Peoples Bancorp of North Carolina (PEBK) 10-Q 4 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
Document And Entity Information
Entity Registrant Name	PEOPLES BANCORP OF NORTH CAROLINA INC
Entity Central Index Key	1,093,672
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
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 Common Stock, Shares Outstanding		5,417,800
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks, including reserve requirements of $15,715 at 9/30/16 and $14,587 at 12/31/15	$ 47,653	$ 29,194
Interest-bearing deposits	35,191	10,569
Cash and cash equivalents	82,844	39,763
Investment securities available for sale	262,423	268,530
Other investments	3,634	3,636
Total securities	266,057	272,166
Mortgage loans held for sale	2,776	4,149
Loans	713,019	689,091
Less allowance for loan losses	(8,045)	(9,589)
Net loans	704,974	679,502
Premises and equipment, net	16,553	16,976
Cash surrender value of life insurance	14,853	14,546
Other real estate	26	739
Accrued interest receivable and other assets	9,525	10,640
Total assets	1,097,608	1,038,481
Deposits:
Noninterest-bearing demand	253,134	244,231
NOW, MMDA & savings	460,767	431,052
Time, $250,000 or more	26,627	26,891
Other time	121,419	130,001
Total deposits	861,947	832,175
Securities sold under agreements to repurchase	50,920	27,874
FHLB borrowings	43,500	43,500
Junior subordinated debentures	20,619	20,619
Accrued interest payable and other liabilities	9,974	9,449
Total liabilities	986,960	933,617
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 5,417,800 shares at September 30, 2016 and 5,510,538 shares at December 31, 2015	44,188	46,171
Retained earnings	59,502	53,183
Accumulated other comprehensive income	6,958	5,510
Total shareholders' equity	110,648	104,864
Total liabilities and shareholders' equity	$ 1,097,608	$ 1,038,481

Consolidated Balance Sheets (U3

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks, reserve requirements	$ 15,715	$ 14,587
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)	5,417,800	5,510,538
Common stock, shares outstanding (in shares)	5,417,800	5,510,538

Consolidated Statements of Earn

Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income:
Interest and fees on loans	$ 8,188	$ 8,089	$ 24,185	$ 23,015
Interest on due from banks	32	4	67	21
Interest on investment securities:
U.S. Government sponsored enterprises	603	633	1,910	1,959
State and political subdivisions	1,105	1,145	3,350	3,465
Other	54	76	191	245
Total interest income	9,982	9,947	29,703	28,705
Interest expense:
NOW, MMDA & savings deposits	126	106	367	324
Time deposits	142	211	452	685
FHLB borrowings	426	443	1,248	1,294
Junior subordinated debentures	122	101	353	297
Other	12	13	30	34
Total interest expense	828	874	2,450	2,634
Net interest income	9,154	9,073	27,253	26,071
Provision for (reduction of provision for) loan losses	(360)	235	(1,108)	193
Net interest income after provision for loan losses	9,514	8,838	28,361	25,878
Non-interest income:
Service charges	1,163	1,193	3,291	3,498
Other service charges and fees	210	173	746	718
Gain on sale of securities	0	0	324	0
Mortgage banking income	426	300	1,088	810
Insurance and brokerage commissions	163	179	476	544
Gain/(loss) on sale and write-down of other real estate	(16)	80	64	246
Miscellaneous	1,468	1,341	4,320	3,992
Total non-interest income	3,414	3,266	10,309	9,808
Non-interest expense:
Salaries and employee benefits	4,829	4,596	14,114	13,683
Occupancy	1,755	1,611	5,243	4,577
Professional fees	429	163	1,603	590
Advertising	313	172	623	576
Debit card expense	271	256	870	737
FDIC insurance	71	162	406	510
Other	1,930	1,709	5,339	5,081
Total non-interest expense	9,598	8,669	28,198	25,754
Earnings before income taxes	3,330	3,435	10,472	9,932
Income tax expense	872	942	2,597	2,487
Net earnings	$ 2,458	$ 2,493	$ 7,875	$ 7,445
Basic net earnings per share	$ 0.45	$ 0.45	$ 1.43	$ 1.34
Diluted net earnings per share	0.44	0.45	1.42	1.32
Cash dividends declared per share	$ 0.10	$ 0.08	$ 0.28	$ 0.20

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements Of Comprehensive Income
Net earnings	$ 2,458	$ 2,493	$ 7,875	$ 7,445
Other comprehensive income (loss):
Unrealized holding (losses) gains on securities available for sale	(1,676)	1,167	2,597	(819)
Reclassification adjustment for gains on securities available for sale included in net earnings	0	0	(324)	0
Total other comprehensive (loss) income, before income taxes	(1,676)	1,167	2,273	(819)
Income tax (benefit) expense related to other comprehensive (loss) income:
Unrealized holding (losses) gains on securities available for sale	(614)	455	951	(319)
Reclassification adjustment for gains on securities available for sale included in net earnings	0	0	(126)	0
Total income tax expense (benefit) related to other comprehensive income (loss)	(614)	455	825	(319)
Total other comprehensive (loss) income, net of tax	(1,062)	712	1,448	(500)
Total comprehensive income	$ 1,396	$ 3,205	$ 9,323	$ 6,945

Consolidated Statements of Chan

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income	Total
Beginning Balance, Shares at Dec. 31, 2014	5,612,588
Beginning Balance, Amount at Dec. 31, 2014	$ 48,088	$ 45,124	$ 5,453	$ 98,665
Common stock repurchase, shares	(84,050)
Common stock repurchase, amount	$ (1,576)			(1,576)
Cash dividends declared on common stock		(1,127)		(1,127)
Net earnings		7,445		7,445
Change in accumulated other comprehensive (loss) income, net of tax			(500)	(500)
Ending Balance, Shares at Sep. 30, 2015	5,528,538
Ending Balance, Amount at Sep. 30, 2015	$ 46,512	51,442	4,953	102,907
Beginning Balance, Shares at Dec. 31, 2015	5,510,538
Beginning Balance, Amount at Dec. 31, 2015	$ 46,171	53,183	5,510	104,864
Common stock repurchase, shares	(92,738)
Common stock repurchase, amount	$ (1,983)			(1,983)
Cash dividends declared on common stock		(1,556)		(1,556)
Net earnings		7,875		7,875
Change in accumulated other comprehensive (loss) income, net of tax			1,448	1,448
Ending Balance, Shares at Sep. 30, 2016	5,417,800
Ending Balance, Amount at Sep. 30, 2016	$ 44,188	$ 59,502	$ 6,958	$ 110,648

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net earnings	$ 7,875	$ 7,445
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and accretion	4,181	4,523
(Reduction)/Provision for loan losses	(1,108)	193
Deferred income taxes	(607)	100
Gain on sale of investment securities	(324)	0
Gain on sale of other real estate	(81)	(275)
Write-down of other real estate	17	29
Restricted stock expense	476	282
Origination of mortgage loans held for sale	(50,813)	(38,139)
Proceeds from sales of mortgage loans held for sale	52,186	37,835
Change in:
Cash surrender value of life insurance	(307)	(315)
Other assets	897	792
Other liabilities	49	1,788
Net cash provided by operating activities	12,441	14,258
Cash flows from investing activities:
Purchases of investment securities available for sale	(12,642)	(13,579)
Proceeds from sales, calls and maturities of investment securities available for sale	2,899	17,984
Proceeds from paydowns of investment securities available for sale	15,946	4,250
Purchases of FHLB stock	0	(5)
FHLB stock redemption	2	125
Net change in loans	(24,639)	(38,098)
Purchases of premises and equipment	(1,257)	(1,549)
Proceeds from sale of other real estate and repossessions	1,052	4,173
Net cash used by investing activities	(18,639)	(26,699)
Cash flows from financing activities:
Net change in deposits	29,772	(8,139)
Net change in securities sold under agreement to repurchase	23,046	(1,190)
Proceeds from FHLB borrowings	0	20,000
Repayments of FHLB borrowings	0	(20,000)
Common stock repurchased	(1,983)	(1,576)
Cash dividends paid on common stock	(1,556)	(1,127)
Net cash provided (used) by financing activities	49,279	(12,032)
Net change in cash and cash equivalents	43,081	(24,473)
Cash and cash equivalents at beginning of period	39,763	69,098
Cash and cash equivalents at end of period	82,844	44,625
Cash paid during the period for:
Interest	2,425	2,624
Income taxes	3,180	1,514
Noncash investing and financing activities:
Change in unrealized gain (loss) on investment securities available for sale, net	1,448	(500)
Transfers of loans to other real estate and repossessions	275	4,274
Financed portion of sales of other real estate	$ 0	$ 60

