively evaluated for impairment 642 818
Total ending allowance balance 642 818
Loans:    
Loans individually evaluated for impairment 864 1,112
Loans collectively evaluated for impairment 82,879 85,064
Total ending loans balance 83,743 86,176
Commercial Real Estate Portfolio Segment [Member]    
Ending allowance balance attributable to loans:    
Individually evaluated for impairment 39 43
Collectively evaluated for impairment 6,724 6,950
Total ending allowance balance 6,763 6,993
Loans:    
Loans individually evaluated for impairment 11,198 12,819
Loans collectively evaluated for impairment 240,319 237,317
Total ending loans balance 251,517 250,136
Residential Portfolio Segment [Member]    
Ending allowance balance attributable to loans:    
Individually evaluated for impairment 425 385
Collectively evaluated for impairment 3,258 3,599
Total ending allowance balance 3,683 3,984
Loans:    
Loans individually evaluated for impairment 14,089 17,673
Loans collectively evaluated for impairment 227,435 227,936
Total ending loans balance 241,524 245,609
Consumer Portfolio Segment [Member]    
Ending allowance balance attributable to loans:    
Individually evaluated for impairment 0 0
Collectively evaluated for impairment 115 122
Total ending allowance balance 115 122
Loans:    
Loans individually evaluated for impairment 8 20
Loans collectively evaluated for impairment 9,921 9,990
Total ending loans balance 9,929 10,010
Agriculture Portfolio Segment [Member]    
Ending allowance balance attributable to loans:    
Individually evaluated for impairment 0 0
Collectively evaluated for impairment 136 122
Total ending allowance balance 136 122
Loans:    
Loans individually evaluated for impairment 77 152
Loans collectively evaluated for impairment 32,654 26,164
Total ending loans balance 32,731 26,316
Other Portfolio Segment [Member]    
Ending allowance balance attributable to loans:    
Individually evaluated for impairment 0 0
Collectively evaluated for impairment 1 2
Total ending allowance balance 1 2
Loans:    
Loans individually evaluated for impairment 0 0
Loans collectively evaluated for impairment 383 419
Total ending loans balance $ 383 $ 419

v3.4.0.3
Note 4 - Loans (Details) - Loans Individually Evaluated for Impairment by Class of Loans - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded $ 27,406   $ 33,572
Recorded investment, with no related allowance recorded 19,970   25,426
Average recorded investment, with no related allowance recorded 22,698 $ 48,919  
Interest income recognized, with no related allowance recorded 353 228  
Cash basis income recognized, with no related allowance recorded 211 73  
With An Allowance Recorded:      
Unpaid principal balance, with an allowance recorded 6,266   6,459
Recorded investment, with an allowance recorded 6,266   6,350
Allowance for loan losses allocated, with an allowance recorded 464   428
Average recorded investment, with an allowance recorded 6,308 14,726  
Interest income recognized, with an allowance recorded 76 78  
Total 33,672   40,031
Total 26,236   31,776
Total 464   428
Total 29,006 63,645  
Total 429 306  
Total 211 73  
Commercial Portfolio Segment [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 1,176   1,558
Recorded investment, with no related allowance recorded 864   1,112
Average recorded investment, with no related allowance recorded 987 1,821  
Interest income recognized, with no related allowance recorded 1    
Cash basis income recognized, with no related allowance recorded 1    
With An Allowance Recorded:      
Average recorded investment, with an allowance recorded   29  
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 277   278
Recorded investment, with no related allowance recorded 261   262
Average recorded investment, with no related allowance recorded 261 4,019  
Interest income recognized, with no related allowance recorded 3 4  
Cash basis income recognized, with no related allowance recorded   1  
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 5,726   6,004
Recorded investment, with no related allowance recorded 4,125   4,263
Average recorded investment, with no related allowance recorded 4,194 4,804  
Interest income recognized, with no related allowance recorded 6 23  
Cash basis income recognized, with no related allowance recorded 5 23  
With An Allowance Recorded:      
Average recorded investment, with an allowance recorded   157  
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 9,705   11,256
Recorded investment, with no related allowance recorded 6,401   7,829
Average recorded investment, with no related allowance recorded 7,116 22,920  
Interest income recognized, with no related allowance recorded 248 65  
Cash basis income recognized, with no related allowance recorded 190    
With An Allowance Recorded:      
Unpaid principal balance, with an allowance recorded 411   574
Recorded investment, with an allowance recorded 411   465
Allowance for loan losses allocated, with an allowance recorded 39   43
Average recorded investment, with an allowance recorded 438 8,535  
Interest income recognized, with an allowance recorded 6 6  
Total 39   43
Residential Portfolio Segment [Member] | Multifamily Loans [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 2,400   32
Recorded investment, with no related allowance recorded 2,400   32
Average recorded investment, with no related allowance recorded 1,216 40  
Interest income recognized, with no related allowance recorded 30    
Cash basis income recognized, with no related allowance recorded 1    
With An Allowance Recorded:      
Unpaid principal balance, with an allowance recorded 4,177   4,195
Recorded investment, with an allowance recorded 4,177   4,195
Allowance for loan losses allocated, with an allowance recorded 48   57
Average recorded investment, with an allowance recorded 4,186 4,258  
Interest income recognized, with an allowance recorded 50 47  
Total 48   57
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 7,977   14,066
Recorded investment, with no related allowance recorded 5,834   11,756
Average recorded investment, with no related allowance recorded 8,795 14,918  
Interest income recognized, with no related allowance recorded 58 134  
Cash basis income recognized, with no related allowance recorded 6 47  
With An Allowance Recorded:      
Unpaid principal balance, with an allowance recorded 1,678   1,690
Recorded investment, with an allowance recorded 1,678   1,690
Allowance for loan losses allocated, with an allowance recorded 377   328
Average recorded investment, with an allowance recorded 1,684 1,727  
Interest income recognized, with an allowance recorded 20 25  
Total 377   328
Consumer Portfolio Segment [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 40   118
Recorded investment, with no related allowance recorded 8   20
Average recorded investment, with no related allowance recorded 14 27  
Interest income recognized, with no related allowance recorded 7    
Cash basis income recognized, with no related allowance recorded 8    
With An Allowance Recorded:      
Average recorded investment, with an allowance recorded   20  
Agriculture Portfolio Segment [Member]      
With No Related Allowance Recorded:      
Unpaid principal balance, with no related allowance recorded 105   260
Recorded investment, with no related allowance recorded 77   $ 152
Average recorded investment, with no related allowance recorded $ 115 247  
Other Portfolio Segment [Member]      
With No Related Allowance Recorded:      
Average recorded investment, with no related allowance recorded   123  
Interest income recognized, with no related allowance recorded   2  
Cash basis income recognized, with no related allowance recorded   $ 2  

