Peoples Bancorp of North Carolina (PEBK) 10-K 14 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Feb. 29, 2016	Jun. 30, 2015
Document And Entity Information
Entity Registrant Name	PEOPLES BANCORP OF NORTH CAROLINA INC
Entity Central Index Key	1,093,672
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 78,498,822
Entity Common Stock, Shares Outstanding		5,510,538
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,015

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets
Cash and due from banks, including reserve requirements of $14,587 at 12/31/15 and $12,569 at 12/31/14	$ 29,194	$ 51,213
Interest-bearing deposits	10,569	17,885
Cash and cash equivalents	39,763	69,098
Investment securities available for sale	268,530	281,099
Other investments	3,636	4,031
Total securities	272,166	285,130
Mortgage loans held for sale	4,149	1,375
Loans	689,091	651,891
Less allowance for loan losses	(9,589)	(11,082)
Net loans	679,502	640,809
Premises and equipment, net	16,976	17,000
Cash surrender value of life insurance	14,546	14,125
Other real estate	739	2,016
Accrued interest receivable and other assets	10,640	10,941
Total assets	1,038,481	1,040,494
Deposits:
Non-interest bearing demand	244,231	210,758
NOW, MMDA & savings	431,052	407,504
Time, $250,000 or more	26,891	47,872
Other time	130,001	148,566
Total deposits	832,175	814,700
Securities sold under agreements to repurchase	27,874	48,430
FHLB borrowings	43,500	50,000
Junior subordinated debentures	20,619	20,619
Accrued interest payable and other liabilities	9,449	8,080
Total liabilities	$ 933,617	$ 941,829
Commitments
Shareholders' equity:
Series A preferred stock, $1,000 stated value; authorized 5,000,000 shares; no shares issued and outstanding	$ 0	$ 0
Common stock, no par value; authorized 20,000,000 shares; issued and outstanding 5,510,538 shares at 12/31/15, and 5,612,588 shares at 12/31/14	46,171	48,088
Retained earnings	53,183	45,124
Accumulated other comprehensive income	5,510	5,453
Total shareholders' equity	104,864	98,665
Total liabilities and shareholders' equity	$ 1,038,481	$ 1,040,494

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets
Cash and due from banks, reserve requirements	$ 14,587	$ 12,569
Shareholders' equity:
Series A preferred stock, stated value (in dollars per share)	$ 1,000	$ 1,000
Series A preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Series A preferred stock, shares issued (in shares)	0	0
Series A preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	5,510,538	5,612,588
Common stock, shares outstanding (in shares)	5,510,538	5,612,588

Consolidated Statements of Earn

Consolidated Statements of Earnings - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Interest income:
Interest and fees on loans	$ 31,098	$ 30,305	$ 30,194
Interest on due from banks	26	65	85
Interest on investment securities:
U.S. Government sponsored enterprises	2,616	2,995	1,639
States and political subdivisions	4,600	4,677	4,427
Other	326	378	351
Total interest income	38,666	38,420	36,696
Interest expense:
NOW, MMDA & savings deposits	432	499	732
Time deposits	870	1,188	1,650
FHLB borrowings	1,735	2,166	2,518
Junior subordinated debentures	402	389	398
Other	45	45	55
Total interest expense	3,484	4,287	5,353
Net interest income	35,182	34,133	31,343
(Reduction of) provision for loan losses	(17)	(699)	2,584
Net interest income after provision for loan losses	35,199	34,832	28,759
Non-interest income:
Service charges	4,647	4,961	4,566
Other service charges and fees	931	1,080	1,172
Gain on sale of securities	0	266	614
Mortgage banking income	1,130	804	1,228
Insurance and brokerage commissions	714	701	661
Gain/(loss) on sales and write-downs of other real estate	245	(622)	(581)
Miscellaneous	5,645	4,974	4,992
Total non-interest income	13,312	12,164	12,652
Non-interest expense:
Salaries and employee benefits	18,285	17,530	16,851
Occupancy	6,288	6,251	5,539
Professional fees	1,468	1,401	1,088
Advertising	784	804	685
Debit card expense	988	905	823
FDIC insurance	681	739	864
Other	7,284	8,041	6,991
Total non-interest expense	35,778	35,671	32,841
Earnings before income taxes	12,733	11,325	8,570
Income tax expense	3,100	1,937	1,879
Net earnings	9,633	9,388	6,691
Dividends and accretion of preferred stock	0	0	656
Net earnings available to common shareholders	$ 9,633	$ 9,388	$ 6,035
Basic net earnings per common share	$ 1.73	$ 1.67	$ 1.08
Diluted net earnings per common share	1.72	1.66	1.07
Cash dividends declared per common share	$ 0.28	$ 0.18	$ 0.12

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements Of Comprehensive Income Loss
Net earnings	$ 9,633	$ 9,388	$ 6,691
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available for sale	93	11,117	(10,498)
Reclassification adjustment for gains on securities available for sale included in net earnings	0	(266)	(614)
Total other comprehensive income (loss), before income taxes	93	10,851	(11,112)
Income tax (benefit) expense related to other comprehensive (loss) income:
Unrealized holding gains (losses) on securities available for sale	36	4,330	(4,089)
Reclassification adjustment for gains on securities available for sale included in net earnings	0	(104)	(239)
Total income tax expense (benefit) related to other comprehensive income (loss)	36	4,226	(4,328)
Total other comprehensive income (loss), net of tax	57	6,625	(6,784)
Total comprehensive income (loss)	$ 9,690	$ 16,013	$ (93)

Consolidated Statements of Chan

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Preferred Stock	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income	Total
Beginning Balance, Shares at Dec. 31, 2012	12,524	5,613,495
Beginning Balance, Amount at Dec. 31, 2012	$ 12,524	$ 48,133	$ 31,478	$ 5,612	$ 97,747
Preferred stock repurchase, shares	(12,524)
Preferred stock repurchase	$ (12,524)				(12,524)
Cash dividends declared on Series A preferred stock			$ (734)		(734)
Cash dividends declared on common stock			(677)		(677)
Net earnings			$ 6,691		6,691
Change in accumulated other comprehensive income, net of tax				$ (6,784)	(6,784)
Ending Balance, Shares at Dec. 31, 2013	0	5,613,495
Ending Balance, Amount at Dec. 31, 2013	$ 0	$ 48,133	$ 36,758	$ (1,172)	83,719
Common stock repurchase, shares		(4,537)
Common stock repurchase		$ (82)			(82)
Cash dividends declared on common stock			$ (1,022)		(1,022)
Stock options exercised, Shares		3,630
Stock options exercised, Amount		$ 37			37
Net earnings			$ 9,388		9,388
Change in accumulated other comprehensive income, net of tax				$ 6,625	6,625
Ending Balance, Shares at Dec. 31, 2014	0	5,612,588
Ending Balance, Amount at Dec. 31, 2014	$ 0	$ 48,088	$ 45,124	5,453	98,665
Common stock repurchase, shares		(102,050)
Common stock repurchase		$ (1,917)			(1,917)
Cash dividends declared on common stock			(1,574)		(1,574)
Net earnings			9,633		9,633
Change in accumulated other comprehensive income, net of tax				57	57
Ending Balance, Shares at Dec. 31, 2015	0	5,510,538
Ending Balance, Amount at Dec. 31, 2015	$ 0	$ 46,171	$ 53,183	$ 5,510	$ 104,864

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash flows from operating activities:
Net earnings	$ 9,633	$ 9,388	$ 6,691
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and accretion	6,053	6,889	8,453
(Reduction)/Provision for loan losses	(17)	(699)	2,584
Deferred income taxes	100	178	534
Gain on sale of investment securities	0	(266)	(614)
Gain on sale of other real estate	(363)	(5)	(14)
Write-down of other real estate	118	627	595
Restricted stock expense	487	389	173
Change in:
Mortgage loans held for sale	(2,774)	(878)	6,425
Cash surrender value of life insurance	(421)	(419)	(432)
Other assets	165	(778)	1,508
Other liabilities	882	15	(982)
Net cash provided by operating activities	13,863	14,441	24,921
Cash flows from investing activities:
Purchases of investment securities available for sale	(19,220)	(32,851)	(98,129)
Proceeds from sales, calls and maturities of investment securities available for sale	5,475	36,148	63,597
Proceeds from paydowns of investment securities available for sale		20,202	17,463
Purchases of other investments	(6)	0	0
FHLB stock redemption	401	959	609
Net change in loans	(43,441)	(36,692)	(6,137)
Purchases of premises and equipment	(2,354)	(3,120)	(2,434)
Proceeds from sale of other real estate and repossessions	6,287	3,456	5,797
Net cash used by investing activities	(30,126)	(11,898)	(19,234)
Cash flows from financing activities:
Net change in deposits	17,475	15,339	17,836
Net change in securities sold under agreement to repurchase	(20,556)	3,034	10,818
Proceeds from FHLB borrowings	20,001	0	15,001
Repayments of FHLB borrowings	(26,501)	(15,000)	(20,001)
Proceeds from FRB borrowings	1	1	1
Repayments of FRB borrowings	(1)	(1)	(1)
Preferred stock and warrant repurchase	0	(12,524)	0
Stock options exercised	0	37	0
Common stock repurchased	(1,917)	(82)	0
Cash dividends paid on Series A preferred stock	0	0	(734)
Cash dividends paid on common stock	(1,574)	(1,022)	(677)
Net cash (used) provided by financing activities	(13,072)	(10,218)	22,243
Net change in cash and cash equivalents	(29,335)	(7,675)	27,930
Cash and cash equivalents at beginning of period	69,098	76,773	48,843
Cash and cash equivalents at end of period	39,763	69,098	76,773
Cash paid during the year for:
Interest	2,667	4,388	5,452
Income taxes	2,278	1,939	2,256
Noncash investing and financing activities:
Change in unrealized (loss) gain on investment securities available for sale, net	57	6,625	(6,784)
Transfer of loans to other real estate and repossessions	4,825	4,415	2,353
Financed portion of sale of other real estate	60	374	708
Accrued redemption of Series A Preferred Stock	$ 0	$ 0	$ 12,632

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
1. Summary of Significant Accounting Policies	Organization Peoples Bancorp of North Carolina, Inc. ("Bancorp") received regulatory approval to operate as a bank holding company on July 22, 1999, and became effective August 31, 1999. Bancorp is primarily regulated by the Board of Governors of the Federal Reserve System, and serves as the one-bank holding company for Peoples Bank (the "Bank"). The Bank commenced business in 1912 upon receipt of its banking charter from the North Carolina State Banking Commission (the "SBC"). The Bank is primarily regulated by the SBC and the Federal Deposit Insurance Corporation (the "FDIC") and undergoes periodic examinations by these regulatory agencies. The Bank, whose main office is in Newton, North Carolina, provides a full range of commercial and consumer banking services primarily in Catawba, Alexander, Lincoln, Mecklenburg, Iredell, Union, Wake, Durham and Forsyth counties in North Carolina. Peoples Investment Services, Inc. is a wholly owned subsidiary of the Bank and began operations in 1996 to provide investment and trust services through agreements with an outside party. Real Estate Advisory Services, Inc. ("REAS") is a wholly owned subsidiary of the Bank and began operations in 1997 to provide real estate appraisal and property management services to individuals and commercial customers of the Bank. Community Bank Real Estate Solutions, LLC is a wholly owned subsidiary of Bancorp and began operations in 2009 as a "clearing house" for appraisal services for community banks. Other banks are able to contract with Community Bank Real Estate Solutions, LLC to find and engage appropriate appraisal companies in the area where the property is located. In March 2015, the Bank established a new wholly owned subsidiary, PB Real Estate Holdings, LLC, which acquires, manages and disposes of real property, other collateral and other assets obtained in the ordinary course of collecting debts previously contracted. The Bank operates four offices focused on the Latino population under the name Banco de la Gente. These offices are operated as a division of the Bank. Banco de la Gente offers normal and customary banking services as are offered in the Bank's other branches such as the taking of deposits and the making of loans and therefore is not considered a reportable segment of the Company (as defined below). Principles of Consolidation The consolidated financial statements include the financial statements of Bancorp and its wholly owned subsidiaries, the Bank and Community Bank Real Estate Solutions, LLC, along with the Bank's wholly owned subsidiaries, Peoples Investment Services, Inc., REAS and PB Real Estate Holdings, LLC (collectively called the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Basis of Presentation The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America ("GAAP") and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and valuation of real estate acquired in connection with or in lieu of foreclosure on loans. Cash and Cash Equivalents Cash, due from banks and interest-bearing deposits are considered cash and cash equivalents for cash flow reporting purposes. Investment Securities There are three classifications the Company is able to classify its investment securities: trading, available for sale, or held to maturity. Trading securities are bought and held principally for sale in the near term. Held to maturity securities are those securities for which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. At December 31, 2015 and 2014, the Company classified all of its investment securities as available for sale. Available for sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders' equity until realized. Management evaluates investment securities for other-than-temporary impairment on an annual basis. A decline in the market value of any investment below cost that is deemed other-than-temporary is charged to earnings for the decline in value deemed to be credit related and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in comprehensive income. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities classified as available for sale are included in earnings and are derived using the specific identification method for determining the cost of securities sold. Other Investments Other investments include equity securities with no readily determinable fair value. These investments are carried at cost. Mortgage Loans Held for Sale Mortgage loans held for sale are carried at lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at the principal amount outstanding, net of the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The recognition of certain loan origination fee income and certain loan origination costs is deferred when such loans are originated and amortized over the life of the loan. A loan is impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings. Allowance for Loan Losses The allowance for loan losses reflects management's assessment and estimate of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. The Bank periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance for loan losses that management believes will be adequate in light of anticipated risks and loan losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed. Other factors considered are: · the Bank's loan loss experience; · the amount of past due and non-performing loans; · specific known risks; · the status and amount of other past due and non-performing assets; · underlying estimated values of collateral securing loans; · current and anticipated economic conditions; and · other factors which management believes affect the allowance for potential credit losses. Management uses several measures to assess and monitor the credit risks in the loan portfolio, including a loan grading system that begins upon loan origination and continues until the loan is collected or collectability becomes doubtful. Upon loan origination, the Bank's originating loan officer evaluates the quality of the loan and assigns one of eight risk grades. The loan officer monitors the loan's performance and credit quality and makes changes to the credit grade as conditions warrant. When originated or renewed, all loans over a certain dollar amount receive in-depth reviews and risk assessments by the Bank's Credit Administration. Before making any changes in these risk grades, management considers assessments as determined by the third party credit review firm (as described below), regulatory examiners and the Bank's Credit Administration. Any issues regarding the risk assessments are addressed by the Bank's senior credit administrators and factored into management's decision to originate or renew the loan. The Bank's Board of Directors reviews, on a monthly basis, an analysis of the Bank's reserves relative to the range of reserves estimated by the Bank's Credit Administration. As an additional measure, the Bank engages an independent third party to review the underwriting, documentation and risk grading analyses. This independent third party reviews and evaluates loan relationships greater than $1.0 million, excluding loans in default, and loans in process of litigation or liquidation. The third party's evaluation and report is shared with management and the Bank's Board of Directors. Management considers certain commercial loans with weak credit risk grades to be individually impaired and measures such impairment based upon available cash flows and the value of the collateral. Allowance or reserve levels are estimated for all other graded loans in the portfolio based on their assigned credit risk grade, type of loan and other matters related to credit risk. Management uses the information developed from the procedures described above in evaluating and grading the loan portfolio. This continual grading process is used to monitor the credit quality of the loan portfolio and to assist management in estimating the allowance for loan losses. The provision for loan losses charged or credited to earnings is based upon management's judgment of the amount necessary to maintain the allowance at a level appropriate to absorb probable incurred losses in the loan portfolio at the balance sheet date. The amount each quarter is dependent upon many factors, including growth and changes in the composition of the loan portfolio, net charge-offs, delinquencies, management's assessment of loan portfolio quality, the value of collateral, and other macro-economic factors and trends. The evaluation of these factors is performed quarterly by management through an analysis of the appropriateness of the allowance for loan losses. The allowance for loan losses is comprised of three components: specific reserves, general reserves and unallocated reserves. After a loan has been identified as impaired, management measures impairment. When the measure of the impaired loan is less than the recorded investment in the loan, the amount of the impairment is recorded as a specific reserve. These specific reserves are determined on an individual loan basis based on management's current evaluation of the Bank's loss exposure for each credit, given the appraised value of any underlying collateral. Loans for which specific reserves are provided are excluded from the general allowance calculations as described below. The general allowance reflects reserves established under GAAP for collective loan impairment. These reserves are based upon historical net charge-offs using the greater of the last two, three, four or five years' loss experience. This charge-off experience may be adjusted to reflect the effects of current conditions. The Bank considers information derived from its loan risk ratings and external data related to industry and general economic trends in establishing reserves. The unallocated allowance is determined through management's assessment of probable losses that are in the portfolio but are not adequately captured by the other two components of the allowance, including consideration of current economic and business conditions and regulatory requirements. The unallocated allowance also reflects management's acknowledgement of the imprecision and subjectivity that underlie the modeling of credit risk. Due to the subjectivity involved in determining the overall allowance, including the unallocated portion, the unallocated portion may fluctuate from period to period based on management's evaluation of the factors affecting the assumptions used in calculating the allowance. There were no significant changes in the estimation methods or fundamental assumptions used in the evaluation of the allowance for loan losses for the year ended December 31, 2015 as compared to the year ended December 31, 2014. Revisions, estimates and assumptions may be made in any period in which the supporting factors indicate that loss levels may vary from the previous estimates. Effective December 31, 2012, stated income mortgage loans from the Banco de la Gente division of the Bank were analyzed separately from other single family residential loans in the Bank's loan portfolio. These loans are first mortgage loans made to the Latino market, primarily in Mecklenburg and surrounding counties. These loans are non-traditional mortgages in that the customer normally did not have a credit history, so all credit information was accumulated by the loan officers. These loans were made as stated income loans rather than full documentation loans because the customer may not have had complete documentation on the income supporting the loan. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for loan losses. Such agencies may require adjustments to the allowance based on their judgments of information available to them at the time of their examinations. Management believes it has established the allowance for credit losses pursuant to GAAP, and has taken into account the views of its regulators and the current economic environment. Management considers the allowance for loan losses adequate to cover the estimated losses inherent in the Bank's loan portfolio as of the date of the financial statements. Although management uses the best information available to make evaluations, significant future additions to the allowance may be necessary based on changes in economic and other conditions, thus adversely affecting the operating results of the Company. Mortgage Banking Activities Mortgage banking income represents net gains from the sale of mortgage loans and fees received from borrowers and loan investors related to the Bank's origination of single-family residential mortgage loans. Mortgage loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balances of mortgage loans serviced for others was approximately $1.6 million, $2.1 million and $2.4 million at December 31, 2015, 2014 and 2013, respectively. The Bank originates certain fixed rate mortgage loans and commits these loans for sale. The commitments to originate fixed rate mortgage loans and the commitments to sell these loans to a third party are both derivative contracts. The fair value of these derivative contracts is immaterial and has no effect on the recorded amounts in the financial statements. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in earnings for the period. The cost of maintenance and repairs that do not improve or extend the useful life of the respective asset is charged to earnings as incurred, whereas significant renewals and improvements are capitalized. The range of estimated useful lives for premises and equipment are generally as follows: Buildings and improvements 10 - 50 years Furniture and equipment 3 - 10 years Other Real Estate Foreclosed assets include all assets received in full or partial satisfaction of a loan. Foreclosed assets are reported at fair value less estimated selling costs. Any write-downs at the time of foreclosure are charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management, and a valuation allowance is established if fair value less estimated selling costs declines below carrying value. Costs relating to the development and improvement of the property are capitalized. Revenues and expenses from operations are included in other expenses. Changes in the valuation allowance are included in loss on sale and write-down of other real estate. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that the realization of such benefits is more likely than not to occur. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities results in a deferred tax asset, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of a deferred tax asset, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Tax effects from an uncertain tax position can be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company assessed the impact of this guidance and determined that it did not have a material impact on the Company's financial position, results of operations or disclosures. Derivative Financial Instruments and Hedging Activities In the normal course of business, the Company enters into derivative contracts to manage interest rate risk by modifying the characteristics of the related balance sheet instruments in order to reduce the adverse effect of changes in interest rates. All material derivative financial instruments are recorded at fair value in the financial statements. The fair value of derivative contracts related to the origination of fixed rate mortgage loans and the commitments to sell these loans to a third party is immaterial and has no effect on the recorded amounts in the financial statements. The disclosure requirements for derivatives and hedging activities have the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. The disclosure requirements include qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. On the date a derivative contract is entered into, the Company designates the derivative as a fair value hedge, a cash flow hedge, or a trading instrument. Changes in the fair value of instruments used as fair value hedges are accounted for in the earnings of the period simultaneous with accounting for the fair value change of the item being hedged. Changes in the fair value of the effective portion of cash flow hedges are accounted for in other comprehensive income rather than earnings. Changes in fair value of instruments that are not intended as a hedge are accounted for in the earnings of the period of the change. If a derivative instrument designated as a fair value hedge is terminated or the hedge designation removed, the difference between a hedged item's then carrying amount and its face amount is recognized into income over the original hedge period. Likewise, if a derivative instrument designated as a cash flow hedge is terminated or the hedge designation removed, related amounts accumulated in other accumulated comprehensive income are reclassified into earnings over the original hedge period during which the hedged item affects income. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company formally documents all hedging relationships, including an assessment that the derivative instruments are expected to be highly effective in offsetting the changes in fair values or cash flows of the hedged items. Advertising Costs Advertising costs are expensed as incurred. Stock-Based Compensation The Company has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the "Plan") whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 267,560 shares are currently remaining for possible issuance under the Plan. All stock-based rights under the Plan must be granted or awarded by May 7, 2019 (or ten years from the Plan effective date). The Company granted 29,514 restricted stock units under the Plan at a grant date fair value of $7.90 per share during the first quarter of 2012, of which 5,355 restricted stock units were forfeited by the executive officers of the Company as required by the agreement with the U.S. Department of the Treasury ("UST") in conjunction with the Company's participation in the Capital Purchase Program ("CPP") under the Troubled Asset Relief Program ("TARP"). In July 2012, the Company granted 5,355 restricted stock units at a grant date fair value of $8.25 per share. The Company granted 26,795 restricted stock units under the Plan at a grant date fair value of $11.90 per share during the second quarter of 2013. The Company granted 21,056 restricted stock units under the Plan at a grant date fair value of $15.70 per share during the first quarter of 2014. The Company granted 15,075 restricted stock units under the Plan at a grant date fair value of $17.97 per share during the first quarter of 2015. The Company recognizes compensation expense on the restricted stock units over the period of time the restrictions are in place (five years from the grant date for the 2012 grants, four years from the grant date for the 2013 and 2015 grants and three years from the grant date for the 2014 grants). The amount of expense recorded each period reflects the changes in the Company's stock price during such period. As of December 31, 2015, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $678,000. The Company recognized compensation expense for restricted stock units granted under the Plan of $487,000, $389,000 and $173,000 for the years ended December 31, 2015, 2014 and 2013, respectively. Net Earnings Per Share Net earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share. The average market price during the year is used to compute equivalent shares. The reconciliations of the amounts used in the computation of both "basic earnings per common share" and "diluted earnings per common share" for the years ended December 31, 2015, 2014 and 2013 are as follows: For the year ended December 31, 2015: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 9,633 5,559,235 $ 1.73 Effect of dilutive securities: Restricted stock units - 47,954 Diluted earnings per common share $ 9,633 5,607,189 $ 1.72 For the year ended December 31, 2014: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 9,388 5,615,666 $ 1.67 Effect of dilutive securities: Restricted stock units - 26,326 Diluted earnings per common share $ 9,388 5,641,992 $ 1.66 For the year ended December 31, 2013: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 6,035 5,613,495 $ 1.08 Effect of dilutive securities: Restricted stock units and stock options - 9,725 Diluted earnings per common share $ 6,035 5,623,220 $ 1.07 Recent Accounting Pronouncements In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-17, (Topic 740): Balance Sheet Classification of Deferred Taxes. In January 2016, FASB issued ASU No. 2016-01, (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. In February 2016, FASB issued ASU No. 2016-02, (Topic 842): Leases Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company's results of operations, financial position or disclosures. Reclassification Certain amounts in the 2013 and 2014 consolidated financial statements have been reclassified to conform to the 2015 presentation.

