Peoples Bancorp of North Carolina (PEBK) 10-Q 7 Aug 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 31, 2018
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	Jun. 30, 2018
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		5,995,256
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,018

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Cash and due from banks, including reserve requirements of $10,866 at 06/30/18 and $7,472 at 12/31/17	$ 45,481	$ 53,186
Interest-bearing deposits	24,074	4,118
Cash and cash equivalents	69,555	57,304
Investment securities available for sale	210,055	229,321
Other investments	4,427	1,830
Total securities	214,482	231,151
Mortgage loans held for sale	671	857
Loans	781,884	759,764
Less allowance for loan losses	(6,277)	(6,366)
Net loans	775,607	753,398
Premises and equipment, net	19,606	19,911
Cash surrender value of life insurance	15,743	15,552
Other real estate	90	118
Accrued interest receivable and other assets	15,418	13,875
Total assets	1,111,172	1,092,166
Deposits:
Noninterest-bearing demand	313,976	285,406
NOW, MMDA & savings	489,426	498,445
Time, $250,000 or more	17,371	18,756
Other time	94,239	104,345
Total deposits	915,012	906,952
Securities sold under agreements to repurchase	46,570	37,757
Junior subordinated debentures	20,619	20,619
Accrued interest payable and other liabilities	10,805	10,863
Total liabilities	993,006	976,191
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 5,995,256 shares	62,096	62,096
Retained earnings	55,198	50,286
Accumulated other comprehensive income	872	3,593
Total shareholders' equity	118,166	115,975
Total liabilities and shareholders' equity	$ 1,111,172	$ 1,092,166

Consolidated Balance Sheets (U3

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Cash and due from banks, reserve requirements	$ 10,866	$ 7,472
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)	5,995,256	5,995,256
Common stock, shares outstanding (in shares)	5,995,256	5,995,256

Consolidated Statements of Earn

Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest income:
Interest and fees on loans	$ 9,386	$ 8,689	$ 18,455	$ 16,969
Interest on due from banks	124	48	169	78
Interest on investment securities:
U.S. Government sponsored enterprises	524	613	1,130	1,217
State and political subdivisions	980	1,067	1,976	2,151
Other	45	44	88	110
Total interest income	11,059	10,461	21,818	20,525
Interest expense:
NOW, MMDA & savings deposits	186	143	362	275
Time deposits	110	120	215	248
FHLB borrowings	0	201	0	393
Junior subordinated debentures	198	145	369	280
Other	19	13	34	24
Total interest expense	513	622	980	1,220
Net interest income	10,546	9,839	20,838	19,305
Provision for (reduction of provision for) loan losses	231	49	262	(187)
Net interest income after provision for loan losses	10,315	9,790	20,576	19,492
Non-interest income:
Service charges	1,056	1,094	2,080	2,200
Other service charges and fees	175	147	355	302
Gain on sale of securities	50	0	50	0
Mortgage banking income	240	319	456	665
Insurance and brokerage commissions	203	179	385	347
Appraisal management fee income	854	849	1,643	1,592
Gain/(loss) on sale and write-down of other real estate	(3)	0	3	(283)
Miscellaneous	1,441	1,341	2,780	2,548
Total non-interest income	4,016	3,929	7,752	7,371
Non-interest expense:
Salaries and employee benefits	5,385	4,871	10,347	10,105
Occupancy	1,750	1,699	3,606	3,312
Professional fees	373	236	753	485
Advertising	260	366	501	612
Debit card expense	283	268	492	574
FDIC insurance	84	87	167	173
Appraisal management fee expense	654	648	1,246	1,214
Other	1,771	1,808	3,490	3,869
Total non-interest expense	10,560	9,983	20,602	20,344
Earnings before income taxes	3,771	3,736	7,726	6,519
Income tax expense	595	925	1,247	1,503
Net earnings	$ 3,176	$ 2,811	$ 6,479	$ 5,016
Basic net earnings per share	$ 0.53	$ 0.47	$ 1.08	$ 0.84
Diluted net earnings per share	0.53	0.47	1.08	0.83
Cash dividends declared per share	$ 0.13	$ 0.11	$ 0.26	$ 0.22