v3.4.0.3
Note 4 - Loans (Details) - Types of Troubled Debt Restructuring Loan Modification by Portfolio Segment - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
1-4 Family    
Troubled Debt Restructuring $ 18,346 $ 20,984
Performing Financial Instruments [Member]    
1-4 Family    
Troubled Debt Restructuring 14,867 17,440
Nonperforming Financial Instruments [Member]    
1-4 Family    
Troubled Debt Restructuring 3,479 3,544
Commercial Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 68 68
Commercial Portfolio Segment [Member] | Payment Deferral [Member]    
1-4 Family    
Troubled Debt Restructuring 439 439
Commercial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 68 68
Commercial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Payment Deferral [Member]    
1-4 Family    
Troubled Debt Restructuring 439 439
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 261 262
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Performing Financial Instruments [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 261 262
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Payment Deferral [Member]    
1-4 Family    
Troubled Debt Restructuring 2,365 2,365
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Nonperforming Financial Instruments [Member] | Payment Deferral [Member]    
1-4 Family    
Troubled Debt Restructuring 2,365 2,365
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 5,593 5,687
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Payment Deferral [Member]    
1-4 Family    
Troubled Debt Restructuring 607 622
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Performing Financial Instruments [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 5,593 5,637
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Nonperforming Financial Instruments [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring   50
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Nonperforming Financial Instruments [Member] | Payment Deferral [Member]    
1-4 Family    
Troubled Debt Restructuring 607 622
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 6,577 4,195
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Performing Financial Instruments [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 6,577 4,195
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring 2,436 7,346
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Performing Financial Instruments [Member] | Contractual Interest Rate Reduction [Member]    
1-4 Family    
Troubled Debt Restructuring $ 2,436 $ 7,346

v3.4.0.3
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual $ 11,119 $ 14,087
Loans Past Due 90 Day and Over Still Accruing 0 0
Commercial Portfolio Segment [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 864 1,112
Loans Past Due 90 Day and Over Still Accruing 0 0
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 0 0
Loans Past Due 90 Day and Over Still Accruing 0 0
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 4,125 4,263
Loans Past Due 90 Day and Over Still Accruing 0 0
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 1,219 2,657
Loans Past Due 90 Day and Over Still Accruing 0 0
Residential Portfolio Segment [Member] | Multifamily Loans [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 0 32
Loans Past Due 90 Day and Over Still Accruing 0 0
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 4,827 5,851
Loans Past Due 90 Day and Over Still Accruing 0 0
Consumer Portfolio Segment [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 7 20
Loans Past Due 90 Day and Over Still Accruing 0 0
Agriculture Portfolio Segment [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 77 152
Loans Past Due 90 Day and Over Still Accruing 0 0
Other Portfolio Segment [Member]    
Note 4 - Loans (Details) - Recorded Investment in Nonaccrual and Loans Past Due 90 Days and Still on Accrual by Class of Loan [Line Items]    
Nonaccrual 0 0
Loans Past Due 90 Day and Over Still Accruing $ 0 $ 0

v3.4.0.3
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual $ 11,119 $ 14,087
Total past due and nonaccrual 13,010 17,461
Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 1,829 3,133
Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 62 241
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Commercial Portfolio Segment [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 864 1,112
Total past due and nonaccrual 898 1,190
Commercial Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 34 78
Commercial Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Commercial Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 0 0
Total past due and nonaccrual 128 0
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 128 0
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 4,125 4,263
Total past due and nonaccrual 4,373 4,719
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 244 456
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 4 0
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 1,219 2,657
Total past due and nonaccrual 1,219 2,983
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 326
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Residential Portfolio Segment [Member] | Multifamily Loans [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 0 32
Total past due and nonaccrual 0 32
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 4,827 5,851
Total past due and nonaccrual 6,251 8,317
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 1,412 2,225
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 12 241
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Consumer Portfolio Segment [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 7 20
Total past due and nonaccrual 26 61
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 11 41
Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 9 0
Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Agriculture Portfolio Segment [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 77 152
Total past due and nonaccrual 114 159
Agriculture Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 7
Agriculture Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 37 0
Agriculture Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Other Portfolio Segment [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Nonaccrual 0 0
Total past due and nonaccrual 0 0
Other Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Other Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due 0 0
Other Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Past due $ 0 $ 0

