Peoples Bancorp of North Carolina (PEBK) 10-Q 7 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 31, 2017
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, 2017
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		5,450,412
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks, including reserve requirements of $9,337 at 9/30/17 and $6,075 at 12/31/16	$ 55,718	$ 53,613
Interest-bearing deposits	37,538	16,481
Cash and cash equivalents	93,256	70,094
Investment securities available for sale	235,736	249,946
Other investments	2,680	2,635
Total securities	238,416	252,581
Mortgage loans held for sale	2,623	5,709
Loans	747,437	723,811
Less allowance for loan losses	(6,844)	(7,550)
Net loans	740,593	716,261
Premises and equipment, net	19,697	16,452
Cash surrender value of life insurance	15,452	14,952
Other real estate	0	283
Accrued interest receivable and other assets	11,516	11,659
Total assets	1,121,553	1,087,991
Deposits:
Noninterest-bearing demand	287,794	271,851
NOW, MMDA & savings	486,051	477,054
Time, $250,000 or more	21,318	26,771
Other time	106,476	117,242
Total deposits	901,639	892,918
Securities sold under agreements to repurchase	53,307	36,434
FHLB borrowings	20,000	20,000
Junior subordinated debentures	20,619	20,619
Accrued interest payable and other liabilities	9,835	10,592
Total liabilities	1,005,400	980,563
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 5,450,412 shares at September 30, 2017 and 5,417,800 shares at December 31, 2016	45,102	44,187
Retained earnings	66,539	60,254
Accumulated other comprehensive income	4,512	2,987
Total shareholders' equity	116,153	107,428
Total liabilities and shareholders' equity	$ 1,121,553	$ 1,087,991

Consolidated Balance Sheets (U3

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks, reserve requirements	$ 9,337	$ 6,075
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)	5,450,412	5,417,800
Common stock, shares outstanding (in shares)	5,450,412	5,417,800

Consolidated Statements of Earn

Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest income:
Interest and fees on loans	$ 8,966	$ 8,188	$ 25,935	$ 24,185
Interest on due from banks	60	32	138	67
Interest on investment securities:
U.S. Government sponsored enterprises	578	603	1,795	1,910
State and political subdivisions	1,047	1,105	3,198	3,350
Other	47	54	157	191
Total interest income	10,698	9,982	31,223	29,703
Interest expense:
NOW, MMDA & savings deposits	156	126	431	367
Time deposits	112	142	360	452
FHLB borrowings	211	426	604	1,248
Junior subordinated debentures	152	122	432	353
Other	19	12	43	30
Total interest expense	650	828	1,870	2,450
Net interest income	10,048	9,154	29,353	27,253
Provision for (reduction of provision for) loan losses	(218)	(360)	(405)	(1,108)
Net interest income after provision for loan losses	10,266	9,514	29,758	28,361
Non-interest income:
Service charges	1,140	1,163	3,340	3,291
Other service charges and fees	145	210	447	746
Gain on sale of securities	0	0	0	324
Mortgage banking income	280	426	945	1,088
Insurance and brokerage commissions	221	163	568	476
Gain/(loss) on sale and write-down of other real estate	43	(16)	(240)	64
Miscellaneous	1,675	1,468	4,601	4,320
Total non-interest income	3,504	3,414	9,661	10,309
Non-interest expense:
Salaries and employee benefits	4,933	4,829	15,038	14,114
Occupancy	1,669	1,755	4,981	5,243
Professional fees	303	429	788	1,603
Advertising	247	313	859	623
Debit card expense	320	271	894	870
FDIC insurance	87	71	260	406
Other	1,792	1,930	5,661	5,339
Total non-interest expense	9,351	9,598	28,481	28,198
Earnings before income taxes	4,419	3,330	10,938	10,472
Income tax expense	1,177	872	2,680	2,597
Net earnings	$ 3,242	$ 2,458	$ 8,258	$ 7,875
Basic net earnings per share	$ 0.59	$ 0.45	$ 1.52	$ 1.43
Diluted net earnings per share	0.58	0.44	1.49	1.42
Cash dividends declared per share	$ 0.12	$ 0.10	$ 0.36	$ 0.28

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Consolidated Statements Of Comprehensive Income
Net earnings	$ 3,242	$ 2,458	$ 8,258	$ 7,875
Other comprehensive income (loss):
Unrealized holding (losses) gains on securities available for sale	(666)	(1,676)	2,027	2,597
Reclassification adjustment for gains on securities available for sale included in net earnings	0	0	0	(324)
Total other comprehensive (loss) income, before income taxes	(666)	(1,676)	2,027	2,273
Income tax expense related to other comprehensive income:
Unrealized holding (losses) gains on securities available for sale	(239)	(614)	502	951
Reclassification adjustment for gains on securities available for sale included in net earnings	0	0	0	(126)
Total income tax expense (benefit) related to other comprehensive income (loss)	(239)	(614)	502	825
Total other comprehensive (loss) income, net of tax	(427)	(1,062)	1,525	1,448
Total comprehensive income	$ 2,815	$ 1,396	$ 9,783	$ 9,323

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, 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)	0	0	(1,983)
Cash dividends declared on common stock		(1,556)		(1,556)
Net earnings		7,875		7,875
Change in accumulated other comprehensive income, net of tax	$ 0	0	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
Beginning Balance, Shares at Dec. 31, 2016	5,417,800
Beginning Balance, Amount at Dec. 31, 2016	$ 44,187	60,254	2,987	107,428
Common stock repurchase, amount				0
Cash dividends declared on common stock		(1,973)		(1,973)
Restricted stock units exercised, shares	32,612
Restricted stock units exercised, amount	$ 915	0	0	915
Net earnings		8,258		8,258
Change in accumulated other comprehensive income, net of tax			1,525	1,525
Ending Balance, Shares at Sep. 30, 2017	5,450,412
Ending Balance, Amount at Sep. 30, 2017	$ 45,102	$ 66,539	$ 4,512	$ 116,153

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net earnings	$ 8,258	$ 7,875
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and accretion	3,764	4,181
Reduction of provision for loan losses	(405)	(1,108)
Deferred income taxes	(1,122)	(607)
Gain on sale of investment securities	0	(324)
Gain on sale of other real estate	0	(81)
Write-down of other real estate	240	17
Loss on sale of premises and equipment	32	0
Restricted stock expense	566	476
Origination of mortgage loans held for sale	(46,173)	(50,813)
Proceeds from sales of mortgage loans held for sale	49,259	52,186
Change in:
Cash surrender value of life insurance	(500)	(307)
Other assets	763	897
Other liabilities	(408)	49
Net cash provided by operating activities	14,274	12,441
Cash flows from investing activities:
Purchases of investment securities available for sale	(6,492)	(12,642)
Proceeds from sales, calls and maturities of investment securities available for sale	6,535	2,899
Proceeds from paydowns of investment securities available for sale	13,963	15,946
FHLB stock redemption	(45)	2
Net change in loans	(23,927)	(24,639)
Purchases of premises and equipment	(4,810)	(1,257)
Proceeds from sale of other real estate and repossessions	43	1,052
Net cash used by investing activities	(14,733)	(18,639)
Cash flows from financing activities:
Net change in deposits	8,721	29,772
Net change in securities sold under agreement to repurchase	16,873	23,046
Proceeds from Fed Funds purchased	0	(8,985)
Repayments of Fed Funds purchased	0	8,985
Common stock repurchased	0	(1,983)
Cash dividends paid on common stock	(1,973)	(1,556)
Net cash provided by financing activities	23,621	49,279
Net change in cash and cash equivalents	23,162	43,081
Cash and cash equivalents at beginning of period	70,094	39,763
Cash and cash equivalents at end of period	93,256	82,844
Cash paid during the period for:
Interest	1,858	2,425
Income taxes	872	3,180
Noncash investing and financing activities:
Change in unrealized gain (loss) on investment securities available for sale, net	1,525	1,448
Issuance of accrued restricted stock units	(915)	0
Transfers of loans to other real estate and repossessions	$ 0	$ 275