2. Investment Securities

2. Investment Securities	12 Months Ended
	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Investment Securities	Investment securities available for sale at December 31, 2015 and 2014 are as follows: (Dollars in thousands) December 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 76,406 1,526 45 77,887 U.S. Government sponsored enterprises 38,173 399 155 38,417 State and political subdivisions 141,500 6,817 72 148,245 Corporate bonds 1,928 - 22 1,906 Trust preferred securities 750 - - 750 Equity securities 748 577 - 1,325 Total $ 259,505 9,319 294 268,530 (Dollars in thousands) December 31, 2014 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 88,496 1,766 52 90,210 U.S. Government sponsored enterprises 33,766 418 136 34,048 State and political subdivisions 145,938 6,534 226 152,246 Corporate bonds 2,469 16 18 2,467 Trust preferred securities 750 - - 750 Equity securities 748 630 - 1,378 Total $ 272,167 9,364 432 281,099 The current fair value and associated unrealized losses on investments in debt securities with unrealized losses at December 31, 2015 and 2014 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position. (Dollars in thousands) December 31, 2015 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 7,891 45 - - 7,891 45 U.S. Government sponsored enterprises 3,074 13 10,828 142 13,902 155 State and political subdivisions 2,198 4 3,930 68 6,128 72 Corporate bonds 1,500 22 - - 1,500 22 Total $ 14,663 84 14,758 210 29,421 294 (Dollars in thousands) December 31, 2014 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 436 1 2,963 51 3,399 52 U.S. Government sponsored enterprises 2,996 4 9,850 132 12,846 136 State and political subdivisions 567 1 14,998 225 15,565 226 Corporate bonds - - 525 18 525 18 Total $ 3,999 6 28,336 426 32,335 432 At December 31, 2015, unrealized losses in the investment securities portfolio relating to debt securities totaled $294,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the December 31, 2015 tables above, eight out of 172 securities issued by state and political subdivisions contained unrealized losses, 12 out of 80 securities issued by U.S. Government sponsored enterprises, including mortgage-backed securities, contained unrealized losses, and two out of three securities issued by corporations contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations on each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed. The Company periodically evaluates its investments for any impairment which would be deemed other-than-temporary. No investment impairments were deemed other-than-temporary in 2015, 2014 or 2013. The amortized cost and estimated fair value of investment securities available for sale at December 31, 2015, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. December 31, 2015 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 3,666 3,647 Due from one to five years 57,322 60,001 Due from five to ten years 106,136 109,829 Due after ten years 15,227 15,841 Mortgage-backed securities 76,406 77,887 Equity securities 748 1,325 Total $ 259,505 268,530 No securities available for sale were sold during the year ended December 31, 2015. During 2014, proceeds from sales of securities available for sale were $20.2 million and resulted in gross gains of $291,000 and gross losses of $25,000. During 2013, proceeds from sales of securities available for sale were $17.5 million and resulted in gross gains of $738,000 and gross losses of $124,000. Securities with a fair value of approximately $91.0 million and $89.9 million at December 31, 2015 and 2014, respectively, were pledged to secure public deposits, Federal Home Loan Bank of Atlanta ("FHLB") borrowings and for other purposes as required by law. GAAP establishes a framework for measuring fair value and expands disclosures about fair value measurements. There is a three-level fair value hierarchy for fair value measurements. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The table below presents the balance of securities available for sale, which are measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2015 and 2014. (Dollars in thousands) December 31, 2015 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 77,887 - 77,887 - U.S. Government sponsored enterprises $ 38,417 - 38,417 - State and political subdivisions $ 148,245 - 148,245 - Corporate bonds $ 1,906 - 1,906 - Trust preferred securities $ 750 - - 750 Equity securities $ 1,325 1,325 - - (Dollars in thousands) December 31, 2014 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 90,210 - 90,210 - U.S. Government sponsored enterprises $ 34,048 - 34,048 - State and political subdivisions $ 152,246 - 152,246 - Corporate bonds $ 2,467 - 2,467 - Trust preferred securities $ 750 - - 750 Equity securities $ 1,378 1,378 - - Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using 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. The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the year ended December 31, 2015. (Dollars in thousands) Investment Securities Available for Sale Level 3 Valuation Balance, beginning of period $ 750 Change in book value - Change in gain/(loss) realized and unrealized - Purchases/(sales and calls) - Transfers in and/or (out) of Level 3 - Balance, end of period $ 750 Change in unrealized gain/(loss) for assets still held in Level 3 $ -

3. Loans

3. Loans	12 Months Ended
	Dec. 31, 2015
Receivables [Abstract]
Loans	Major classifications of loans at December 31, 2015 and 2014 are summarized as follows: (Dollars in thousands) December 31, 2015 December 31, 2014 Real estate loans: Construction and land development $ 65,791 57,617 Single-family residential 220,690 206,417 Single-family residential - Banco de la Gente stated income 43,733 47,015 Commercial 228,526 228,558 Multifamily and farmland 18,080 12,400 Total real estate loans 576,820 552,007 Loans not secured by real estate: Commercial loans 91,010 76,262 Farm loans 3 7 Consumer loans 10,027 10,060 All other loans 11,231 13,555 Total loans 689,091 651,891 Less allowance for loan losses 9,589 11,082 Total net loans $ 679,502 640,809 The Bank grants loans and extensions of credit primarily within the Catawba Valley region of North Carolina, which encompasses Catawba, Alexander, Iredell and Lincoln counties and also in Mecklenburg, Union, Wake, Durham and Forsyth counties of North Carolina. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate, the value of which is dependent upon the real estate market. Risk characteristics of the major components of the Bank's loan portfolio are discussed below: · Construction and land development loans – The risk of loss is largely dependent on the initial estimate of whether the property's value at completion equals or exceeds the cost of property construction and the availability of take-out financing. During the construction phase, a number of factors can result in delays or cost overruns. If the estimate is inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed through a permanent loan, sale of the property, or by seizure of collateral. As of December 31, 2015, construction and land development loans comprised approximately 10% of the Bank's total loan portfolio. · Single-family residential loans – Declining home sales volumes, decreased real estate values and higher than normal levels of unemployment could contribute to losses on these loans. As of December 31, 2015, single-family residential loans comprised approximately 38% of the Bank's total loan portfolio, including Banco de la Gente single-family residential stated income loans which were approximately 6% of the Bank's total loan portfolio. · Commercial real estate loans – Repayment is dependent on income being generated in amounts sufficient to cover operating expenses and debt service. These loans also involve greater risk because they are generally not fully amortizing over a loan period, but rather have a balloon payment due at maturity. A borrower's ability to make a balloon payment typically will depend on being able to either refinance the loan or timely sell the underlying property. As of December 31, 2015, commercial real estate loans comprised approximately 33% of the Bank's total loan portfolio. · Commercial loans – Repayment is generally dependent upon the successful operation of the borrower's business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid, or fluctuate in value based on the success of the business. As of December 31, 2015, commercial loans comprised approximately 13% of the Bank's total loan portfolio. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The following tables present an age analysis of past due loans, by loan type, as of December 31, 2015 and 2014: December 31, 2015 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 330 17 347 65,444 65,791 - Single-family residential 2,822 1,385 4,207 216,483 220,690 - Single-family residential - Banco de la Gente stated income 7,021 114 7,135 36,598 43,733 - Commercial 2,619 157 2,776 225,750 228,526 - Multifamily and farmland - - - 18,080 18,080 - Total real estate loans 12,792 1,673 14,465 562,355 576,820 - Loans not secured by real estate: Commercial loans 185 40 225 90,785 91,010 17 Farm loans - - - 3 3 - Consumer loans 136 8 144 9,883 10,027 - All other loans - - - 11,231 11,231 - Total loans $ 13,113 1,721 14,834 674,257 689,091 17 December 31, 2014 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 294 3,540 3,834 53,783 57,617 - Single-family residential 5,988 268 6,256 200,161 206,417 - Single-family residential - Banco de la Gente stated income 8,998 610 9,608 37,407 47,015 - Commercial 3,205 366 3,571 224,987 228,558 - Multifamily and farmland 85 - 85 12,315 12,400 - Total real estate loans 18,570 4,784 23,354 528,653 552,007 - Loans not secured by real estate: Commercial loans 241 49 290 75,972 76,262 - Farm loans - - - 7 7 - Consumer loans 184 - 184 9,876 10,060 - All other loans - - - 13,555 13,555 - Total loans $ 18,995 4,833 23,828 628,063 651,891 - The following table presents the Bank's non-accrual loans as of December 31, 2015 and 2014: (Dollars in thousands) December 31, 2015 December 31, 2014 Real estate loans: Construction and land development $ 146 3,854 Single-family residential 4,023 2,370 Single-family residential - Banco de la Gente stated income 1,106 1,545 Commercial 2,992 2,598 Multifamily and farmland - 110 Total real estate loans 8,267 10,477 Loans not secured by real estate: Commercial loans 113 176 Consumer loans 52 75 Total $ 8,432 10,728 At each reporting period, the Bank determines which loans are impaired. Accordingly, the Bank's impaired loans are reported at their estimated fair value on a non-recurring basis. An allowance for each impaired loan that is collateral-dependent is calculated based on the fair value of its collateral. The fair value of the collateral is based on appraisals performed by REAS, a subsidiary of the Bank. REAS is staffed by certified appraisers that also perform appraisals for other companies. Factors, including the assumptions and techniques utilized by the appraiser, are considered by management. If the recorded investment in the impaired loan exceeds the measure of fair value of the collateral, a valuation allowance is recorded as a component of the allowance for loan losses. An allowance for each impaired loan that is not collateral dependent is calculated based on the present value of projected cash flows. If the recorded investment in the impaired loan exceeds the present value of projected cash flows, a valuation allowance is recorded as a component of the allowance for loan losses. Impaired loans under $250,000 are not individually evaluated for impairment with the exception of the Bank's troubled debt restructured ("TDR") loans in the residential mortgage loan portfolio, which are individually evaluated for impairment. Impaired loans collectively evaluated for impairment totaled $8.4 million and $8.1 million at December 31, 2015 and 2014, respectively. Accruing impaired loans were $25.0 million and $25.6 million at December 31, 2015 and December 31, 2014, respectively. Interest income recognized on accruing impaired loans was $1.3 million for the years ended December 31, 2015 and 2014. No interest income is recognized on non-accrual impaired loans subsequent to their classification as non-accrual. The following tables present the Bank's impaired loans as of December 31, 2015 and 2014: December 31, 2015 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans Real estate loans: Construction and land development $ 643 216 226 442 12 705 Single-family residential 8,828 1,489 6,805 8,294 189 10,852 Single-family residential - Banco de la Gente stated income 20,375 - 19,215 19,215 1,143 18,414 Commercial 4,556 - 4,893 4,893 179 5,497 Multifamily and farmland 96 - 83 83 - 93 Total impaired real estate loans 34,498 1,705 31,222 32,927 1,523 35,561 Loans not secured by real estate: Commercial loans 180 - 161 161 3 132 Consumer loans 286 - 260 260 4 283 Total impaired loans $ 34,964 1,705 31,643 33,348 1,530 35,976 December 31, 2014 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans Real estate loans: Construction and land development $ 5,481 3,639 555 4,194 31 5,248 Single-family residential 6,717 933 5,540 6,473 154 7,430 Single-family residential - Banco de la Gente stated income 21,243 - 20,649 20,649 1,191 19,964 Commercial 4,752 1,485 2,866 4,351 272 4,399 Multifamily and farmland 111 - 110 110 1 154 Total impaired real estate loans 38,304 6,057 29,720 35,777 1,649 37,195 Loans not secured by real estate: Commercial loans 218 - 201 201 4 641 Consumer loans 318 - 313 313 5 309 Total impaired loans $ 38,840 6,057 30,234 36,291 1,658 38,145 The fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis at December 31, 2015 and 2014 are presented below. The Company's valuation methodology is discussed in Note 15. (Dollars in thousands) Fair Value Measurements December 31, 2015 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 4,149 - - 4,149 Impaired loans $ 31,818 - - 31,818 Other real estate $ 739 - - 739 (Dollars in thousands) Fair Value Measurements December 31, 2014 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 1,375 - - 1,375 Impaired loans $ 34,633 - - 34,633 Other real estate $ 2,016 - - 2,016 (Dollars in thousands) Fair Value December 31, 2015 Fair Value December 31, 2014 Valuation Technique Significant Inputs General Range of Significant Input Values Mortgage loans held for sale $ 4,149 1,375 Rate lock commitment N/A N/A Impaired loans $ 31,818 34,633 Appraised value Discounts to reflect current market conditions 0 - 25% Other real estate $ 739 2,016 Appraised value Discounts to reflect current and estimated costs to sell 0 - 25% (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Allowance for loan losses: Beginning balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Charge-offs (198 ) (618 ) (117 ) (329 ) - (37 ) - (545 ) - (1,844 ) Recoveries 45 34 22 21 - 101 - 145 - 368 Provision (447 ) 552 (55 ) 323 (7 ) (320 ) - 339 (402 ) (17 ) Ending balance $ 2,185 2,534 1,460 1,917 - 842 - 172 479 9,589 Ending balance: individually evaluated for impairment $ - 96 1,115 171 - - - - - 1,382 Ending balance: collectively evaluated for impairment 2,185 2,438 345 1,746 - 842 - 172 479 8,207 Ending balance $ 2,185 2,534 1,460 1,917 - 842 - 172 479 9,589 Loans: Ending balance $ 65,791 220,690 43,733 228,526 18,080 91,010 3 21,258 - 689,091 Ending balance: individually evaluated for impairment $ 216 2,636 17,850 4,212 - - - - - 24,914 Ending balance: collectively evaluated for impairment $ 65,575 218,054 25,883 224,314 18,080 91,010 3 21,258 - 664,177 Changes in the allowance for loan losses for the year ended December 31, 2014 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Allowance for loan losses: Beginning balance $ 3,218 3,123 1,863 2,219 37 1,069 - 245 1,727 13,501 Charge-offs (884 ) (309 ) (190 ) (290 ) - (430 ) - (534 ) - (2,637 ) Recoveries 428 72 16 171 - 54 - 176 - 917 Provision 23 (320 ) (79 ) (198 ) (30 ) 405 - 346 (846 ) (699 ) Ending balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Ending balance: individually evaluated for impairment $ - 82 1,155 260 - - - - - 1,497 Ending balance: collectively evaluated for impairment 2,785 2,484 455 1,642 7 1,098 - 233 881 9,585 Ending balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Loans: Ending balance $ 57,617 206,417 47,015 228,558 12,400 76,262 7 23,615 - 651,891 Ending balance: individually evaluated for impairment $ 3,639 2,298 18,884 3,345 - - - - - 28,166 Ending balance: collectively evaluated for impairment $ 53,978 204,119 28,131 225,213 12,400 76,262 7 23,615 - 623,725 Changes in the allowance for loan losses for the year ended December 31, 2013 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Allowance for loan losses: Beginning balance $ 4,399 3,231 1,998 2,049 28 1,088 - 245 1,385 14,423 Charge-offs (777 ) (1,724 ) (272 ) (445 ) - (502 ) - (652 ) - (4,372 ) Recoveries 377 111 141 50 - 44 - 143 - 866 Provision (781 ) 1,505 (4 ) 565 9 439 - 509 342 2,584 Ending balance $ 3,218 3,123 1,863 2,219 37 1,069 - 245 1,727 13,501 Ending balance: individually evaluated for impairment $ - 39 1,268 171 - - - - - 1,478 Ending balance: collectively evaluated for impairment 3,218 3,084 595 2,048 37 1,069 - 245 1,727 12,023 Ending balance $ 3,218 3,123 1,863 2,219 37 1,069 - 245 1,727 13,501 Loans: Ending balance $ 63,742 195,975 49,463 209,287 11,801 68,047 19 22,626 - 620,960 Ending balance: individually evaluated for impairment $ 6,293 3,127 19,958 3,767 - 256 - 265 - 33,666 Ending balance: collectively evaluated for impairment $ 57,449 192,848 29,505 205,520 11,801 67,791 19 22,361 - 587,294 The Bank utilizes an internal risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 8. These risk grades are evaluated on an ongoing basis. A description of the general characteristics of the eight risk grades is as follows: · Risk Grade 1 – Excellent Quality: Loans are well above average quality and a minimal amount of credit risk exists. CD or cash secured loans or properly margined actively traded stock or bond secured loans would fall in this grade. · Risk Grade 2 – High Quality: Loans are of good quality with risk levels well within the Company's range of acceptability. The organization or individual is established with a history of successful performance though somewhat susceptible to economic changes. · Risk Grade 3 – Good Quality: Loans of average quality with risk levels within the Company's range of acceptability but higher than normal. This may be a new organization or an existing organization in a transitional phase (e.g. expansion, acquisition, market change). · Risk Grade 4 – Management Attention: These loans have higher risk and servicing needs but still are acceptable. Evidence of marginal performance or deteriorating trends is observed. These are not problem credits presently, but may be in the future if the borrower is unable to change its present course. · Risk Grade 5 – Watch: These loans are currently performing satisfactorily, but there has been some recent past due history on repayment and there are potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Company's position at some future date. · Risk Grade 6 – Substandard: A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged (if there is any). There is a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. · Risk Grade 7 – Doubtful: Loans classified as Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off. · Risk Grade 8 – Loss: Loans classified as Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be realized in the future. Loss is a temporary grade until the appropriate authority is obtained to charge the loan off. The following tables present the credit risk profile of each loan type based on internally assigned risk grades as of December 31, 2015 and 2014. December 31, 2015 (Dollars in thousands) Real Estate Loans Construction Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 15,189 - - - 700 - 1,091 - 16,980 2- High Quality 10,144 86,061 - 38,647 2,998 24,955 - 3,647 1,665 168,117 3- Good Quality 35,535 78,843 19,223 148,805 12,058 58,936 3 4,571 7,828 365,802 4- Management Attention 12,544 30,259 15,029 31,824 335 5,905 - 620 1,738 98,254 5- Watch 7,265 4,322 3,308 4,561 2,689 332 - 43 - 22,520 6- Substandard 303 6,016 6,173 4,689 - 182 - 55 - 17,418 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 65,791 220,690 43,733 228,526 18,080 91,010 3 10,027 11,231 689,091 December 31, 2014 (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 15,099 - - - 924 - 1,232 - 17,255 2- High Quality 6,741 74,367 - 39,888 241 18,730 - 3,576 1,860 145,403 3- Good Quality 24,641 74,453 21,022 142,141 8,376 44,649 7 4,549 8,055 327,893 4- Management Attention 13,013 30,954 12,721 36,433 1,001 11,312 - 566 3,640 109,640 5- Watch 9,294 5,749 5,799 6,153 2,672 383 - 46 - 30,096 6- Substandard 3,928 5,795 7,473 3,943 110 264 - 87 - 21,600 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - 4 - 4 Total $ 57,617 206,417 47,015 228,558 12,400 76,262 7 10,060 13,555 651,891 TDR loans modified in 2015, past due TDR loans and non-accrual TDR loans totaled $8.8 million and $15.0 million at December 31, 2015 and December 31, 2014, respectively. The terms of these loans have been renegotiated to provide a concession to original terms, including a reduction in principal or interest as a result of the deteriorating financial position of the borrower. There were $354,000 and $1.4 million in performing loans classified as TDR loans at December 31, 2015 and December 31, 2014, respectively. The following table presents an analysis of loan modifications during the year ended December 31, 2015: Year ended December 31, 2015 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans: Construction and land development 1 $ 216 216 Single-family residential 3 288 271 Total TDR loans 4 $ 504 487 During the year ended December 31, 2015, four loans were modified that were considered to be new TDR loans. The interest rate was modified on these TDR loans. The following table presents an analysis of loan modifications during the year ended December 31, 2014: Year ended December 31, 2014 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans: Construction and land development 1 $ 291 266 Single-family residential 2 849 845 Single-family residential Banco de la Gente stated income 3 281 278 Total TDR loans 6 $ 1,421 1,389 During the year ended December 31, 2014, six loans were modified that were considered to be new TDR loans. The interest rate was modified on these TDR loans. There were no TDR loans with a payment default occurring within 12 months of the restructure date, and the payment default occurring during the years ended December 31, 2015 and 2014. TDR loans are deemed to be in default if they become past due by 90 days or more.