v3.4.0.3
Note 4 - Loans (Details) - Risk Category of Loans by Class of Loans - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]    
Gross loans $ 619,827 $ 618,666
Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 534,451 517,484
Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 59,265 63,363
Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 1,383 1,395
Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 24,728 36,424
Commercial Portfolio Segment [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 83,743 86,176
Commercial Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 81,911 81,570
Commercial Portfolio Segment [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 436 2,953
Commercial Portfolio Segment [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 1,396 1,653
Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 251,517 250,136
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 34,631 33,154
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 29,027 27,603
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 5,604 5,289
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans   262
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 73,119 76,412
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 62,573 65,476
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 4,829 4,844
Commercial Real Estate Portfolio Segment [Member] | Farmland Loans [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 5,717 6,092
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 143,767 140,570
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 117,964 111,901
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 22,017 22,687
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 1,317 1,328
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 2,469 4,654
Residential Portfolio Segment [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 241,524 245,609
Residential Portfolio Segment [Member] | Multifamily Loans [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 43,541 44,131
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 32,648 35,300
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 6,988 4,879
Residential Portfolio Segment [Member] | Multifamily Loans [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 3,905 3,952
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 197,983 201,478
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 172,540 164,490
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 14,432 17,636
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Special Mention [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 66 67
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 10,945 19,285
Consumer Portfolio Segment [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 9,929 10,010
Consumer Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 9,356 9,323
Consumer Portfolio Segment [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 436 474
Consumer Portfolio Segment [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 137 213
Agriculture Portfolio Segment [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 32,731 26,316
Agriculture Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 28,049 21,402
Agriculture Portfolio Segment [Member] | Watch [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 4,523 4,601
Agriculture Portfolio Segment [Member] | Substandard [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 159 313
Other Portfolio Segment [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans 383 419
Other Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Gross loans $ 383 $ 419

v3.4.0.3
Note 5 - Other Real Estate Owned (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Note 5 - Other Real Estate Owned (Details) [Line Items]      
Foreclosed Real Estate Rental Income $ 256,000 $ 357,000  
One- to Four-family Residential Properties [Member]      
Note 5 - Other Real Estate Owned (Details) [Line Items]      
Mortgage Loans in Process of Foreclosure, Amount $ 601,000   $ 934,000

v3.4.0.3
Note 5 - Other Real Estate Owned (Details) - Major Categories of OREO - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Real Estate Properties [Line Items]        
Other real estate owned, gross $ 18,749 $ 19,844    
Valuation allowance (888) (630) $ (492) $ (1,066)
17,861 19,214 $ 43,618 $ 46,197
Commercial Real Estate Portfolio Segment [Member] | Construction, Land Development, and Other Land Loans [Member]        
Real Estate Properties [Line Items]        
Other real estate owned, gross 12,507 12,749    
Commercial Real Estate Portfolio Segment [Member] | Nonfarm Nonresidential [Member]        
Real Estate Properties [Line Items]        
Other real estate owned, gross 5,802 6,967    
Residential Portfolio Segment [Member] | One- to Four-family Residential Properties [Member]        
Real Estate Properties [Line Items]        
Other real estate owned, gross $ 440 $ 128    

v3.4.0.3
Note 5 - Other Real Estate Owned (Details) - OREO Valuation Allowance Activity - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
OREO Valuation Allowance Activity:    
Beginning balance $ 630,000 $ 1,066,000
Provision to allowance 500,000 300,000
Write-downs (242,000) (874,000)
Ending balance $ 888,000 $ 492,000

v3.4.0.3
Note 5 - Other Real Estate Owned (Details) - Activity Relating to Other Real Estate Owned - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
OREO Activity    
OREO $ 19,214,000 $ 46,197,000
Real estate acquired 441,000 347,000
Valuation adjustment write-downs (500,000) (300,000)
Net gain on sales 55,000 3,000
Proceeds from sales of properties (1,349,000) (2,629,000)
OREO $ 17,861,000 $ 43,618,000

v3.4.0.3
Note 5 - Other Real Estate Owned (Details) - Expenses Related to Other Real Estate Owned - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Expenses Related to Other Real Estate Owned [Abstract]    
Net gain on sales $ (55) $ (3)
Provision to allowance 500 300
Operating expense 223 436
Total $ 668 $ 733

v3.4.0.3
Note 6 - Deposits (Details) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Disclosure Text Block [Abstract]    
Time Deposits, $250,000 or More $ 28.1 $ 28.4

v3.4.0.3
Note 6 - Deposits (Details) - Deposit Balances by Category - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Deposit Balances by Category [Abstract]    
Non-interest bearing $ 120,302 $ 120,043
Interest checking 96,465 97,515
Money market 134,684 125,935
Savings 35,197 34,677
Certificates of deposit 478,965 499,827
Total $ 865,613 $ 877,997

v3.4.0.3
Note 6 - Deposits (Details) - Maturities of Time Deposits
$ in Thousands
Mar. 31, 2016
USD ($)
Maturities of Time Deposits [Abstract]  
Year 1 $ 359,138
Year 2 43,553
Year 3 12,751
Year 4 35,860
Year 5 27,663
$ 478,965

v3.4.0.3
Note 7 - Advances from Federal Home Loan Bank (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Note 7 - Advances from Federal Home Loan Bank (Details) [Line Items]    
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Repayment and Penalties $ 0 $ 0
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds $ 28,600,000  
Maximum [Member] | Federal Home Loan Bank Advances [Member]    
Note 7 - Advances from Federal Home Loan Bank (Details) [Line Items]    
Debt Instrument, Term 1 year  

v3.4.0.3
Note 7 - Advances from Federal Home Loan Bank (Details) - Advances from the Federal Home Loan Bank - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]    
Monthly amortizing advances with fixed rates from 0.00% to 5.25% and maturities ranging from 2017 through 2033, averaging 2.58% at March 31, 2016 and 2.65% at December 31, 2015 $ 2,932 $ 3,081