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
1. Summary of Significant Accounting Policies	The consolidated financial statements include the financial statements of Peoples Bancorp of North Carolina, Inc. and its wholly owned subsidiary, Peoples Bank (the "Bank"), along with the Bank's wholly owned subsidiaries, Peoples Investment Services, Inc., Real Estate Advisory Services, Inc. ("REAS") Community Bank Real Estate Solutions, LLC ("CBRES") and PB Real Estate Holdings, LLC (collectively called the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. CBRES was moved from a wholly owned subsidiary of Peoples Bancorp of North Carolina, Inc. to a wholly owned subsidiary of the Bank effective August 31, 2016. The Bank operates four banking offices focused on the Latino population under the name Banco de la Gente ("Banco"). These offices are operated as a division of the Bank. Banco 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. The Bank operates one Banco loan production office in Durham County and one Banco loan production office in Forsyth County specifically designed to serve the growing Latino market. The consolidated financial statements in this report (other than the Consolidated Balance Sheet at December 31, 2015) are unaudited. In the opinion of management, all adjustments (none of which were other than normal accruals) necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP"). Actual results could differ from those estimates. The Company's accounting policies are fundamental to understanding management's discussion and analysis of results of operations and financial condition. Many of the Company's accounting policies require significant judgment regarding valuation of assets and liabilities and/or significant interpretation of the specific accounting guidance. A description of the Company's significant accounting policies can be found in Note 1 of the Notes to Consolidated Financial Statements in the Company's 2015 Annual Report to Shareholders which is Appendix A to the Proxy Statement for the May 5, 2016 Annual Meeting of Shareholders. Recently Issued Accounting Pronouncements In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 In March 2016, FASB issued ASU No. 2016-07, (Topic 323): Simplifying the Transition to the Equity Method of Accounting In March 2016, FASB issued ASU No. 2016-08, (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) In March 2016, FASB issued ASU No. 2016-09, (Topic 718): Improvements to Employee Share-Based Payment Accounting In April 2016, FASB issued ASU No. 2016-10, (Topic 606): Identifying Performance Obligations and Licensing In May 2016, FASB issued ASU No. 2016-12, (Topic 606): Narrow-Scope Improvements and Practical Expedients Revenue from Contracts with Customers collectability, noncash consideration, presentation of sales tax, and transition. ASU No. 2016-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures. In June 2016, FASB issued ASU No. 2016-13, (Topic 326): Measurement of Credit Losses on Financial Instruments In August 2016, FASB issued ASU No. 2016-15, (Topic 230): Classification of Certain Cash Receipts and Cash Payments Statement of Cash Flows 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.

2. Investment Securities

2. Investment Securities	9 Months Ended
	Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]
2. Investment Securities	Investment securities available for sale at September 30, 2016 and December 31, 2015 are as follows: (Dollars in thousands) September 30, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 71,359 2,083 49 73,393 U.S. Government sponsored enterprises 38,575 743 240 39,078 State and political subdivisions 138,672 8,481 11 147,142 Corporate bonds 1,505 20 - 1,525 Trust preferred securities 750 - - 750 Equity securities 264 271 - 535 Total $ 251,125 11,598 300 262,423 (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 The current fair value and associated unrealized losses on investments in securities with unrealized losses at September 30, 2016 and December 31, 2015 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position. (Dollars in thousands) September 30, 2016 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 5,795 49 - - 5,795 49 U.S. Government sponsored enterprises 7,517 66 9,685 174 17,202 240 State and political subdivisions 426 1 582 10 1,008 11 Total $ 13,738 116 10,267 184 24,005 300 (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 At September 30, 2016, unrealized losses in the investment securities portfolio relating to debt securities totaled $300,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the September 30, 2016 tables above, two out of 170 securities issued by state and political subdivisions contained unrealized losses, 10 out of 82 securities issued by U.S. Government sponsored enterprises contained unrealized losses, and no securities issued by corporations contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations of entities that issued each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed. The amortized cost and estimated fair value of investment securities available for sale at September 30, 2016, 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. September 30, 2016 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 8,444 8,500 Due from one to five years 76,972 81,294 Due from five to ten years 83,725 87,937 Due after ten years 10,361 10,764 Mortgage-backed securities 71,359 73,393 Equity securities 264 535 Total $ 251,125 262,423 Proceeds from sales of securities available for sale during the nine months ended September 30, 2016 were $804,000 and resulted in gross gains of $324,000. No securities available for sale were sold during the three months ended September 30, 2016, or the three and nine months ended September 30, 2015. Securities with a fair value of approximately $85.2 million and $91.0 million at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and for other purposes as required by law.