4. Premises and Equipment

4. Premises and Equipment	12 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Premises and Equipment	Major classifications of premises and equipment at December 31, 2015 and 2014 are summarized as follows: (Dollars in thousands) 2015 2014 Land $ 3,669 3,681 Buildings and improvements 15,889 15,864 Furniture and equipment 19,462 18,442 Total premises and equipment 39,020 37,987 Less accumulated depreciation 22,044 20,987 Total net premises and equipment $ 16,976 17,000 The Company recognized approximately $2.4 million in depreciation expense for the year ended December 31, 2015. Depreciation expense was approximately $2.5 million and $1.9 million for the years ended December 31, 2014 and 2013, respectively.

5. Time Deposits

5. Time Deposits	12 Months Ended
	Dec. 31, 2015
Banking and Thrift [Abstract]
Time Deposits	At December 31, 2015, the scheduled maturities of time deposits are as follows: (Dollars in thousands) 2016 $ 97,586 2017 27,702 2018 24,122 2019 3,019 2020 and thereafter 4,463 Total $ 156,892 At December 31, 2015 and 2014, the Company had approximately $4.3 million and $11.4 million, respectively, in time deposits purchased through third party brokers, including certificates of deposit participated through the Certificate of Deposit Account Registry Service ("CDARS") on behalf of local customers. CDARS balances totaled $4.1 million and $11.0 million as of December 31, 2015 and 2014, respectively. The weighted average rate of brokered deposits as of December 31, 2015 and 2014 was 0.10% and 0.13%, respectively.

6. Federal Home Loan Bank and F

6. Federal Home Loan Bank and Federal Reserve Bank Borrowings	12 Months Ended
	Dec. 31, 2015
Banking and Thrift [Abstract]
Federal Home Loan Bank and Federal Reserve Bank Borrowings	The Bank has borrowings from the FHLB with monthly or quarterly interest payments at December 31, 2015. The FHLB borrowings are collateralized by a blanket assignment on all residential first mortgage loans, home equity lines of credit and loans secured by multi-family real estate that the Bank owns. At December 31, 2015, the carrying value of loans pledged as collateral totaled approximately $124.8 million. The remaining availability under the line of credit with the FHLB was $38.5 million at December 31, 2015. Borrowings from the FHLB outstanding at December 31, 2015 and 2014 consist of the following: December 31, 2015 (Dollars in thousands) Maturity Date Call Date Rate Rate Type Amount October 17, 2018 N/A 3.485% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.725% Adjustable Rate Hybrid 15,000 October 17, 2018 N/A 3.500% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.555% Adjustable Rate Hybrid 5,000 May 8, 2018 N/A 2.144% Floating to Fixed 5,000 May 8, 2018 N/A 3.734% Floating to Fixed 8,500 $ 43,500 December 31, 2014 (Dollars in thousands) Maturity Date Call Date Rate Rate Type Amount October 17, 2018 N/A 3.398% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.638% Adjustable Rate Hybrid 15,000 October 17, 2018 N/A 3.413% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.468% Adjustable Rate Hybrid 5,000 May 8, 2018 N/A 1.792% Floating to Fixed 5,000 May 8, 2018 N/A 3.432% Floating to Fixed 15,000 $ 50,000 The Bank is required to purchase and hold certain amounts of FHLB stock in order to obtain FHLB borrowings. No ready market exists for the FHLB stock, and it has no quoted market value. The stock is redeemable at $100 per share subject to certain limitations set by the FHLB. The Bank owned $2.8 million and $3.2 million of FHLB stock, included in other investments, at December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, the Bank had no borrowings from the Federal Reserve Bank ("FRB"). FRB borrowings are collateralized by a blanket assignment on all qualifying loans that the Bank owns which are not pledged to the FHLB. At December 31, 2015, the carrying value of loans pledged as collateral totaled approximately $365.9 million. Availability under the line of credit with the FRB was $279.2 million at December 31, 2015.

7. Junior Subordinated Debentur

7. Junior Subordinated Debentures	12 Months Ended
	Dec. 31, 2015
Brokers and Dealers [Abstract]
Junior Subordinated Debentures	In June 2006, the Company formed a second wholly owned Delaware statutory trust, PEBK Capital Trust II ("PEBK Trust II"), which issued $20.0 million of guaranteed preferred beneficial interests in the Company's junior subordinated deferrable interest debentures. All of the common securities of PEBK Trust II are owned by the Company. The proceeds from the issuance of the common securities and the trust preferred securities were used by PEBK Trust II to purchase $20.6 million of junior subordinated debentures of the Company. The proceeds received by the Company from the sale of the junior subordinated debentures were used to repay in December 2006 the trust preferred securities issued in December 2001 by PEBK Capital Trust, a wholly owned Delaware statutory trust of the Company, and for general purposes. The debentures represent the sole assets of PEBK Trust II. PEBK Trust II is not included in the consolidated financial statements. The trust preferred securities issued by PEBK Trust II accrue and pay interest quarterly at a floating rate of three-month LIBOR plus 163 basis points. The Company has guaranteed distributions and other payments due on the trust preferred securities to the extent PEBK Trust II does not have funds with which to make the distributions and other payments. The net combined effect of all the documents entered into in connection with the trust preferred securities is that the Company is liable to make the distributions and other payments required on the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity of the debentures on June 28, 2036, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the debentures purchased by PEBK Trust II, in whole or in part, which became effective on June 28, 2011. As specified in the indenture, if the debentures are redeemed prior to maturity, the redemption price will be the principal amount plus any accrued but unpaid interest.

8. Income Taxes

8. Income Taxes	12 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Income Taxes	The provision for income taxes is summarized as follows: (Dollars in thousands) 2015 2014 2013 Current expense $ 2,427 1,759 1,345 Deferred income tax expense 673 178 534 Total income tax $ 3,100 1,937 1,879 The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes are as follows: (Dollars in thousands) 2015 2014 2013 Tax expense at statutory rate (34%) $ 4,329 3,851 2,914 State income tax, net of federal income tax effect 494 (283 ) 428 Tax-exempt interest income (1,682 ) (1,630 ) (1,481 ) Increase in cash surrender value of life insurance (143 ) (143 ) (147 ) Nondeductible interest and other expense 103 119 141 Other (1 ) 23 24 Total $ 3,100 1,937 1,879 The following summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities. The net deferred tax asset is included as a component of other assets at December 31, 2015 and 2014. (Dollars in thousands) 2015 2014 Deferred tax assets: Allowance for loan losses $ 3,513 4,134 Accrued retirement expense 1,574 1,529 Other real estate 33 206 Federal credit carryforward - 342 State credit carryforward - 327 Restricted stock 417 243 Accrued bonuses 238 224 Interest income on nonaccrual loans 88 56 Other than temporary impairment 374 186 Other 16 152 Total gross deferred tax assets 6,253 7,399 Deferred tax liabilities: Deferred loan fees 588 433 Accumulated depreciation 172 728 Prepaid expenses 59 101 Other 70 100 Unrealized gain on available for sale securities 3,308 3,479 Total gross deferred tax liabilities 4,197 4,841 Net deferred tax asset $ 2,056 2,558 The Company has analyzed the tax positions taken or expected to be taken in its tax returns and has concluded that it has no liability related to uncertain tax positions. The Company's tax filings for years 2012 through 2015 were at year end 2015 open to audit under statutes of limitations by the Internal Revenue Service and State taxing authorities.

9. Related Party Transactions

9. Related Party Transactions	12 Months Ended
	Dec. 31, 2015
Related Party Transactions [Abstract]
Related Party Transactions	The Company conducts transactions with its directors and executive officers, including companies in which they have beneficial interests, in the normal course of business. It is the policy of the Bank that loan transactions with directors and officers are made on substantially the same terms as those prevailing at the time made for comparable loans to other persons. The following is a summary of activity for related party loans for 2015 and 2014: (Dollars in thousands) 2015 2014 Beginning balance $ 4,760 4,340 New loans 6,018 6,903 Repayments (6,700 ) (6,483 ) Ending balance $ 4,078 4,760 At December 31, 2015 and 2014, the Bank had deposit relationships with related parties of approximately $18.4 million and $15.1 million, respectively.

10. Commitments and Contingenci

10. Commitments and Contingencies	12 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	The Company leases various office spaces for banking and operational facilities and equipment under operating lease arrangements. Future minimum lease payments required for all operating leases having a remaining term in excess of one year at December 31, 2015 are as follows: (Dollars in thousands) Year ending December 31, 2016 664 2017 550 2018 501 2019 490 2020 422 Thereafter 1,548 Total minimum obligation $ 4,175 Total rent expense was approximately $702,000, $691,000 and $672,000 for the years ended December 31, 2015, 2014 and 2013, respectively. The Bank is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments. The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. In most cases, the Bank requires collateral or other security to support financial instruments with credit risk. (Dollars in thousands) Contractual Amount 2015 2014 Financial instruments whose contract amount represent credit risk: Commitments to extend credit $ 189,351 168,733 Standby letters of credit and financial guarantees written $ 3,872 3,911 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates and because they may expire without being drawn upon, the total commitment amount of $193.2 million does not necessarily represent future cash requirements. Standby letters of credit and financial guarantees written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to businesses in the Bank's delineated market area. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds real estate, equipment, automobiles and customer deposits as collateral supporting those commitments for which collateral is deemed necessary. In the normal course of business, the Company is a party (both as plaintiff and defendant) to a number of lawsuits. In the opinion of management and counsel, none of these cases should have a material adverse effect on the financial position of the Company. Bancorp and the Bank have employment agreements with certain key employees. The agreements, among other things, include salary, bonus, incentive stock option, and change in control provisions. The Company has $59.5 million available for the purchase of overnight federal funds from five correspondent financial institutions as of December 31, 2015.

11. Employee and Director Benef

11. Employee and Director Benefit Programs	12 Months Ended
	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
Employee and Director Benefit Programs	The Company has a profit sharing and 401(k) plan for the benefit of substantially all employees subject to certain minimum age and service requirements. Under the 401(k) plan, the Company matched employee contributions to a maximum of 4.00% of annual compensation in 2013, 2014 and 2015. The Company's contribution pursuant to this formula was approximately $539,000, $439,000 and $430,000 for the years 2015, 2014 and 2013, respectively. Investments of the 401(k) plan are determined by a committee comprised of senior management. No investments in Company stock have been made by the 401(k) plan. Prior to January 1, 2015, the vesting schedule for the 401(k) plan began at 20 percent after two years of employment and graduated 20 percent each year until reaching 100 percent after six years of employment. Effective January 1, 2015, contributions to the 401(k) plan are vested immediately. In December 2001, the Company initiated a postretirement benefit plan to provide retirement benefits to key officers and its Board of Directors and to provide death benefits for their designated beneficiaries. Under the postretirement benefit plan, the Company purchased life insurance contracts on the lives of the key officers and each director. The increase in cash surrender value of the contracts constitutes the Company's contribution to the postretirement benefit plan each year. Postretirement benefit plan participants are to be paid annual benefits for a specified number of years commencing upon retirement. Expenses incurred for benefits relating to the postretirement benefit plan were approximately $413,000, $422,000 and $395,000 for the years 2015, 2014 and 2013, respectively. The Company is currently paying medical benefits for certain retired employees. The Company did not incur any postretirement medical benefits expense in 2015, 2014 and 2013 due to an excess accrual balance. The following table sets forth the change in the accumulated benefit obligation for the Company's two postretirement benefit plans described above: (Dollars in thousands) 2015 2014 Benefit obligation at beginning of period $ 3,812 3,581 Service cost 334 348 Interest cost 65 67 Benefits paid (218 ) (184 ) Reversal of excess accrual - - Benefit obligation at end of period $ 3,993 3,812 The amounts recognized in the Company's Consolidated Balance Sheet as of December 31, 2015 and 2014 are shown in the following two tables: (Dollars in thousands) 2015 2014 Benefit obligation $ 3,993 3,812 Fair value of plan assets - - (Dollars in thousands) 2015 2014 Funded status $ (3,993 ) (3,812 ) Unrecognized prior service cost/benefit - - Unrecognized net actuarial loss - - Net amount recognized $ (3,993 ) (3,812 ) Unfunded accrued liability $ (3,993 ) (3,812 ) Intangible assets - - Net amount recognized $ (3,993 ) (3,812 ) Net periodic benefit cost of the Company's postretirement benefit plans for the years ended December 31, 2015, 2014 and 2013 consisted of the following: (Dollars in thousands) 2015 2014 2013 Service cost $ 334 348 336 Interest cost 65 67 65 Net periodic cost $ 399 415 401 Weighted average discount rate assumption used to determine benefit obligation 5.47 % 5.47 % 5.46 % The Company paid benefits under the two postretirement plans totaling $218,000 and $184,000 during the years ended December 31, 2015 and 2014, respectively. Information about the expected benefit payments for the Company's two postretirement benefit plans is as follows: (Dollars in thousands) Year ending December 31, 2016 $ 244 2017 $ 262 2018 $ 274 2019 $ 310 2020 $ 333 Thereafter $ 8,259

12. Regulatory Matters

12. Regulatory Matters	12 Months Ended
	Dec. 31, 2015
Banking and Thrift [Abstract]
Regulatory Matters	The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of capital in relation to both on- and off-balance sheet items at various risk weights. Total capital consists of two tiers of capital. Tier 1 Capital includes common shareholders' equity and trust preferred securities less adjustments for intangible assets. Tier 2 Capital consists of the allowance for loan losses, up to 1.25% of risk-weighted assets and other adjustments. Management believes, as of December 31, 2015, that the Company and the Bank meet all capital adequacy requirements to which they are subject. As of December 31, 2015, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank's category. In 2013, the Federal Reserve Board approved its final rule on the Basel III capital standards, which implement changes to the regulatory capital framework for banking organizations. The Basel III capital standards, which became effective January 1, 2015, include new risk-based capital and leverage ratios, which will be phased in from 2015 to 2019. The new minimum capital level requirements applicable to the Company and the Bank under the final rules are as follows: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total risk based capital ratio of 8% (unchanged from previous rules); and (iv) a Tier 1 leverage ratio of 4% (unchanged from previous rules). An additional capital conservation buffer will be added to the minimum requirements for capital adequacy purposes beginning on January 1, 2016 at 0.625% and will be phased in through 2019 (increasing by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019). This will result in the following minimum ratios beginning in 2019: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. Under the final rules, institutions would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained earnings that could be utilized for such actions. The Company's and the Bank's actual capital amounts and ratios are presented below: (Dollars in thousands) Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2015: Total Capital (to Risk-Weighted Assets) Consolidated $ 129,203 16.63 % 62,137 8.00 % N/ N/ A Bank $ 124,910 16.11 % 62,026 8.00 % 77,532 10.00 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 119,354 15.37 % 46,603 6.00 % N/A N/ A Bank $ 115,160 14.85 % 46,519 6.00 % 62,026 8.00 % Tier 1 Capital (to Average Assets) Consolidated $ 119,354 11.44 % 41,743 4.00 % N/A N/ A Bank $ 115,160 11.03 % 41,776 4.00 % 52,220 5.00 % Common Equity Tier 1 (to Risk-Weighted Assets) Consolidated $ 99,354 12.79 % 34,952 4.50 % N/A N/ A Bank $ 115,160 14.85 % 34,890 4.50 % 50,396 6.50 % As of December 31, 2014: Total Capital (to Risk-Weighted Assets) Consolidated $ 122,732 16.62 % 59,085 8.00 % N/A N/ A Bank $ 118,356 16.06 % 58,974 8.00 % 73,717 10.00 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 113,211 15.33 % 29,542 4.00 % N/A N/ A Bank $ 108,934 14.78 % 29,487 4.00 % 44,230 6.00 % Tier 1 Capital (to Average Assets) Consolidated $ 113,211 10.74 % 42,181 4.00 % N/A N/ A Bank $ 108,934 10.33 % 42,164 4.00 % 52,706 5.00 % On August 31, 2015, the FDIC and the SBC issued a Consent Order (the "Order") in connection with compliance by the Bank with the Bank Secrecy Act and its implementing regulations (collectively, the "BSA"). The Order was issued pursuant to the consent of the Bank. In consenting to the issuance of the Order, the Bank did not admit or deny any unsafe or unsound banking practices or violations of law or regulation. The Order requires the Bank to take certain affirmative actions to comply with its obligations under the BSA, including, without limitation, strengthening its Board of Directors' oversight of BSA activities; reviewing, enhancing, adopting and implementing a revised BSA compliance program; completing a BSA risk assessment; developing a revised system of internal controls designed to ensure full compliance with the BSA; reviewing and revising customer due diligence and risk assessment processes, policies and procedures; developing, adopting and implementing effective BSA training programs; assessing BSA staffing needs and resources and appointing a qualified BSA officer; establishing an independent BSA testing program; ensuring that all reports required by the BSA are accurately and properly filed and engaging an independent firm to review past account activity to determine whether suspicious activity was properly identified and reported. Prior to implementation, certain of the actions described above are subject to review by and approval or non-objection from the FDIC and the SBC. The Order will remain in effect and be enforceable until it is modified, terminated, suspended or set aside by the FDIC and the SBC. The Bank continues to make progress in addressing the issues identified in the Order and expects that it will be able to undertake and implement all required actions within the time period specified in the Order. The Bank has incurred and will continue to incur additional non-interest expenses associated with the implementation of corrective actions; however, these expenses are not expected to have a significant impact on the results of operations or financial position of the Company. Operating under the Order will limit the Company's ability to participate in acquisitions, to open new branches, and to allocate funds to its stock repurchase plan until such time as the consent Order has been modified, terminated, suspended or set aside by the FDIC and the SBC.