v3.4.0.3
Note 7 - Advances from Federal Home Loan Bank (Details) - Advances from the Federal Home Loan Bank (Parentheticals)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]    
Advances from FHLB, earliest maturity 2017 2017
Advances from FHLB, latest maturity 2033 2033
Advances from FHLB, average interest rate 2.58% 2.65%
Minimum [Member]    
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]    
Advances from FHLB, fixed rate 0.00% 0.00%
Maximum [Member]    
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]    
Advances from FHLB, fixed rate 5.25% 5.25%

v3.4.0.3
Note 8 - Fair Values Measurement (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Note 8 - Fair Values Measurement (Details) [Line Items]      
Debt Instrument, Interest Rate, Stated Percentage   6.50%  
Debt Instrument, Interest Rate, Effective Percentage   8.00%  
Impaired Financing Receivable, with Related Allowance, Recorded Investment $ 6,266,000   $ 6,350,000
Impaired Financing Receivable, Related Allowance 464,000   428,000
Impaired Financing Receivable Provision for Loan Losses 46,000 $ 0  
Other Repossessed Assets 17,900,000 43,600,000 19,200,000
Real Estate Owned, Valuation Allowance, Provision 500,000 300,000  
Impaired Loans [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Impaired Financing Receivable, Related Allowance 383,000 131,000 337,000
Measured for Impairment Using Fair Value of Collateral [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Impaired Financing Receivable, with Related Allowance, Recorded Investment $ 1,800,000 $ 1,900,000 $ 1,800,000
Minimum [Member] | Impaired Loans [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs Estimated Discount Rate for Cost to Sell 6.00%    
Minimum [Member] | Other Real Estate Owned [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs Estimated Discount Rate for Cost to Sell 6.00%    
Maximum [Member] | Impaired Loans [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs Estimated Discount Rate for Cost to Sell 10.00%    
Maximum [Member] | Other Real Estate Owned [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs Estimated Discount Rate for Cost to Sell 10.00%    
Routine Real Estate Collateral [Member] | Impaired Loans [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs, Discount Rate 10.00%    
Routine Real Estate Collateral [Member] | Other Real Estate Owned [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs, Discount Rate 10.00%    
Thin Trading Market or Specialized Collateral [Member] | Impaired Loans [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs, Discount Rate 25.00%    
Thin Trading Market or Specialized Collateral [Member] | Other Real Estate Owned [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs, Discount Rate 25.00%    
Impaired Loans [Member] | Minimum [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs, Discount Rate 10.00%    
Impaired Loans [Member] | Maximum [Member]      
Note 8 - Fair Values Measurement (Details) [Line Items]      
Fair Value Inputs, Discount Rate 33.00%    

v3.4.0.3
Note 8 - Fair Values Measurement (Details) - Financial Assets Measured at Fair Value on Recurring and Non-recurring Basis - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Available for sale securities    
Available-for-sale securities $ 141,525 $ 144,978
Impaired loans:    
Impaired loans 26,236 31,776
Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 141,525 144,978
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Nonfarm Nonresidential [Member]    
Impaired loans:    
Impaired loans 91 139
Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member] | Construction Loans [Member]    
Commercial real estate:    
Other real-estate 11,914 12,344
Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member] | Nonfarm Nonresidential [Member]    
Commercial real estate:    
Other real-estate 5,528 6,746
Residential Portfolio Segment [Member] | Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | One- to Four-family Residential Properties [Member]    
Impaired loans:    
Impaired loans 1,301 1,362
Residential Portfolio Segment [Member] | Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member] | One- to Four-family Residential Properties [Member]    
Commercial real estate:    
Other real-estate 419 124
US Treasury and Government [Member]    
Available for sale securities    
Available-for-sale securities 34,736 33,262
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 34,736 33,262
Residential Mortgage Backed Securities [Member]    
Available for sale securities    
Available-for-sale securities 101,362 102,662
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 101,362 102,662
US States and Political Subdivisions Debt Securities [Member]    
Available for sale securities    
Available-for-sale securities 3,337 6,861
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 3,337 6,861
Corporate Debt Securities [Member]    
Available for sale securities    
Available-for-sale securities 2,090 2,193
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 2,090 2,193
Fair Value, Inputs, Level 2 [Member]    
Available for sale securities    
Available-for-sale securities 141,525 144,978
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 141,525 144,978
Fair Value, Inputs, Level 2 [Member] | US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 34,736 33,262
Fair Value, Inputs, Level 2 [Member] | Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 101,362 102,662
Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 3,337 6,861
Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]    
Available for sale securities    
Available-for-sale securities 2,090 2,193
Fair Value, Inputs, Level 3 [Member] | Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Nonfarm Nonresidential [Member]    
Impaired loans:    
Impaired loans 91 139
Fair Value, Inputs, Level 3 [Member] | Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member] | Construction Loans [Member]    
Commercial real estate:    
Other real-estate 11,914 12,344
Fair Value, Inputs, Level 3 [Member] | Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member] | Nonfarm Nonresidential [Member]    
Commercial real estate:    
Other real-estate 5,528 6,746
Fair Value, Inputs, Level 3 [Member] | Residential Portfolio Segment [Member] | Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | One- to Four-family Residential Properties [Member]    
Impaired loans:    
Impaired loans 1,301 1,362
Fair Value, Inputs, Level 3 [Member] | Residential Portfolio Segment [Member] | Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member] | One- to Four-family Residential Properties [Member]    
Commercial real estate:    
Other real-estate $ 419 $ 124