3. Loans

3. Loans	9 Months Ended
	Sep. 30, 2016
Receivables [Abstract]
3. Loans	Major classifications of loans at September 30, 2016 and December 31, 2015 are summarized as follows: (Dollars in thousands) September 30, 2016 December 31, 2015 Real estate loans: Construction and land development $ 59,456 65,791 Single-family residential 231,958 220,690 Single-family residential - Banco de la Gente stated income 40,934 43,733 Commercial 240,150 228,526 Multifamily and farmland 18,727 18,080 Total real estate loans 591,225 576,820 Loans not secured by real estate: Commercial loans 94,790 91,010 Farm loans - 3 Consumer loans 10,036 10,027 All other loans 16,968 11,231 Total loans 713,019 689,091 Less allowance for loan losses 8,045 9,589 Total net loans $ 704,974 679,502 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 September 30, 2016, construction and land development loans comprised approximately 8% 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 September 30, 2016, single-family residential loans comprised approximately 38% of the Bank's total loan portfolio, and include Banco's 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 September 30, 2016, commercial real estate loans comprised approximately 34% 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 September 30, 2016, 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 September 30, 2016 and December 31, 2015: September 30, 2016 (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 $ 18 13 31 59,425 59,456 - Single-family residential 1,344 310 1,654 230,304 231,958 - Single-family residential - Banco de la Gente stated income 1,588 257 1,845 39,089 40,934 - Commercial 58 - 58 240,092 240,150 - Multifamily and farmland - - - 18,727 18,727 - Total real estate loans 3,008 580 3,588 587,637 591,225 - Loans not secured by real estate: Commercial loans 85 - 85 94,705 94,790 - Farm loans - - - - - - Consumer loans 95 7 102 9,934 10,036 - All other loans - - - 16,968 16,968 - Total loans $ 3,188 587 3,775 709,244 713,019 - 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 The following table presents non-accrual loans as of September 30, 2016 and December 31, 2015: (Dollars in thousands) September 30, 2016 December 31, 2015 Real estate loans: Construction and land development $ 31 146 Single-family residential 1,797 4,023 Single-family residential - Banco de la Gente stated income 1,251 1,106 Commercial 1,571 2,992 Multifamily and farmland - - Total real estate loans 4,650 8,267 Loans not secured by real estate: Commercial loans 66 113 Consumer loans 41 52 Total $ 4,757 8,432 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. Accruing impaired loans were $22.9 million, $25.0 million and $25.5 million at September 30, 2016, December 31, 2015 and September 30, 2015, respectively. Interest income recognized on accruing impaired loans was $871,000, $968,000 and $1.3 million for the nine months ended September 30, 2016, the nine months ended September 30, 2015 and the year ended December 31, 2015, respectively. No interest income is recognized on non-accrual impaired loans subsequent to their classification as non-accrual. The following tables present impaired loans as of September 30, 2016 and December 31, 2015: September 30, 2016 (Dollars in thousands) Nine months ended Three months ended Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans Interest Income Recognized Average Outstanding Impaired Loans Interest Income Recognized Real estate loans: Construction and land development $ 292 - 288 288 13 375 10 369 3 Single-family residential 5,731 878 4,473 5,351 46 8,921 122 6,556 40 Single-family residential - Banco de la Gente stated income 18,603 - 18,094 18,094 1,188 17,673 657 17,395 207 Commercial 3,775 1,221 2,222 3,443 174 5,376 73 4,013 24 Multifamily and farmland 78 - 78 78 - 79 3 78 - Total impaired real estate loans 28,479 2,099 25,155 27,254 1,421 32,424 865 28,411 274 Loans not secured by real estate: Commercial loans 74 - 73 73 1 123 - 116 - Consumer loans 226 - 219 219 4 235 6 225 2 Total impaired loans $ 28,779 2,099 25,447 27,546 1,426 32,782 871 28,752 276 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 YTD Interest Income Recognized Real estate loans: Construction and land development $ 643 216 226 442 12 705 18 Single-family residential 8,828 1,489 6,805 8,294 189 10,852 224 Single-family residential - Banco de la Gente stated income 20,375 - 19,215 19,215 1,143 18,414 921 Commercial 4,556 - 4,893 4,893 179 5,497 89 Multifamily and farmland 96 - 83 83 - 93 6 Total impaired real estate loans 34,498 1,705 31,222 32,927 1,523 35,561 1,258 Loans not secured by real estate: Commercial loans 180 - 161 161 3 132 5 Consumer loans 286 - 260 260 4 283 11 Total impaired loans $ 34,964 1,705 31,643 33,348 1,530 35,976 1,274 Changes in the allowance for loan losses for the three and nine months ended September 30, 2016 and 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 Nine months ended September 30, 2016: Allowance for loan losses: Beginning balance $ 2,185 2,534 1,460 1,917 - 842 - 172 479 9,589 Charge-offs - (158 ) - (106 ) - (129 ) - (361 ) - (754 ) Recoveries 8 18 - 15 - 165 - 112 - 318 Provision (808 ) (388 ) (60 ) (250 ) 47 (118 ) - 291 178 (1,108 ) Ending balance $ 1,385 2,006 1,400 1,576 47 760 - 214 657 8,045 Three months ended September 30, 2016: Allowance for loan losses: Beginning balance $ 1,582 2,233 1,354 1,650 46 803 - 234 638 8,540 Charge-offs - (35 ) - - - (89 ) - (122 ) - (246 ) Recoveries 2 6 - 5 - 60 - 38 - 111 Provision (199 ) (198 ) 46 (79 ) 1 (14 ) - 64 19 (360 ) Ending balance $ 1,385 2,006 1,400 1,576 47 760 - 214 657 8,045 Allowance for loan losses at September 30, 2016: Ending balance: individually evaluated for impairment $ - - 1,164 167 - - - - - 1,331 Ending balance: collectively evaluated for impairment 1,385 2,006 236 1,409 47 760 - 214 657 6,714 Ending balance $ 1,385 2,006 1,400 1,576 47 760 - 214 657 8,045 Loans at September 30, 2016: Ending balance $ 59,456 231,958 40,934 240,150 18,727 94,790 - 27,004 - 713,019 Ending balance: individually evaluated for impairment $ - 1,019 16,890 3,586 - - - - - 21,495 Ending balance: collectively evaluated for impairment $ 59,456 230,939 24,044 236,564 18,727 94,790 - 27,004 - 691,524 (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 Nine months ended September 30, 2015: Allowance for loan losses: Beginning balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Charge-offs (198 ) (447 ) (59 ) (62 ) - (16 ) - (394 ) - (1,176 ) Recoveries 43 30 22 15 - 96 - 115 - 321 Provision 119 676 (113 ) 75 (2 ) (297 ) - 258 (523 ) 193 Ending balance $ 2,749 2,825 1,460 1,930 5 881 - 212 358 10,420 Three months ended September 30, 2015: Allowance for loan losses: Beginning balance $ 2,924 2,456 1,528 1,749 2 902 - 231 586 10,378 Charge-offs (110 ) (48 ) - - - (1 ) - (156 ) - (315 ) Recoveries 20 21 - 5 - 43 - 33 - 122 Provision (85 ) 396 (68 ) 176 3 (63 ) - 104 (228 ) 235 Ending balance $ 2,749 2,825 1,460 1,930 5 881 - 212 358 10,420 Allowance for loan losses September 30, 2015: Ending balance: individually evaluated for impairment $ - 96 1,128 227 - - - - - 1,451 Ending balance: collectively evaluated for impairment 2,749 2,729 332 1,703 5 881 - 212 358 8,969 Ending balance $ 2,749 2,825 1,460 1,930 5 881 - 212 358 10,420 Loans September 30, 2015: Ending balance $ 61,748 218,365 44,433 234,003 14,003 88,931 3 23,314 - 684,800 Ending balance: individually evaluated for impairment $ 241 2,944 18,193 3,525 - - - - - 24,903 Ending balance: collectively evaluated for impairment $ 61,507 215,421 26,240 230,478 14,003 88,931 3 23,314 - 659,897 The provision for loan losses for the three months ended September 30, 2016 was a credit of $360,000, as compared to an expense of $235,000 for the three months ended September 30, 2015. The decrease in the provision for loan losses is primarily attributable to a reduction in the required level of the allowance for loan losses resulting from lower historical loss rates used to calculate the ASC 450-20 reserve as the elevated level of loan losses incurred in 2010 and 2011 are no longer included in the historical loss calculations. The provision for loan losses for the nine months ended September 30, 2016 was a credit of $1.1 million, as compared to an expense of $193,000 for the nine months ended September 30, 2015. The decrease in the provision for loan losses is primarily attributable to a reduction in the required level of the allowance for loan losses resulting from lower historical loss rates used to calculate the ASC 450-20 reserve as the elevated level of loan losses incurred in 2010 and 2011 are no longer included in the historical loss calculations. The Company 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 as 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 September 30, 2016 and December 31, 2015: September 30, 2016 (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 $ - 12,340 - - - 546 - 1,069 50 14,005 2- High Quality 8,012 103,847 - 39,701 2,915 28,510 - 3,399 2,580 188,964 3- Good Quality 32,958 81,307 17,136 166,724 12,150 59,125 - 4,838 12,565 386,803 4- Management Attention 11,406 25,846 15,811 27,507 1,187 6,248 - 632 1,773 90,410 5- Watch 6,858 3,854 2,807 3,321 2,475 250 - 43 - 19,608 6- Substandard 222 4,764 5,180 2,897 - 111 - 54 - 13,228 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - 1 - 1 Total $ 59,456 231,958 40,934 240,150 18,727 94,790 - 10,036 16,968 713,019 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 Current year TDR modifications, past due TDR loans and non-accrual TDR loans totaled $4.3 million and $8.8 million at September 30, 2016 and December 31, 2015, 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 $41,000 and $354,000 in performing loans classified as TDR loans at September 30, 2016 and December 31, 2015, respectively. The following table presents an analysis of TDR loan modifications during the three and nine months ended September 30, 2016. Three and nine months ended September 30, 2016 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 1 $ 41 41 Total real estate TDR loans 1 41 41 Total TDR loans 1 $ 41 41 During the three and nine months ended September 30, 2016, one loan was modified that was considered to be a new TDR loan. The interest rate was modified on this TDR loan. There were no TDR modifications during the three months ended September 30, 2015. The following table presents an analysis of TDR loan modifications during the nine months ended September 30, 2015. Nine months ended September 30, 2015 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 1 $ 146 142 Total real estate TDR loans 1 146 142 Total TDR loans 1 $ 146 142 During the nine months ended September 30, 2015, one loan was modified that was considered to be a new TDR loan. The interest rate was modified on this TDR loan. There were no loans modified as TDR that defaulted during the three and nine months ended September 30, 2016 and 2015, which were within 12 months of their modification date. Generally, a TDR loan is considered to be in default once it becomes 90 days or more past due following a modification.

4. Net Earnings Per Share

4. Net Earnings Per Share	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
4. Net Earnings Per Share	Net earnings per share is based on the weighted average number of shares outstanding during the period while the effects of potential shares outstanding during the period are included in diluted earnings per share. The average market price during the year is used to compute equivalent shares. The reconciliation of the amounts used in the computation of both "basic earnings per share" and "diluted earnings per share" for the three and nine months ended September 30, 2016 and 2015 is as follows: For the three months ended September 30, 2016 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,458 5,470,826 $ 0.45 Effect of dilutive securities: Restricted stock units - 74,042 Diluted earnings per share $ 2,458 5,544,868 $ 0.44 For the nine months ended September 30, 2016 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 7,875 5,497,204 $ 1.43 Effect of dilutive securities: Restricted stock units - 68,122 Diluted earnings per share $ 7,875 5,565,326 $ 1.42 For the three months ended September 30, 2015 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,493 5,534,581 $ 0.45 Effect of dilutive securities: Restricted stock units - 52,861 Diluted earnings per share $ 2,493 5,587,442 $ 0.45 For the nine months ended September 30, 2015 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 7,445 5,573,743 $ 1.34 Effect of dilutive securities: Restricted stock units - 45,466 Diluted earnings per share $ 7,445 5,619,209 $ 1.32

5. Stock-Based Compensation

5. Stock-Based Compensation	9 Months Ended
	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
5. 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 262,520 shares are currently reserved 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 granted 5,040 restricted stock units under the Plan at a grant date fair value of $18.60 per share during the first quarter of 2016. 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, 2015 and 2016 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 September 30, 2016, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $460,000. The Company recognized compensation expense for restricted stock unit awards granted under the Plan of $476,000 and $282,000 for the nine months ended September 30, 2016 and 2015, respectively.