13. Shareholders' Equity

13. Shareholders' Equity	12 Months Ended
	Dec. 31, 2015
Equity [Abstract]
Shareholders' Equity	Shareholders' equity was $104.9 million, or 10.1% of total assets, as of December 31, 2015, compared to $98.7 million, or 9.5% of total assets, as of December 31, 2014. This increase is primarily due to an increase in retained earnings due to net income, which was partially offset by a decrease in common stock due to 102,050 shares of common stock repurchased during 2015 under the Company's stock repurchase program implemented in September 2014. Annualized return on average equity for the year ended December 31, 2015 was 9.03% compared to 9.69% for the year ended December 31, 2014. Total cash dividends paid on common stock were $1.6 million and $1.0 million for the years ended December 31, 2015 and 2014, respectively. The Board of Directors, at its discretion, can issue shares of preferred stock up to a maximum of 5,000,000 shares. The Board is authorized to determine the number of shares, voting powers, designations, preferences, limitations and relative rights. The Board of Directors does not currently anticipate issuing any additional series of preferred stock. In 2014, the Company's Board of Directors authorized a stock repurchase program, pursuant to which up to $2 million will be allocated to repurchase the Company's common stock. Any purchases under the Company's stock repurchase program may be made periodically as permitted by securities laws and other legal requirements in the open market or in privately negotiated transactions. The timing and amount of any repurchase of shares will be determined by the Company's management, based on its evaluation of market conditions and other factors. The repurchase program may be suspended at any time or from time-to-time without prior notice. The Company has repurchased approximately $2.0 million, or 106,587 shares of its common stock, under this program as of December 31, 2015.

14. Other Operating Income and

14. Other Operating Income and Expense	12 Months Ended
	Dec. 31, 2015
Other Income and Expenses [Abstract]
Other Operating Income and Expense	Miscellaneous non-interest income for the years ended December 31, 2015, 2014 and 2013 included the following items that exceeded one percent of total revenues at some point during the following three-year period: (Dollars in thousands) 2015 2014 2013 Visa debit card income $ 3,452 3,170 2,990 Net appraisal management fee income $ 635 525 718 Insurance and brokerage commissions $ 713 701 661 Other non-interest expense for the years ended December 31, 2015, 2014 and 2013 included the following items that exceeded one percent of total revenues at some point during the following three-year period: (Dollars in thousands) 2015 2014 2013 Advertising $ 784 804 685 FDIC insurance $ 681 739 864 Visa debit card expense $ 988 905 823 Telephone $ 588 574 570 Foreclosure/OREO expense $ 398 317 356 Internet banking expense $ 671 644 568 FHLB advance prepayment penalty $ 504 869 530 Consulting $ 904 609 468 NC Tax Credit Amortization $ - 870 160

15. Fair Value of Financial Ins

15. Fair Value of Financial Instruments	12 Months Ended
	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	The Company is required to disclose fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair value of the Company's financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good faith estimate of the increase or decrease in the value of financial instruments held by the Company since purchase, origination, or issuance. The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: · Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets. · Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. · Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. Cash and Cash Equivalents For cash, due from banks and interest-bearing deposits, the carrying amount is a reasonable estimate of fair value. Cash and cash equivalents are reported in the Level 1 fair value category. Investment Securities Available for Sale Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using 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. Fair values for investment securities with quoted market prices are reported in the Level 1 fair value category. Fair value measurements obtained from independent pricing services are reported in the Level 2 fair value category. All other fair value measurements are reported in the Level 3 fair value category. Other Investments For other investments, the carrying value is a reasonable estimate of fair value. Other investments are reported in the Level 3 fair value category. Mortgage Loans Held for Sale Mortgage loans held for sale are carried at lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. Mortgage loans held for sale are reported in the Level 3 fair value category. Loans The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate loans, the carrying amount is a reasonable estimate of fair value. Loans are reported in the Level 3 fair value category, as the pricing of loans is more subjective than the pricing of other financial instruments. Cash Surrender Value of Life Insurance For cash surrender value of life insurance, the carrying value is a reasonable estimate of fair value. Cash surrender value of life insurance is reported in the Level 2 fair value category. Other Real Estate The fair value of other real estate is based upon independent market prices, appraised values of the collateral or management's estimation of the value of the collateral. Other real estate is reported in the Level 3 fair value category. Deposits The fair value of demand deposits, interest-bearing demand deposits and savings is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Deposits are reported in the Level 2 fair value category. Securities Sold Under Agreements to Repurchase For securities sold under agreements to repurchase, the carrying value is a reasonable estimate of fair value. Securities sold under agreements to repurchase are reported in the Level 2 fair value category. FHLB Borrowings The fair value of FHLB borrowings is estimated based upon discounted future cash flows using a discount rate comparable to the current market rate for such borrowings. FHLB borrowings are reported in the Level 2 fair value category. Junior Subordinated Debentures Because the Company's junior subordinated debentures were issued at a floating rate, the carrying amount is a reasonable estimate of fair value. Junior subordinated debentures are reported in the Level 2 fair value category. Commitments to Extend Credit and Standby Letters of Credit Commitments to extend credit and standby letters of credit are generally short-term and at variable interest rates. Therefore, both the carrying value and estimated fair value associated with these instruments are immaterial. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. The fair value presentation for non-recurring assets is presented in Note 3. There were no non-recurring liabilities at December 31, 2015 and 2014. The carrying amount and estimated fair value of the Company's financial instruments at December 31, 2015 and 2014 are as follows: (Dollars in thousands) Fair Value Measurements at December 31, 2015 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 39,763 39,763 - - 39,763 Investment securities available for sale $ 268,530 1,325 266,455 750 268,530 Other investments $ 3,636 - - 3,636 3,636 Mortgage loans held for sale $ 4,149 - - 4,149 4,149 Loans, net $ 679,502 - - 683,540 683,540 Cash surrender value of life insurance $ 14,546 - 14,546 - 14,546 Liabilities: Deposits $ 832,175 - - 827,874 827,874 Securities sold under agreements to repurchase $ 27,874 - 27,874 - 27,874 FHLB borrowings $ 43,500 - 43,144 - 43,144 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2014 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 69,098 69,098 - - 69,098 Investment securities available for sale $ 281,099 1,378 278,971 750 281,099 Other investments $ 4,031 - - 4,031 4,031 Mortgage loans held for sale $ 1,375 - - 1,375 1,375 Loans, net $ 640,809 - - 644,708 644,708 Cash surrender value of life insurance $ 14,125 - 14,125 - 14,125 Liabilities: Deposits $ 814,700 - - 813,288 813,288 Securities sold under agreements to repurchase $ 48,430 - 48,430 - 48,430 FHLB borrowings $ 50,000 - 49,598 - 49,598 Junior subordinated debentures $ 20,619 - 20,619 - 20,619

16. Peoples Bancorp of North Ca

16. Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements	12 Months Ended
	Dec. 31, 2015
Condensed Financial Information of Parent Company Only Disclosure [Abstract]
Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements	Balance Sheets December 31, 2015 and 2014 (Dollars in thousands) Assets 2015 2014 Cash $ 558 745 Interest-bearing time deposit 1,000 1,000 Investment in subsidiaries 121,848 115,457 Investment in PEBK Capital Trust II 619 619 Investment securities available for sale 1,234 1,235 Other assets 244 245 Total assets $ 125,503 119,301 Liabilities and Shareholders' Equity Junior subordinated debentures $ 20,619 20,619 Liabilities 20 17 Shareholders' equity 104,864 98,665 Total liabilities and shareholders' equity $ 125,503 119,301 Statements of Earnings For the Years Ended December 31, 2015, 2014 and 2013 (Dollars in thousands) Revenues: 2015 2014 2013 Interest and dividend income $ 3,979 2,718 13,576 Total revenues 3,979 2,718 13,576 Expenses: Interest 403 389 398 Other operating expenses 538 527 159 Total expenses 941 916 557 Income before income tax benefit and equity in undistributed earnings of subsidiaries 3,038 1,802 13,019 Income tax benefit 262 239 84 Income before equity in undistributed earnings of subsidiaries 3,300 2,041 13,103 Equity in undistributed earnings (loss) of subsidiaries 6,333 7,347 (6,412 ) Net earnings $ 9,633 9,388 6,691 Statements of Cash Flows For the Years Ended December 31, 2015, 2014 and 2013 (Dollars in thousands) 2015 2014 2013 Cash flows from operating activities: Net earnings $ 9,633 9,388 6,691 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Equity in undistributed earnings of subsidiaries (6,333 ) (7,347 ) 6,412 Change in: Other assets 1 28 (73 ) Accrued income - (5 ) - Accrued expense 3 1 27 Other liabilities - (108 ) 108 Net cash provided (used) by operating activities 3,304 1,957 13,165 Cash flows from investing activities: Proceeds from maturities of investment securities available for sale - 500 1 Net change in interest-bearing time deposit - (1,000 ) 800 Net cash provided (used) by investing activities - (500 ) 801 Cash flows from financing activities: Cash dividends paid on Series A preferred stock - - (734 ) Cash dividends paid on common stock (1,574 ) (1,022 ) (677 ) Preferred stock and warrant repurchase - (12,524 ) - Stock repurchase (1,917 ) (82 ) - Proceeds from exercise of stock options - 37 - Net cash used by financing activities (3,491 ) (13,591 ) (1,411 ) Net change in cash (187 ) (12,134 ) 12,555 Cash at beginning of year 745 12,879 324 Cash at end of year $ 558 745 12,879 Noncash investing and financing activities: Change in unrealized gain on investment securities available for sale, net $ 1 8 77 Accrued redemption of Series A Preferred Stock - - 12,632

17. Quarterly Data

17. Quarterly Data	12 Months Ended
	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
17. Quarterly Data	2015 2014 (Dollars in thousands, except per share amounts) First Second Third Fourth First Second Third Fourth Total interest income $ 9,567 9,191 9,947 9,961 $ 9,545 9,576 9,583 9,716 Total interest expense 884 875 874 851 1,111 1,085 1,076 1,015 Net interest income 8,683 8,316 9,073 9,110 8,434 8,491 8,507 8,701 (Reduction of) provision for loan losses 173 (214 ) 235 (211 ) (349 ) 67 256 (673 ) Other income 3,245 3,297 3,266 3,504 2,841 3,110 3,207 3,006 Other expense 8,748 8,337 8,669 10,024 8,123 8,067 8,541 10,940 Income before income taxes 3,007 3,490 3,435 2,801 3,501 3,467 2,917 1,440 Income taxes 679 866 942 613 923 916 475 (377 ) Net earnings 2,328 2,624 2,493 2,188 2,578 2,551 2,442 1,817 Basic net earnings per share 0.41 0.47 0.45 0.40 $ 0.46 0.45 0.43 0.33 Diluted net earnings per share $ 0.41 0.47 0.45 0.39 $ 0.46 0.45 0.43 0.32

1. Summary of Significant Acc25

1. Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
Organization	Peoples Bancorp of North Carolina, Inc. ("Bancorp") received regulatory approval to operate as a bank holding company on July 22, 1999, and became effective August 31, 1999. Bancorp is primarily regulated by the Board of Governors of the Federal Reserve System, and serves as the one-bank holding company for Peoples Bank (the "Bank"). The Bank commenced business in 1912 upon receipt of its banking charter from the North Carolina State Banking Commission (the "SBC"). The Bank is primarily regulated by the SBC and the Federal Deposit Insurance Corporation (the "FDIC") and undergoes periodic examinations by these regulatory agencies. The Bank, whose main office is in Newton, North Carolina, provides a full range of commercial and consumer banking services primarily in Catawba, Alexander, Lincoln, Mecklenburg, Iredell, Union, Wake, Durham and Forsyth counties in North Carolina. Peoples Investment Services, Inc. is a wholly owned subsidiary of the Bank and began operations in 1996 to provide investment and trust services through agreements with an outside party. Real Estate Advisory Services, Inc. ("REAS") is a wholly owned subsidiary of the Bank and began operations in 1997 to provide real estate appraisal and property management services to individuals and commercial customers of the Bank. Community Bank Real Estate Solutions, LLC is a wholly owned subsidiary of Bancorp and began operations in 2009 as a "clearing house" for appraisal services for community banks. Other banks are able to contract with Community Bank Real Estate Solutions, LLC to find and engage appropriate appraisal companies in the area where the property is located. In March 2015, the Bank established a new wholly owned subsidiary, PB Real Estate Holdings, LLC, which acquires, manages and disposes of real property, other collateral and other assets obtained in the ordinary course of collecting debts previously contracted. The Bank operates four offices focused on the Latino population under the name Banco de la Gente. These offices are operated as a division of the Bank. Banco de la Gente offers normal and customary banking services as are offered in the Bank's other branches such as the taking of deposits and the making of loans and therefore is not considered a reportable segment of the Company (as defined below).
Principles of Consolidation	The consolidated financial statements include the financial statements of Bancorp and its wholly owned subsidiaries, the Bank and Community Bank Real Estate Solutions, LLC, along with the Bank's wholly owned subsidiaries, Peoples Investment Services, Inc., REAS and PB Real Estate Holdings, LLC (collectively called the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation	The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America ("GAAP") and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and valuation of real estate acquired in connection with or in lieu of foreclosure on loans.
Cash and Cash Equivalents	Cash, due from banks and interest-bearing deposits are considered cash and cash equivalents for cash flow reporting purposes.
Investment Securities	There are three classifications the Company is able to classify its investment securities: trading, available for sale, or held to maturity. Trading securities are bought and held principally for sale in the near term. Held to maturity securities are those securities for which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. At December 31, 2015 and 2014, the Company classified all of its investment securities as available for sale. Available for sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders' equity until realized. Management evaluates investment securities for other-than-temporary impairment on an annual basis. A decline in the market value of any investment below cost that is deemed other-than-temporary is charged to earnings for the decline in value deemed to be credit related and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in comprehensive income. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities classified as available for sale are included in earnings and are derived using the specific identification method for determining the cost of securities sold.
Other Investments	Other investments include equity securities with no readily determinable fair value. These investments are carried at cost.
Mortgage Loans Held for Sale	Mortgage loans held for sale are carried at lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value.
Loans	Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at the principal amount outstanding, net of the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The recognition of certain loan origination fee income and certain loan origination costs is deferred when such loans are originated and amortized over the life of the loan. A loan is impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings.
Allowance for Loan Losses	The allowance for loan losses reflects management's assessment and estimate of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. The Bank periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance for loan losses that management believes will be adequate in light of anticipated risks and loan losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed. Other factors considered are: · the Bank's loan loss experience; · the amount of past due and non-performing loans; · specific known risks; · the status and amount of other past due and non-performing assets; · underlying estimated values of collateral securing loans; · current and anticipated economic conditions; and · other factors which management believes affect the allowance for potential credit losses. Management uses several measures to assess and monitor the credit risks in the loan portfolio, including a loan grading system that begins upon loan origination and continues until the loan is collected or collectability becomes doubtful. Upon loan origination, the Bank's originating loan officer evaluates the quality of the loan and assigns one of eight risk grades. The loan officer monitors the loan's performance and credit quality and makes changes to the credit grade as conditions warrant. When originated or renewed, all loans over a certain dollar amount receive in-depth reviews and risk assessments by the Bank's Credit Administration. Before making any changes in these risk grades, management considers assessments as determined by the third party credit review firm (as described below), regulatory examiners and the Bank's Credit Administration. Any issues regarding the risk assessments are addressed by the Bank's senior credit administrators and factored into management's decision to originate or renew the loan. The Bank's Board of Directors reviews, on a monthly basis, an analysis of the Bank's reserves relative to the range of reserves estimated by the Bank's Credit Administration. As an additional measure, the Bank engages an independent third party to review the underwriting, documentation and risk grading analyses. This independent third party reviews and evaluates loan relationships greater than $1.0 million, excluding loans in default, and loans in process of litigation or liquidation. The third party's evaluation and report is shared with management and the Bank's Board of Directors. Management considers certain commercial loans with weak credit risk grades to be individually impaired and measures such impairment based upon available cash flows and the value of the collateral. Allowance or reserve levels are estimated for all other graded loans in the portfolio based on their assigned credit risk grade, type of loan and other matters related to credit risk. Management uses the information developed from the procedures described above in evaluating and grading the loan portfolio. This continual grading process is used to monitor the credit quality of the loan portfolio and to assist management in estimating the allowance for loan losses. The provision for loan losses charged or credited to earnings is based upon management's judgment of the amount necessary to maintain the allowance at a level appropriate to absorb probable incurred losses in the loan portfolio at the balance sheet date. The amount each quarter is dependent upon many factors, including growth and changes in the composition of the loan portfolio, net charge-offs, delinquencies, management's assessment of loan portfolio quality, the value of collateral, and other macro-economic factors and trends. The evaluation of these factors is performed quarterly by management through an analysis of the appropriateness of the allowance for loan losses. The allowance for loan losses is comprised of three components: specific reserves, general reserves and unallocated reserves. After a loan has been identified as impaired, management measures impairment. When the measure of the impaired loan is less than the recorded investment in the loan, the amount of the impairment is recorded as a specific reserve. These specific reserves are determined on an individual loan basis based on management's current evaluation of the Bank's loss exposure for each credit, given the appraised value of any underlying collateral. Loans for which specific reserves are provided are excluded from the general allowance calculations as described below. The general allowance reflects reserves established under GAAP for collective loan impairment. These reserves are based upon historical net charge-offs using the greater of the last two, three, four or five years' loss experience. This charge-off experience may be adjusted to reflect the effects of current conditions. The Bank considers information derived from its loan risk ratings and external data related to industry and general economic trends in establishing reserves. The unallocated allowance is determined through management's assessment of probable losses that are in the portfolio but are not adequately captured by the other two components of the allowance, including consideration of current economic and business conditions and regulatory requirements. The unallocated allowance also reflects management's acknowledgement of the imprecision and subjectivity that underlie the modeling of credit risk. Due to the subjectivity involved in determining the overall allowance, including the unallocated portion, the unallocated portion may fluctuate from period to period based on management's evaluation of the factors affecting the assumptions used in calculating the allowance. There were no significant changes in the estimation methods or fundamental assumptions used in the evaluation of the allowance for loan losses for the year ended December 31, 2015 as compared to the year ended December 31, 2014. Revisions, estimates and assumptions may be made in any period in which the supporting factors indicate that loss levels may vary from the previous estimates. Effective December 31, 2012, stated income mortgage loans from the Banco de la Gente division of the Bank were analyzed separately from other single family residential loans in the Bank's loan portfolio. These loans are first mortgage loans made to the Latino market, primarily in Mecklenburg and surrounding counties. These loans are non-traditional mortgages in that the customer normally did not have a credit history, so all credit information was accumulated by the loan officers. These loans were made as stated income loans rather than full documentation loans because the customer may not have had complete documentation on the income supporting the loan. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for loan losses. Such agencies may require adjustments to the allowance based on their judgments of information available to them at the time of their examinations. Management believes it has established the allowance for credit losses pursuant to GAAP, and has taken into account the views of its regulators and the current economic environment. Management considers the allowance for loan losses adequate to cover the estimated losses inherent in the Bank's loan portfolio as of the date of the financial statements. Although management uses the best information available to make evaluations, significant future additions to the allowance may be necessary based on changes in economic and other conditions, thus adversely affecting the operating results of the Company.
Mortgage Banking Activities	Mortgage banking income represents net gains from the sale of mortgage loans and fees received from borrowers and loan investors related to the Bank's origination of single-family residential mortgage loans. Mortgage loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balances of mortgage loans serviced for others was approximately $1.6 million, $2.1 million and $2.4 million at December 31, 2015, 2014 and 2013, respectively. The Bank originates certain fixed rate mortgage loans and commits these loans for sale. The commitments to originate fixed rate mortgage loans and the commitments to sell these loans to a third party are both derivative contracts. The fair value of these derivative contracts is immaterial and has no effect on the recorded amounts in the financial statements.
Premises and Equipment	Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in earnings for the period. The cost of maintenance and repairs that do not improve or extend the useful life of the respective asset is charged to earnings as incurred, whereas significant renewals and improvements are capitalized. The range of estimated useful lives for premises and equipment are generally as follows: Buildings and improvements 10 - 50 years Furniture and equipment 3 - 10 years
Other Real Estate	Foreclosed assets include all assets received in full or partial satisfaction of a loan. Foreclosed assets are reported at fair value less estimated selling costs. Any write-downs at the time of foreclosure are charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management, and a valuation allowance is established if fair value less estimated selling costs declines below carrying value. Costs relating to the development and improvement of the property are capitalized. Revenues and expenses from operations are included in other expenses. Changes in the valuation allowance are included in loss on sale and write-down of other real estate.
Income Taxes	Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that the realization of such benefits is more likely than not to occur. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities results in a deferred tax asset, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of a deferred tax asset, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Tax effects from an uncertain tax position can be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company assessed the impact of this guidance and determined that it did not have a material impact on the Company's financial position, results of operations or disclosures.
Derivative Financial Instruments and Hedging Activities	In the normal course of business, the Company enters into derivative contracts to manage interest rate risk by modifying the characteristics of the related balance sheet instruments in order to reduce the adverse effect of changes in interest rates. All material derivative financial instruments are recorded at fair value in the financial statements. The fair value of derivative contracts related to the origination of fixed rate mortgage loans and the commitments to sell these loans to a third party is immaterial and has no effect on the recorded amounts in the financial statements. The disclosure requirements for derivatives and hedging activities have the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. The disclosure requirements include qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. On the date a derivative contract is entered into, the Company designates the derivative as a fair value hedge, a cash flow hedge, or a trading instrument. Changes in the fair value of instruments used as fair value hedges are accounted for in the earnings of the period simultaneous with accounting for the fair value change of the item being hedged. Changes in the fair value of the effective portion of cash flow hedges are accounted for in other comprehensive income rather than earnings. Changes in fair value of instruments that are not intended as a hedge are accounted for in the earnings of the period of the change. If a derivative instrument designated as a fair value hedge is terminated or the hedge designation removed, the difference between a hedged item's then carrying amount and its face amount is recognized into income over the original hedge period. Likewise, if a derivative instrument designated as a cash flow hedge is terminated or the hedge designation removed, related amounts accumulated in other accumulated comprehensive income are reclassified into earnings over the original hedge period during which the hedged item affects income. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company formally documents all hedging relationships, including an assessment that the derivative instruments are expected to be highly effective in offsetting the changes in fair values or cash flows of the hedged items.
Advertising Costs	Advertising costs are expensed as incurred.
Stock-Based Compensation	The Company has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the "Plan") whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 267,560 shares are currently remaining for possible issuance under the Plan. All stock-based rights under the Plan must be granted or awarded by May 7, 2019 (or ten years from the Plan effective date). The Company granted 29,514 restricted stock units under the Plan at a grant date fair value of $7.90 per share during the first quarter of 2012, of which 5,355 restricted stock units were forfeited by the executive officers of the Company as required by the agreement with the U.S. Department of the Treasury ("UST") in conjunction with the Company's participation in the Capital Purchase Program ("CPP") under the Troubled Asset Relief Program ("TARP"). In July 2012, the Company granted 5,355 restricted stock units at a grant date fair value of $8.25 per share. The Company granted 26,795 restricted stock units under the Plan at a grant date fair value of $11.90 per share during the second quarter of 2013. The Company granted 21,056 restricted stock units under the Plan at a grant date fair value of $15.70 per share during the first quarter of 2014. The Company granted 15,075 restricted stock units under the Plan at a grant date fair value of $17.97 per share during the first quarter of 2015. The Company recognizes compensation expense on the restricted stock units over the period of time the restrictions are in place (five years from the grant date for the 2012 grants, four years from the grant date for the 2013 and 2015 grants and three years from the grant date for the 2014 grants). The amount of expense recorded each period reflects the changes in the Company's stock price during such period. As of December 31, 2015, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $678,000. The Company recognized compensation expense for restricted stock units granted under the Plan of $487,000, $389,000 and $173,000 for the years ended December 31, 2015, 2014 and 2013, respectively.
Net Earnings Per Share	Net earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share. The average market price during the year is used to compute equivalent shares. The reconciliations of the amounts used in the computation of both "basic earnings per common share" and "diluted earnings per common share" for the years ended December 31, 2015, 2014 and 2013 are as follows: For the year ended December 31, 2015: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 9,633 5,559,235 $ 1.73 Effect of dilutive securities: Restricted stock units - 47,954 Diluted earnings per common share $ 9,633 5,607,189 $ 1.72 For the year ended December 31, 2014: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 9,388 5,615,666 $ 1.67 Effect of dilutive securities: Restricted stock units - 26,326 Diluted earnings per common share $ 9,388 5,641,992 $ 1.66 For the year ended December 31, 2013: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 6,035 5,613,495 $ 1.08 Effect of dilutive securities: Restricted stock units and stock options - 9,725 Diluted earnings per common share $ 6,035 5,623,220 $ 1.07
Recent Accounting Pronouncements	In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-17, (Topic 740): Balance Sheet Classification of Deferred Taxes. In January 2016, FASB issued ASU No. 2016-01, (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. In February 2016, FASB issued ASU No. 2016-02, (Topic 842): Leases Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company's results of operations, financial position or disclosures.
Reclassification	Certain amounts in the 2013 and 2014 consolidated financial statements have been reclassified to conform to the 2015 presentation.