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
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. The Bank operates three banking offices focused on the Latino population that were formerly operated as a division of the Bank under the name Banco de la Gente (“Banco”). These offices are now branded as Bank branches and considered a separate market territory of the Bank as they offer 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. The consolidated financial statements in this report (other than the Consolidated Balance Sheet at December 31, 2016) 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 2016 Annual Report to Shareholders which is Appendix A to the Proxy Statement for the May 4, 2017 Annual Meeting of Shareholders. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, (Topic 606): Revenue from Contracts with Customers The Company will apply ASU No. 2014-09 using a modified retrospective approach. The Company’s revenue is comprised of net interest income and noninterest income. The scope of ASU No. 2014-09 explicitly excludes net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities, and derivatives. Accordingly, the majority of the Company’s revenues will not be affected. The Company is currently assessing its revenue contracts related to revenue streams that are within the scope of ASU No. 2014-09. The Company’s accounting policies will not change materially since the principles of revenue recognition from ASU No. 2014-09 are largely consistent with existing guidance and the Company’s current practices. The Company has not identified material changes to the timing or amount of revenue recognition. However, the Company does anticipate that it will make changes to its revenue-related disclosures. The Company will provide qualitative disclosures of its performance obligations related to its revenue recognition and will continue to evaluate disaggregation for significant categories of revenue within the scope of ASU No. 2014-09. In February 2016, FASB issued ASU No. 2016-02, (Topic 842): Leases The Company expects to adopt ASU No. 2016-02 using the modified retrospective method and practical expedients for transition. The practical expedients allow the Company to largely account for its existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees. The Company has started an initial evaluation of its leasing contracts and activities and has started developing its methodology to estimate the right-of use assets and lease liabilities, which is based on the present value of lease payments (the December 31, 2016 future minimum lease payments were $4.6 million). While the Company does not expect there to be a material change in the timing of expense recognition, it is too early in the evaluation process to determine if there will be a material change to the timing of expense recognition. The Company is evaluating its existing disclosures and may need to provide additional information as a result of adoption of ASU No. 2016-02. In June 2016, FASB issued ASU No. 2016-13, (Topic 326): Measurement of Credit Losses on Financial Instruments The Company will apply the amendments to ASU No. 2016-13 through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. While early adoption is permitted beginning in the first quarter of 2019, the Company does not expect to elect that option. The Company is evaluating the impact of ASU No. 2016-13 on its consolidated financial statements. The Company anticipates that ASU No. 2016-13 will have no material impact on the recorded allowance for loan losses given the change to estimated losses over the contractual life of the loans adjusted for expected prepayments. In addition to the Company’s allowance for loan losses, it will also record an allowance for credit losses on debt securities instead of applying the impairment model currently utilized. The amount of the adjustments will be impacted by each portfolio’s composition and credit quality at the adoption date as well as economic conditions and forecasts at that time. In January 2017, FASB issued ASU No. 2017-01, (Topic 805): Clarifying the Definition of a Business. In January 2017, FASB issued ASU No. 2017-04, (Topic 350): Simplifying the Test for Goodwill Impairment In February 2017, FASB issued ASU No. 2017-05, (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets Revenue from Contracts with Customers In March 2017, FASB issued ASU No. 2017-07, (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs In March 2017, FASB issued ASU No. 2017-08, (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. In May 2017, FASB issued ASU No. 2017-09, (Topic 718): Scope of Modification Accounting 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, 2017
Investments, Debt and Equity Securities [Abstract]
2. Investment Securities	Investment securities available for sale at September 30, 2017 and December 31, 2016 are as follows: (Dollars in thousands) September 30, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 55,947 1,142 196 56,893 U.S. Government sponsored enterprises 40,815 290 151 40,954 State and political subdivisions 130,175 5,954 20 136,109 Corporate bonds 1,500 30 - 1,530 Trust preferred securities 250 - - 250 Total $ 228,687 7,416 367 235,736 (Dollars in thousands) December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 66,654 1,221 290 67,585 U.S. Government sponsored enterprises 38,188 308 274 38,222 State and political subdivisions 137,832 4,176 152 141,856 Corporate bonds 1,500 33 - 1,533 Trust preferred securities 750 - - 750 Total $ 244,924 5,738 716 249,946 The current fair value and associated unrealized losses on investments in securities with unrealized losses at September 30, 2017 and December 31, 2016 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, 2017 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 10,540 95 4,792 101 15,332 196 U.S. Government sponsored enterprises 5,424 47 10,762 104 16,186 151 State and political subdivisions 545 2 986 18 1,531 20 Total $ 16,509 144 16,540 223 33,049 367 (Dollars in thousands) December 31, 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 $ 15,594 290 - - 15,594 290 U.S. Government sponsored enterprises 10,120 94 9,562 180 19,682 274 State and political subdivisions 10,441 123 561 29 11,002 152 Total $ 36,155 507 10,123 209 46,278 716 At September 30, 2017, unrealized losses in the investment securities portfolio relating to debt securities totaled $367,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the September 30, 2017 tables above, three out of 160 securities issued by state and political subdivisions contained unrealized losses, 17 out of 78 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, 2017, 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, 2017 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 13,299 13,397 Due from one to five years 95,096 99,142 Due from five to ten years 55,333 57,069 Due after ten years 8,762 8,985 Mortgage-backed securities 55,947 56,893 Trust preferred securities 250 250 Total $ 228,687 235,736 No securities available for sale were sold during the nine months ended September 30, 2017. 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. Securities with a fair value of approximately $88.2 million and $95.6 million at September 30, 2017 and December 31, 2016, respectively, were pledged to secure public deposits and for other purposes as required by law.