6. Fair Value

6. Fair Value	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
6. Fair Value	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 the 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. Federal Home Loan Bank ("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 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 September 30, 2016 and December 31, 2015. (Dollars in thousands) September 30, 2016 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 73,393 - 73,393 - U.S. Government sponsored enterprises 39,078 - 39,078 - State and political subdivisions 147,142 - 147,142 - Corporate bonds 1,525 - 1,525 - Trust preferred securities 750 - - 750 Equity securities 535 535 - - Total $ 262,423 535 261,138 750 (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 - - Total $ 268,530 1,325 266,455 750 The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the nine months ended September 30, 2016. (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 $ - The fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis at September 30, 2016 and December 31, 2015 are presented below. The fair value measurement process uses certified appraisals and other market-based information; however, in many cases, it also requires significant input based on management's knowledge of, and judgment about, current market conditions, specific issues relating to the collateral and other matters. As a result, all fair value measurements for impaired loans and other real estate are considered Level 3. (Dollars in thousands) Fair Value Measurements September 30, 2016 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 2,776 - - 2,776 Impaired loans $ 26,120 - - 26,120 Other real estate $ 26 - - 26 (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 September 30, 2016 Fair Value December 31, 2015 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 2,776 4,149 Rate lock commitment N/A N/A Impaired loans $ 26,120 31,818 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ 26 739 Appraised value Discounts to reflect current market conditions and estimated costs to sell 0 - 25% The carrying amount and estimated fair value of financial instruments at September 30, 2016 and December 31, 2015 are as follows: (Dollars in thousands) Fair Value Measurements at September 30, 2016 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 82,844 82,844 - - 82,844 Investment securities available for sale $ 262,423 535 261,138 750 262,423 Other investments $ 3,634 - - 3,634 3,634 Mortgage loans held for sale $ 2,776 - - 2,776 2,776 Loans, net $ 704,974 - - 698,402 698,402 Cash surrender value of life insurance $ 14,853 - 14,853 - 14,853 Liabilities: Deposits $ 861,947 - - 855,156 855,156 Securities sold under agreements to repurchase $ 50,920 - 50,920 - 50,920 FHLB borrowings $ 43,500 - 40,560 - 40,560 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (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

7. Regulatory Matters

7. Regulatory Matters	9 Months Ended
	Sep. 30, 2016
Regulatory Matters
7. Regulatory Matters	On August 31, 2015, the Federal Deposit Insurance Corporation ("FDIC") and the North Carolina Office of the Commissioner of Banks ("Commissioner") 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 Commissioner. The Order will remain in effect and be enforceable until it is modified, terminated, suspended or set aside by the FDIC and the Commissioner. 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 Bank's and 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 Order has been modified, terminated, suspended or set aside by the FDIC and the Commissioner.

8. Subsequent Events

8. Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
8. Subsequent Events	The Company has reviewed and evaluated subsequent events and transactions for material subsequent events through the date the financial statements are issued. Management has concluded that there were no material subsequent events.

1. Summary of Significant Acc16

1. Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Recently Issued Accounting Pronouncements	In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 In March 2016, FASB issued ASU No. 2016-07, (Topic 323): Simplifying the Transition to the Equity Method of Accounting In March 2016, FASB issued ASU No. 2016-08, (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) In March 2016, FASB issued ASU No. 2016-09, (Topic 718): Improvements to Employee Share-Based Payment Accounting In April 2016, FASB issued ASU No. 2016-10, (Topic 606): Identifying Performance Obligations and Licensing In May 2016, FASB issued ASU No. 2016-12, (Topic 606): Narrow-Scope Improvements and Practical Expedients Revenue from Contracts with Customers In June 2016, FASB issued ASU No. 2016-13, (Topic 326): Measurement of Credit Losses on Financial Instruments In August 2016, FASB issued ASU No. 2016-15, (Topic 230): Classification of Certain Cash Receipts and Cash Payments Statement of Cash Flows 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.

2. Investment Securities (Table

2. Investment Securities (Tables)	9 Months Ended
	Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]
Investment securities available for sale	(Dollars in thousands) September 30, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 71,359 2,083 49 73,393 U.S. Government sponsored enterprises 38,575 743 240 39,078 State and political subdivisions 138,672 8,481 11 147,142 Corporate bonds 1,505 20 - 1,525 Trust preferred securities 750 - - 750 Equity securities 264 271 - 535 Total $ 251,125 11,598 300 262,423 (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
Current fair value and associated unrealized losses on investments in securities with unrealized losses	(Dollars in thousands) September 30, 2016 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 5,795 49 - - 5,795 49 U.S. Government sponsored enterprises 7,517 66 9,685 174 17,202 240 State and political subdivisions 426 1 582 10 1,008 11 Total $ 13,738 116 10,267 184 24,005 300 (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
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity	September 30, 2016 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 8,444 8,500 Due from one to five years 76,972 81,294 Due from five to ten years 83,725 87,937 Due after ten years 10,361 10,764 Mortgage-backed securities 71,359 73,393 Equity securities 264 535 Total $ 251,125 262,423

3. Loans (Tables)

3. Loans (Tables)	9 Months Ended
	Sep. 30, 2016
Receivables [Abstract]
Major classifications of loans	(Dollars in thousands) September 30, 2016 December 31, 2015 Real estate loans: Construction and land development $ 59,456 65,791 Single-family residential 231,958 220,690 Single-family residential - Banco de la Gente stated income 40,934 43,733 Commercial 240,150 228,526 Multifamily and farmland 18,727 18,080 Total real estate loans 591,225 576,820 Loans not secured by real estate: Commercial loans 94,790 91,010 Farm loans - 3 Consumer loans 10,036 10,027 All other loans 16,968 11,231 Total loans 713,019 689,091 Less allowance for loan losses 8,045 9,589 Total net loans $ 704,974 679,502
Age analysis of past due loans, by loan type	September 30, 2016 (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 $ 18 13 31 59,425 59,456 - Single-family residential 1,344 310 1,654 230,304 231,958 - Single-family residential - Banco de la Gente stated income 1,588 257 1,845 39,089 40,934 - Commercial 58 - 58 240,092 240,150 - Multifamily and farmland - - - 18,727 18,727 - Total real estate loans 3,008 580 3,588 587,637 591,225 - Loans not secured by real estate: Commercial loans 85 - 85 94,705 94,790 - Farm loans - - - - - - Consumer loans 95 7 102 9,934 10,036 - All other loans - - - 16,968 16,968 - Total loans $ 3,188 587 3,775 709,244 713,019 - 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
Non-accrual loans	(Dollars in thousands) September 30, 2016 December 31, 2015 Real estate loans: Construction and land development $ 31 146 Single-family residential 1,797 4,023 Single-family residential - Banco de la Gente stated income 1,251 1,106 Commercial 1,571 2,992 Multifamily and farmland - - Total real estate loans 4,650 8,267 Loans not secured by real estate: Commercial loans 66 113 Consumer loans 41 52 Total $ 4,757 8,432
Impaired loans	September 30, 2016 (Dollars in thousands) Nine months ended Three months ended Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans Interest Income Recognized Average Outstanding Impaired Loans Interest Income Recognized Real estate loans: Construction and land development $ 292 - 288 288 13 375 10 369 3 Single-family residential 5,731 878 4,473 5,351 46 8,921 122 6,556 40 Single-family residential - Banco de la Gente stated income 18,603 - 18,094 18,094 1,188 17,673 657 17,395 207 Commercial 3,775 1,221 2,222 3,443 174 5,376 73 4,013 24 Multifamily and farmland 78 - 78 78 - 79 3 78 - Total impaired real estate loans 28,479 2,099 25,155 27,254 1,421 32,424 865 28,411 274 Loans not secured by real estate: Commercial loans 74 - 73 73 1 123 - 116 - Consumer loans 226 - 219 219 4 235 6 225 2 Total impaired loans $ 28,779 2,099 25,447 27,546 1,426 32,782 871 28,752 276 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 YTD Interest Income Recognized Real estate loans: Construction and land development $ 643 216 226 442 12 705 18 Single-family residential 8,828 1,489 6,805 8,294 189 10,852 224 Single-family residential - Banco de la Gente stated income 20,375 - 19,215 19,215 1,143 18,414 921 Commercial 4,556 - 4,893 4,893 179 5,497 89 Multifamily and farmland 96 - 83 83 - 93 6 Total impaired real estate loans 34,498 1,705 31,222 32,927 1,523 35,561 1,258 Loans not secured by real estate: Commercial loans 180 - 161 161 3 132 5 Consumer loans 286 - 260 260 4 283 11 Total impaired loans $ 34,964 1,705 31,643 33,348 1,530 35,976 1,274
Changes in the allowance for loan losses	(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 Nine months ended September 30, 2016: Allowance for loan losses: Beginning balance $ 2,185 2,534 1,460 1,917 - 842 - 172 479 9,589 Charge-offs - (158 ) - (106 ) - (129 ) - (361 ) - (754 ) Recoveries 8 18 - 15 - 165 - 112 - 318 Provision (808 ) (388 ) (60 ) (250 ) 47 (118 ) - 291 178 (1,108 ) Ending balance $ 1,385 2,006 1,400 1,576 47 760 - 214 657 8,045 Three months ended September 30, 2016: Allowance for loan losses: Beginning balance $ 1,582 2,233 1,354 1,650 46 803 - 234 638 8,540 Charge-offs - (35 ) - - - (89 ) - (122 ) - (246 ) Recoveries 2 6 - 5 - 60 - 38 - 111 Provision (199 ) (198 ) 46 (79 ) 1 (14 ) - 64 19 (360 ) Ending balance $ 1,385 2,006 1,400 1,576 47 760 - 214 657 8,045 Allowance for loan losses at September 30, 2016: Ending balance: individually evaluated for impairment $ - - 1,164 167 - - - - - 1,331 Ending balance: collectively evaluated for impairment 1,385 2,006 236 1,409 47 760 - 214 657 6,714 Ending balance $ 1,385 2,006 1,400 1,576 47 760 - 214 657 8,045 Loans at September 30, 2016: Ending balance $ 59,456 231,958 40,934 240,150 18,727 94,790 - 27,004 - 713,019 Ending balance: individually evaluated for impairment $ - 1,019 16,890 3,586 - - - - - 21,495 Ending balance: collectively evaluated for impairment $ 59,456 230,939 24,044 236,564 18,727 94,790 - 27,004 - 691,524 (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 Nine months ended September 30, 2015: Allowance for loan losses: Beginning balance $ 2,785 2,566 1,610 1,902 7 1,098 - 233 881 11,082 Charge-offs (198 ) (447 ) (59 ) (62 ) - (16 ) - (394 ) - (1,176 ) Recoveries 43 30 22 15 - 96 - 115 - 321 Provision 119 676 (113 ) 75 (2 ) (297 ) - 258 (523 ) 193 Ending balance $ 2,749 2,825 1,460 1,930 5 881 - 212 358 10,420 Three months ended September 30, 2015: Allowance for loan losses: Beginning balance $ 2,924 2,456 1,528 1,749 2 902 - 231 586 10,378 Charge-offs (110 ) (48 ) - - - (1 ) - (156 ) - (315 ) Recoveries 20 21 - 5 - 43 - 33 - 122 Provision (85 ) 396 (68 ) 176 3 (63 ) - 104 (228 ) 235 Ending balance $ 2,749 2,825 1,460 1,930 5 881 - 212 358 10,420 Allowance for loan losses September 30, 2015: Ending balance: individually evaluated for impairment $ - 96 1,128 227 - - - - - 1,451 Ending balance: collectively evaluated for impairment 2,749 2,729 332 1,703 5 881 - 212 358 8,969 Ending balance $ 2,749 2,825 1,460 1,930 5 881 - 212 358 10,420 Loans September 30, 2015: Ending balance $ 61,748 218,365 44,433 234,003 14,003 88,931 3 23,314 - 684,800 Ending balance: individually evaluated for impairment $ 241 2,944 18,193 3,525 - - - - - 24,903 Ending balance: collectively evaluated for impairment $ 61,507 215,421 26,240 230,478 14,003 88,931 3 23,314 - 659,897
Credit risk profile of each loan type based on internally assigned risk grade	September 30, 2016 (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 $ - 12,340 - - - 546 - 1,069 50 14,005 2- High Quality 8,012 103,847 - 39,701 2,915 28,510 - 3,399 2,580 188,964 3- Good Quality 32,958 81,307 17,136 166,724 12,150 59,125 - 4,838 12,565 386,803 4- Management Attention 11,406 25,846 15,811 27,507 1,187 6,248 - 632 1,773 90,410 5- Watch 6,858 3,854 2,807 3,321 2,475 250 - 43 - 19,608 6- Substandard 222 4,764 5,180 2,897 - 111 - 54 - 13,228 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - 1 - 1 Total $ 59,456 231,958 40,934 240,150 18,727 94,790 - 10,036 16,968 713,019 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
Analysis of loan modifications	Three and nine months ended September 30, 2016 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 1 $ 41 41 Total real estate TDR loans 1 41 41 Total TDR loans 1 $ 41 41 Nine months ended September 30, 2015 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 1 $ 146 142 Total real estate TDR loans 1 146 142 Total TDR loans 1 $ 146 142