1. Summary of Significant Acc26

1. Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Dec. 31, 2015
Summary Of Significant Accounting Policies Tables
Reconciliations of the amounts used in the computation of both basic earnings per common share and diluted earnings per common share	For the year ended December 31, 2015: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 9,633 5,559,235 $ 1.73 Effect of dilutive securities: Restricted stock units - 47,954 Diluted earnings per common share $ 9,633 5,607,189 $ 1.72 For the year ended December 31, 2014: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 9,388 5,615,666 $ 1.67 Effect of dilutive securities: Restricted stock units - 26,326 Diluted earnings per common share $ 9,388 5,641,992 $ 1.66 For the year ended December 31, 2013: Net Earnings Available to Common Shareholders (Dollars in thousands) Common Shares Per Share Amount Basic earnings per common share $ 6,035 5,613,495 $ 1.08 Effect of dilutive securities: Restricted stock units and stock options - 9,725 Diluted earnings per common share $ 6,035 5,623,220 $ 1.07

2. Investment Securities (Table

2. Investment Securities (Tables)	12 Months Ended
	Dec. 31, 2015
Investment Securities Tables
Investment securities available for sale	(Dollars in thousands) December 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 76,406 1,526 45 77,887 U.S. Government sponsored enterprises 38,173 399 155 38,417 State and political subdivisions 141,500 6,817 72 148,245 Corporate bonds 1,928 - 22 1,906 Trust preferred securities 750 - - 750 Equity securities 748 577 - 1,325 Total $ 259,505 9,319 294 268,530 (Dollars in thousands) December 31, 2014 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 88,496 1,766 52 90,210 U.S. Government sponsored enterprises 33,766 418 136 34,048 State and political subdivisions 145,938 6,534 226 152,246 Corporate bonds 2,469 16 18 2,467 Trust preferred securities 750 - - 750 Equity securities 748 630 - 1,378 Total $ 272,167 9,364 432 281,099
Current fair value and associated unrealized losses on investments in debt securities with unrealized losses	(Dollars in thousands) December 31, 2015 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 7,891 45 - - 7,891 45 U.S. Government sponsored enterprises 3,074 13 10,828 142 13,902 155 State and political subdivisions 2,198 4 3,930 68 6,128 72 Corporate bonds 1,500 22 - - 1,500 22 Total $ 14,663 84 14,758 210 29,421 294 (Dollars in thousands) December 31, 2014 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 436 1 2,963 51 3,399 52 U.S. Government sponsored enterprises 2,996 4 9,850 132 12,846 136 State and political subdivisions 567 1 14,998 225 15,565 226 Corporate bonds - - 525 18 525 18 Total $ 3,999 6 28,336 426 32,335 432
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity	December 31, 2015 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 3,666 3,647 Due from one to five years 57,322 60,001 Due from five to ten years 106,136 109,829 Due after ten years 15,227 15,841 Mortgage-backed securities 76,406 77,887 Equity securities 748 1,325 Total $ 259,505 268,530
Available for sale securities measured at fair value on a recurring basis	(Dollars in thousands) December 31, 2015 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 77,887 - 77,887 - U.S. Government sponsored enterprises $ 38,417 - 38,417 - State and political subdivisions $ 148,245 - 148,245 - Corporate bonds $ 1,906 - 1,906 - Trust preferred securities $ 750 - - 750 Equity securities $ 1,325 1,325 - - (Dollars in thousands) December 31, 2014 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 90,210 - 90,210 - U.S. Government sponsored enterprises $ 34,048 - 34,048 - State and political subdivisions $ 152,246 - 152,246 - Corporate bonds $ 2,467 - 2,467 - Trust preferred securities $ 750 - - 750 Equity securities $ 1,378 1,378 - -
Fair value measurements of investment securities available for sale using Level 3 significant unobservable inputs	(Dollars in thousands) Investment Securities Available for Sale Level 3 Valuation Balance, beginning of period $ 750 Change in book value - Change in gain/(loss) realized and unrealized - Purchases/(sales and calls) - Transfers in and/or (out) of Level 3 - Balance, end of period $ 750 Change in unrealized gain/(loss) for assets still held in Level 3 $ -

3. Loans (Tables)

3. Loans (Tables)	12 Months Ended
	Dec. 31, 2015
Loans Tables
Major classifications of loans	(Dollars in thousands) December 31, 2015 December 31, 2014 Real estate loans: Construction and land development $ 65,791 57,617 Single-family residential 220,690 206,417 Single-family residential - Banco de la Gente stated income 43,733 47,015 Commercial 228,526 228,558 Multifamily and farmland 18,080 12,400 Total real estate loans 576,820 552,007 Loans not secured by real estate: Commercial loans 91,010 76,262 Farm loans 3 7 Consumer loans 10,027 10,060 All other loans 11,231 13,555 Total loans 689,091 651,891 Less allowance for loan losses 9,589 11,082 Total net loans $ 679,502 640,809
Age analysis of past due loans, by loan type	December 31, 2015 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 330 17 347 65,444 65,791 - Single-family residential 2,822 1,385 4,207 216,483 220,690 - Single-family residential - Banco de la Gente stated income 7,021 114 7,135 36,598 43,733 - Commercial 2,619 157 2,776 225,750 228,526 - Multifamily and farmland - - - 18,080 18,080 - Total real estate loans 12,792 1,673 14,465 562,355 576,820 - Loans not secured by real estate: Commercial loans 185 40 225 90,785 91,010 17 Farm loans - - - 3 3 - Consumer loans 136 8 144 9,883 10,027 - All other loans - - - 11,231 11,231 - Total loans $ 13,113 1,721 14,834 674,257 689,091 17 December 31, 2014 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 294 3,540 3,834 53,783 57,617 - Single-family residential 5,988 268 6,256 200,161 206,417 - Single-family residential - Banco de la Gente stated income 8,998 610 9,608 37,407 47,015 - Commercial 3,205 366 3,571 224,987 228,558 - Multifamily and farmland 85 - 85 12,315 12,400 - Total real estate loans 18,570 4,784 23,354 528,653 552,007 - Loans not secured by real estate: Commercial loans 241 49 290 75,972 76,262 - Farm loans - - - 7 7 - Consumer loans 184 - 184 9,876 10,060 - All other loans - - - 13,555 13,555 - Total loans $ 18,995 4,833 23,828 628,063 651,891 -
Non-accrual loans	(Dollars in thousands) December 31, 2015 December 31, 2014 Real estate loans: Construction and land development $ 146 3,854 Single-family residential 4,023 2,370 Single-family residential - Banco de la Gente stated income 1,106 1,545 Commercial 2,992 2,598 Multifamily and farmland - 110 Total real estate loans 8,267 10,477 Loans not secured by real estate: Commercial loans 113 176 Consumer loans 52 75 Total $ 8,432 10,728
Impaired loans	December 31, 2015 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans Real estate loans: Construction and land development $ 643 216 226 442 12 705 Single-family residential 8,828 1,489 6,805 8,294 189 10,852 Single-family residential - Banco de la Gente stated income 20,375 - 19,215 19,215 1,143 18,414 Commercial 4,556 - 4,893 4,893 179 5,497 Multifamily and farmland 96 - 83 83 - 93 Total impaired real estate loans 34,498 1,705 31,222 32,927 1,523 35,561 Loans not secured by real estate: Commercial loans 180 - 161 161 3 132 Consumer loans 286 - 260 260 4 283 Total impaired loans $ 34,964 1,705 31,643 33,348 1,530 35,976 December 31, 2014 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans Real estate loans: Construction and land development $ 5,481 3,639 555 4,194 31 5,248 Single-family residential 6,717 933 5,540 6,473 154 7,430 Single-family residential - Banco de la Gente stated income 21,243 - 20,649 20,649 1,191 19,964 Commercial 4,752 1,485 2,866 4,351 272 4,399 Multifamily and farmland 111 - 110 110 1 154 Total impaired real estate loans 38,304 6,057 29,720 35,777 1,649 37,195 Loans not secured by real estate: Commercial loans 218 - 201 201 4 641 Consumer loans 318 - 313 313 5 309 Total impaired loans $ 38,840 6,057 30,234 36,291 1,658 38,145
Fair value measurements for impaired loans and other real estate on a non-recurring basis	(Dollars in thousands) Fair Value Measurements December 31, 2015 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 4,149 - - 4,149 Impaired loans $ 31,818 - - 31,818 Other real estate $ 739 - - 739 (Dollars in thousands) Fair Value Measurements December 31, 2014 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 1,375 - - 1,375 Impaired loans $ 34,633 - - 34,633 Other real estate $ 2,016 - - 2,016 (Dollars in thousands) Fair Value December 31, 2015 Fair Value December 31, 2014 Valuation Technique Significant Inputs General Range of Significant Input Values Mortgage loans held for sale $ 4,149 1,375 Rate lock commitment N/A N/A Impaired loans $ 31,818 34,633 Appraised value Discounts to reflect current market conditions 0 - 25% Other real estate $ 739 2,016 Appraised value Discounts to reflect current and estimated costs to sell 0 - 25%
Changes in the allowance for loan losses	Changes in the allowance for loan losses for the year ended December 31, 2015 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Allowance for loan losses: Beginning balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Charge-offs (198 ) (618 ) (117 ) (329 ) - (37 ) - (545 ) - (1,844 ) Recoveries 45 34 22 21 - 101 - 145 - 368 Provision (447 ) 552 (55 ) 323 (7 ) (320 ) - 339 (402 ) (17 ) Ending balance $ 2,185 2,534 1,460 1,917 - 842 - 172 479 9,589 Ending balance: individually evaluated for impairment $ - 96 1,115 171 - - - - - 1,382 Ending balance: collectively evaluated for impairment 2,185 2,438 345 1,746 - 842 - 172 479 8,207 Ending balance $ 2,185 2,534 1,460 1,917 - 842 - 172 479 9,589 Loans: Ending balance $ 65,791 220,690 43,733 228,526 18,080 91,010 3 21,258 - 689,091 Ending balance: individually evaluated for impairment $ 216 2,636 17,850 4,212 - - - - - 24,914 Ending balance: collectively evaluated for impairment $ 65,575 218,054 25,883 224,314 18,080 91,010 3 21,258 - 664,177 Changes in the allowance for loan losses for the year ended December 31, 2014 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Allowance for loan losses: Beginning balance $ 3,218 3,123 1,863 2,219 37 1,069 - 245 1,727 13,501 Charge-offs (884 ) (309 ) (190 ) (290 ) - (430 ) - (534 ) - (2,637 ) Recoveries 428 72 16 171 - 54 - 176 - 917 Provision 23 (320 ) (79 ) (198 ) (30 ) 405 - 346 (846 ) (699 ) Ending balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Ending balance: individually evaluated for impairment $ - 82 1,155 260 - - - - - 1,497 Ending balance: collectively evaluated for impairment 2,785 2,484 455 1,642 7 1,098 - 233 881 9,585 Ending balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Loans: Ending balance $ 57,617 206,417 47,015 228,558 12,400 76,262 7 23,615 - 651,891 Ending balance: individually evaluated for impairment $ 3,639 2,298 18,884 3,345 - - - - - 28,166 Ending balance: collectively evaluated for impairment $ 53,978 204,119 28,131 225,213 12,400 76,262 7 23,615 - 623,725 Changes in the allowance for loan losses for the year ended December 31, 2013 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Allowance for loan losses: Beginning balance $ 4,399 3,231 1,998 2,049 28 1,088 - 245 1,385 14,423 Charge-offs (777 ) (1,724 ) (272 ) (445 ) - (502 ) - (652 ) - (4,372 ) Recoveries 377 111 141 50 - 44 - 143 - 866 Provision (781 ) 1,505 (4 ) 565 9 439 - 509 342 2,584 Ending balance $ 3,218 3,123 1,863 2,219 37 1,069 - 245 1,727 13,501 Ending balance: individually evaluated for impairment $ - 39 1,268 171 - - - - - 1,478 Ending balance: collectively evaluated for impairment 3,218 3,084 595 2,048 37 1,069 - 245 1,727 12,023 Ending balance $ 3,218 3,123 1,863 2,219 37 1,069 - 245 1,727 13,501 Loans: Ending balance $ 63,742 195,975 49,463 209,287 11,801 68,047 19 22,626 - 620,960 Ending balance: individually evaluated for impairment $ 6,293 3,127 19,958 3,767 - 256 - 265 - 33,666 Ending balance: collectively evaluated for impairment $ 57,449 192,848 29,505 205,520 11,801 67,791 19 22,361 - 587,294
Credit risk profile of each loan type based on internally assigned risk grade	December 31, 2015 (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 15,189 - - - 700 - 1,091 - 16,980 2- High Quality 10,144 86,061 - 38,647 2,998 24,955 - 3,647 1,665 168,117 3- Good Quality 35,535 78,843 19,223 148,805 12,058 58,936 3 4,571 7,828 365,802 4- Management Attention 12,544 30,259 15,029 31,824 335 5,905 - 620 1,738 98,254 5- Watch 7,265 4,322 3,308 4,561 2,689 332 - 43 - 22,520 6- Substandard 303 6,016 6,173 4,689 - 182 - 55 - 17,418 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 65,791 220,690 43,733 228,526 18,080 91,010 3 10,027 11,231 689,091 December 31, 2014 (Dollars in thousands) Real Estate Loans Construction and Land Development Single- Family Residential Single- Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 15,099 - - - 924 - 1,232 - 17,255 2- High Quality 6,741 74,367 - 39,888 241 18,730 - 3,576 1,860 145,403 3- Good Quality 24,641 74,453 21,022 142,141 8,376 44,649 7 4,549 8,055 327,893 4- Management Attention 13,013 30,954 12,721 36,433 1,001 11,312 - 566 3,640 109,640 5- Watch 9,294 5,749 5,799 6,153 2,672 383 - 46 - 30,096 6- Substandard 3,928 5,795 7,473 3,943 110 264 - 87 - 21,600 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - 4 - 4 Total $ 57,617 206,417 47,015 228,558 12,400 76,262 7 10,060 13,555 651,891
Analysis of TDR loans by loan type	Year ended December 31, 2015 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans: Construction and land development 1 $ 216 216 Single-family residential 3 288 271 Total TDR loans 4 $ 504 487 Year ended December 31, 2014 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans: Construction and land development 1 $ 291 266 Single-family residential 2 849 845 Single-family residential Banco de la Gente stated income 3 281 278 Total TDR loans 6 $ 1,421 1,389

4. Premises and Equipment (Tabl

4. Premises and Equipment (Tables)	12 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Summary of premises and equipment	(Dollars in thousands) 2015 2014 Land $ 3,669 3,681 Buildings and improvements 15,889 15,864 Furniture and equipment 19,462 18,442 Total premises and equipment 39,020 37,987 Less accumulated depreciation 22,044 20,987 Total net premises and equipment $ 16,976 17,000

5. Time Deposits (Tables)

5. Time Deposits (Tables)	12 Months Ended
	Dec. 31, 2015
Banking and Thrift [Abstract]
Scheduled maturities of time deposits	(Dollars in thousands) 2016 $ 97,586 2017 27,702 2018 24,122 2019 3,019 2020 and thereafter 4,463 Total $ 156,892