3. Loans

3. Loans	9 Months Ended
	Sep. 30, 2017
Receivables [Abstract]
3. Loans	Major classifications of loans at September 30, 2017 and December 31, 2016 are summarized as follows: (Dollars in thousands) September 30, 2017 December 31, 2016 Real estate loans: Construction and land development $ 75,483 61,749 Single-family residential 247,184 240,700 Single-family residential - Banco de la Gente stated income 37,840 40,189 Commercial 245,279 247,521 Multifamily and farmland 28,662 21,047 Total real estate loans 634,448 611,206 Loans not secured by real estate: Commercial loans 87,019 87,596 Farm loans 895 - Consumer loans 10,005 9,832 All other loans 15,070 15,177 Total loans 747,437 723,811 Less allowance for loan losses 6,844 7,550 Total net loans $ 740,593 716,261 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, Wake and Durham 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, 2017, construction and land development loans comprised approximately 10% of the Bank’s total loan portfolio. ● Single-family residential loans – Declining home sales volumes, decreased real estate values and higher than normal levels of unemployment could contribute to losses on these loans. As of September 30, 2017, 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 5% 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, 2017, commercial real estate loans comprised approximately 33% of the Bank’s total loan portfolio. ● Commercial loans – Repayment is generally dependent upon the successful operation of the borrower’s business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid or fluctuate in value based on the success of the business. As of September 30, 2017, commercial loans comprised approximately 12% 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 of 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, 2017 and December 31, 2016: September 30, 2017 (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 $ 206 - 206 75,277 75,483 - Single-family residential 2,268 416 2,684 244,500 247,184 - Single-family residential - Banco de la Gente stated income 1,363 462 1,825 36,015 37,840 - Commercial 27 229 256 245,023 245,279 - Multifamily and farmland - 12 12 28,650 28,662 - Total real estate loans 3,864 1,119 4,983 629,465 634,448 - Loans not secured by real estate: Commercial loans 121 1,013 1,134 85,885 87,019 - Farm loans - - - 895 895 - Consumer loans 93 5 98 9,907 10,005 - All other loans - - - 15,070 15,070 - Total loans $ 4,078 2,137 6,215 741,222 747,437 - December 31, 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 $ - 10 10 61,739 61,749 - Single-family residential 4,890 80 4,970 235,730 240,700 - Single-family residential - Banco de la Gente stated income 5,250 249 5,499 34,690 40,189 - Commercial 342 126 468 247,053 247,521 - Multifamily and farmland 471 - 471 20,576 21,047 - Total real estate loans 10,953 465 11,418 599,788 611,206 - Loans not secured by real estate: Commercial loans 273 - 273 87,323 87,596 - Farm loans - - - - - - Consumer loans 68 6 74 9,758 9,832 - All other loans 3 - 3 15,174 15,177 - Total loans $ 11,297 471 11,768 712,043 723,811 - The following table presents non-accrual loans as of September 30, 2017 and December 31, 2016: (Dollars in thousands) September 30, 2017 December 31, 2016 Real estate loans: Construction and land development $ 16 22 Single-family residential 1,728 1,662 Single-family residential - Banco de la Gente stated income 1,502 1,340 Commercial 1,422 669 Multifamily and farmland 12 78 Total real estate loans 4,680 3,771 Loans not secured by real estate: Commercial loans 229 21 Consumer loans 22 33 Total $ 4,931 3,825 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 $21.3 million, $23.5 million and $22.9 million at September 30, 2017, December 31, 2016 and September 30, 2016, respectively. Interest income recognized on accruing impaired loans was $1.1 million, $871,000 and $1.2 million for the nine months ended September 30, 2017, the nine months ended September 30, 2016 and the year ended December 31, 2016, respectively. No interest income is recognized on non-accrual impaired loans subsequent to their classification as non-accrual. The following table presents impaired loans as of September 30, 2017: September 30, 2017 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Real estate loans: Construction and land development $ 216 - 221 221 7 Single-family residential 4,978 1,142 4,232 5,374 42 Single-family residential - Banco de la Gente stated income 17,127 - 17,743 17,743 1,123 Commercial 3,513 1,619 2,181 3,800 45 Multifamily and farmland 12 - 78 78 - Total impaired real estate loans 25,846 2,761 24,455 27,216 1,217 Loans not secured by real estate: Commercial loans 233 229 39 268 - Consumer loans 179 - 189 189 3 Total impaired loans $ 26,258 2,990 24,683 27,673 1,220 The following table presents the average impaired loan balance and the interest income recognized by loan class for the three and nine months ended September 30, 2017 and 2016. (Dollars in thousands) Three months ended Nine months ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Real estate loans: Construction and land development $ 246 5 369 3 253 11 375 10 Single-family residential 4,783 71 6,556 40 5,113 202 8,921 122 Single-family residential - Banco de la Gente stated income 17,283 225 17,395 207 17,235 694 17,673 657 Commercial 3,852 18 4,013 24 3,712 144 5,376 73 Multifamily and farmland 12 - 78 - 45 - 79 3 Total impaired real estate loans 26,176 319 28,411 274 26,358 1,051 32,424 865 Loans not secured by real estate: Commercial loans 243 - 116 - 130 3 123 - Consumer loans 183 3 225 2 206 8 235 6 Total impaired loans $ 26,602 322 28,752 276 26,694 1,062 32,782 871 The following table presents impaired loans as of and for the year ended December 31, 2016: December 31, 2016 (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 $ 282 - 278 278 11 330 13 Single-family residential 5,354 703 4,323 5,026 47 7,247 164 Single-family residential - Banco de la Gente stated income 18,611 - 18,074 18,074 1,182 17,673 861 Commercial 3,750 1,299 2,197 3,496 166 4,657 152 Multifamily and farmland 78 - 78 78 - 78 - Total impaired real estate loans 28,075 2,002 24,950 26,952 1,406 29,985 1,190 Loans not secured by real estate: Commercial loans 27 - 27 27 - 95 - Consumer loans 211 - 202 202 3 222 8 Total impaired loans $ 28,313 2,002 25,179 27,181 1,409 30,302 1,198 Changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 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, 2017: Allowance for loan losses: Beginning balance $ 1,152 2,126 1,377 1,593 52 675 - 204 371 7,550 Charge-offs - (64 ) - - (66 ) (63 ) - (288 ) - (481 ) Recoveries 12 26 - 17 - 23 - 102 - 180 Provision (178 ) (211 ) (101 ) (192 ) 86 (74 ) - 143 122 (405 ) Ending balance $ 986 1,877 1,276 1,418 72 561 - 161 493 6,844 Three months ended September 30, 2017: Allowance for loan losses: Beginning balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Charge-offs - (20 ) - - - (26 ) - (106 ) - (152 ) Recoveries 2 9 - 4 - 8 - 24 - 47 Provision (199 ) 69 (17 ) (49 ) (3 ) (125 ) - 85 21 (218 ) Ending balance $ 986 1,877 1,276 1,418 72 561 - 161 493 6,844 Allowance for loan losses at September 30, 2017: Ending balance: individually evaluated for impairment $ - - 1,104 42 - - - - - 1,146 Ending balance: collectively evaluated for impairment 986 1,877 172 1,376 72 561 - 161 493 5,698 Ending balance $ 986 1,877 1,276 1,418 72 561 - 161 493 6,844 Loans at September 30, 2017: Ending balance $ 75,483 247,184 37,840 245,279 28,662 87,019 895 25,075 - 747,437 Ending balance: individually evaluated for impairment $ 10 1,875 15,732 3,069 - 229 - - - 20,915 Ending balance: collectively evaluated for impairment $ 75,473 245,309 22,108 242,210 28,662 86,790 895 25,075 - 726,522 (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 The provision for loan losses for the three months ended September 30, 2017 was a credit of $218,000, as compared to a credit of $360,000 for the three months ended September 30, 2016. The decrease in the credit to the provision for loan losses is primarily attributable to a $34.4 million increase in loans from September 30, 2016 to September 30, 2017. The provision for loan losses for the nine months ended September 30, 2017 was a credit of $405,000, as compared to a credit of $1.1 million for the nine months ended September 30, 2016. The decrease in the credit to the provision for loan losses is primarily attributable to a $34.4 million increase in loans from September 30, 2016 to September 30, 2017. 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. Certificates of deposit 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, 2017 and December 31, 2016: September 30, 2017 (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 $ - 11,007 - - - 562 - 838 - 12,407 2- High Quality 11,541 118,964 - 35,461 1,986 18,836 - 3,502 1,161 191,451 3- Good Quality 51,307 87,337 15,318 190,950 23,565 62,767 756 5,015 13,096 450,111 4- Management Attention 6,063 21,783 15,318 13,366 1,942 4,362 139 582 813 64,368 5- Watch 6,285 4,679 3,506 4,034 1,157 235 - 24 - 19,920 6- Substandard 287 3,414 3,698 1,468 12 257 - 44 - 9,180 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 75,483 247,184 37,840 245,279 28,662 87,019 895 10,005 15,070 747,437 December 31, 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 $ - 14,996 - - - 541 - 959 - 16,496 2- High Quality 9,784 109,809 - 39,769 2,884 26,006 - 3,335 2,507 194,094 3- Good Quality 33,633 82,147 16,703 176,109 14,529 55,155 - 4,842 10,921 394,039 4- Management Attention 10,892 25,219 15,580 24,753 2,355 5,586 - 619 1,749 86,753 5- Watch 7,229 4,682 3,943 4,906 1,201 246 - 31 - 22,238 6- Substandard 211 3,847 3,963 1,984 78 62 - 42 - 10,187 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - 4 - 4 Total $ 61,749 240,700 40,189 247,521 21,047 87,596 - 9,832 15,177 723,811 Current year TDR modifications, past due TDR loans and non-accrual TDR loans totaled $2.6 million and $5.9 million at September 30, 2017 and December 31, 2016, 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 $22,000 and $81,000 in performing loans classified as TDR loans at September 30, 2017 and December 31, 2016, respectively. The following table presents an analysis of TDR loan modifications during the three and nine months ended September 30, 2017. Three and nine months ended September 30, 2017 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 2 $ 22 22 Total real estate TDR loans 2 22 22 Total TDR loans 2 $ 22 22 During the three and nine months ended September 30, 2017, two loans were modified that were considered to be new TDR loans. The interest rate was modified on these TDR loans. The following table presents an analysis of 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 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 loans modified as TDR that defaulted during the three and nine months ended September 30, 2017 and 2016, 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, 2017
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, 2017 and 2016 is as follows: For the three months ended September 30, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,242 5,450,412 $ 0.59 Effect of dilutive securities: Restricted stock units - 87,581 Diluted earnings per share $ 3,242 5,537,993 $ 0.58 For the nine months ended September 30, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 8,258 5,440,995 $ 1.52 Effect of dilutive securities: Restricted stock units - 85,969 Diluted earnings per share $ 8,258 5,526,964 $ 1.49 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 B Effect of dilutive securities: Restricted stock units - 68,122 Diluted earnings per share $ 7,875 5,565,326 $ 1.42

5. Stock-Based Compensation

5. Stock-Based Compensation	9 Months Ended
	Sep. 30, 2017
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 258,780 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 granted 3,740 restricted stock units under the Plan at a grant date fair value of $27.50 per share during the first quarter of 2017. 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, 2016 and 2017 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, 2017, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $389,000. The Company recognized compensation expense for restricted stock unit awards granted under the Plan of $566,000 and $476,000 for the nine months ended September 30, 2017 and 2016, respectively.

6. Fair Value

6. Fair Value	9 Months Ended
	Sep. 30, 2017
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, 2017 and December 31, 2016. (Dollars in thousands) September 30, 2017 Fair Value Measurements Level 1 Level 2 Level 3 Mortgage-backed securities $ 56,893 - 56,893 - U.S. Government sponsored enterprises $ 40,954 - 40,954 - State and political subdivisions $ 136,109 - 136,109 - Corporate bonds $ 1,530 - 1,530 - Trust preferred securities $ 250 - - 250 (Dollars in thousands) December 31, 2016 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 67,585 - 67,585 - U.S. Government sponsored enterprises $ 38,222 - 38,222 - State and political subdivisions $ 141,856 - 141,856 - Corporate bonds $ 1,533 - 1,533 - Trust preferred securities $ 750 - - 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, 2017. (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) (500 ) Transfers in and/or (out) of Level 3 - Balance, end of period $ 250 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, 2017 and December 31, 2016 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, 2017 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 2,623 - - 2,623 Impaired loans $ 26,453 - - 26,453 Other real estate $ - - - - (Dollars in thousands) Fair Value Measurements December 31, 2016 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 5,709 - - 5,709 Impaired loans $ 25,772 - - 25,772 Other real estate $ 283 - - 283 (Dollars in thousands) Fair Value September 30, 2017 Fair Value December 31, 2016 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 2,623 5,709 Rate lock commitment N/A N/A Impaired loans $ 26,453 25,772 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ - 283 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, 2017 and December 31, 2016 are as follows: (Dollars in thousands) Fair Value Measurements at September 30, 2017 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 93,256 93,256 - - 93,256 Investment securities available for sale $ 235,736 - 235,486 250 235,736 Other investments $ 2,680 - - 2,680 2,680 Mortgage loans held for sale $ 2,623 - - 2,623 2,623 Loans, net $ 740,593 - - 745,481 745,481 Cash surrender value of life insurance $ 15,452 - 15,452 - 15,452 Liabilities: Deposits $ 901,639 - - 890,957 890,957 Securities sold under agreements to repurchase $ 53,307 - 53,307 - 53,307 FHLB borrowings $ 20,000 - 19,967 - 19,967 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2016 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 70,094 70,094 - - 70,094 Investment securities available for sale $ 249,946 - 249,196 750 249,946 Other investments $ 2,635 - - 2,635 2,635 Mortgage loans held for sale $ 5,709 - - 5,709 5,709 Loans, net $ 716,261 - - 720,675 720,675 Cash surrender value of life insurance $ 14,952 - 14,952 - 14,952 Liabilities: Deposits $ 892,918 - - 884,510 884,510 Securities sold under agreements to repurchase $ 36,434 - 36,434 - 36,434 FHLB borrowings $ 20,000 - 18,864 - 18,864 Junior subordinated debentures $ 20,619 - 20,619 - 20,619

7. Regulatory Matters

7. Regulatory Matters	9 Months Ended
	Sep. 30, 2017
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 required 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. During the third quarter of 2017 the Bank received notice that the Order was terminated effective August 30, 2017.