v3.4.0.3
Note 8 - Fair Values Measurement (Details) - Reconcilation of All Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs Level 3
$ in Thousands
3 Months Ended
Mar. 31, 2015
USD ($)
Reconcilation of All Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs Level 3 [Abstract]  
Balances of recurring Level 3 assets $ 658
Total gain (loss) for the period:  
Included in other comprehensive income (loss) 7
Balances of recurring Level 3 assets $ 665

v3.4.0.3
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Residential Portfolio Segment [Member] | Cost Approach Valuation Technique [Member] | Impaired Loans [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Fair value (in Dollars) $ 1,301 $ 1,362
Unobservable input(s) Adjustment for differences between the comparable sales Adjustment for differences between the comparable sales
Residential Portfolio Segment [Member] | Minimum [Member] | Cost Approach Valuation Technique [Member] | Impaired Loans [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 1.00% 1.00%
Weighted average (1.00%) (1.00%)
Residential Portfolio Segment [Member] | Maximum [Member] | Cost Approach Valuation Technique [Member] | Impaired Loans [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 16.00% 16.00%
Weighted average (16.00%) (16.00%)
Residential Portfolio Segment [Member] | Weighted Average [Member] | Cost Approach Valuation Technique [Member] | Impaired Loans [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 7.00% 7.00%
Weighted average (7.00%) (7.00%)
Commercial Real Estate Portfolio Segment [Member] | Cost Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Fair value (in Dollars) $ 17,442 $ 19,090
Unobservable input(s) Adjustment for differences between the comparable sales Adjustment for differences between the comparable sales
Commercial Real Estate Portfolio Segment [Member] | Income Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Unobservable input(s) Discount or capitalization rate Discount or capitalization rate
Commercial Real Estate Portfolio Segment [Member] | Minimum [Member] | Cost Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 0.00% 0.00%
Weighted average (0.00%) (0.00%)
Commercial Real Estate Portfolio Segment [Member] | Minimum [Member] | Income Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 10.00% 10.00%
Weighted average (10.00%) (10.00%)
Commercial Real Estate Portfolio Segment [Member] | Maximum [Member] | Cost Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 30.00% 30.00%
Weighted average (30.00%) (30.00%)
Commercial Real Estate Portfolio Segment [Member] | Maximum [Member] | Income Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 20.00% 20.00%
Weighted average (20.00%) (20.00%)
Commercial Real Estate Portfolio Segment [Member] | Weighted Average [Member] | Cost Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 12.00% 12.00%
Weighted average (12.00%) (12.00%)
Commercial Real Estate Portfolio Segment [Member] | Weighted Average [Member] | Income Approach Valuation Technique [Member] | Other Real Estate Owned [Member]    
Note 8 - Fair Values Measurement (Details) - Qualitative Information about Level Three Fair Value Measurements for Financial Instruments Measured at Fair Value On Non-recurring Basis [Line Items]    
Range of inputs 17.00% 17.00%
Weighted average (17.00%) (17.00%)

v3.4.0.3
Note 8 - Fair Values Measurement (Details) - Carrying Amount and Estimated Fair Values of Financial Instruments - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Financial assets        
Cash and cash equivalents $ 80,306 $ 93,335 $ 109,771 $ 80,180
Cash and cash equivalents 80,306 93,335    
Securities available for sale 141,525 144,978    
Securities held to maturity 42,011 42,075    
Securities held to maturity 44,683 44,253    
Federal Home Loan Bank stock $ 7,323 $ 7,323    
Federal Home Loan Bank stock    
Loans held for sale $ 113 $ 186    
Loans held for sale 113 186    
Loans, net 608,487 606,625    
Loans, net 615,391 614,162    
Accrued interest receivable 3,034 3,116    
Accrued interest receivable 3,034 3,116    
Financial liabilities        
Deposits 865,613 877,997    
Deposits 854,492 859,195    
Federal Home Loan Bank advances 2,932 3,081    
Federal Home Loan Bank advances 2,980 3,076    
Subordinated capital notes 3,825 4,050    
Subordinated capital notes 3,726 3,933    
Junior subordinated debentures 21,000 21,000    
Junior subordinated debentures 12,713 12,810    
Accrued interest payable 2,936 2,805    
Accrued interest payable 2,936 2,805    
Fair Value, Inputs, Level 1 [Member]        
Financial assets        
Cash and cash equivalents $ 67,398 $ 79,498    
Federal Home Loan Bank stock    
Financial liabilities        
Deposits $ 120,302 $ 120,043    
Fair Value, Inputs, Level 2 [Member]        
Financial assets        
Cash and cash equivalents 12,908 13,837    
Securities available for sale 141,525 144,978    
Securities held to maturity $ 44,683 $ 44,253    
Federal Home Loan Bank stock    
Loans held for sale $ 113 $ 186    
Accrued interest receivable 1,030 1,111    
Financial liabilities        
Deposits 734,190 739,152    
Federal Home Loan Bank advances 2,980 3,076    
Accrued interest payable $ 385 $ 422    
Fair Value, Inputs, Level 3 [Member]        
Financial assets        
Federal Home Loan Bank stock    
Loans, net $ 615,391 $ 614,162    
Accrued interest receivable 2,004 2,005    
Financial liabilities        
Subordinated capital notes 3,726 3,933    
Junior subordinated debentures 12,713 12,810    
Accrued interest payable $ 2,551 $ 2,383    

v3.4.0.3
Note 9 - Income Taxes (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Jul. 10, 2015
Income Tax Disclosure [Abstract]        
Unrecognized Tax Benefits $ 0   $ 0  
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued 0 $ 0    
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense $ 0 $ 0    
Common Stock Ownership Percentage by Individual 5.00%      
Common Stock Ownership Percentage 50.00%      
Dividend Declared, Preferred Stock Purchase Right Per Each Share of Common Stock (in Shares)       1