6. Federal Home Loan Bank and31

6. Federal Home Loan Bank and Federal Reserve Bank Borrowings (Tables)	12 Months Ended
	Dec. 31, 2015
Banking and Thrift [Abstract]
Borrowings from the FHLB outstanding	December 31, 2015 (Dollars in thousands) Maturity Date Call Date Rate Rate Type Amount October 17, 2018 N/A 3.485% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.725% Adjustable Rate Hybrid 15,000 October 17, 2018 N/A 3.500% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.555% Adjustable Rate Hybrid 5,000 May 8, 2018 N/A 2.144% Floating to Fixed 5,000 May 8, 2018 N/A 3.734% Floating to Fixed 8,500 $ 43,500 December 31, 2014 (Dollars in thousands) Maturity Date Call Date Rate Rate Type Amount October 17, 2018 N/A 3.398% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.638% Adjustable Rate Hybrid 15,000 October 17, 2018 N/A 3.413% Adjustable Rate Hybrid 5,000 October 17, 2018 N/A 3.468% Adjustable Rate Hybrid 5,000 May 8, 2018 N/A 1.792% Floating to Fixed 5,000 May 8, 2018 N/A 3.432% Floating to Fixed 15,000 $ 50,000

8. Income Taxes (Tables)

8. Income Taxes (Tables)	12 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Components of Income Tax Expense (Benefit)	(Dollars in thousands) 2015 2014 2013 Current expense $ 2,427 1,759 1,345 Deferred income tax expense 673 178 534 Total income tax $ 3,100 1,937 1,879
Schedule of Effective Income Tax Rate Reconciliation	(Dollars in thousands) 2015 2014 2013 Tax expense at statutory rate (34%) $ 4,329 3,851 2,914 State income tax, net of federal income tax effect 494 (283 ) 428 Tax-exempt interest income (1,682 ) (1,630 ) (1,481 ) Increase in cash surrender value of life insurance (143 ) (143 ) (147 ) Nondeductible interest and other expense 103 119 141 Other (1 ) 23 24 Total $ 3,100 1,937 1,879
Schedule of Deferred Tax Assets and Liabilities	(Dollars in thousands) 2015 2014 Deferred tax assets: Allowance for loan losses $ 3,513 4,134 Accrued retirement expense 1,574 1,529 Other real estate 33 206 Federal credit carryforward - 342 State credit carryforward - 327 Restricted stock 417 243 Accrued bonuses 238 224 Interest income on nonaccrual loans 88 56 Other than temporary impairment 374 186 Other 16 152 Total gross deferred tax assets 6,253 7,399 Deferred tax liabilities: Deferred loan fees 588 433 Accumulated depreciation 172 728 Prepaid expenses 59 101 Other 70 100 Unrealized gain on available for sale securities 3,308 3,479 Total gross deferred tax liabilities 4,197 4,841 Net deferred tax asset $ 2,056 2,558

9. Related Party Transactions (

9. Related Party Transactions (Tables)	12 Months Ended
	Dec. 31, 2015
Related Party Transactions [Abstract]
Summary of activity for related party loans	(Dollars in thousands) 2015 2014 Beginning balance $ 4,760 4,340 New loans 6,018 6,903 Repayments (6,700 ) (6,483 ) Ending balance $ 4,078 4,760

10. Commitments and Contingen34

10. Commitments and Contingencies (Tables)	12 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Future Minimum Rental Payments for Operating Leases	(Dollars in thousands) Year ending December 31, 2016 664 2017 550 2018 501 2019 490 2020 422 Thereafter 1,548 Total minimum obligation $ 4,175
Financial instruments with credit risk	(Dollars in thousands) Contractual Amount 2015 2014 Financial instruments whose contract amount represent credit risk: Commitments to extend credit $ 189,351 168,733 Standby letters of credit and financial guarantees written $ 3,872 3,911

11. Employee and Director Ben35

11. Employee and Director Benefit Programs (Tables)	12 Months Ended
	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
Change in accumulated benefit obligation	(Dollars in thousands) 2015 2014 Benefit obligation at beginning of period $ 3,812 3,581 Service cost 334 348 Interest cost 65 67 Benefits paid (218 ) (184 ) Reversal of excess accrual - - Benefit obligation at end of period $ 3,993 3,812
Amounts recognized in the Consolidated Balance Sheet	(Dollars in thousands) 2015 2014 Benefit obligation $ 3,993 3,812 Fair value of plan assets - - (Dollars in thousands) 2015 2014 Funded status $ (3,993 ) (3,812 ) Unrecognized prior service cost/benefit - - Unrecognized net actuarial loss - - Net amount recognized $ (3,993 ) (3,812 ) Unfunded accrued liability $ (3,993 ) (3,812 ) Intangible assets - - Net amount recognized $ (3,993 ) (3,812 )
Schedule of Net Benefit Costs	(Dollars in thousands) 2015 2014 2013 Service cost $ 334 348 336 Interest cost 65 67 65 Net periodic cost $ 399 415 401 Weighted average discount rate assumption used to determine benefit obligation 5.47 % 5.47 % 5.46 %
Schedule of Expected Benefit Payments	(Dollars in thousands) Year ending December 31, 2016 $ 244 2017 $ 262 2018 $ 274 2019 $ 310 2020 $ 333 Thereafter $ 8,259

12. Regulatory Matters (Tables)

12. Regulatory Matters (Tables)	12 Months Ended
	Dec. 31, 2015
Banking and Thrift [Abstract]
Bank's actual capital amounts and ratios	(Dollars in thousands) Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2015: Total Capital (to Risk-Weighted Assets) Consolidated $ 129,203 16.63 % 62,137 8.00 % N/ N/ A Bank $ 124,910 16.11 % 62,026 8.00 % 77,532 10.00 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 119,354 15.37 % 46,603 6.00 % N/A N/ A Bank $ 115,160 14.85 % 46,519 6.00 % 62,026 8.00 % Tier 1 Capital (to Average Assets) Consolidated $ 119,354 11.44 % 41,743 4.00 % N/A N/ A Bank $ 115,160 11.03 % 41,776 4.00 % 52,220 5.00 % Common Equity Tier 1 (to Risk-Weighted Assets) Consolidated $ 99,354 12.79 % 34,952 4.50 % N/A N/ A Bank $ 115,160 14.85 % 34,890 4.50 % 50,396 6.50 % As of December 31, 2014: Total Capital (to Risk-Weighted Assets) Consolidated $ 122,732 16.62 % 59,085 8.00 % N/A N/ A Bank $ 118,356 16.06 % 58,974 8.00 % 73,717 10.00 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 113,211 15.33 % 29,542 4.00 % N/A N/ A Bank $ 108,934 14.78 % 29,487 4.00 % 44,230 6.00 % Tier 1 Capital (to Average Assets) Consolidated $ 113,211 10.74 % 42,181 4.00 % N/A N/ A Bank $ 108,934 10.33 % 42,164 4.00 % 52,706 5.00 %

14. Other Operating Income an37

14. Other Operating Income and Expense (Tables)	12 Months Ended
	Dec. 31, 2015
Other Income and Expenses [Abstract]
Other operating income and expense	Miscellaneous non-interest income for the years ended December 31, 2015, 2014 and 2013 included the following items that exceeded one percent of total revenues at some point during the following three-year period: (Dollars in thousands) 2015 2014 2013 Visa debit card income $ 3,452 3,170 2,990 Net appraisal management fee income $ 635 525 718 Insurance and brokerage commissions $ 713 701 661 Other non-interest expense for the years ended December 31, 2015, 2014 and 2013 included the following items that exceeded one percent of total revenues at some point during the following three-year period: (Dollars in thousands) 2015 2014 2013 Advertising $ 784 804 685 FDIC insurance $ 681 739 864 Visa debit card expense $ 988 905 823 Telephone $ 588 574 570 Foreclosure/OREO expense $ 398 317 356 Internet banking expense $ 671 644 568 FHLB advance prepayment penalty $ 504 869 530 Consulting $ 904 609 468 NC Tax Credit Amortization $ - 870 160

15. Fair Value of Financial I38

15. Fair Value of Financial Instruments (Tables)	12 Months Ended
	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Carrying amount and estimated fair value of the Company's financial instruments	(Dollars in thousands) Fair Value Measurements at December 31, 2015 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 39,763 39,763 - - 39,763 Investment securities available for sale $ 268,530 1,325 266,455 750 268,530 Other investments $ 3,636 - - 3,636 3,636 Mortgage loans held for sale $ 4,149 - - 4,149 4,149 Loans, net $ 679,502 - - 683,540 683,540 Cash surrender value of life insurance $ 14,546 - 14,546 - 14,546 Liabilities: Deposits $ 832,175 - - 827,874 827,874 Securities sold under agreements to repurchase $ 27,874 - 27,874 - 27,874 FHLB borrowings $ 43,500 - 43,144 - 43,144 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2014 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 69,098 69,098 - - 69,098 Investment securities available for sale $ 281,099 1,378 278,971 750 281,099 Other investments $ 4,031 - - 4,031 4,031 Mortgage loans held for sale $ 1,375 - - 1,375 1,375 Loans, net $ 640,809 - - 644,708 644,708 Cash surrender value of life insurance $ 14,125 - 14,125 - 14,125 Liabilities: Deposits $ 814,700 - - 813,288 813,288 Securities sold under agreements to repurchase $ 48,430 - 48,430 - 48,430 FHLB borrowings $ 50,000 - 49,598 - 49,598 Junior subordinated debentures $ 20,619 - 20,619 - 20,619

16. Peoples Bancorp of North 39

16. Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements (Tables)	12 Months Ended
	Dec. 31, 2015
Condensed Financial Information of Parent Company Only Disclosure [Abstract]
Balance Sheets	Balance Sheets December 31, 2015 and 2014 (Dollars in thousands) Assets 2015 2014 Cash $ 558 745 Interest-bearing time deposit 1,000 1,000 Investment in subsidiaries 121,848 115,457 Investment in PEBK Capital Trust II 619 619 Investment securities available for sale 1,234 1,235 Other assets 244 245 Total assets $ 125,503 119,301 Liabilities and Shareholders' Equity Junior subordinated debentures $ 20,619 20,619 Liabilities 20 17 Shareholders' equity 104,864 98,665 Total liabilities and shareholders' equity $ 125,503 119,301
Statements of Earnings	Statements of Earnings For the Years Ended December 31, 2015, 2014 and 2013 (Dollars in thousands) Revenues: 2015 2014 2013 Interest and dividend income $ 3,979 2,718 13,576 Total revenues 3,979 2,718 13,576 Expenses: Interest 403 389 398 Other operating expenses 538 527 159 Total expenses 941 916 557 Income before income tax benefit and equity in undistributed earnings of subsidiaries 3,038 1,802 13,019 Income tax benefit 262 239 84 Income before equity in undistributed earnings of subsidiaries 3,300 2,041 13,103 Equity in undistributed earnings (loss) of subsidiaries 6,333 7,347 (6,412 ) Net earnings $ 9,633 9,388 6,691
Statements of Cash Flows	Statements of Cash Flows For the Years Ended December 31, 2015, 2014 and 2013 (Dollars in thousands) 2015 2014 2013 Cash flows from operating activities: Net earnings $ 9,633 9,388 6,691 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Equity in undistributed earnings of subsidiaries (6,333 ) (7,347 ) 6,412 Change in: Other assets 1 28 (73 ) Accrued income - (5 ) - Accrued expense 3 1 27 Other liabilities - (108 ) 108 Net cash provided (used) by operating activities 3,304 1,957 13,165 Cash flows from investing activities: Proceeds from maturities of investment securities available for sale - 500 1 Net change in interest-bearing time deposit - (1,000 ) 800 Net cash provided (used) by investing activities - (500 ) 801 Cash flows from financing activities: Cash dividends paid on Series A preferred stock - - (734 ) Cash dividends paid on common stock (1,574 ) (1,022 ) (677 ) Preferred stock and warrant repurchase - (12,524 ) - Stock repurchase (1,917 ) (82 ) - Proceeds from exercise of stock options - 37 - Net cash used by financing activities (3,491 ) (13,591 ) (1,411 ) Net change in cash (187 ) (12,134 ) 12,555 Cash at beginning of year 745 12,879 324 Cash at end of year $ 558 745 12,879 Noncash investing and financing activities: Change in unrealized gain on investment securities available for sale, net $ 1 8 77 Accrued redemption of Series A Preferred Stock - - 12,632

17. Quarterly Data (Tables)

17. Quarterly Data (Tables)	12 Months Ended
	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Schedule of Quarterly Financial Information	2015 2014 (Dollars in thousands, except per share amounts) First Second Third Fourth First Second Third Fourth Total interest income $ 9,567 9,191 9,947 9,961 $ 9,545 9,576 9,583 9,716 Total interest expense 884 875 874 851 1,111 1,085 1,076 1,015 Net interest income 8,683 8,316 9,073 9,110 8,434 8,491 8,507 8,701 (Reduction of) provision for loan losses 173 (214 ) 235 (211 ) (349 ) 67 256 (673 ) Other income 3,245 3,297 3,266 3,504 2,841 3,110 3,207 3,006 Other expense 8,748 8,337 8,669 10,024 8,123 8,067 8,541 10,940 Income before income taxes 3,007 3,490 3,435 2,801 3,501 3,467 2,917 1,440 Income taxes 679 866 942 613 923 916 475 (377 ) Net earnings 2,328 2,624 2,493 2,188 2,578 2,551 2,442 1,817 Basic net earnings per share 0.41 0.47 0.45 0.40 $ 0.46 0.45 0.43 0.33 Diluted net earnings per share $ 0.41 0.47 0.45 0.39 $ 0.46 0.45 0.43 0.32

1. Summary of Significant Acc41

1. Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Net Earnings Available to Common Shareholders
Basic earnings per common share									$ 9,633	$ 9,388	$ 6,035
Effect of dilutive securities: Restricted stock units and stock options									0	0	0
Diluted earnings per common share									$ 9,633	$ 9,388	$ 6,035
Common Shares
Basic earnings per common share (in shares)									5,559,235	5,615,666	5,613,495
Effect of dilutive securities: Restricted stock units and stock options (in shares)									47,954	26,326	9,725
Diluted earnings per common share (in shares)									5,607,189	5,641,992	5,623,220
Per Share Amount
Basic earnings per common share (in dollars per share)	$ 0.40	$ 0.45	$ 0.47	$ 0.41	$ 0.33	$ 0.43	$ 0.45	$ 0.46	$ 1.73	$ 1.67	$ 1.08
Diluted earnings per common share (in dollars per share)	$ 0.39	$ 0.45	$ 0.47	$ 0.41	$ 0.32	$ 0.43	$ 0.45	$ 0.46	$ 1.72	$ 1.66	$ 1.07

1. Summary of Significant Acc42

1. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Summary Of Significant Accounting Policies Details Narrative
Unpaid principal balances of mortgage loans serviced for others	$ 1,600	$ 2,100	$ 2,400
Compensation expense for restricted stock units	487	$ 389	$ 173
Unrecognized compensation expense	$ 678

2. Investment Securities (Detai

2. Investment Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Investment securities available for sale
Amortized Cost	$ 259,505	$ 272,167
Estimated Fair Value	268,530	281,099
Mortgage-backed securities
Investment securities available for sale
Amortized Cost	76,406	88,496
Gross Unrealized Gains	1,526	1,766
Gross Unrealized Losses	45	52
Estimated Fair Value	77,887	90,210
U.S. Government sponsored enterprises
Investment securities available for sale
Amortized Cost	38,173	33,766
Gross Unrealized Gains	399	418
Gross Unrealized Losses	155	136
Estimated Fair Value	38,417	34,048
State and political subdivisions
Investment securities available for sale
Amortized Cost	141,500	145,938
Gross Unrealized Gains	6,817	6,534
Gross Unrealized Losses	72	226
Estimated Fair Value	148,245	152,246
Corporate bonds
Investment securities available for sale
Amortized Cost	1,928	2,469
Gross Unrealized Gains	0	16
Gross Unrealized Losses	22	18
Estimated Fair Value	1,906	2,467
Trust preferred securities
Investment securities available for sale
Amortized Cost	750	750
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	750	750
Equity securities
Investment securities available for sale
Amortized Cost	748	748
Gross Unrealized Gains	577	630
Gross Unrealized Losses	0	0
Estimated Fair Value	1,325	1,378
Total
Investment securities available for sale
Amortized Cost	259,505	272,167
Gross Unrealized Gains	9,319	9,364
Gross Unrealized Losses	294	432
Estimated Fair Value	$ 268,530	$ 281,099

2. Investment securities, Conti

2. Investment securities, Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	$ 14,663	$ 3,999
Less than 12 Months, Unrealized Losses	84	6
12 Months or More, Fair Value	14,758	28,336
12 Months or More, Unrealized Losses	210	426
Total, Fair Value	29,421	32,335
Total, Unrealized Losses	294	432
Mortgage-backed securities
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	7,891	436
Less than 12 Months, Unrealized Losses	45	1
12 Months or More, Fair Value	0	2,963
12 Months or More, Unrealized Losses	0	51
Total, Fair Value	7,891	3,399
Total, Unrealized Losses	45	52
U.S. Government sponsored enterprises
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	3,074	2,996
Less than 12 Months, Unrealized Losses	13	4
12 Months or More, Fair Value	10,828	9,850
12 Months or More, Unrealized Losses	142	132
Total, Fair Value	13,902	12,846
Total, Unrealized Losses	155	136
State and political subdivisions
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	2,198	567
Less than 12 Months, Unrealized Losses	4	1
12 Months or More, Fair Value	3,930	14,998
12 Months or More, Unrealized Losses	68	225
Total, Fair Value	6,128	15,565
Total, Unrealized Losses	72	226
Corporate bonds
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	1,500	0
Less than 12 Months, Unrealized Losses	22	0
12 Months or More, Fair Value	0	525
12 Months or More, Unrealized Losses	0	18
Total, Fair Value	1,500	525
Total, Unrealized Losses	$ 22	$ 18

2. Investment securities, Contr

2. Investment securities, Contractual Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Amortized Cost
Due within one year	$ 3,666
Due from one to five years	57,322
Due from five to ten years	106,136
Due after ten years	15,227
Mortgage-backed securities	76,406
Equity securities	748
Total	259,505	$ 272,167
Estimated Fair Value
Due within one year	3,647
Due from one to five years	60,001
Due from five to ten years	109,829
Due after ten years	15,841
Mortgage-backed securities	77,887
Equity securities	1,325
Total	$ 268,530

2. Investment securities, Fair

2. Investment securities, Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Estimated Fair Value	$ 268,530	$ 281,099
Mortgage-backed securities
Estimated Fair Value	77,887	90,210
Level 1 valuation	0	0
Level 2 valuation	77,887	90,210
Level 3 valuation	0	0
U.S. Government sponsored enterprises
Estimated Fair Value	38,417	34,048
Level 1 valuation	0	0
Level 2 valuation	38,417	34,048
Level 3 valuation	0	0
State and political subdivisions
Estimated Fair Value	148,245	152,246
Level 1 valuation	0	0
Level 2 valuation	148,245	152,246
Level 3 valuation	0	0
Corporate bonds
Estimated Fair Value	1,906	2,467
Level 1 valuation	0	0
Level 2 valuation	1,906	2,467
Level 3 valuation	0	0
Trust preferred securities
Estimated Fair Value	750	750
Level 1 valuation	0	0
Level 2 valuation	0	0
Level 3 valuation	750	750
Equity securities
Estimated Fair Value	1,325	1,378
Level 1 valuation	1,325	1,378
Level 2 valuation	0	0
Level 3 valuation	$ 0	$ 0

2. Investment securities, Fai47

2. Investment securities, Fair Value Level 3 Valuation (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015USD ($)
Investment Securities Available for Sale Level 3 Valuation
Balance, beginning of period	$ 750
Change in book value	0
Change in gain/(loss) realized and unrealized	0
Purchases/(sales and calls)	0
Transfers in and/or (out) of Level 3	0
Balance, end of period	750
Change in unrealized gain/(loss) for assets still held in Level 3	$ 0

2. Investment Securities (Det48

2. Investment Securities (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2015
Investment Securities Details Narrative
Unrealized losses in the investment securites portfolio relating to debt securities			$ 294
Proceeds from sales of investment securities available for sale	$ 20,202	$ 17,463
Gains on sales of available for sale securities	291	738
Loss on sales of available for sale securities	25	$ 124
Securities pledged to secure public deposits	$ 89,900		$ 91,000