8. Subsequent Events

8. Subsequent Events	9 Months Ended
	Sep. 30, 2017
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 other than the FHLB borrowings prepayment noted below. On October 26, 2017, the Bank repaid the remaining FHLB borrowings totaling $20.0 million. Prepayment penalties totaling $508,000 will be reflected in fourth quarter 2017 non-interest expense and will be partially offset by a reduction of approximately $150,000 in fourth quarter 2017 interest expense based on current interest rates.

1. Summary of Significant Acc16

1. Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, (Topic 606): Revenue from Contracts with Customers The Company will apply ASU No. 2014-09 using a modified retrospective approach. The Company’s revenue is comprised of net interest income and noninterest income. The scope of ASU No. 2014-09 explicitly excludes net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities, and derivatives. Accordingly, the majority of the Company’s revenues will not be affected. The Company is currently assessing its revenue contracts related to revenue streams that are within the scope of ASU No. 2014-09. The Company’s accounting policies will not change materially since the principles of revenue recognition from ASU No. 2014-09 are largely consistent with existing guidance and the Company’s current practices. The Company has not identified material changes to the timing or amount of revenue recognition. However, the Company does anticipate that it will make changes to its revenue-related disclosures. The Company will provide qualitative disclosures of its performance obligations related to its revenue recognition and will continue to evaluate disaggregation for significant categories of revenue within the scope of ASU No. 2014-09. In February 2016, FASB issued ASU No. 2016-02, (Topic 842): Leases The Company expects to adopt ASU No. 2016-02 using the modified retrospective method and practical expedients for transition. The practical expedients allow the Company to largely account for its existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees. The Company has started an initial evaluation of its leasing contracts and activities and has started developing its methodology to estimate the right-of use assets and lease liabilities, which is based on the present value of lease payments (the December 31, 2016 future minimum lease payments were $4.6 million). While the Company does not expect there to be a material change in the timing of expense recognition, it is too early in the evaluation process to determine if there will be a material change to the timing of expense recognition. The Company is evaluating its existing disclosures and may need to provide additional information as a result of adoption of ASU No. 2016-02. In June 2016, FASB issued ASU No. 2016-13, (Topic 326): Measurement of Credit Losses on Financial Instruments The Company will apply the amendments to ASU No. 2016-13 through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. While early adoption is permitted beginning in the first quarter of 2019, the Company does not expect to elect that option. The Company is evaluating the impact of ASU No. 2016-13 on its consolidated financial statements. The Company anticipates that ASU No. 2016-13 will have no material impact on the recorded allowance for loan losses given the change to estimated losses over the contractual life of the loans adjusted for expected prepayments. In addition to the Company’s allowance for loan losses, it will also record an allowance for credit losses on debt securities instead of applying the impairment model currently utilized. The amount of the adjustments will be impacted by each portfolio’s composition and credit quality at the adoption date as well as economic conditions and forecasts at that time. In January 2017, FASB issued ASU No. 2017-01, (Topic 805): Clarifying the Definition of a Business. In January 2017, FASB issued ASU No. 2017-04, (Topic 350): Simplifying the Test for Goodwill Impairment In February 2017, FASB issued ASU No. 2017-05, (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets Revenue from Contracts with Customers In March 2017, FASB issued ASU No. 2017-07, (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs In March 2017, FASB issued ASU No. 2017-08, (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. In May 2017, FASB issued ASU No. 2017-09, (Topic 718): Scope of Modification Accounting 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, 2017
Investments, Debt and Equity Securities [Abstract]
Investment securities available for sale	(Dollars in thousands) September 30, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 55,947 1,142 196 56,893 U.S. Government sponsored enterprises 40,815 290 151 40,954 State and political subdivisions 130,175 5,954 20 136,109 Corporate bonds 1,500 30 - 1,530 Trust preferred securities 250 - - 250 Total $ 228,687 7,416 367 235,736 (Dollars in thousands) December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 66,654 1,221 290 67,585 U.S. Government sponsored enterprises 38,188 308 274 38,222 State and political subdivisions 137,832 4,176 152 141,856 Corporate bonds 1,500 33 - 1,533 Trust preferred securities 750 - - 750 Total $ 244,924 5,738 716 249,946
Current fair value and associated unrealized losses on investments in securities with unrealized losses	(Dollars in thousands) September 30, 2017 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 10,540 95 4,792 101 15,332 196 U.S. Government sponsored enterprises 5,424 47 10,762 104 16,186 151 State and political subdivisions 545 2 986 18 1,531 20 Total $ 16,509 144 16,540 223 33,049 367 (Dollars in thousands) December 31, 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 $ 15,594 290 - - 15,594 290 U.S. Government sponsored enterprises 10,120 94 9,562 180 19,682 274 State and political subdivisions 10,441 123 561 29 11,002 152 Total $ 36,155 507 10,123 209 46,278 716
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity	September 30, 2017 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 13,299 13,397 Due from one to five years 95,096 99,142 Due from five to ten years 55,333 57,069 Due after ten years 8,762 8,985 Mortgage-backed securities 55,947 56,893 Trust preferred securities 250 250 Total $ 228,687 235,736