4. Net Earnings Per Share (Tabl

4. Net Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
Reconciliations of the amounts used in the computation of both basic earnings per common share and diluted earnings per common share	For the three months ended September 30, 2016 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,458 5,470,826 $ 0.45 Effect of dilutive securities: Restricted stock units - 74,042 Diluted earnings per share $ 2,458 5,544,868 $ 0.44 For the nine months ended September 30, 2016 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 7,875 5,497,204 $ 1.43 Effect of dilutive securities: Restricted stock units - 68,122 Diluted earnings per share $ 7,875 5,565,326 $ 1.42 For the three months ended September 30, 2015 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,493 5,534,581 $ 0.45 Effect of dilutive securities: Restricted stock units - 52,861 Diluted earnings per share $ 2,493 5,587,442 $ 0.45 For the nine months ended September 30, 2015 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 7,445 5,573,743 $ 1.34 Effect of dilutive securities: Restricted stock units - 45,466 Diluted earnings per share $ 7,445 5,619,209 $ 1.32

6. Fair Value (Tables)

6. Fair Value (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
Available for sale securities measured at fair value on a recurring basis	(Dollars in thousands) September 30, 2016 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 73,393 - 73,393 - U.S. Government sponsored enterprises 39,078 - 39,078 - State and political subdivisions 147,142 - 147,142 - Corporate bonds 1,525 - 1,525 - Trust preferred securities 750 - - 750 Equity securities 535 535 - - Total $ 262,423 535 261,138 750 (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 - - Total $ 268,530 1,325 266,455 750
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 $ -
Fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis	(Dollars in thousands) Fair Value Measurements September 30, 2016 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 2,776 - - 2,776 Impaired loans $ 26,120 - - 26,120 Other real estate $ 26 - - 26 (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 September 30, 2016 Fair Value December 31, 2015 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 2,776 4,149 Rate lock commitment N/A N/A Impaired loans $ 26,120 31,818 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ 26 739 Appraised value Discounts to reflect current market conditions and estimated costs to sell 0 - 25%
Carrying amount and estimated fair value of the Company's financial instruments	(Dollars in thousands) Fair Value Measurements at September 30, 2016 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 82,844 82,844 - - 82,844 Investment securities available for sale $ 262,423 535 261,138 750 262,423 Other investments $ 3,634 - - 3,634 3,634 Mortgage loans held for sale $ 2,776 - - 2,776 2,776 Loans, net $ 704,974 - - 698,402 698,402 Cash surrender value of life insurance $ 14,853 - 14,853 - 14,853 Liabilities: Deposits $ 861,947 - - 855,156 855,156 Securities sold under agreements to repurchase $ 50,920 - 50,920 - 50,920 FHLB borrowings $ 43,500 - 40,560 - 40,560 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (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

2. Investment Securities (Detai

2. Investment Securities (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Investment securities available for sale
Amortized Cost	$ 251,125	$ 259,505
Estimated Fair Value	262,423	268,530
Mortgage-backed securities
Investment securities available for sale
Amortized Cost	71,359	76,406
Gross Unrealized Gains	2,083	1,526
Gross Unrealized Losses	49	45
Estimated Fair Value	73,393	77,887
U.S. Government sponsored enterprises
Investment securities available for sale
Amortized Cost	38,575	38,173
Gross Unrealized Gains	743	399
Gross Unrealized Losses	240	155
Estimated Fair Value	39,078	38,417
State and political subdivisions
Investment securities available for sale
Amortized Cost	138,672	141,500
Gross Unrealized Gains	8,481	6,817
Gross Unrealized Losses	11	72
Estimated Fair Value	147,142	148,245
Corporate bonds
Investment securities available for sale
Amortized Cost	1,505	1,928
Gross Unrealized Gains	20	0
Gross Unrealized Losses	0	22
Estimated Fair Value	1,525	1,906
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	264	748
Gross Unrealized Gains	271	577
Gross Unrealized Losses	0	0
Estimated Fair Value	535	1,325
Total
Investment securities available for sale
Amortized Cost	251,125	259,505
Gross Unrealized Gains	11,598	9,319
Gross Unrealized Losses	300	294
Estimated Fair Value	$ 262,423	$ 268,530

2. Investment securities, Conti

2. Investment securities, Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	$ 13,738	$ 14,663
Less than 12 Months, Unrealized Losses	116	84
12 Months or More, Fair Value	10,267	14,758
12 Months or More, Unrealized Losses	184	210
Total, Fair Value	24,005	29,421
Total, Unrealized Losses	300	294
Mortgage-backed securities
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	5,795	7,891
Less than 12 Months, Unrealized Losses	49	45
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	5,795	7,891
Total, Unrealized Losses	49	45
U.S. Government sponsored enterprises
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	7,517	3,074
Less than 12 Months, Unrealized Losses	66	13
12 Months or More, Fair Value	9,685	10,828
12 Months or More, Unrealized Losses	174	142
Total, Fair Value	17,202	13,902
Total, Unrealized Losses	240	155
State and political subdivisions
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	426	2,198
Less than 12 Months, Unrealized Losses	1	4
12 Months or More, Fair Value	582	3,930
12 Months or More, Unrealized Losses	10	68
Total, Fair Value	1,008	6,128
Total, Unrealized Losses	$ 11	72
Corporate bonds
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value		1,500
Less than 12 Months, Unrealized Losses		22
12 Months or More, Fair Value		0
12 Months or More, Unrealized Losses		0
Total, Fair Value		1,500
Total, Unrealized Losses		$ 22