v3.4.0.3
Note 9 - Income Taxes (Details) - Deferred Tax Assets and Liabilities - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Deferred tax assets:    
Net operating loss carry-forward $ 38,469 $ 38,085
Allowance for loan losses 3,969 4,214
Other real estate owned write-down 6,991 7,619
Alternative minimum tax credit carry-forward 692 692
Net assets from acquisitions 671 671
Net unrealized loss on securities   166
New market tax credit carry-forward 208 208
Nonaccrual loan interest 525 549
Other 1,958 1,875
53,483 54,079
Deferred tax liabilities:    
FHLB stock dividends 928 928
Fixed assets 207 176
Net unrealized gain on securities 197  
Other 854 865
2,186 1,969
Net deferred tax assets before valuation allowance 51,297 52,110
Valuation allowance (51,297) (52,110)
Net deferred tax asset $ 0 $ 0

v3.4.0.3
Note 10 - Stock Plans and Stock Based Compensation (Details) - USD ($)
3 Months Ended
Mar. 25, 2015
Mar. 31, 2016
Mar. 31, 2015
May. 25, 2016
Dec. 31, 2015
Dec. 31, 2014
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Restricted Stock, Shares Cancelled 538,479          
Share-based Compensation (in Dollars)   $ 73,000 $ 49,000      
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost (in Dollars)   $ 0 $ 0      
Stock Incentive Plan 2006 [Member]            
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized   1,563,050        
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number   917,541     922,419 770,440
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant   307,156        
Non-Employee Directors Stock Incentive Plan 2006 [Member]            
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized   700,000        
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number         0 5,052
Share-based Compensation Arrangement by Share-based Payment Award, Shares Remaining Available for Issuance   185,774        
Scenario, Forecast [Member] | 2016 Omnibus Equity Compensation Plan [Member]            
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized       489,366    
Restricted Stock [Member] | Non-Employee Directors Stock Incentive Plan 2006 [Member]            
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Share-based Compensation Arrangement by Share-based Payment Award, Annual Award to Non-Employee Directors, Value (in Dollars)   $ 25,000        
Service-based Restricted Stock [Member]            
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period 4 years          
Stock Issued During Period, Shares, Restricted Stock Award, Gross 800,000          
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification Incremental Expense Recognized (in Dollars) $ 233,000          
Minimum [Member] | Unvested Shares [Member] | Stock Incentive Plan 2006 [Member]            
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period   3 years        
Maximum [Member] | Unvested Shares [Member] | Stock Incentive Plan 2006 [Member]            
Note 10 - Stock Plans and Stock Based Compensation (Details) [Line Items]            
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period   10 years        

v3.4.0.3
Note 10 - Stock Plans and Stock Based Compensation (Details) - Unvested Share Activity - Stock Incentive Plan 2006 [Member] - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Note 10 - Stock Plans and Stock Based Compensation (Details) - Unvested Share Activity [Line Items]    
Outstanding, beginning 922,419 770,440
Outstanding, beginning $ 0.96 $ 1.33
Granted 0 800,000
Granted $ 0 $ 0.89
Vested (1,522) (165,185)
Vested $ 21.87 $ 1.50
Terminated 0 (450,994)
Terminated $ 0 $ 1.25
Forfeited (3,356) (31,842)
Forfeited $ 1.35 $ 1.13
Outstanding, ending 917,541 922,419
Outstanding, ending $ 0.93 $ 0.96

v3.4.0.3
Note 10 - Stock Plans and Stock Based Compensation (Details) - Unvested Share Activity for Non-Employee Directors - Non-Employee Directors Stock Incentive Plan 2006 [Member]
12 Months Ended
Dec. 31, 2015
$ / shares
shares
Note 10 - Stock Plans and Stock Based Compensation (Details) - Unvested Share Activity for Non-Employee Directors [Line Items]  
Outstanding, beginning | shares 5,052
Outstanding, beginning | $ / shares $ 1.65
Granted | shares 115,740
Granted | $ / shares $ 1.08
Vested | shares (120,792)
Vested | $ / shares $ 1.10
Forfeited | shares 0
Forfeited | $ / shares $ 0
Outstanding, ending | shares 0
Outstanding, ending | $ / shares $ 0

v3.4.0.3
Note 10 - Stock Plans and Stock Based Compensation (Details) - Unrecognized Stock Based Compensation Expense Related to Unvested Shares
$ in Thousands
Mar. 31, 2016
USD ($)
Unrecognized Stock Based Compensation Expense Related to Unvested Shares [Abstract]  
April 2016 – December 2016 $ 175
2017 156
2018 $ 149

v3.4.0.3
Note 11 - Earnings (Loss) Per Share (Details) - $ / shares
1 Months Ended 3 Months Ended
Sep. 30, 2015
Mar. 31, 2016
Mar. 31, 2015
Note 11 - Earnings (Loss) Per Share (Details) [Line Items]      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number   0 0
Common Stock [Member]      
Note 11 - Earnings (Loss) Per Share (Details) [Line Items]      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)   $ 15.88 $ 15.88
Warrant [Member]      
Note 11 - Earnings (Loss) Per Share (Details) [Line Items]      
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations 650,544    
Warrant [Member] | Common Stock [Member]      
Note 11 - Earnings (Loss) Per Share (Details) [Line Items]      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount   330,561 330,561
Nonvoting Common Stock [Member]      
Note 11 - Earnings (Loss) Per Share (Details) [Line Items]      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)     $ 10.95
Nonvoting Common Stock [Member] | Warrant [Member]      
Note 11 - Earnings (Loss) Per Share (Details) [Line Items]      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount     650,544