3. Loans (Tables)

3. Loans (Tables)	9 Months Ended
	Sep. 30, 2017
Receivables [Abstract]
Major classifications of loans	(Dollars in thousands) September 30, 2017 December 31, 2016 Real estate loans: Construction and land development $ 75,483 61,749 Single-family residential 247,184 240,700 Single-family residential - Banco de la Gente stated income 37,840 40,189 Commercial 245,279 247,521 Multifamily and farmland 28,662 21,047 Total real estate loans 634,448 611,206 Loans not secured by real estate: Commercial loans 87,019 87,596 Farm loans 895 - Consumer loans 10,005 9,832 All other loans 15,070 15,177 Total loans 747,437 723,811 Less allowance for loan losses 6,844 7,550 Total net loans $ 740,593 716,261
Age analysis of past due loans, by loan type	September 30, 2017 (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 $ 206 - 206 75,277 75,483 - Single-family residential 2,268 416 2,684 244,500 247,184 - Single-family residential - Banco de la Gente stated income 1,363 462 1,825 36,015 37,840 - Commercial 27 229 256 245,023 245,279 - Multifamily and farmland - 12 12 28,650 28,662 - Total real estate loans 3,864 1,119 4,983 629,465 634,448 - Loans not secured by real estate: Commercial loans 121 1,013 1,134 85,885 87,019 - Farm loans - - - 895 895 - Consumer loans 93 5 98 9,907 10,005 - All other loans - - - 15,070 15,070 - Total loans $ 4,078 2,137 6,215 741,222 747,437 - December 31, 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 $ - 10 10 61,739 61,749 - Single-family residential 4,890 80 4,970 235,730 240,700 - Single-family residential - Banco de la Gente stated income 5,250 249 5,499 34,690 40,189 - Commercial 342 126 468 247,053 247,521 - Multifamily and farmland 471 - 471 20,576 21,047 - Total real estate loans 10,953 465 11,418 599,788 611,206 - Loans not secured by real estate: Commercial loans 273 - 273 87,323 87,596 - Farm loans - - - - - - Consumer loans 68 6 74 9,758 9,832 - All other loans 3 - 3 15,174 15,177 - Total loans $ 11,297 471 11,768 712,043 723,811 -
Non-accrual loans	(Dollars in thousands) September 30, 2017 December 31, 2016 Real estate loans: Construction and land development $ 16 22 Single-family residential 1,728 1,662 Single-family residential - Banco de la Gente stated income 1,502 1,340 Commercial 1,422 669 Multifamily and farmland 12 78 Total real estate loans 4,680 3,771 Loans not secured by real estate: Commercial loans 229 21 Consumer loans 22 33 Total $ 4,931 3,825
Impaired loans	September 30, 2017 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Real estate loans: Construction and land development $ 216 - 221 221 7 Single-family residential 4,978 1,142 4,232 5,374 42 Single-family residential - Banco de la Gente stated income 17,127 - 17,743 17,743 1,123 Commercial 3,513 1,619 2,181 3,800 45 Multifamily and farmland 12 - 78 78 - Total impaired real estate loans 25,846 2,761 24,455 27,216 1,217 Loans not secured by real estate: Commercial loans 233 229 39 268 - Consumer loans 179 - 189 189 3 Total impaired loans $ 26,258 2,990 24,683 27,673 1,220 (Dollars in thousands) Three months ended Nine months ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Real estate loans: Construction and land development $ 246 5 369 3 253 11 375 10 Single-family residential 4,783 71 6,556 40 5,113 202 8,921 122 Single-family residential - Banco de la Gente stated income 17,283 225 17,395 207 17,235 694 17,673 657 Commercial 3,852 18 4,013 24 3,712 144 5,376 73 Multifamily and farmland 12 - 78 - 45 - 79 3 Total impaired real estate loans 26,176 319 28,411 274 26,358 1,051 32,424 865 Loans not secured by real estate: Commercial loans 243 - 116 - 130 3 123 - Consumer loans 183 3 225 2 206 8 235 6 Total impaired loans $ 26,602 322 28,752 276 26,694 1,062 32,782 871 December 31, 2016 (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 $ 282 - 278 278 11 330 13 Single-family residential 5,354 703 4,323 5,026 47 7,247 164 Single-family residential - Banco de la Gente stated income 18,611 - 18,074 18,074 1,182 17,673 861 Commercial 3,750 1,299 2,197 3,496 166 4,657 152 Multifamily and farmland 78 - 78 78 - 78 - Total impaired real estate loans 28,075 2,002 24,950 26,952 1,406 29,985 1,190 Loans not secured by real estate: Commercial loans 27 - 27 27 - 95 - Consumer loans 211 - 202 202 3 222 8 Total impaired loans $ 28,313 2,002 25,179 27,181 1,409 30,302 1,198
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, 2017: Allowance for loan losses: Beginning balance $ 1,152 2,126 1,377 1,593 52 675 - 204 371 7,550 Charge-offs - (64 ) - - (66 ) (63 ) - (288 ) - (481 ) Recoveries 12 26 - 17 - 23 - 102 - 180 Provision (178 ) (211 ) (101 ) (192 ) 86 (74 ) - 143 122 (405 ) Ending balance $ 986 1,877 1,276 1,418 72 561 - 161 493 6,844 Three months ended September 30, 2017: Allowance for loan losses: Beginning balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Charge-offs - (20 ) - - - (26 ) - (106 ) - (152 ) Recoveries 2 9 - 4 - 8 - 24 - 47 Provision (199 ) 69 (17 ) (49 ) (3 ) (125 ) - 85 21 (218 ) Ending balance $ 986 1,877 1,276 1,418 72 561 - 161 493 6,844 Allowance for loan losses at September 30, 2017: Ending balance: individually evaluated for impairment $ - - 1,104 42 - - - - - 1,146 Ending balance: collectively evaluated for impairment 986 1,877 172 1,376 72 561 - 161 493 5,698 Ending balance $ 986 1,877 1,276 1,418 72 561 - 161 493 6,844 Loans at September 30, 2017: Ending balance $ 75,483 247,184 37,840 245,279 28,662 87,019 895 25,075 - 747,437 Ending balance: individually evaluated for impairment $ 10 1,875 15,732 3,069 - 229 - - - 20,915 Ending balance: collectively evaluated for impairment $ 75,473 245,309 22,108 242,210 28,662 86,790 895 25,075 - 726,522 (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
Credit risk profile of each loan type based on internally assigned risk grade	September 30, 2017 (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 $ - 11,007 - - - 562 - 838 - 12,407 2- High Quality 11,541 118,964 - 35,461 1,986 18,836 - 3,502 1,161 191,451 3- Good Quality 51,307 87,337 15,318 190,950 23,565 62,767 756 5,015 13,096 450,111 4- Management Attention 6,063 21,783 15,318 13,366 1,942 4,362 139 582 813 64,368 5- Watch 6,285 4,679 3,506 4,034 1,157 235 - 24 - 19,920 6- Substandard 287 3,414 3,698 1,468 12 257 - 44 - 9,180 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 75,483 247,184 37,840 245,279 28,662 87,019 895 10,005 15,070 747,437 December 31, 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 $ - 14,996 - - - 541 - 959 - 16,496 2- High Quality 9,784 109,809 - 39,769 2,884 26,006 - 3,335 2,507 194,094 3- Good Quality 33,633 82,147 16,703 176,109 14,529 55,155 - 4,842 10,921 394,039 4- Management Attention 10,892 25,219 15,580 24,753 2,355 5,586 - 619 1,749 86,753 5- Watch 7,229 4,682 3,943 4,906 1,201 246 - 31 - 22,238 6- Substandard 211 3,847 3,963 1,984 78 62 - 42 - 10,187 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - 4 - 4 Total $ 61,749 240,700 40,189 247,521 21,047 87,596 - 9,832 15,177 723,811
Analysis of TDR loans by loan type	Three and nine months ended September 30, 2017 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 2 $ 22 22 Total real estate TDR loans 2 22 22 Total TDR loans 2 $ 22 22 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

4. Net Earnings Per Share (Tabl

4. Net Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2017
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, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,242 5,450,412 $ 0.59 Effect of dilutive securities: Restricted stock units - 87,581 Diluted earnings per share $ 3,242 5,537,993 $ 0.58 For the nine months ended September 30, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 8,258 5,440,995 $ 1.52 Effect of dilutive securities: Restricted stock units - 85,969 Diluted earnings per share $ 8,258 5,526,964 $ 1.49 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

6. Fair Value (Tables)

6. Fair Value (Tables)	9 Months Ended
	Sep. 30, 2017
Fair Value Disclosures [Abstract]
Available for sale securities measured at fair value on a recurring basis	(Dollars in thousands) September 30, 2017 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 56,893 - 56,893 - U.S. Government sponsored enterprises $ 40,954 - 40,954 - State and political subdivisions $ 136,109 - 136,109 - Corporate bonds $ 1,530 - 1,530 - Trust preferred securities $ 250 - - 250 (Dollars in thousands) December 31, 2016 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 67,585 - 67,585 - U.S. Government sponsored enterprises $ 38,222 - 38,222 - State and political subdivisions $ 141,856 - 141,856 - Corporate bonds $ 1,533 - 1,533 - Trust preferred securities $ 750 - - 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) (500 ) Transfers in and/or (out) of Level 3 - Balance, end of period $ 250 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) September 30, 2017 Fair Value Measurements Level 1 Level 2 Level 3 Mortgage-backed securities $ 56,893 - 56,893 - U.S. Government sponsored enterprises $ 40,954 - 40,954 - State and political subdivisions $ 136,109 - 136,109 - Corporate bonds $ 1,530 - 1,530 - Trust preferred securities $ 250 - - 250 (Dollars in thousands) December 31, 2016 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 67,585 - 67,585 - U.S. Government sponsored enterprises $ 38,222 - 38,222 - State and political subdivisions $ 141,856 - 141,856 - Corporate bonds $ 1,533 - 1,533 - Trust preferred securities $ 750 - - 750 (Dollars in thousands) Fair Value September 30, 2017 Fair Value December 31, 2016 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 2,623 5,709 Rate lock commitment N/A N/A Impaired loans $ 26,453 25,772 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ - 283 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, 2017 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 93,256 93,256 - - 93,256 Investment securities available for sale $ 235,736 - 235,486 250 235,736 Other investments $ 2,680 - - 2,680 2,680 Mortgage loans held for sale $ 2,623 - - 2,623 2,623 Loans, net $ 740,593 - - 745,481 745,481 Cash surrender value of life insurance $ 15,452 - 15,452 - 15,452 Liabilities: Deposits $ 901,639 - - 890,957 890,957 Securities sold under agreements to repurchase $ 53,307 - 53,307 - 53,307 FHLB borrowings $ 20,000 - 19,967 - 19,967 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2016 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 70,094 70,094 - - 70,094 Investment securities available for sale $ 249,946 - 249,196 750 249,946 Other investments $ 2,635 - - 2,635 2,635 Mortgage loans held for sale $ 5,709 - - 5,709 5,709 Loans, net $ 716,261 - - 720,675 720,675 Cash surrender value of life insurance $ 14,952 - 14,952 - 14,952 Liabilities: Deposits $ 892,918 - - 884,510 884,510 Securities sold under agreements to repurchase $ 36,434 - 36,434 - 36,434 FHLB borrowings $ 20,000 - 18,864 - 18,864 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, 2017	Dec. 31, 2016
Investment securities available for sale
Amortized Cost	$ 228,687	$ 244,924
Estimated Fair Value	235,736	249,946
Mortgage-backed securities
Investment securities available for sale
Amortized Cost	55,947	66,654
Gross Unrealized Gains	1,142	1,221
Gross Unrealized Losses	196	290
Estimated Fair Value	56,893	67,585
U.S. Government sponsored enterprises
Investment securities available for sale
Amortized Cost	40,815	38,188
Gross Unrealized Gains	290	308
Gross Unrealized Losses	151	274
Estimated Fair Value	40,954	38,222
State and political subdivisions
Investment securities available for sale
Amortized Cost	130,175	137,832
Gross Unrealized Gains	5,954	4,176
Gross Unrealized Losses	20	152
Estimated Fair Value	136,109	141,856
Corporate bonds
Investment securities available for sale
Amortized Cost	1,500	1,500
Gross Unrealized Gains	30	33
Gross Unrealized Losses	0	0
Estimated Fair Value	1,530	1,533
Trust preferred securities
Investment securities available for sale
Amortized Cost	250	750
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	250	750
Total
Investment securities available for sale
Amortized Cost	228,687	244,924
Gross Unrealized Gains	7,416	5,738
Gross Unrealized Losses	367	716
Estimated Fair Value	$ 235,736	$ 249,946