2. Investment securities, Contr

2. Investment securities, Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Amortized Cost
Due within one year	$ 8,444
Due from one to five years	76,972
Due from five to ten years	83,725
Due after ten years	10,361
Mortgage-backed securities	71,359
Equity securities	264
Total	251,125	$ 259,505
Estimated Fair Value
Due within one year	8,500
Due from one to five years	81,294
Due from five to ten years	87,937
Due after ten years	10,764
Mortgage-backed securities	73,393
Equity securities	535
Total	$ 262,423

2. Investment Securities (Det24

2. Investment Securities (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Pledged to secure public deposits	$ 85,200	$ 91,000

3. Loans (Details)

3. Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Major classifications
Total loans	$ 713,019		$ 689,091	$ 684,800
Less allowance for loan losses	8,045	$ 8,540	9,589	10,420	$ 10,378	$ 11,082
Total net loans	704,974		679,502
Construction and land development
Major classifications
Total loans	59,456		65,791	61,748
Less allowance for loan losses	1,385	1,582	2,185	2,749	2,924	2,785
Single-family residential
Major classifications
Total loans	231,958		220,690	218,365
Less allowance for loan losses	2,006	2,233	2,534	2,825	2,456	2,566
Single-family residential - Banco de la Gente stated income
Major classifications
Total loans	40,934		43,733	44,433
Less allowance for loan losses	1,400	1,354	1,460	1,460	1,528	1,610
Commercial
Major classifications
Total loans	240,150		228,526	234,003
Less allowance for loan losses	1,576	1,650	1,917	1,930	1,749	1,902
Multifamily and Farmland
Major classifications
Total loans	18,727		18,080	14,003
Less allowance for loan losses	47	46	0	5	2	7
Total real estate loans
Major classifications
Total loans	591,225		576,820
Commercial loans (not secured by real estate)
Major classifications
Total loans	94,790		91,010	88,931
Less allowance for loan losses	760	803	842	881	902	1,098
Farm loans (not secured by real estate)
Major classifications
Total loans	0		3	3
Less allowance for loan losses	0	$ 0	0	$ 0	$ 0	$ 0
Consumer loans (not secured by real estate)
Major classifications
Total loans	10,036		10,027
All other loans (not secured by real estate)
Major classifications
Total loans	$ 16,968		$ 11,231

3. Loans, Past Due (Details)

3. Loans, Past Due (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Past due loans
Loans 30-89 Days Past Due	$ 3,188	$ 13,113
Loans 90 or More Days Past Due	587	1,721
Total Past Due Loans	3,775	14,834
Total Current Loans	709,244	674,257
Total loans	713,019	689,091	$ 684,800
Accruing Loans 90 or More Days Past Due	0	17
Construction and land development
Past due loans
Loans 30-89 Days Past Due	18	330
Loans 90 or More Days Past Due	13	17
Total Past Due Loans	31	347
Total Current Loans	59,425	65,444
Total loans	59,456	65,791
Accruing Loans 90 or More Days Past Due	0	0
Single-family residential
Past due loans
Loans 30-89 Days Past Due	1,344	2,822
Loans 90 or More Days Past Due	310	1,385
Total Past Due Loans	1,654	4,207
Total Current Loans	230,304	216,483
Total loans	231,958	220,690
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	1,588	7,021
Loans 90 or More Days Past Due	257	114
Total Past Due Loans	1,845	7,135
Total Current Loans	39,089	36,598
Total loans	40,934	43,733
Accruing Loans 90 or More Days Past Due	0	0
Commercial
Past due loans
Loans 30-89 Days Past Due	58	2,619
Loans 90 or More Days Past Due	0	157
Total Past Due Loans	58	2,776
Total Current Loans	240,092	225,750
Total loans	240,150	228,526
Accruing Loans 90 or More Days Past Due	0	0
Multifamily and Farmland
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	18,727	18,080
Total loans	18,727	18,080
Accruing Loans 90 or More Days Past Due	0	0
Total real estate loans
Past due loans
Loans 30-89 Days Past Due	3,008	12,792
Loans 90 or More Days Past Due	580	1,673
Total Past Due Loans	3,588	14,465
Total Current Loans	587,637	562,355
Total loans	591,225	576,820
Accruing Loans 90 or More Days Past Due	0	0
Commercial loans (not secured by real estate)
Past due loans
Loans 30-89 Days Past Due	85	185
Loans 90 or More Days Past Due	0	40
Total Past Due Loans	85	225
Total Current Loans	94,705	90,785
Total loans	94,790	91,010
Accruing Loans 90 or More Days Past Due	0	17
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	0	3
Total loans	0	3
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	95	136
Loans 90 or More Days Past Due	7	8
Total Past Due Loans	102	144
Total Current Loans	9,934	9,883
Total loans	10,036	10,027
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	16,968	11,231
Total loans	16,968	11,231
Accruing Loans 90 or More Days Past Due	$ 0	$ 0

3. Loans, Nonaccrual (Details)

3. Loans, Nonaccrual (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Non-accrual loans
Non-accrual loans	$ 4,757	$ 8,432
Construction and land development
Non-accrual loans
Non-accrual loans	31	146
Single-family residential
Non-accrual loans
Non-accrual loans	1,797	4,023
Single-family residential - Banco de la Gente stated income
Non-accrual loans
Non-accrual loans	1,251	1,106
Commercial
Non-accrual loans
Non-accrual loans	1,571	2,992
Multifamily and Farmland
Non-accrual loans
Non-accrual loans	0	0
Total real estate loans
Non-accrual loans
Non-accrual loans	4,650	8,267
Commercial loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	66	113
Consumer loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	$ 41	$ 52

3. Loans, Impaired (Details)

3. Loans, Impaired (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Impaired loans
Unpaid Contractual Principal Balance	$ 28,779	$ 28,779		$ 34,964
Recorded Investment With No Allowance	2,099	2,099		1,705
Recorded Investment With Allowance	25,447	25,447		31,643
Recorded Investment in Impaired Loans	27,546	27,546		33,348
Related Allowance	1,426	1,426		1,530
Average Outstanding Impaired Loans	28,752	32,782		35,976
Interest Income Recognized	276	871	$ 968	1,274
Construction and land development
Impaired loans
Unpaid Contractual Principal Balance	292	292		643
Recorded Investment With No Allowance	0	0		216
Recorded Investment With Allowance	288	288		226
Recorded Investment in Impaired Loans	288	288		442
Related Allowance	13	13		12
Average Outstanding Impaired Loans	369	375		705
Interest Income Recognized	3	10		18
Single-family residential
Impaired loans
Unpaid Contractual Principal Balance	5,731	5,731		8,828
Recorded Investment With No Allowance	878	878		1,489
Recorded Investment With Allowance	4,473	4,473		6,805
Recorded Investment in Impaired Loans	5,351	5,351		8,294
Related Allowance	46	46		189
Average Outstanding Impaired Loans	6,556	8,921		10,852
Interest Income Recognized	40	122		224
Single-family residential - Banco de la Gente stated income
Impaired loans
Unpaid Contractual Principal Balance	18,603	18,603		20,375
Recorded Investment With No Allowance	0	0		0
Recorded Investment With Allowance	18,094	18,094		19,215
Recorded Investment in Impaired Loans	18,094	18,094		19,215
Related Allowance	1,188	1,188		1,143
Average Outstanding Impaired Loans	17,395	17,673		18,414
Interest Income Recognized	207	657		921
Commercial
Impaired loans
Unpaid Contractual Principal Balance	3,775	3,775		4,556
Recorded Investment With No Allowance	1,221	1,221		0
Recorded Investment With Allowance	2,222	2,222		4,893
Recorded Investment in Impaired Loans	3,443	3,443		4,893
Related Allowance	174	174		179
Average Outstanding Impaired Loans	4,013	5,376		5,497
Interest Income Recognized	24	73		89
Multifamily and Farmland
Impaired loans
Unpaid Contractual Principal Balance	78	78		96
Recorded Investment With No Allowance	0	0		0
Recorded Investment With Allowance	78	78		83
Recorded Investment in Impaired Loans	78	78		83
Related Allowance	0	0		0
Average Outstanding Impaired Loans	78	79		93
Interest Income Recognized	0	3		6
Total real estate loans
Impaired loans
Unpaid Contractual Principal Balance	28,479	28,479		34,498
Recorded Investment With No Allowance	2,099	2,099		1,705
Recorded Investment With Allowance	25,155	25,155		31,222
Recorded Investment in Impaired Loans	27,254	27,254		32,927
Related Allowance	1,421	1,421		1,523
Average Outstanding Impaired Loans	28,411	32,424		35,561
Interest Income Recognized	274	865		1,258
Commercial loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	74	74		180
Recorded Investment With No Allowance	0	0		0
Recorded Investment With Allowance	73	73		161
Recorded Investment in Impaired Loans	73	73		161
Related Allowance	1	1		3
Average Outstanding Impaired Loans	116	123		132
Interest Income Recognized	0	0		5
Consumer loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	226	226		286
Recorded Investment With No Allowance	0	0		0
Recorded Investment With Allowance	219	219		260
Recorded Investment in Impaired Loans	219	219		260
Related Allowance	4	4		4
Average Outstanding Impaired Loans	225	235		283
Interest Income Recognized	$ 2	$ 6		$ 11