v3.4.0.3
Note 11 - Earnings (Loss) Per Share (Details) - Basic and Diluted Loss Per Share - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Dec. 31, 2014
Note 11 - Earnings (Loss) Per Share (Details) - Basic and Diluted Loss Per Share [Line Items]        
Net income (in Dollars) $ 1,480 $ 594 $ (3,200) $ (11,200)
Less:        
Earnings allocated (in Dollars) 51 185    
Net income attributable to common shareholders, basic and diluted (in Dollars) $ 1,429 $ 409    
Basic        
Weighted average common shares including unvested common shares outstanding 26,945,307 25,419,523    
Less:        
Weighted average shares outstanding 26,025,327 17,493,397    
Basic income per common share (in Dollars per share) $ 0.05 $ 0.02    
Diluted        
Add: Dilutive effects of assumed exercises of common stock warrants 0 0    
Weighted average common shares and potential common shares 26,025,327 17,493,397    
Diluted income per common share (in Dollars per share) $ 0.05 $ 0.02    
Unvested Shares [Member]        
Less:        
Earnings allocated (in Dollars) $ 51 $ 21    
Less:        
Weighted average shares outstanding 919,980 918,393    
Series C Preferred Stock [Member]        
Less:        
Earnings allocated (in Dollars)   $ 164    
Series B Preferred Stock [Member]        
Less:        
Weighted average shares outstanding   2,702,400    
Series D Preferred Stock [Member]        
Less:        
Weighted average shares outstanding   4,305,333    

v3.4.0.3
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) - USD ($)
$ in Billions
Mar. 31, 2016
Dec. 31, 2015
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) [Line Items]    
Maximum Asset for Opt Out Requirement in Capital Calculation (in Dollars) $ 250  
Tier One Leverage Capital Required for Capital Adequacy to Average Assets 4.00% 4.00%
Capital Required for Capital Adequacy to Risk Weighted Assets 8.00% 8.00%
PBI Bank [Member]    
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) [Line Items]    
Tier One Leverage Capital Required for Capital Adequacy to Average Assets 4.00% 4.00%
Capital Required for Capital Adequacy to Risk Weighted Assets 8.00% 8.00%
PBI Bank [Member] | Consent Order [Member]    
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) [Line Items]    
Tier One Leverage Capital Required for Capital Adequacy to Average Assets 9.00%  
Capital Required for Capital Adequacy to Risk Weighted Assets 12.00%  

v3.4.0.3
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) - Ratios and Amounts of Common Equity Tier 1, Tier 1 Capital and Total Capital to Risk-Adjusted Assets and the Leverage Ratios - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Total risk-based capital (to risk-weighted assets)    
Total risk-based capital to risk-weighted assets, actual amount $ 69,981 $ 68,530
Total risk-based capital (to risk-weighted ssets, actual ratio 10.46% 10.46%
Total risk-based capital to risk-weighted assets, for capital adequacy purposes, amount $ 53,537 $ 52,436
Total risk-based capital to risk-weighted assets, for capital adequacy purposes, ratio 8.00% 8.00%
Total common equity Tier I risk-based capital (to risk-weighted assets)    
Total common equity Tier I risk-based capital to risk-weighted assets, actual amount $ 34,883 $ 33,368
Total common equity Tier I risk-based capital to risk-weighted assets, actual ratio 5.21% 5.09%
Total common equity Tier I risk-based capital to risk-weighted assets, for capital adequacy purposes, amount $ 30,114 $ 29,495
Total common equity Tier I risk-based capital to risk-weighted assets, for captial adequacy purposes, ratio 4.50% 4.50%
Tier I capital (to risk-weighted assets)    
Tier I capital to risk-weighted assets, actual amount $ 47,068 $ 45,174
Tier I capital to risk-weighted assets, actual ratio 7.03% 6.89%
Tier I capital to risk-weighted assets, for capital adequacy purposes, amount $ 40,152 $ 39,327
Tier I capital to risk-weighted assets, for capital adequacy purposes, ratio 6.00% 6.00%
Tier I capital (to average assets)    
Tier I capital to average assets, actual amount $ 47,068 $ 45,174
Tier I capital to average assets, actual ratio 5.03% 4.74%
Tier I capital to average assets, for capital adequacy purposes, amount $ 37,434 $ 38,131
Tier I capital to average assets, for capital adequacy purposes, ratio 4.00% 4.00%
PBI Bank [Member]    
Total risk-based capital (to risk-weighted assets)    
Total risk-based capital to risk-weighted assets, actual amount $ 71,108 $ 69,250
Total risk-based capital (to risk-weighted ssets, actual ratio 10.64% 10.58%
Total risk-based capital to risk-weighted assets, for capital adequacy purposes, amount $ 53,479 $ 52,347
Total risk-based capital to risk-weighted assets, for capital adequacy purposes, ratio 8.00% 8.00%
Total common equity Tier I risk-based capital (to risk-weighted assets)    
Total common equity Tier I risk-based capital to risk-weighted assets, actual amount $ 59,790 $ 57,873
Total common equity Tier I risk-based capital to risk-weighted assets, actual ratio 8.94% 8.84%
Total common equity Tier I risk-based capital to risk-weighted assets, for capital adequacy purposes, amount $ 30,082 $ 29,445
Total common equity Tier I risk-based capital to risk-weighted assets, for captial adequacy purposes, ratio 4.50% 4.50%
Tier I capital (to risk-weighted assets)    
Tier I capital to risk-weighted assets, actual amount $ 59,790 $ 57,873
Tier I capital to risk-weighted assets, actual ratio 8.94% 8.84%
Tier I capital to risk-weighted assets, for capital adequacy purposes, amount $ 40,109 $ 39,260
Tier I capital to risk-weighted assets, for capital adequacy purposes, ratio 6.00% 6.00%
Tier I capital (to average assets)    
Tier I capital to average assets, actual amount $ 59,790 $ 57,873
Tier I capital to average assets, actual ratio 6.39% 6.08%
Tier I capital to average assets, for capital adequacy purposes, amount $ 37,406 $ 38,085
Tier I capital to average assets, for capital adequacy purposes, ratio 4.00% 4.00%