2. Investment securities, Conti

2. Investment securities, Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	$ 16,509	$ 36,155
Less than 12 Months, Unrealized Losses	144	507
12 Months or More, Fair Value	16,540	10,123
12 Months or More, Unrealized Losses	223	209
Total, Fair Value	33,049	46,278
Total, Unrealized Losses	367	716
Mortgage-backed securities
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	10,540	15,594
Less than 12 Months, Unrealized Losses	95	290
12 Months or More, Fair Value	4,792	0
12 Months or More, Unrealized Losses	101	0
Total, Fair Value	15,332	15,594
Total, Unrealized Losses	196	290
U.S. Government sponsored enterprises
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	5,424	10,120
Less than 12 Months, Unrealized Losses	47	94
12 Months or More, Fair Value	10,762	9,562
12 Months or More, Unrealized Losses	104	180
Total, Fair Value	16,186	19,682
Total, Unrealized Losses	151	274
State and political subdivisions
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	545	10,441
Less than 12 Months, Unrealized Losses	2	123
12 Months or More, Fair Value	986	561
12 Months or More, Unrealized Losses	18	29
Total, Fair Value	1,531	11,002
Total, Unrealized Losses	$ 20	$ 152

2. Investment securities, Contr

2. Investment securities, Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Amortized Cost
Due within one year	$ 13,299
Due from one to five years	95,096
Due from five to ten years	55,333
Due after ten years	8,762
Mortgage-backed securities	55,947
Trust preferred securities	250
Total	228,687	$ 244,924
Estimated Fair Value
Due within one year	13,397
Due from one to five years	99,142
Due from five to ten years	57,069
Due after ten years	8,985
Mortgage-backed securities	56,893
Trust preferred securities	250
Total	$ 235,736

2. Investment Securities (Det24

2. Investment Securities (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Pledged to secure public deposits	$ 88,200	$ 95,600

3. Loans (Details)

3. Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Major classifications
Total loans	$ 747,437		$ 723,811	$ 713,019
Less allowance for loan losses	6,844	$ 7,167	7,550	8,045	$ 8,540	$ 9,589
Total net loans	740,593		716,261
Construction and land development
Major classifications
Total loans	75,483		61,749	59,456
Less allowance for loan losses	986	1,183	1,152	1,385	1,582	2,185
Single-family residential
Major classifications
Total loans	247,184		240,700	231,958
Less allowance for loan losses	1,877	1,819	2,126	2,006	2,233	2,534
Single-family residential - Banco de la Gente stated income
Major classifications
Total loans	37,840		40,189	40,934
Less allowance for loan losses	1,276	1,293	1,377	1,400	1,354	1,460
Commercial
Major classifications
Total loans	245,279		247,521	240,150
Less allowance for loan losses	1,418	1,463	1,593	1,576	1,650	1,917
Multifamily and Farmland
Major classifications
Total loans	28,662		21,047	18,727
Less allowance for loan losses	72	75	52	47	46	0
Total real estate loans
Major classifications
Total loans	634,448		611,206
Commercial loans (not secured by real estate)
Major classifications
Total loans	87,019		87,596	94,790
Less allowance for loan losses	561	704	675	760	803	842
Farm loans (not secured by real estate)
Major classifications
Total loans	895		0	0
Less allowance for loan losses	0	$ 0	0	$ 0	$ 0	$ 0
Consumer loans (not secured by real estate)
Major classifications
Total loans	10,005		9,832
All other loans (not secured by real estate)
Major classifications
Total loans	$ 15,070		$ 15,177

3. Loans, Past Due (Details)

3. Loans, Past Due (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Past due loans
Loans 30-89 Days Past Due	$ 4,078	$ 11,297
Loans 90 or More Days Past Due	2,137	471
Total Past Due Loans	6,215	11,768
Total Current Loans	741,222	712,043
Total loans	747,437	723,811	$ 713,019
Accruing Loans 90 or More Days Past Due	0	0
Construction and land development
Past due loans
Loans 30-89 Days Past Due	206	0
Loans 90 or More Days Past Due	0	10
Total Past Due Loans	206	10
Total Current Loans	75,277	61,739
Total loans	75,483	61,749
Accruing Loans 90 or More Days Past Due	0	0
Single-family residential
Past due loans
Loans 30-89 Days Past Due	2,268	4,890
Loans 90 or More Days Past Due	416	80
Total Past Due Loans	2,684	4,970
Total Current Loans	244,500	235,730
Total loans	247,184	240,700
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	1,363	5,250
Loans 90 or More Days Past Due	462	249
Total Past Due Loans	1,825	5,499
Total Current Loans	36,015	34,690
Total loans	37,840	40,189
Accruing Loans 90 or More Days Past Due	0	0
Commercial
Past due loans
Loans 30-89 Days Past Due	27	342
Loans 90 or More Days Past Due	229	126
Total Past Due Loans	256	468
Total Current Loans	245,023	247,053
Total loans	245,279	247,521
Accruing Loans 90 or More Days Past Due	0	0
Multifamily and Farmland
Past due loans
Loans 30-89 Days Past Due	0	471
Loans 90 or More Days Past Due	12	0
Total Past Due Loans	12	471
Total Current Loans	28,650	20,576
Total loans	28,662	21,047
Accruing Loans 90 or More Days Past Due	0	0
Total real estate loans
Past due loans
Loans 30-89 Days Past Due	3,864	10,953
Loans 90 or More Days Past Due	1,119	465
Total Past Due Loans	4,983	11,418
Total Current Loans	629,465	599,788
Total loans	634,448	611,206
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	121	273
Loans 90 or More Days Past Due	1,013	0
Total Past Due Loans	1,134	273
Total Current Loans	85,885	87,323
Total loans	87,019	87,596
Accruing Loans 90 or More Days Past Due	0	0
Farm loans (not secured by real estate)
Past due loans
Loans 30-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Total Past Due Loans	0	0
Total Current Loans	895	0
Total loans	895	0
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	93	68
Loans 90 or More Days Past Due	5	6
Total Past Due Loans	98	74
Total Current Loans	9,907	9,758
Total loans	10,005	9,832
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	3
Loans 90 or More Days Past Due	0	0
Total Past Due Loans	0	3
Total Current Loans	15,070	15,174
Total loans	15,070	15,177
Accruing Loans 90 or More Days Past Due	$ 0	$ 0

3. Loans, Nonaccrual (Details)

3. Loans, Nonaccrual (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Non-accrual loans
Non-accrual loans	$ 4,931	$ 3,825
Construction and land development
Non-accrual loans
Non-accrual loans	16	22
Single-family residential
Non-accrual loans
Non-accrual loans	1,728	1,662
Single-family residential - Banco de la Gente stated income
Non-accrual loans
Non-accrual loans	1,502	1,340
Commercial
Non-accrual loans
Non-accrual loans	1,422	669
Multifamily and Farmland
Non-accrual loans
Non-accrual loans	12	78
Total real estate loans
Non-accrual loans
Non-accrual loans	4,680	3,771
Commercial loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	229	21
Consumer loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	$ 22	$ 33

3. Loans, Impaired (Details)

3. Loans, Impaired (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Impaired loans
Unpaid Contractual Principal Balance	$ 26,258		$ 26,258		$ 28,313
Recorded Investment With No Allowance	2,990		2,990		2,002
Recorded Investment With Allowance	24,683		24,683		25,179
Recorded Investment in Impaired Loans	27,673		27,673		27,181
Related Allowance	1,220		1,220		1,409
Average Outstanding Impaired Loans	26,602	$ 28,752	26,694	$ 32,782	30,302
Interest Income Recognized	322	276	1,062	871	1,198
Construction and land development
Impaired loans
Unpaid Contractual Principal Balance	216		216		282
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	221		221		278
Recorded Investment in Impaired Loans	221		221		278
Related Allowance	7		7		11
Average Outstanding Impaired Loans	246	369	253	375	330
Interest Income Recognized	5	3	11	10	13
Single-family residential
Impaired loans
Unpaid Contractual Principal Balance	4,978		4,978		5,354
Recorded Investment With No Allowance	1,142		1,142		703
Recorded Investment With Allowance	4,232		4,232		4,323
Recorded Investment in Impaired Loans	5,374		5,374		5,026
Related Allowance	42		42		47
Average Outstanding Impaired Loans	4,783	6,556	5,113	8,921	7,247
Interest Income Recognized	71	40	202	122	164
Single-family residential - Banco de la Gente stated income
Impaired loans
Unpaid Contractual Principal Balance	17,127		17,127		18,611
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	17,743		17,743		18,074
Recorded Investment in Impaired Loans	17,743		17,743		18,074
Related Allowance	1,123		1,123		1,182
Average Outstanding Impaired Loans	17,283	17,395	17,235	17,673	17,673
Interest Income Recognized	225	207	694	657	861
Commercial
Impaired loans
Unpaid Contractual Principal Balance	3,513		3,513		3,750
Recorded Investment With No Allowance	1,619		1,619		1,299
Recorded Investment With Allowance	2,181		2,181		2,197
Recorded Investment in Impaired Loans	3,800		3,800		3,496
Related Allowance	45		45		166
Average Outstanding Impaired Loans	3,852	4,013	3,712	5,376	4,657
Interest Income Recognized	18	24	144	73	152
Multifamily and Farmland
Impaired loans
Unpaid Contractual Principal Balance	12		12		78
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	78		78		78
Recorded Investment in Impaired Loans	78		78		78
Related Allowance	0		0		0
Average Outstanding Impaired Loans	12	78	45	79	78
Interest Income Recognized	0	0	0	3	0
Total real estate loans
Impaired loans
Unpaid Contractual Principal Balance	25,846		25,846		28,075
Recorded Investment With No Allowance	2,761		2,761		2,002
Recorded Investment With Allowance	24,455		24,455		24,950
Recorded Investment in Impaired Loans	27,216		27,216		26,952
Related Allowance	1,217		1,217		1,406
Average Outstanding Impaired Loans	26,176	28,411	26,358	32,424	29,985
Interest Income Recognized	319	274	1,051	865	1,190
Commercial loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	233		233		27
Recorded Investment With No Allowance	229		229		0
Recorded Investment With Allowance	39		39		27
Recorded Investment in Impaired Loans	268		268		27
Related Allowance	0		0		0
Average Outstanding Impaired Loans	243	116	130	123	95
Interest Income Recognized	0	0	3	0	0
Consumer loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	179		179		211
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	189		189		202
Recorded Investment in Impaired Loans	189		189		202
Related Allowance	3		3		3
Average Outstanding Impaired Loans	183	225	206	235	222
Interest Income Recognized	$ 3	$ 2	$ 8	$ 6	$ 8