3. Loans, Allowance for Loan Lo

3. Loans, Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Allowance for loan losses
Beginning balance	$ 8,540	$ 10,378	$ 9,589	$ 11,082
Charge-offs	(246)	(315)	(754)	(1,176)
Recoveries	111	122	318	321
Provision	(360)	235	(1,108)	193
Ending balance	8,045	10,420	8,045	10,420
Ending balance: individually evaluated for impairments	1,331	1,451	1,331	1,451
Ending balance: collectively evaluated for impairments	6,714	8,969	6,714	8,969
Ending balance	8,045	10,420	8,045	10,420
Loans
Ending balance	713,019	684,800	713,019	684,800
Ending balance: individually evaluated for impairment	21,495	24,903	21,495	24,903
Ending balance: collectively evaluated for impairment	691,524	659,897	691,524	659,897
Construction and land development
Allowance for loan losses
Beginning balance	1,582	2,924	2,185	2,785
Charge-offs	0	(110)	0	(198)
Recoveries	2	20	8	43
Provision	(199)	(85)	(808)	119
Ending balance	1,385	2,749	1,385	2,749
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	1,385	2,749	1,385	2,749
Ending balance	1,385	2,749	1,385	2,749
Loans
Ending balance	59,456	61,748	59,456	61,748
Ending balance: individually evaluated for impairment	0	241	0	241
Ending balance: collectively evaluated for impairment	59,456	61,507	59,456	61,507
Single-family residential
Allowance for loan losses
Beginning balance	2,233	2,456	2,534	2,566
Charge-offs	(35)	(48)	(158)	(447)
Recoveries	6	21	18	30
Provision	(198)	396	(388)	676
Ending balance	2,006	2,825	2,006	2,825
Ending balance: individually evaluated for impairments	0	96	0	96
Ending balance: collectively evaluated for impairments	2,006	2,729	2,006	2,729
Ending balance	2,006	2,825	2,006	2,825
Loans
Ending balance	231,958	218,365	231,958	218,365
Ending balance: individually evaluated for impairment	1,019	2,944	1,019	2,944
Ending balance: collectively evaluated for impairment	230,939	215,421	230,939	215,421
Single-family residential - Banco de la Gente stated income
Allowance for loan losses
Beginning balance	1,354	1,528	1,460	1,610
Charge-offs	0	0	0	(59)
Recoveries	0	0	0	22
Provision	46	(68)	(60)	(113)
Ending balance	1,400	1,460	1,400	1,460
Ending balance: individually evaluated for impairments	1,164	1,128	1,164	1,128
Ending balance: collectively evaluated for impairments	236	332	236	332
Ending balance	1,400	1,460	1,400	1,460
Loans
Ending balance	40,934	44,433	40,934	44,433
Ending balance: individually evaluated for impairment	16,890	18,193	16,890	18,193
Ending balance: collectively evaluated for impairment	24,044	26,240	24,044	26,240
Commercial
Allowance for loan losses
Beginning balance	1,650	1,749	1,917	1,902
Charge-offs	0	0	(106)	(62)
Recoveries	5	5	15	15
Provision	(79)	176	(250)	75
Ending balance	1,576	1,930	1,576	1,930
Ending balance: individually evaluated for impairments	167	227	167	227
Ending balance: collectively evaluated for impairments	1,409	1,703	1,409	1,703
Ending balance	1,576	1,930	1,576	1,930
Loans
Ending balance	240,150	234,003	240,150	234,003
Ending balance: individually evaluated for impairment	3,586	3,525	3,586	3,525
Ending balance: collectively evaluated for impairment	236,564	230,478	236,564	230,478
Multifamily and Farmland
Allowance for loan losses
Beginning balance	46	2	0	7
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	1	3	47	(2)
Ending balance	47	5	47	5
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	47	5	47	5
Ending balance	47	5	47	5
Loans
Ending balance	18,727	14,003	18,727	14,003
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	18,727	14,003	18,727	14,003
Commercial loans (not secured by real estate)
Allowance for loan losses
Beginning balance	803	902	842	1,098
Charge-offs	(89)	(1)	(129)	(16)
Recoveries	60	43	165	96
Provision	(14)	(63)	(118)	(297)
Ending balance	760	881	760	881
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	760	881	760	881
Ending balance	760	881	760	881
Loans
Ending balance	94,790	88,931	94,790	88,931
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	94,790	88,931	94,790	88,931
Farm loans (not secured by real estate)
Allowance for loan losses
Beginning balance	0	0	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	0	0	0	0
Ending balance	0	0	0	0
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	0	0	0	0
Ending balance	0	0	0	0
Loans
Ending balance	0	3	0	3
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	0	3	0	3
Consumer And All Other Loans
Allowance for loan losses
Beginning balance	234	231	172	233
Charge-offs	(122)	(156)	(361)	(394)
Recoveries	38	33	112	115
Provision	64	104	291	258
Ending balance	214	212	214	212
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	214	212	214	212
Ending balance	214	212	214	212
Loans
Ending balance	27,004	23,314	27,004	23,314
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	27,004	23,314	27,004	23,314
Unallocated
Allowance for loan losses
Beginning balance	638	586	479	881
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	19	(228)	178	(523)
Ending balance	657	358	657	358
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	657	358	657	358
Ending balance	657	358	657	358
Loans
Ending balance	0	0	0	0
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	$ 0	$ 0	$ 0	$ 0

3. Loans, Credit Risk (Details)

3. Loans, Credit Risk (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Credit risk profile
Total Loans	$ 713,019	$ 689,091	$ 684,800
Excellent Quality
Credit risk profile
Total Loans	14,005	16,980
High Quality
Credit risk profile
Total Loans	188,964	168,117
Good Quality
Credit risk profile
Total Loans	386,803	365,802
Management Attention
Credit risk profile
Total Loans	90,410	98,254
Watch
Credit risk profile
Total Loans	19,608	22,520
Substandard
Credit risk profile
Total Loans	13,228	17,418
Doubtful
Credit risk profile
Total Loans	0	0
Loss
Credit risk profile
Total Loans	1	0
Construction and land development
Credit risk profile
Total Loans	59,456	65,791
Single-family residential
Credit risk profile
Total Loans	231,958	220,690
Single-family residential - Banco de la Gente stated income
Credit risk profile
Total Loans	40,934	43,733
Commercial
Credit risk profile
Total Loans	240,150	228,526
Multifamily and Farmland
Credit risk profile
Total Loans	18,727	18,080
Commercial loans (not secured by real estate)
Credit risk profile
Total Loans	94,790	91,010
Farm loans (not secured by real estate)
Credit risk profile
Total Loans	0	3
Consumer loans (not secured by real estate)
Credit risk profile
Total Loans	10,036	10,027
All other loans (not secured by real estate)
Credit risk profile
Total Loans	16,968	11,231
Construction and land development
Credit risk profile
Total Loans	59,456	65,791	61,748
Construction and land development | Excellent Quality
Credit risk profile
Total Loans	0	0
Construction and land development | High Quality
Credit risk profile
Total Loans	8,012	10,144
Construction and land development | Good Quality
Credit risk profile
Total Loans	32,958	35,535
Construction and land development | Management Attention
Credit risk profile
Total Loans	11,406	12,544
Construction and land development | Watch
Credit risk profile
Total Loans	6,858	7,265
Construction and land development | Substandard
Credit risk profile
Total Loans	222	303
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	231,958	220,690	218,365
Single-family residential | Excellent Quality
Credit risk profile
Total Loans	12,340	15,189
Single-family residential | High Quality
Credit risk profile
Total Loans	103,847	86,061
Single-family residential | Good Quality
Credit risk profile
Total Loans	81,307	78,843
Single-family residential | Management Attention
Credit risk profile
Total Loans	25,846	30,259
Single-family residential | Watch
Credit risk profile
Total Loans	3,854	4,322
Single-family residential | Substandard
Credit risk profile
Total Loans	4,764	6,016
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	40,934	43,733	44,433
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	17,136	19,223
Single-family residential - Banco de la Gente stated income | Management Attention
Credit risk profile
Total Loans	15,811	15,029
Single-family residential - Banco de la Gente stated income | Watch
Credit risk profile
Total Loans	2,807	3,308
Single-family residential - Banco de la Gente stated income | Substandard
Credit risk profile
Total Loans	5,180	6,173
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	240,150	228,526	234,003
Commercial | Excellent Quality
Credit risk profile
Total Loans	0	0
Commercial | High Quality
Credit risk profile
Total Loans	39,701	38,647
Commercial | Good Quality
Credit risk profile
Total Loans	166,724	148,805
Commercial | Management Attention
Credit risk profile
Total Loans	27,507	31,824
Commercial | Watch
Credit risk profile
Total Loans	3,321	4,561
Commercial | Substandard
Credit risk profile
Total Loans	2,897	4,689
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	18,727	18,080	14,003
Multifamily and Farmland | Excellent Quality
Credit risk profile
Total Loans	0	0
Multifamily and Farmland | High Quality
Credit risk profile
Total Loans	2,915	2,998
Multifamily and Farmland | Good Quality
Credit risk profile
Total Loans	12,150	12,058
Multifamily and Farmland | Management Attention
Credit risk profile
Total Loans	1,187	335
Multifamily and Farmland | Watch
Credit risk profile
Total Loans	2,475	2,689
Multifamily and Farmland | Substandard
Credit risk profile
Total Loans	0	0
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	94,790	91,010	88,931
Commercial loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	546	700
Commercial loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	28,510	24,955
Commercial loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	59,125	58,936
Commercial loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	6,248	5,905
Commercial loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	250	332
Commercial loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	111	182
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	0	3	$ 3
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	0	3
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	10,036	10,027
Consumer loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	1,069	1,091
Consumer loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	3,399	3,647
Consumer loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	4,838	4,571
Consumer loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	632	620
Consumer loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	43	43
Consumer loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	54	55
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	1	0
All other loans (not secured by real estate)
Credit risk profile
Total Loans	16,968	11,231
All other loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	50	0
All other loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	2,580	1,665
All other loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	12,565	7,828
All other loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	1,773	1,738
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	3 Months Ended	9 Months Ended
	Sep. 30, 2016USD ($)Integer	Sep. 30, 2016USD ($)Integer	Sep. 30, 2015USD ($)Integer
Real estate loans, TDR
Number of Contracts | Integer	1	1	1
Pre-Modification Outstanding Recorded Investment	$ 41	$ 41	$ 146
Post-Modification Outstanding Recorded Investment	$ 41	$ 41	$ 142
Single-family residential
Real estate loans, TDR
Number of Contracts | Integer	1	1	1
Pre-Modification Outstanding Recorded Investment	$ 41	$ 41	$ 146
Post-Modification Outstanding Recorded Investment	$ 41	$ 41	$ 142
Total real estate loans
Real estate loans, TDR
Number of Contracts | Integer	1	1	1
Pre-Modification Outstanding Recorded Investment	$ 41	$ 41	$ 146
Post-Modification Outstanding Recorded Investment	$ 41	$ 41	$ 142