3. Loans (Details)

3. Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Major classifications
Total Loans	$ 689,091	$ 651,891	$ 620,960	$ 619,974
Less allowance for loan losses	9,589	11,082	13,501	14,423
Net loans	679,502	640,809
Construction and land development
Major classifications
Total Loans	65,791	57,617	63,742
Less allowance for loan losses	2,185	2,785	3,218	4,399
Single-family residential
Major classifications
Total Loans	220,690	206,417	195,975
Less allowance for loan losses	2,534	2,566	3,123	3,231
Single-family residential - Banco de la Gente stated income
Major classifications
Total Loans	43,733	47,015	49,463
Less allowance for loan losses	1,460	1,610	1,863	1,998
Commercial
Major classifications
Total Loans	228,526	228,558	209,287
Less allowance for loan losses	1,917	1,902	2,219	2,049
Multifamily and Farmland
Major classifications
Total Loans	18,080	12,400	11,801
Less allowance for loan losses	0	7	37	28
Total real estate loans
Major classifications
Total Loans	576,820	552,007
Commercial loans (not secured by real estate)
Major classifications
Total Loans	91,010	76,262	68,047
Less allowance for loan losses	842	1,098	1,069	1,088
Farm loans (not secured by real estate)
Major classifications
Total Loans	3	7	19
Less allowance for loan losses	0	0	$ 0	$ 0
Consumer loans (not secured by real estate)
Major classifications
Total Loans	10,027	10,060
All other loans (not secured by real estate)
Major classifications
Total Loans	$ 11,231	$ 13,555

3. Loans, Past Due (Details)

3. Loans, Past Due (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Past due loans
Loans 30-89 Days Past Due	$ 13,113	$ 18,995
Loans 90 or More Days Past Due	1,721	4,833
Total Past Due Loans	14,834	23,828
Total Current Loans	674,257	628,063
Total loans	689,091	651,891	$ 620,960	$ 619,974
Accruing Loans 90 or More Days Past Due	17	0
Construction and land development
Past due loans
Loans 30-89 Days Past Due	330	294
Loans 90 or More Days Past Due	17	3,540
Total Past Due Loans	347	3,834
Total Current Loans	65,444	53,783
Total loans	65,791	57,617
Accruing Loans 90 or More Days Past Due	0	0
Single-family residential
Past due loans
Loans 30-89 Days Past Due	2,822	5,988
Loans 90 or More Days Past Due	1,385	268
Total Past Due Loans	4,207	6,256
Total Current Loans	216,483	200,161
Total loans	220,690	206,417
Accruing Loans 90 or More Days Past Due	0	0
Single-family residential - Banco de la Gente stated income
Past due loans
Loans 30-89 Days Past Due	7,021	8,998
Loans 90 or More Days Past Due	114	610
Total Past Due Loans	7,135	9,608
Total Current Loans	36,598	37,407
Total loans	43,733	47,015
Accruing Loans 90 or More Days Past Due	0	0
Commercial
Past due loans
Loans 30-89 Days Past Due	2,619	3,205
Loans 90 or More Days Past Due	157	366
Total Past Due Loans	2,776	3,571
Total Current Loans	225,750	224,987
Total loans	228,526	228,558
Accruing Loans 90 or More Days Past Due	0	0
Multifamily and Farmland
Past due loans
Loans 30-89 Days Past Due	0	85
Loans 90 or More Days Past Due	0	0
Total Past Due Loans	0	85
Total Current Loans	18,080	12,315
Total loans	18,080	12,400
Accruing Loans 90 or More Days Past Due	0	0
Total real estate loans
Past due loans
Loans 30-89 Days Past Due	12,792	18,570
Loans 90 or More Days Past Due	1,673	4,784
Total Past Due Loans	14,465	23,354
Total Current Loans	562,355	528,653
Total loans	576,820	552,007
Accruing Loans 90 or More Days Past Due		0
Commercial loans (not secured by real estate)
Past due loans
Loans 30-89 Days Past Due	185	241
Loans 90 or More Days Past Due	40	49
Total Past Due Loans	225	290
Total Current Loans	90,785	75,972
Total loans	91,010	76,262
Accruing Loans 90 or More Days Past Due	17	0
Farm loans (not secured by real estate)
Past due loans
Loans 30-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Total Past Due Loans	0	0
Total Current Loans	3	7
Total loans	3	7
Accruing Loans 90 or More Days Past Due	0	0
Consumer loans (not secured by real estate)
Past due loans
Loans 30-89 Days Past Due	136	184
Loans 90 or More Days Past Due	8	0
Total Past Due Loans	144	184
Total Current Loans	9,883	9,876
Total loans	10,027	10,060
Accruing Loans 90 or More Days Past Due	0	0
All other loans (not secured by real estate)
Past due loans
Loans 30-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Total Past Due Loans	0	0
Total Current Loans	11,231	13,555
Total loans	11,231	13,555
Accruing Loans 90 or More Days Past Due	$ 0	$ 0

3. Loans, Nonaccrual (Details)

3. Loans, Nonaccrual (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Non-accrual loans
Non-accrual loans	$ 8,432	$ 10,728
Construction and land development
Non-accrual loans
Non-accrual loans	146	3,854
Single-family residential
Non-accrual loans
Non-accrual loans	4,023	2,370
Single-family residential - Banco de la Gente stated income
Non-accrual loans
Non-accrual loans	1,106	1,545
Commercial
Non-accrual loans
Non-accrual loans	2,992	2,598
Multifamily and Farmland
Non-accrual loans
Non-accrual loans	0	110
Total real estate loans
Non-accrual loans
Non-accrual loans	8,267	10,477
Commercial loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	113	176
Consumer loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	$ 52	$ 75

3. Loans, Impaired (Details)

3. Loans, Impaired (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Impaired loans
Unpaid Contractual Principal Balance	$ 34,964	$ 38,840
Recorded Investment With No Allowance	1,705	6,057
Recorded Investment With Allowance	31,643	30,234
Recorded Investment in Impaired Loans	33,348	36,291
Related Allowance	1,530	1,658
Average Outstanding Impaired Loans	35,976	38,145
Construction and land development
Impaired loans
Unpaid Contractual Principal Balance	643	5,481
Recorded Investment With No Allowance	216	3,639
Recorded Investment With Allowance	226	555
Recorded Investment in Impaired Loans	442	4,194
Related Allowance	12	31
Average Outstanding Impaired Loans	705	5,248
Single-family residential
Impaired loans
Unpaid Contractual Principal Balance	8,828	6,717
Recorded Investment With No Allowance	1,489	933
Recorded Investment With Allowance	6,805	5,540
Recorded Investment in Impaired Loans	8,294	6,473
Related Allowance	189	154
Average Outstanding Impaired Loans	10,852	7,430
Single-family residential - Banco de la Gente stated income
Impaired loans
Unpaid Contractual Principal Balance	20,375	21,243
Recorded Investment With No Allowance	0	0
Recorded Investment With Allowance	19,215	20,649
Recorded Investment in Impaired Loans	19,215	20,649
Related Allowance	1,143	1,191
Average Outstanding Impaired Loans	18,414	19,964
Commercial
Impaired loans
Unpaid Contractual Principal Balance	4,556	4,752
Recorded Investment With No Allowance	0	1,485
Recorded Investment With Allowance	4,893	2,866
Recorded Investment in Impaired Loans	4,893	4,351
Related Allowance	179	272
Average Outstanding Impaired Loans	5,497	4,399
Multifamily and Farmland
Impaired loans
Unpaid Contractual Principal Balance	96	111
Recorded Investment With No Allowance	0	0
Recorded Investment With Allowance	83	110
Recorded Investment in Impaired Loans	83	110
Related Allowance	0	1
Average Outstanding Impaired Loans	93	154
Total real estate loans
Impaired loans
Unpaid Contractual Principal Balance	34,498	38,304
Recorded Investment With No Allowance	1,705	6,057
Recorded Investment With Allowance	31,222	29,720
Recorded Investment in Impaired Loans	32,927	35,777
Related Allowance	1,523	1,649
Average Outstanding Impaired Loans	35,561	37,195
Commercial loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	180	218
Recorded Investment With No Allowance	0	0
Recorded Investment With Allowance	161	201
Recorded Investment in Impaired Loans	161	201
Related Allowance	3	4
Average Outstanding Impaired Loans	132	641
Consumer loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	286	318
Recorded Investment With No Allowance	0	0
Recorded Investment With Allowance	260	313
Recorded Investment in Impaired Loans	260	313
Related Allowance	4	5
Average Outstanding Impaired Loans	$ 283	$ 309

3. Loans Impaired, Fair Value M

3. Loans Impaired, Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Mortgage loans held for sale	$ 4,149	$ 1,375
Impaired loans	31,818	34,633
Other real estate	739	2,016
Level 1
Mortgage loans held for sale	0	0
Impaired loans	0	0
Other real estate	0	0
Level 2
Mortgage loans held for sale	0	0
Impaired loans	0	0
Other real estate	0	0
Level 3
Mortgage loans held for sale	4,149	1,375
Impaired loans	31,818	34,633
Other real estate	$ 739	$ 2,016

3. Loans, Allowance for Loan Lo

3. Loans, Allowance for Loan Losses (Details) (USD $) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Allowance for loan losses
Beginning balance	$ 11,082	$ 13,501	$ 14,423
Charge-offs	(1,844)	(2,637)	(4,372)
Recoveries	368	917	866
Provision	(17)	(699)	2,584
Ending balance	9,589	11,082	13,501
Ending balance: individually evaluated for impairments	1,382	1,497	1,478
Ending balance: collectively evaluated for impairments	8,207	9,585	12,023
Ending balance	9,589	11,082	13,501
Loans
Ending balance	689,091	651,891	620,960
Ending balance: individually evaluated for impairment	24,914	28,166	33,666
Ending balance: collectively evaluated for impairment	664,177	623,725	587,294
Construction and land development
Allowance for loan losses
Beginning balance	2,785	3,218	4,399
Charge-offs	(198)	(884)	(777)
Recoveries	45	428	377
Provision	(447)	23	(781)
Ending balance	2,185	2,785	3,218
Ending balance: individually evaluated for impairments	0	0	0
Ending balance: collectively evaluated for impairments	2,185	2,785	3,218
Ending balance	2,185	2,785	3,218
Loans
Ending balance	65,791	57,617	63,742
Ending balance: individually evaluated for impairment	216	3,639	6,293
Ending balance: collectively evaluated for impairment	65,575	53,978	57,449
Single-family residential
Allowance for loan losses
Beginning balance	2,566	3,123	3,231
Charge-offs	(618)	(309)	(1,724)
Recoveries	34	72	111
Provision	552	(320)	1,505
Ending balance	2,534	2,566	3,123
Ending balance: individually evaluated for impairments	96	82	39
Ending balance: collectively evaluated for impairments	2,438	2,484	3,084
Ending balance	2,534	2,566	3,123
Loans
Ending balance	220,690	206,417	195,975
Ending balance: individually evaluated for impairment	2,636	2,298	3,127
Ending balance: collectively evaluated for impairment	218,054	204,119	192,848
Single-family residential - Banco de la Gente stated income
Allowance for loan losses
Beginning balance	1,610	1,863	1,998
Charge-offs	(117)	(190)	(272)
Recoveries	22	16	141
Provision	(55)	(79)	(4)
Ending balance	1,460	1,610	1,863
Ending balance: individually evaluated for impairments	1,115	1,155	1,268
Ending balance: collectively evaluated for impairments	345	455	595
Ending balance	1,460	1,610	1,863
Loans
Ending balance	43,733	47,015	49,463
Ending balance: individually evaluated for impairment	17,850	18,884	19,958
Ending balance: collectively evaluated for impairment	25,883	28,131	29,505
Commercial
Allowance for loan losses
Beginning balance	1,902	2,219	2,049
Charge-offs	(329)	(290)	(445)
Recoveries	21	171	50
Provision	323	(198)	565
Ending balance	1,917	1,902	2,219
Ending balance: individually evaluated for impairments	171	260	171
Ending balance: collectively evaluated for impairments	1,746	1,642	2,048
Ending balance	1,917	1,902	2,219
Loans
Ending balance	228,526	228,558	209,287
Ending balance: individually evaluated for impairment	4,212	3,345	3,767
Ending balance: collectively evaluated for impairment	224,314	225,213	205,520
Multifamily and Farmland
Allowance for loan losses
Beginning balance	7	37	28
Charge-offs	0	0	0
Recoveries	0	0	0
Provision	(7)	(30)	9
Ending balance	0	7	37
Ending balance: individually evaluated for impairments	0	0	0
Ending balance: collectively evaluated for impairments	0	7	37
Ending balance	0	7	37
Loans
Ending balance	18,080	12,400	11,801
Ending balance: individually evaluated for impairment	0	0	0
Ending balance: collectively evaluated for impairment	18,080	12,400	11,801
Commercial loans (not secured by real estate)
Allowance for loan losses
Beginning balance	1,098	1,069	1,088
Charge-offs	(37)	(430)	(502)
Recoveries	101	54	44
Provision	(320)	405	439
Ending balance	842	1,098	1,069
Ending balance: individually evaluated for impairments	0	0	0
Ending balance: collectively evaluated for impairments	842	1,098	1,069
Ending balance	842	1,098	1,069
Loans
Ending balance	91,010	76,262	68,047
Ending balance: individually evaluated for impairment	0	0	256
Ending balance: collectively evaluated for impairment	91,010	76,262	67,791
Farm loans (not secured by real estate)
Allowance for loan losses
Beginning balance	0	0	0
Charge-offs	0	0	0
Recoveries	0	0	0
Provision	0	0	0
Ending balance	0	0	0
Ending balance: individually evaluated for impairments	0	0	0
Ending balance: collectively evaluated for impairments	0	0	0
Ending balance	0	0	0
Loans
Ending balance	3	7	19
Ending balance: individually evaluated for impairment	0	0	0
Ending balance: collectively evaluated for impairment	3	7	19
Consumer And All Other Loans
Allowance for loan losses
Beginning balance	233	245	245
Charge-offs	(545)	(534)	(652)
Recoveries	145	176	143
Provision	339	346	509
Ending balance	172	233	245
Ending balance: individually evaluated for impairments	0	0	0
Ending balance: collectively evaluated for impairments	172	233	245
Ending balance	172	233	245
Loans
Ending balance	21,258	23,615	22,626
Ending balance: individually evaluated for impairment	0	0	265
Ending balance: collectively evaluated for impairment	21,258	23,615	22,361
Unallocated
Allowance for loan losses
Beginning balance	881	1,727	1,385
Charge-offs	0	0	0
Recoveries	0	0	0
Provision	(402)	(846)	342
Ending balance	479	881	1,727
Ending balance: individually evaluated for impairments	0	0	0
Ending balance: collectively evaluated for impairments	479	881	1,727
Ending balance	479	881	1,727
Loans
Ending balance	0	0	0
Ending balance: individually evaluated for impairment	0	0	0
Ending balance: collectively evaluated for impairment	$ 0	$ 0	$ 0

3. Loans, Credit Risk (Details)

3. Loans, Credit Risk (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Credit risk profile
Total Loans	$ 689,091	$ 651,891	$ 620,960	$ 619,974
Excellent Quality
Credit risk profile
Total Loans	16,980	17,255
High Quality
Credit risk profile
Total Loans	168,117	145,403
Good Quality
Credit risk profile
Total Loans	365,802	327,893
Management Attention
Credit risk profile
Total Loans	98,254	109,640
Watch
Credit risk profile
Total Loans	22,520	30,096
Substandard
Credit risk profile
Total Loans	17,418	21,600
Doubtful
Credit risk profile
Total Loans	0	0
Loss
Credit risk profile
Total Loans	0	4
Construction and land development
Credit risk profile
Total Loans	65,791	57,617
Single-family residential
Credit risk profile
Total Loans	220,690	206,417
Single-family residential - Banco de la Gente stated income
Credit risk profile
Total Loans	43,733	47,015
Commercial
Credit risk profile
Total Loans	228,526	228,558
Multifamily and Farmland
Credit risk profile
Total Loans	18,080	12,400
Commercial loans (not secured by real estate)
Credit risk profile
Total Loans	91,010	76,262
Farm loans (not secured by real estate)
Credit risk profile
Total Loans	3	7
Consumer loans (not secured by real estate)
Credit risk profile
Total Loans	10,027	10,060
All other loans (not secured by real estate)
Credit risk profile
Total Loans	11,231	13,555
Construction and land development
Credit risk profile
Total Loans	65,791	57,617	63,742
Construction and land development | Excellent Quality
Credit risk profile
Total Loans	0	0
Construction and land development | High Quality
Credit risk profile
Total Loans	10,144	6,741
Construction and land development | Good Quality
Credit risk profile
Total Loans	35,535	24,641
Construction and land development | Management Attention
Credit risk profile
Total Loans	12,544	13,013
Construction and land development | Watch
Credit risk profile
Total Loans	7,265	9,294
Construction and land development | Substandard
Credit risk profile
Total Loans	303	3,928
Construction and land development | Doubtful
Credit risk profile
Total Loans	0	0
Construction and land development | Loss
Credit risk profile
Total Loans	0	0
Single-family residential
Credit risk profile
Total Loans	220,690	206,417	195,975
Single-family residential | Excellent Quality
Credit risk profile
Total Loans	15,189	15,099
Single-family residential | High Quality
Credit risk profile
Total Loans	86,061	74,367
Single-family residential | Good Quality
Credit risk profile
Total Loans	78,843	74,453
Single-family residential | Management Attention
Credit risk profile
Total Loans	30,259	30,954
Single-family residential | Watch
Credit risk profile
Total Loans	4,322	5,749
Single-family residential | Substandard
Credit risk profile
Total Loans	6,016	5,795
Single-family residential | Doubtful
Credit risk profile
Total Loans	0	0
Single-family residential | Loss
Credit risk profile
Total Loans	0	0
Single-family residential - Banco de la Gente stated income
Credit risk profile
Total Loans	43,733	47,015	49,463
Single-family residential - Banco de la Gente stated income | Excellent Quality
Credit risk profile
Total Loans	0	0
Single-family residential - Banco de la Gente stated income | High Quality
Credit risk profile
Total Loans	0	0
Single-family residential - Banco de la Gente stated income | Good Quality
Credit risk profile
Total Loans	19,223	21,022
Single-family residential - Banco de la Gente stated income | Management Attention
Credit risk profile
Total Loans	15,029	12,721
Single-family residential - Banco de la Gente stated income | Watch
Credit risk profile
Total Loans	3,308	5,799
Single-family residential - Banco de la Gente stated income | Substandard
Credit risk profile
Total Loans	6,173	7,473
Single-family residential - Banco de la Gente stated income | Doubtful
Credit risk profile
Total Loans	0	0
Single-family residential - Banco de la Gente stated income | Loss
Credit risk profile
Total Loans	0	0
Commercial
Credit risk profile
Total Loans	228,526	228,558	209,287
Commercial | Excellent Quality
Credit risk profile
Total Loans	0	0
Commercial | High Quality
Credit risk profile
Total Loans	38,647	39,888
Commercial | Good Quality
Credit risk profile
Total Loans	148,805	142,141
Commercial | Management Attention
Credit risk profile
Total Loans	31,824	36,433
Commercial | Watch
Credit risk profile
Total Loans	4,561	6,153
Commercial | Substandard
Credit risk profile
Total Loans	4,689	3,943
Commercial | Doubtful
Credit risk profile
Total Loans	0	0
Commercial | Loss
Credit risk profile
Total Loans	0	0
Multifamily and Farmland
Credit risk profile
Total Loans	18,080	12,400	11,801
Multifamily and Farmland | Excellent Quality
Credit risk profile
Total Loans	0	0
Multifamily and Farmland | High Quality
Credit risk profile
Total Loans	2,998	241
Multifamily and Farmland | Good Quality
Credit risk profile
Total Loans	12,058	8,376
Multifamily and Farmland | Management Attention
Credit risk profile
Total Loans	335	1,001
Multifamily and Farmland | Watch
Credit risk profile
Total Loans	2,689	2,672
Multifamily and Farmland | Substandard
Credit risk profile
Total Loans	0	110
Multifamily and Farmland | Doubtful
Credit risk profile
Total Loans	0	0
Multifamily and Farmland | Loss
Credit risk profile
Total Loans	0	0
Commercial loans (not secured by real estate)
Credit risk profile
Total Loans	91,010	76,262	68,047
Commercial loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	700	924
Commercial loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	24,955	18,730
Commercial loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	58,936	44,649
Commercial loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	5,905	11,312
Commercial loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	332	383
Commercial loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	182	264
Commercial loans (not secured by real estate) | Doubtful
Credit risk profile
Total Loans	0	0
Commercial loans (not secured by real estate) | Loss
Credit risk profile
Total Loans	0	0
Farm loans (not secured by real estate)
Credit risk profile
Total Loans	3	7	$ 19
Farm loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	0	0
Farm loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	0	0
Farm loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	3	7
Farm loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	0	0
Farm loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	0	0
Farm loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	0	0
Farm loans (not secured by real estate) | Doubtful
Credit risk profile
Total Loans	0	0
Farm loans (not secured by real estate) | Loss
Credit risk profile
Total Loans	0	0
Consumer loans (not secured by real estate)
Credit risk profile
Total Loans	10,027	10,060
Consumer loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	1,091	1,232
Consumer loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	3,647	3,576
Consumer loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	4,571	4,549
Consumer loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	620	566
Consumer loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	43	46
Consumer loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	55	87
Consumer loans (not secured by real estate) | Doubtful
Credit risk profile
Total Loans	0	0
Consumer loans (not secured by real estate) | Loss
Credit risk profile
Total Loans	0	4
All other loans (not secured by real estate)
Credit risk profile
Total Loans	11,231	13,555
All other loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	0	0
All other loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	1,665	1,860
All other loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	7,828	8,055
All other loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	1,738	3,640
All other loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	0	0
All other loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	0	0
All other loans (not secured by real estate) | Doubtful
Credit risk profile
Total Loans	0	0
All other loans (not secured by real estate) | Loss
Credit risk profile
Total Loans	$ 0	$ 0