v3.4.0.3
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) - Minimum Capital Ratios - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) - Minimum Capital Ratios [Line Items]    
Total capital to risk-weighted assets $ 69,981 $ 68,530
Total capital to risk-weighted assets 10.46% 10.46%
Total capital to risk-weighted assets $ 53,537 $ 52,436
Total capital to risk-weighted assets 8.00% 8.00%
Tier I capital to average assets $ 47,068 $ 45,174
Tier I capital to average assets 5.03% 4.74%
Tier I capital to average assets $ 37,434 $ 38,131
Tier I capital to average assets 4.00% 4.00%
PBI Bank [Member]    
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) - Minimum Capital Ratios [Line Items]    
Total capital to risk-weighted assets $ 71,108 $ 69,250
Total capital to risk-weighted assets 10.64% 10.58%
Total capital to risk-weighted assets $ 53,479 $ 52,347
Total capital to risk-weighted assets 8.00% 8.00%
Tier I capital to average assets $ 59,790 $ 57,873
Tier I capital to average assets 6.39% 6.08%
Tier I capital to average assets $ 37,406 $ 38,085
Tier I capital to average assets 4.00% 4.00%
PBI Bank [Member] | Consent Order [Member]    
Note 12 - Capital Requirements and Restrictions on Retained Earnings (Details) - Minimum Capital Ratios [Line Items]    
Total capital to risk-weighted assets $ 80,218  
Total capital to risk-weighted assets 12.00%  
Tier I capital to average assets $ 84,164  
Tier I capital to average assets 9.00%  

v3.4.0.3
Note 13 - Contingencies (Details)
12 Months Ended
Jul. 16, 2013
USD ($)
Jun. 18, 2010
USD ($)
Dec. 31, 2009
USD ($)
Mar. 31, 2016
USD ($)
Note 13 - Contingencies (Details) [Line Items]        
Loss Contingency Accrual       $ 2,200,000
Loss Contingency, Number of Plaintiffs   3    
Signature Point Litigation [Member]        
Note 13 - Contingencies (Details) [Line Items]        
Loss Contingency Accrual       $ 1,500,000
Loss Contingency, Estimate of Possible Loss   $ 26,000,000    
Signature Point Litigation [Member] | Compensatory Damages [Member]        
Note 13 - Contingencies (Details) [Line Items]        
Loss Contingency, Damages Awarded, Value $ 1,515,000      
Signature Point Litigation [Member] | Punitive Damages [Member]        
Note 13 - Contingencies (Details) [Line Items]        
Loss Contingency, Damages Awarded, Value $ 5,500,000      
AIT Laboratories Employee Stock Ownership Plan Litigation [Member]        
Note 13 - Contingencies (Details) [Line Items]        
Alleged Imprudent and Disloyal Purchase of Stock Authorized     $ 90,000,000  

v3.4.0.3
Note 14 - Subsequent Events (Details) - USD ($)
$ in Thousands
3 Months Ended
Apr. 15, 2016
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Note 14 - Subsequent Events (Details) [Line Items]        
Interest Paid (in Dollars)   $ 4,205 $ 1,906  
Voting Common Stock [Member]        
Note 14 - Subsequent Events (Details) [Line Items]        
Common Stock, Shares, Outstanding   20,086,177   20,089,533
Common Stock, Shares, Issued   20,086,177   20,089,533
Nonvoting Common Stock [Member]        
Note 14 - Subsequent Events (Details) [Line Items]        
Common Stock, Shares, Outstanding   6,858,000   6,858,000
Common Stock, Shares, Issued   6,858,000   6,858,000
Subsequent Event [Member] | Private Placement [Member]        
Note 14 - Subsequent Events (Details) [Line Items]        
Sale of Stock, Consideration Received on Transaction (in Dollars) $ 5,000      
Interest Paid (in Dollars) $ 2,800      
Subsequent Event [Member] | Voting Common Stock [Member]        
Note 14 - Subsequent Events (Details) [Line Items]        
Common Stock, Shares, Outstanding 22,986,177      
Common Stock, Shares, Issued 22,986,177      
Subsequent Event [Member] | Voting Common Stock [Member] | Private Placement [Member]        
Note 14 - Subsequent Events (Details) [Line Items]        
Stock Issued During Period, Shares, New Issues 2,900,000      
Subsequent Event [Member] | Nonvoting Common Stock [Member]        
Note 14 - Subsequent Events (Details) [Line Items]        
Common Stock, Shares, Outstanding 7,958,000      
Common Stock, Shares, Issued 7,958,000      
Subsequent Event [Member] | Nonvoting Common Stock [Member] | Private Placement [Member]        
Note 14 - Subsequent Events (Details) [Line Items]        
Stock Issued During Period, Shares, New Issues 1,100,000      
Sale of Stock, Consideration Received on Transaction (in Dollars) $ 5,000      

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