3. Loans, Allowance for Loan Lo

3. Loans, Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Allowance for loan losses
Beginning balance	$ 7,167	$ 8,540	$ 7,550	$ 9,589
Charge-offs	(152)	(246)	(481)	(754)
Recoveries	47	111	180	318
Provision	(218)	(360)	(405)	(1,108)
Ending balance	6,844	8,045	6,844	8,045
Ending balance: individually evaluated for impairments	1,146	1,331	1,146	1,331
Ending balance: collectively evaluated for impairments	5,698	6,714	5,698	6,714
Ending balance	6,844	8,045	6,844	8,045
Loans
Ending balance	747,437	713,019	747,437	713,019
Ending balance: individually evaluated for impairment	20,915	21,495	20,915	21,495
Ending balance: collectively evaluated for impairment	726,522	691,524	726,522	691,524
Construction and land development
Allowance for loan losses
Beginning balance	1,183	1,582	1,152	2,185
Charge-offs	0	0	0	0
Recoveries	2	2	12	8
Provision	(199)	(199)	(178)	(808)
Ending balance	986	1,385	986	1,385
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	986	1,385	986	1,385
Ending balance	986	1,385	986	1,385
Loans
Ending balance	75,483	59,456	75,483	59,456
Ending balance: individually evaluated for impairment	10	0	10	0
Ending balance: collectively evaluated for impairment	75,473	59,456	75,473	59,456
Single-family residential
Allowance for loan losses
Beginning balance	1,819	2,233	2,126	2,534
Charge-offs	(20)	(35)	(64)	(158)
Recoveries	9	6	26	18
Provision	69	(198)	(211)	(388)
Ending balance	1,877	2,006	1,877	2,006
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	1,877	2,006	1,877	2,006
Ending balance	1,877	2,006	1,877	2,006
Loans
Ending balance	247,184	231,958	247,184	231,958
Ending balance: individually evaluated for impairment	1,875	1,019	1,875	1,019
Ending balance: collectively evaluated for impairment	245,309	230,939	245,309	230,939
Single-family residential - Banco de la Gente stated income
Allowance for loan losses
Beginning balance	1,293	1,354	1,377	1,460
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	(17)	46	(101)	(60)
Ending balance	1,276	1,400	1,276	1,400
Ending balance: individually evaluated for impairments	1,104	1,164	1,104	1,164
Ending balance: collectively evaluated for impairments	172	236	172	236
Ending balance	1,276	1,400	1,276	1,400
Loans
Ending balance	37,840	40,934	37,840	40,934
Ending balance: individually evaluated for impairment	15,732	16,890	15,732	16,890
Ending balance: collectively evaluated for impairment	22,108	24,044	22,108	24,044
Commercial
Allowance for loan losses
Beginning balance	1,463	1,650	1,593	1,917
Charge-offs	0	0	0	(106)
Recoveries	4	5	17	15
Provision	(49)	(79)	(192)	(250)
Ending balance	1,418	1,576	1,418	1,576
Ending balance: individually evaluated for impairments	42	167	42	167
Ending balance: collectively evaluated for impairments	1,376	1,409	1,376	1,409
Ending balance	1,418	1,576	1,418	1,576
Loans
Ending balance	245,279	240,150	245,279	240,150
Ending balance: individually evaluated for impairment	3,069	3,586	3,069	3,586
Ending balance: collectively evaluated for impairment	242,210	236,564	242,210	236,564
Multifamily and Farmland
Allowance for loan losses
Beginning balance	75	46	52	0
Charge-offs	0	0	(66)	0
Recoveries	0	0	0	0
Provision	(3)	1	86	47
Ending balance	72	47	72	47
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	72	47	72	47
Ending balance	72	47	72	47
Loans
Ending balance	28,662	18,727	28,662	18,727
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	28,662	18,727	28,662	18,727
Commercial loans (not secured by real estate)
Allowance for loan losses
Beginning balance	704	803	675	842
Charge-offs	(26)	(89)	(63)	(129)
Recoveries	8	60	23	165
Provision	(125)	(14)	(74)	(118)
Ending balance	561	760	561	760
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	561	760	561	760
Ending balance	561	760	561	760
Loans
Ending balance	87,019	94,790	87,019	94,790
Ending balance: individually evaluated for impairment	229	0	229	0
Ending balance: collectively evaluated for impairment	86,790	94,790	86,790	94,790
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	895	0	895	0
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	895	0	895	0
Consumer And All Other Loans
Allowance for loan losses
Beginning balance	158	234	204	172
Charge-offs	(106)	(122)	(288)	(361)
Recoveries	24	38	102	112
Provision	85	64	143	291
Ending balance	161	214	161	214
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	161	214	161	214
Ending balance	161	214	161	214
Loans
Ending balance	25,075	27,004	25,075	27,004
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	25,075	27,004	25,075	27,004
Unallocated
Allowance for loan losses
Beginning balance	472	638	371	479
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	21	19	122	178
Ending balance	493	657	493	657
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	493	657	493	657
Ending balance	493	657	493	657
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, 2017	Dec. 31, 2016	Sep. 30, 2016
Credit risk profile
Total Loans	$ 747,437	$ 723,811	$ 713,019
Excellent Quality
Credit risk profile
Total Loans	12,407	16,496
High Quality
Credit risk profile
Total Loans	191,451	194,094
Good Quality
Credit risk profile
Total Loans	450,111	394,039
Management Attention
Credit risk profile
Total Loans	64,368	86,753
Watch
Credit risk profile
Total Loans	19,920	22,238
Substandard
Credit risk profile
Total Loans	9,180	10,187
Doubtful
Credit risk profile
Total Loans	0	0
Loss
Credit risk profile
Total Loans	0	4
Construction and land development
Credit risk profile
Total Loans	75,483	61,749
Single-family residential
Credit risk profile
Total Loans	247,184	240,700
Single-family residential - Banco de la Gente stated income
Credit risk profile
Total Loans	37,840	40,189
Commercial
Credit risk profile
Total Loans	245,279	247,521
Multifamily and Farmland
Credit risk profile
Total Loans	28,662	21,047
Commercial loans (not secured by real estate)
Credit risk profile
Total Loans	87,019	87,596
Farm loans (not secured by real estate)
Credit risk profile
Total Loans	895	0
Consumer loans (not secured by real estate)
Credit risk profile
Total Loans	10,005	9,832
All other loans (not secured by real estate)
Credit risk profile
Total Loans	15,070	15,177
Construction and land development
Credit risk profile
Total Loans	75,483	61,749	59,456
Construction and land development | Excellent Quality
Credit risk profile
Total Loans	0	0
Construction and land development | High Quality
Credit risk profile
Total Loans	11,541	9,784
Construction and land development | Good Quality
Credit risk profile
Total Loans	51,307	33,633
Construction and land development | Management Attention
Credit risk profile
Total Loans	6,063	10,892
Construction and land development | Watch
Credit risk profile
Total Loans	6,285	7,229
Construction and land development | Substandard
Credit risk profile
Total Loans	287	211
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	247,184	240,700	231,958
Single-family residential | Excellent Quality
Credit risk profile
Total Loans	11,007	14,996
Single-family residential | High Quality
Credit risk profile
Total Loans	118,964	109,809
Single-family residential | Good Quality
Credit risk profile
Total Loans	87,337	82,147
Single-family residential | Management Attention
Credit risk profile
Total Loans	21,783	25,219
Single-family residential | Watch
Credit risk profile
Total Loans	4,679	4,682
Single-family residential | Substandard
Credit risk profile
Total Loans	3,414	3,847
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	37,840	40,189	40,934
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	15,318	16,703
Single-family residential - Banco de la Gente stated income | Management Attention
Credit risk profile
Total Loans	15,318	15,580
Single-family residential - Banco de la Gente stated income | Watch
Credit risk profile
Total Loans	3,506	3,943
Single-family residential - Banco de la Gente stated income | Substandard
Credit risk profile
Total Loans	3,698	3,963
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	245,279	247,521	240,150
Commercial | Excellent Quality
Credit risk profile
Total Loans	0	0
Commercial | High Quality
Credit risk profile
Total Loans	35,461	39,769
Commercial | Good Quality
Credit risk profile
Total Loans	190,950	176,109
Commercial | Management Attention
Credit risk profile
Total Loans	13,366	24,753
Commercial | Watch
Credit risk profile
Total Loans	4,034	4,906
Commercial | Substandard
Credit risk profile
Total Loans	1,468	1,984
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	28,662	21,047	18,727
Multifamily and Farmland | Excellent Quality
Credit risk profile
Total Loans	0	0
Multifamily and Farmland | High Quality
Credit risk profile
Total Loans	1,986	2,884
Multifamily and Farmland | Good Quality
Credit risk profile
Total Loans	23,565	14,529
Multifamily and Farmland | Management Attention
Credit risk profile
Total Loans	1,942	2,355
Multifamily and Farmland | Watch
Credit risk profile
Total Loans	1,157	1,201
Multifamily and Farmland | Substandard
Credit risk profile
Total Loans	12	78
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	87,019	87,596	94,790
Commercial loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	562	541
Commercial loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	18,836	26,006
Commercial loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	62,767	55,155
Commercial loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	4,362	5,586
Commercial loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	235	246
Commercial loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	257	62
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	895	0	$ 0
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	756	0
Farm loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	139	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	10,005	9,832
Consumer loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	838	959
Consumer loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	3,502	3,335
Consumer loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	5,015	4,842
Consumer loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	582	619
Consumer loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	24	31
Consumer loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	44	42
Consumer loans (not secured by real estate) | Doubtful
Credit risk profile
Total Loans	0	0
Consumer loans (not secured by real estate) | Loss
Credit risk profile
Total Loans	0	4
All other loans (not secured by real estate)
Credit risk profile
Total Loans	15,070	15,177
All other loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	0	0
All other loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	1,161	2,507
All other loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	13,096	10,921
All other loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	813	1,749
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, 2017USD ($)Integer	Sep. 30, 2016USD ($)Integer	Sep. 30, 2017USD ($)Integer	Sep. 30, 2016USD ($)Integer
Single-family residential TDR
TDR Loans
Number of Contracts | Integer	2	1	2	1
Pre-Modification Outstanding Recorded Investment	$ 22	$ 41	$ 22	$ 41
Post-Modification Outstanding Recorded Investment	$ 22	$ 41	$ 22	$ 41
Total real estate TDR loans
TDR Loans
Number of Contracts | Integer	2	1	2	1
Pre-Modification Outstanding Recorded Investment	$ 22	$ 41	$ 22	$ 41
Post-Modification Outstanding Recorded Investment	$ 22	$ 41	$ 22	$ 41
Total TDR Loans
TDR Loans
Number of Contracts | Integer	2	1	2	1
Pre-Modification Outstanding Recorded Investment	$ 22	$ 41	$ 22	$ 41
Post-Modification Outstanding Recorded Investment	$ 22	$ 41	$ 22	$ 41