3. Loans (Details Narrative)

3. Loans (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Receivables [Abstract]
Percentage of construction and land development loans in Bank's loan portfolio	8.00%		8.00%
Percentage of single-family residential loans in Bank's loan portfolio	38.00%		38.00%
Percentage of Single-family residential - Banco de la Gente stated income loans in Bank's loan portfolio	6.00%		6.00%
Percentage of commercial real estate loans in Bank's loan portfolio	34.00%		34.00%
Percentage of commercial loans in Bank's loan portfolio	13.00%		13.00%
Accruing impaired loans	$ 22,900	$ 25,500	$ 22,900	$ 25,500	$ 25,000
Interest income recognized on accruing impaired loans	276		871	968	1,274
Provision for loan losses	(360)	$ 235	(1,100)	$ 193
TDR loans modified, past-due TDR loans and non-accrual TDR Loans	4,300		4,300		8,800
Amount of performing TDR loans included	$ 41		$ 41		$ 354

4. Net Earnings Per Share (Deta

4. Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Earnings
Basic earnings per share	$ 2,458	$ 2,493	$ 7,875	$ 7,445
Effect of dilutive securities: Restricted stock units	0	0	0	0
Diluted earnings per share	$ 2,458	$ 2,493	$ 7,875	$ 7,445
Weighted Average Number of Shares
Basic earnings per share (in shares)	5,470,826	5,534,581	5,497,204	5,573,743
Effect of dilutive securities: Restricted stock units (in shares)	74,042	52,861	68,122	45,466
Diluted earnings per share (in shares)	5,544,868	5,587,442	5,565,326	5,619,209
Per Share Amount
Basic earnings per share	$ 0.45	$ 0.45	$ 1.43	$ 1.34
Diluted earnings per share	$ 0.44	$ 0.45	$ 1.42	$ 1.32

5. Stock-Based Compensation (De

5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Unrecognized compensation cost	$ 460
Recognized compensation expense	$ 476	$ 282

6. Fair Value, Level of Hierarc

6. Fair Value, Level of Hierarchy (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Estimated Fair Value	$ 262,423	$ 268,530
Level 1
Estimated Fair Value	535	1,325
Level 2
Estimated Fair Value	261,138	266,455
Level 3
Estimated Fair Value	750	750
Mortgage-backed securities
Estimated Fair Value	73,393	77,887
Mortgage-backed securities | Level 1
Estimated Fair Value	0	0
Mortgage-backed securities | Level 2
Estimated Fair Value	73,393	77,887
Mortgage-backed securities | Level 3
Estimated Fair Value	0	0
U.S. Government sponsored enterprises
Estimated Fair Value	39,078	38,417
U.S. Government sponsored enterprises | Level 1
Estimated Fair Value	0	0
U.S. Government sponsored enterprises | Level 2
Estimated Fair Value	39,078	38,417
U.S. Government sponsored enterprises | Level 3
Estimated Fair Value	0	0
State and political subdivisions
Estimated Fair Value	147,142	148,245
State and political subdivisions | Level 1
Estimated Fair Value	0	0
State and political subdivisions | Level 2
Estimated Fair Value	147,142	148,245
State and political subdivisions | Level 3
Estimated Fair Value	0	0
Corporate bonds
Estimated Fair Value	1,525	1,906
Corporate bonds | Level 1
Estimated Fair Value	0	0
Corporate bonds | Level 2
Estimated Fair Value	1,525	1,906
Corporate bonds | Level 3
Estimated Fair Value	0	0
Trust preferred securities
Estimated Fair Value	750	750
Trust preferred securities | Level 1
Estimated Fair Value	0	0
Trust preferred securities | Level 2
Estimated Fair Value	0	0
Trust preferred securities | Level 3
Estimated Fair Value	750	750
Equity securities
Estimated Fair Value	535	1,325
Equity securities | Level 1
Estimated Fair Value	535	1,325
Equity securities | Level 2
Estimated Fair Value	0	0
Equity securities | Level 3
Estimated Fair Value	$ 0	$ 0

6. Fair Value, Level 3 Valuatio

6. Fair Value, Level 3 Valuation (Details) - Level 3 $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
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

6. Fair Value, Loans Impaired (

6. Fair Value, Loans Impaired (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Mortgage loans held for sale	$ 2,776	$ 4,149
Impaired loans	26,120	31,818
Other real estate	$ 26	739
Mortgage loans held for sale [Member]
Valuation Technique	Rate lock commitment
Significant Unobservable Inputs	N/A
General Range of Significant Unobservable Input Values	N/A
Impaired loans [Member]
Valuation Technique	Appraised value and discontinued cash flows
Significant Unobservable Inputs	Discounts to reflect current market conditions and ultimate collectability
General Range of Significant Unobservable Input Values	0-25%
Other real estate [Member]
Valuation Technique	Appraised value
Significant Unobservable Inputs	Discounts to reflect current market conditions and estimated costs to sell
General Range of Significant Unobservable Input Values	0-25%
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	2,776	4,149
Impaired loans	26,120	31,818
Other real estate	$ 26	$ 739

6. Fair Value, Financial Instru

6. Fair Value, Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets:
Cash and cash equivalents	$ 82,844	$ 39,763
Investment securities available for sale	262,423	268,530
Other investments	3,634	3,636
Mortgage loans held for sale	2,776	4,149
Loans, net	704,974	679,502
Cash surrender value of life insurance	14,853	14,546
Liabilities:
Deposits	861,947	832,175
Securities sold under agreements to repurchase	50,920	27,874
FHLB borrowings	43,500	43,500
Junior subordinated debentures	20,619	20,619
Estimated Fair Value
Assets:
Cash and cash equivalents	82,844	39,763
Investment securities available for sale	262,423	268,530
Other investments	3,634	3,636
Mortgage loans held for sale	2,776	4,149
Loans, net	698,402	683,540
Cash surrender value of life insurance	14,853	14,546
Liabilities:
Deposits	855,156	827,874
Securities sold under agreements to repurchase	50,920	27,874
FHLB borrowings	40,560	43,144
Junior subordinated debentures	20,619	20,619
Level 1
Assets:
Cash and cash equivalents	82,844	39,763
Investment securities available for sale	535	1,325
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	261,138	266,455
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	14,853	14,546
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	50,920	27,874
FHLB borrowings	40,560	43,144
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	3,634	3,636
Mortgage loans held for sale	2,776	4,149
Loans, net	698,402	683,540
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	855,156	827,874
Securities sold under agreements to repurchase	0	0
FHLB borrowings	0	0
Junior subordinated debentures	$ 0	$ 0