3. Loans, TDR Loan Modification

3. Loans, TDR Loan Modifications (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015USD ($)Integer	Dec. 31, 2014USD ($)Integer
TDR Loans
Post-Modification Outstanding Recorded Investment	$ 8,800	$ 15,000
Construction and land development
TDR Loans
Number of Contracts | Integer	1	1
Pre-Modification Outstanding Recorded Investment	$ 216	$ 291
Post-Modification Outstanding Recorded Investment	$ 216	$ 266
Single-family residential
TDR Loans
Number of Contracts | Integer	3	2
Pre-Modification Outstanding Recorded Investment	$ 288	$ 849
Post-Modification Outstanding Recorded Investment	$ 271	$ 845
Single-family residential- Banco de la Gente stated income
TDR Loans
Number of Contracts | Integer		3
Pre-Modification Outstanding Recorded Investment		$ 281
Post-Modification Outstanding Recorded Investment		$ 278
Total TDR Loans
TDR Loans
Number of Contracts | Integer	4	6
Pre-Modification Outstanding Recorded Investment	$ 504	$ 1,421
Post-Modification Outstanding Recorded Investment	$ 487	$ 1,389

3. Loans (Details Narrative)

3. Loans (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Loans Details Narrative
Percentage of construction and land development loans in Bank's loan portfolio	10.00%
Percentage of single-family residential loans in Bank's loan portfolio	38.00%
Percentage of Single-family residential - Banco de la Gente stated income loans in Bank's loan portfolio	6.00%
Percentage of commercial real estate loans in Bank's loan portfolio	33.00%
Percentage of commercial loans in Bank's loan portfolio	13.00%
Accruing impaired loans	$ 25,000	$ 25,600
Interest income recognized on accruing impaired loans	1,300	1,300
TDR loan amounts	8,800	15,000
Amount of performing TDR loans included	$ 354	$ 1,400

4. Premises and Equipment (Deta

4. Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Premises And Equipment Details
Land	$ 3,669	$ 3,681
Buildings and improvements	15,889	15,864
Furniture and equipment	19,462	18,442
Total premises and equipment	39,020	37,987
Less accumulated depreciation	22,044	20,987
Total net premises and equipment	$ 16,976	$ 17,000

4. Premises and Equipment (De59

4. Premises and Equipment (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Premises And Equipment Details Narrative
Depreciation expense	$ 2,400	$ 2,500	$ 1,900

5. Time Deposits (Details)

5. Time Deposits (Details) $ in Thousands	Dec. 31, 2015USD ($)
Time Deposits Details
2,016	$ 97,586
2,017	27,702
2,018	24,122
2,019	3,019
2020 and thereafter	4,463
Total	$ 156,892

5. Time Deposits (Details Narra

5. Time Deposits (Details Narrative) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Time Deposits Details Narrative
Time deposits purchased through third party brokers, including certificates of deposit participated through the Certificate of Deposit Account Registry Service ("CDARS") on behalf of local customers	$ 4,300	$ 11,400
CDARS balances	$ 4,100	$ 11,000
Weighted average rate of brokered deposits	0.10%	0.13%

6. Federal Home Loan Bank and62

6. Federal Home Loan Bank and Federal Reserve Bank Borrowings (Details Narrative) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Federal Home Loan Bank And Federal Reserve Bank Borrowings Details Narrative
Loans pledged as collateral to the FHLB	$ 124,800
FHLB stock owned	2,800	$ 3,200
Carrying value of loans pledged as collateral to the FRB	$ 365,900

8. Income Taxes (Details)

8. Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Taxes Details
Current expense									$ 2,427	$ 1,759	$ 1,345
Deferred income tax expense									673	178	534
Total income tax	$ 613	$ 942	$ 866	$ 679	$ (377)	$ 475	$ 916	$ 923	$ 3,100	$ 1,937	$ 1,879

8. Income Taxes (Details 1)

8. Income Taxes (Details 1) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Taxes Details 1
Tax expense at statutory rate (34%)									$ 4,329	$ 3,851	$ 2,914
Differences:
State income tax, net of federal income tax effect									494	(283)	428
Tax exempt interest income									(1,682)	(1,630)	(1,481)
Increase in cash surrender value of life insurance									(143)	(143)	(147)
Nondeductible interest and other expense									103	119	141
Other, net									(1)	23	24
Total	$ 613	$ 942	$ 866	$ 679	$ (377)	$ 475	$ 916	$ 923	$ 3,100	$ 1,937	$ 1,879

8. Income Taxes (Details 2)

8. Income Taxes (Details 2) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Allowance for loan losses	$ 3,513	$ 4,134
Accrued retirement expense	1,574	1,529
Other real estate	33	206
Federal credit carryforward	0	342
State credit carryforward	0	327
Restricted stock	417	243
Accrued bonuses	238	224
Interest income on nonaccrual loans	88	56
Other than temporary impairment	374	186
Other	16	152
Total gross deferred tax assets	6,253	7,399
Deferred tax liabilities:
Deferred loan fees	588	433
Accumulated depreciation	172	728
Prepaid expenses	59	101
Other	70	100
Unrealized gain on available for sale securities	3,308	3,479
Total gross deferred tax liabilities	4,197	4,841
Net deferred tax asset	$ 2,056	$ 2,558

9. Related Party Transactions66

9. Related Party Transactions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Related Party Transactions Details
Beginning balance	$ 4,760	$ 4,340
New loans	6,018	6,903
Repayments	(6,700)	(6,483)
Ending balance	$ 4,078	$ 4,760

9. Related Party Transactions67

9. Related Party Transactions (Details Narrative) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Related Party Transactions Details Narrative
Related party deposits	$ 18,400	$ 15,100

10. Commitments and Contingen68

10. Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2015USD ($)
Commitments And Contingencies Details
2,016	$ 664
2,017	550
2,018	501
2,019	490
2,020	422
Thereafter	1,548
Total minimum obligation	$ 4,175

10. Commitments and Contingen69

10. Commitments and Contingencies (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Commitments and contingencies
Commitments to extend credit
Commitments and contingencies	$ 189,351	$ 168,733
Standby letters of credit and financial guarantees written
Commitments and contingencies	$ 3,872	$ 3,911

10. Commitments and Contingen70

10. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Commitments And Contingencies Details Narrative
Rent expense	$ 702	$ 691	$ 672
Overnight federal funds	$ 59,500

11. Employee and Director Ben71

11. Employee and Director Benefit Programs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Employee And Director Benefit Programs Details
Benefit obligation at beginning of period	$ 3,812	$ 3,581
Service cost	334	348	$ 336
Interest cost	65	67	65
Benefits paid	(218)	(184)
Reversal of excess accrual	0	0
Benefit obligation at end of period	$ 3,993	$ 3,812	$ 3,581

11. Employee and Director Ben72

11. Employee and Director Benefit Programs (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Employee And Director Benefit Programs Details 1
Benefit obligation	$ 3,993	$ 3,812	$ 3,581
Fair value of plan assets	0	0
Funded status	(3,993)	(3,812)
Unrecognized prior service cost/benefit	0	0
Unrecognized net actuarial loss	0	0
Net amount recognized	(3,993)	(3,812)
Unfunded accrued liability	(3,993)	(3,812)
Intangible assets	0	0
Net amounts recognized	$ (3,993)	$ (3,812)

11. Employee and Director Ben73

11. Employee and Director Benefit Programs (Details 2) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Employee And Director Benefit Programs Details 2
Service cost	$ 334	$ 348	$ 336
Interest cost	65	67	65
Net periodic cost	$ 399	$ 415	$ 401
Weighted average discount rate assumption used to determine benefit obligation	5.47%	5.47%	5.46%

11. Employee and Director Ben74

11. Employee and Director Benefit Programs (Details 3) $ in Thousands	Dec. 31, 2015USD ($)
Employee And Director Benefit Programs Details 3
2,016	$ 244
2,017	262
2,018	274
2,019	310
2,020	333
Thereafter	$ 8,259

11. Employee and Director Ben75

11. Employee and Director Benefit Programs (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Employee And Director Benefit Programs Details Narrative
Matching of employee contributions, percentage	4.00%	4.00%	4.00%
Defined Benefit Plan, Contributions by Employer	$ 539	$ 439	$ 430
Expenses incurred for benefits relating to the postretirement benefit plan	413	422	$ 395
Postretirement Benefits paid	$ 218	$ 184

12. Regulatory Matters (Details

12. Regulatory Matters (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Total capital (to Risk-Weighted Assets) | Consolidated
Actual, amount	$ 129,203	$ 122,732
Actual, ratio	16.63%	16.62%
For Capital Adequacy Purposes, amount	$ 62,137	$ 59,085
For Capital Adequacy Purposes, ratio	8.00%	8.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 0	$ 0
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	0.00%	0.00%
Total capital (to Risk-Weighted Assets) | Bank
Actual, amount	$ 124,910	$ 118,356
Actual, ratio	16.11%	16.06%
For Capital Adequacy Purposes, amount	$ 62,026	$ 58,974
For Capital Adequacy Purposes, ratio	8.00%	8.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 77,532	$ 73,717
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	10.00%	10.00%
Tier 1 Capital (to Risk- Weighted Assets) | Consolidated
Actual, amount	$ 119,354	$ 113,211
Actual, ratio	15.37%	15.33%
For Capital Adequacy Purposes, amount	$ 46,603	$ 29,542
For Capital Adequacy Purposes, ratio	6.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 0	$ 0
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	0.00%	0.00%
Tier 1 Capital (to Risk- Weighted Assets) | Bank
Actual, amount	$ 115,160	$ 108,934
Actual, ratio	14.85%	14.78%
For Capital Adequacy Purposes, amount	$ 46,519	$ 29,487
For Capital Adequacy Purposes, ratio	6.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 62,026	$ 44,230
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	8.00%	6.00%
Tier 1 Capital (Average Assets) | Consolidated
Actual, amount	$ 119,354	$ 113,211
Actual, ratio	11.44%	10.74%
For Capital Adequacy Purposes, amount	$ 41,743	$ 42,181
For Capital Adequacy Purposes, ratio	4.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 0	$ 0
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	0.00%	0.00%
Tier 1 Capital (Average Assets) | Bank
Actual, amount	$ 115,160	$ 108,934
Actual, ratio	11.03%	10.33%
For Capital Adequacy Purposes, amount	$ 41,776	$ 42,164
For Capital Adequacy Purposes, ratio	4.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 52,220	$ 52,706
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	5.00%	5.00%
Common Equity Tier 1 (to Risk-Weighted Assets) | Consolidated
Actual, amount	$ 99,354
Actual, ratio	12.79%
For Capital Adequacy Purposes, amount	$ 34,952
For Capital Adequacy Purposes, ratio	4.50%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 0
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	0.00%
Common Equity Tier 1 (to Risk-Weighted Assets) | Bank
Actual, amount	$ 115,160
Actual, ratio	14.85%
For Capital Adequacy Purposes, amount	$ 34,890
For Capital Adequacy Purposes, ratio	4.50%
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount	$ 50,396
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio	6.50%

14. Other Operating Income an77

14. Other Operating Income and Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Other Operating Income And Expense Details
Visa debit card income	$ 3,452	$ 3,170	$ 2,990
Net appraisal management fee income	635	525	718
Insurance and brokerage commissions	714	701	661
Advertising	784	804	685
FDIC insurance	681	739	864
Visa debit card expense	988	905	823
Telephone	588	574	570
Foreclosure/OREO expense	398	317	356
Internet banking expense	671	644	568
FHLB advance prepayment penalty	504	869	530
Consulting	904	609	468
NC Tax Credit Amortization	$ 0	$ 870	$ 160

15. Fair Value of Financial I78

15. Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets:
Investment securities available for sale	$ 268,530	$ 281,099
Mortgage loans held for sale	4,149	1,375
Carrying Amount
Assets:
Cash and cash equivalents	39,763	69,098
Investment securities available for sale	268,530	281,099
Other investments	3,636	4,031
Mortgage loans held for sale	4,149	1,375
Loans, net	679,502	640,809
Cash surrender value of life insurance	14,546	14,125
Liabilities:
Deposits	832,175	814,700
Securities sold under agreements to repurchase	27,874	48,430
FHLB borrowings	43,500	50,000
Junior subordinated debentures	20,619	20,619
Level 1
Assets:
Cash and cash equivalents	39,763	69,098
Investment securities available for sale	1,325	1,378
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	0	0
FHLB borrowings	0	0
Junior subordinated debentures	0	0
Level 2
Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	266,455	278,971
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	14,546	14,125
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	27,874	48,430
FHLB borrowings	43,144	49,598
Junior subordinated debentures	20,619	20,619
Level 3
Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	750	750
Other investments	3,636	4,031
Mortgage loans held for sale	4,149	1,375
Loans, net	683,540	644,708
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	827,874	813,288
Securities sold under agreements to repurchase	0	0
FHLB borrowings	0	0
Junior subordinated debentures	0	0
Estimated Fair Value
Assets:
Cash and cash equivalents	39,763	69,098
Investment securities available for sale	268,530	281,099
Other investments	3,636	4,031
Mortgage loans held for sale	4,149	1,375
Loans, net	683,540	644,708
Cash surrender value of life insurance	14,546	14,125
Liabilities:
Deposits	827,874	813,288
Securities sold under agreements to repurchase	27,874	48,430
FHLB borrowings	43,144	49,598
Junior subordinated debentures	$ 20,619	$ 20,619

16. Peoples Bancorp of North 79

16. Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014
Assets
Interest-bearing time deposit												$ 10,569	$ 17,885
Investment securities available for sale												268,530	281,099
Total assets												1,038,481	1,040,494
Liabilities and Shareholders' Equity
Junior subordinated debentures												20,619	20,619
Liabilities												933,617	941,829
Shareholders' equity												104,864	98,665
Total liabilities and shareholders' equity												1,038,481	1,040,494
Revenues:
Interest and dividend income	$ 9,961	$ 9,947	$ 9,191	$ 9,567	$ 9,716	$ 9,583	$ 9,576	$ 9,545	$ 38,666	$ 38,420	$ 36,696
Expenses:
Interest	851	874	875	884	1,015	1,076	1,085	1,111	3,484	4,287	5,353
Income/(Loss) before income tax benefit and equity in undistributed earnings of subsidiaries	2,801	3,435	3,490	3,007	1,440	2,917	3,467	3,501	12,733	11,325	8,570
Income tax benefit	613	942	866	679	(377)	475	916	923	3,100	1,937	1,879
Net earnings	2,188	2,493	2,624	2,328	1,817	2,442	2,551	2,578	9,633	9,388	6,691
Cash flows from operating activities:
Net earnings	2,188	$ 2,493	$ 2,624	2,328	1,817	$ 2,442	$ 2,551	2,578	9,633	9,388	6,691
Change in:
Other assets									165	(778)	1,508
Net cash provided (used by) operating activities									13,863	14,441	24,921
Cash flows from investing activities:
Purchases of investment securities available for sale									(19,220)	(32,851)	(98,129)
Proceeds from maturities of investment securities available for sale									5,475	36,148	63,597
Net cash used by investing activities									(30,126)	(11,898)	(19,234)
Cash flows from financing activities:
Cash dividends paid on Series A preferred stock									0	0	(734)
Proceeds from exercise of stock options									0	37	0
Net cash (used) provided by financing activities									(13,072)	(10,218)	22,243
Net change in cash and cash equivalents									(29,335)	(7,675)	27,930
Noncash investing and financing activities:
Change in unrealized gain on investment securities available for sale, net									57	6,625	(6,784)
Accrued redemption of Series A Preferred Stock									0	0	12,632
Parent Company
Assets
Cash	558			745	745			12,879	745	745	12,879	558	745
Interest-bearing time deposit												1,000	1,000
Investment in subsidiaries												121,848	115,457
Investment in PEBK Capital Trust II												619	619
Investment securities available for sale												1,234	1,235
Other assets												244	245
Total assets												125,503	119,301
Liabilities and Shareholders' Equity
Junior subordinated debentures												20,619	20,619
Liabilities												20	17
Shareholders' equity												104,864	98,665
Total liabilities and shareholders' equity												$ 125,503	$ 119,301
Revenues:
Interest and dividend income									3,979	2,718	13,576
Total revenues									3,979	2,718	13,576
Expenses:
Interest									403	389	398
Other operating expenses									538	527	159
Total expenses									941	916	557
Income/(Loss) before income tax benefit and equity in undistributed earnings of subsidiaries									3,038	1,802	13,019
Income tax benefit									262	239	84
Income/(Loss) before equity in undistributed earnings of subsidiaries									3,300	2,041	13,103
Equity in undistributed earnings (loss) of subsidiaries									6,333	7,347	(6,412)
Net earnings									9,633	9,388	6,691
Cash flows from operating activities:
Net earnings									9,633	9,388	6,691
Adjustments to reconcile net earnings to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries									(6,333)	(7,347)	6,412
Change in:
Other assets									1	28	(73)
Accrued income									0	(5)	0
Accrued expense									3	1	27
Other liabilities									0	(108)	108
Net cash provided (used by) operating activities									3,304	1,957	13,165
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale									0	500	1
Net change in interest-bearing time deposit									0	(1,000)	800
Net cash used by investing activities									0	(500)	801
Cash flows from financing activities:
Cash dividends paid on Series A preferred stock									0	0	(734)
Cash dividends paid on common stock									(1,574)	(1,022)	(677)
Preferred stock and warrant repurchase									0	(12,524)	0
Stock repurchase									(1,917)	(82)	0
Proceeds from exercise of stock options									0	37	0
Net cash (used) provided by financing activities									(3,491)	(13,591)	(1,411)
Net change in cash and cash equivalents									(187)	(12,134)	12,555
Cash at beginning of year				$ 745				$ 12,879	745	12,879	324
Cash at end of year	$ 558				$ 745				558	745	12,879
Noncash investing and financing activities:
Change in unrealized gain on investment securities available for sale, net									1	8	77
Accrued redemption of Series A Preferred Stock									$ 0	$ 0	$ 12,632

17. Quarterly Data (Details)

17. Quarterly Data (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Information Disclosure [Abstract]
Total interest income	$ 9,961	$ 9,947	$ 9,191	$ 9,567	$ 9,716	$ 9,583	$ 9,576	$ 9,545	$ 38,666	$ 38,420	$ 36,696
Total interest expense	851	874	875	884	1,015	1,076	1,085	1,111	3,484	4,287	5,353
Net interest income	9,110	9,073	8,316	8,683	8,701	8,507	8,491	8,434	35,182	34,133	31,343
(Reduction of) provision for loan losses	(211)	235	(214)	173	(673)	256	67	(349)	(17)	(699)	2,584
Other income	3,504	3,266	3,297	3,245	3,006	3,207	3,110	2,841	13,312	12,164	12,652
Other expense	10,024	8,669	8,337	8,748	10,940	8,541	8,067	8,123	35,778	35,671	32,841
Income before income taxes	2,801	3,435	3,490	3,007	1,440	2,917	3,467	3,501	12,733	11,325	8,570
Income tax expense	613	942	866	679	(377)	475	916	923	3,100	1,937	1,879
Net earnings	$ 2,188	$ 2,493	$ 2,624	$ 2,328	$ 1,817	$ 2,442	$ 2,551	$ 2,578	$ 9,633	$ 9,388	$ 6,691
Basic net earnings per share	$ 0.40	$ 0.45	$ 0.47	$ 0.41	$ 0.33	$ 0.43	$ 0.45	$ 0.46	$ 1.73	$ 1.67	$ 1.08
Diluted net earnings per share	$ 0.39	$ 0.45	$ 0.47	$ 0.41	$ 0.32	$ 0.43	$ 0.45	$ 0.46	$ 1.72	$ 1.66	$ 1.07