3. Loans (Details Narrative)

3. Loans (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Receivables [Abstract]
Percentage of construction and land development loans in Bank's loan portfolio	10.00%		10.00%
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	5.00%		5.00%
Percentage of commercial real estate loans in Bank's loan portfolio	33.00%		33.00%
Percentage of commercial loans in Bank's loan portfolio	12.00%		12.00%
Accruing impaired loans	$ 21,300	$ 22,900	$ 21,300	$ 22,900	$ 23,500
Interest income recognized on accruing impaired loans	322	276	1,062	$ 871	1,198
Provision for loan losses	(218)	$ (360)
TDR loans modified, past-due TDR loans and non-accrual TDR Loans	$ 2,600		$ 2,600		$ 5,900

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, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Earnings
Basic earnings per share	$ 3,242	$ 2,458	$ 8,258	$ 7,875
Effect of dilutive securities: Restricted stock units	0	0	0	0
Diluted earnings per share	$ 3,242	$ 2,458	$ 8,258	$ 7,875
Weighted Average Number of Shares
Basic earnings per share (in shares)	5,450,412	5,470,826	5,440,995	5,497,204
Effect of dilutive securities: Restricted stock units (in shares)	87,581	74,042	85,969	68,122
Diluted earnings per share (in shares)	5,537,993	5,544,868	5,526,964	5,565,326
Per Share Amount
Basic earnings per share	$ 0.59	$ 0.45	$ 1.52	$ 1.43
Diluted earnings per share	$ 0.58	$ 0.44	$ 1.49	$ 1.42

5. Stock-Based Compensation (De

5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Unrecognized compensation cost	$ 389
Recognized compensation expense	$ 566	$ 476

6. Fair Value, Level of Hierarc

6. Fair Value, Level of Hierarchy (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Estimated Fair Value	$ 235,736	$ 249,946
Level 1
Estimated Fair Value	0	0
Level 2
Estimated Fair Value	235,486	249,196
Level 3
Estimated Fair Value	250	750
Mortgage-backed securities
Estimated Fair Value	56,893	67,585
Mortgage-backed securities | Level 1
Estimated Fair Value	0	0
Mortgage-backed securities | Level 2
Estimated Fair Value	56,893	67,585
Mortgage-backed securities | Level 3
Estimated Fair Value	0	0
U.S. Government sponsored enterprises
Estimated Fair Value	40,954	38,222
U.S. Government sponsored enterprises | Level 1
Estimated Fair Value	0	0
U.S. Government sponsored enterprises | Level 2
Estimated Fair Value	40,954	38,222
U.S. Government sponsored enterprises | Level 3
Estimated Fair Value	0	0
State and political subdivisions
Estimated Fair Value	136,109	141,856
State and political subdivisions | Level 1
Estimated Fair Value	0	0
State and political subdivisions | Level 2
Estimated Fair Value	136,109	141,856
State and political subdivisions | Level 3
Estimated Fair Value	0	0
Corporate bonds
Estimated Fair Value	1,530	1,533
Corporate bonds | Level 1
Estimated Fair Value	0	0
Corporate bonds | Level 2
Estimated Fair Value	1,530	1,533
Corporate bonds | Level 3
Estimated Fair Value	0	0
Trust preferred securities
Estimated Fair Value	250	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	$ 250	$ 750

6. Fair Value, Level 3 Valuatio

6. Fair Value, Level 3 Valuation (Details) - Level 3 $ in Thousands	9 Months Ended
	Sep. 30, 2017USD ($)
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)	(500)
Transfers in and/or (out) of Level 3	0
Balance, end of period	250
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, 2017	Dec. 31, 2016
Mortgage loans held for sale	$ 2,623	$ 5,709
Impaired loans	26,453	25,772
Other real estate	$ 0	283
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 discounted cash flows
Significant Unobservable Inputs	Discounts to reflect current market conditions and ultimate collectibility
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	2,623	5,709
Impaired loans	26,453	25,772
Other real estate	$ 0	$ 283

6. Fair Value, Financial Instru

6. Fair Value, Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets:
Cash and cash equivalents	$ 93,256	$ 70,094
Investment securities available for sale	235,736	249,946
Other investments	2,680	2,635
Mortgage loans held for sale	2,623	5,709
Loans, net	740,593	716,261
Cash surrender value of life insurance	15,452	14,952
Liabilities:
Deposits	901,639	892,918
Securities sold under agreements to repurchase	53,307	36,434
FHLB borrowings	20,000	20,000
Junior subordinated debentures	20,619	20,619
Estimated Fair Value
Assets:
Cash and cash equivalents	93,256	70,094
Investment securities available for sale	235,736	249,946
Other investments	2,680	2,635
Mortgage loans held for sale	2,623	5,709
Loans, net	745,481	720,675
Cash surrender value of life insurance	15,452	14,952
Liabilities:
Deposits	890,957	884,510
Securities sold under agreements to repurchase	53,307	36,434
FHLB borrowings	19,967	18,864
Junior subordinated debentures	20,619	20,619
Level 1
Assets:
Cash and cash equivalents	93,256	70,094
Investment securities available for sale	0	0
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	235,486	249,196
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	15,452	14,952
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	53,307	36,434
FHLB borrowings	19,967	18,864
Junior subordinated debentures	20,619	20,619
Level 3
Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	250	750
Other investments	2,680	2,635
Mortgage loans held for sale	2,623	5,709
Loans, net	745,481	720,675
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	890,957	884,510
Securities sold under agreements to repurchase	0	0
FHLB borrowings	0	0
Junior subordinated debentures	$ 0	$ 0