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Consolidated Statements Of Comprehensive Income
Net earnings	$ 3,176	$ 2,811	$ 6,479	$ 5,016
Other comprehensive income:
Unrealized holding gains (losses) on securities available for sale	(869)	2,107	(3,483)	2,694
Reclassification adjustment for gains on securities available for sale included in net earnings	(50)	0	(50)	0
Total other comprehensive income (loss), before income taxes	(919)	2,107	(3,533)	2,694
Income tax benefit related to other comprehensive income:
Unrealized holding gains (losses) on securities available for sale	(200)	758	(801)	742
Reclassification adjustment for gains on securities available for sale included in net earnings	(11)	0	(11)	0
Total income tax benefit related to other comprehensive income (loss)	(211)	758	(812)	742
Total other comprehensive income (loss), net of tax	(708)	1,349	(2,721)	1,952
Total comprehensive income	$ 2,468	$ 4,160	$ 3,758	$ 6,968

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, 2016	5,417,800
Beginning Balance, Amount at Dec. 31, 2016	$ 44,187	$ 60,254	$ 2,987	$ 107,428
Cash dividends declared on common stock		(1,316)		(1,316)
Restricted stock units exercised, shares	30,654
Restricted stock units exercised, amount	$ 852			852
Net earnings		5,016		5,016
Change in accumulated other comprehensive income, net of tax			1,952	1,952
Ending Balance, Shares at Jun. 30, 2017	5,448,454
Ending Balance, Amount at Jun. 30, 2017	$ 45,039	63,954	4,939	113,932
Beginning Balance, Shares at Dec. 31, 2017	5,995,256
Beginning Balance, Amount at Dec. 31, 2017	$ 62,096	50,286	3,593	115,975
Cash dividends declared on common stock		(1,567)		(1,567)
Net earnings		6,479		6,479
Change in accumulated other comprehensive income, net of tax			(2,721)	(2,721)
Ending Balance, Shares at Jun. 30, 2018	5,995,256
Ending Balance, Amount at Jun. 30, 2018	$ 62,096	$ 55,198	$ 872	$ 118,166

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net earnings	$ 6,479	$ 5,016
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and accretion	2,418	2,506
(Reduction)/Provision for loan losses	262	(187)
Deferred income taxes	(7)	(1,122)
Gain on sale of investment securities	(50)	0
Gain on sale of other real estate	(3)	0
Write-down of other real estate	0	283
Loss on sale of premises and equipment	2	32
Restricted stock expense	139	471
Proceeds from sales of mortgage loans held for sale	18,475	34,845
Origination of mortgage loans held for sale	(18,289)	(32,649)
Change in:
Cash surrender value of life insurance	(191)	(399)
Other assets	(1,249)	230
Other liabilities	(197)	(240)
Net cash provided by operating activities	7,789	8,786
Cash flows from investing activities:
Purchases of investment securities available for sale	(17,347)	(3,138)
Proceeds from sales, calls and maturities of investment securities available for sale	23,384	4,285
Proceeds from paydowns of investment securities available for sale	8,519	8,682
Purchases of other investments	(2,611)	0
Proceeds from paydowns on other investments	29	0
Purchases of FHLB stock	(4)	(45)
Net change in loans	(22,044)	(21,423)
Purchases of premises and equipment	(898)	(3,980)
Proceeds from sale of other real estate and repossessions	128	0
Net cash used by investing activities	(10,844)	(15,619)
Cash flows from financing activities:
Net change in deposits	8,060	(433)
Net change in securities sold under agreement to repurchase	8,813	13,543
Proceeds from Fed Funds purchased	850	0
Repayments of Fed Funds purchased	(850)	0
Cash dividends paid on common stock	(1,567)	(1,316)
Net cash provided by financing activities	15,306	11,794
Net change in cash and cash equivalents	12,251	4,961
Cash and cash equivalents at beginning of period	57,304	70,094
Cash and cash equivalents at end of period	69,555	75,055
Cash paid during the period for:
Interest	973	1,241
Income taxes	252	40
Noncash investing and financing activities:
Change in unrealized gain on investment securities available for sale, net	(2,721)	1,952
Issuance of accrued restricted stock units	0	(852)
Transfers of loans to other real estate and repossessions	$ 97	$ 0

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2018
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. (“PIS”), 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, 2017) 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 2017 Annual Report to Shareholders which is Appendix A to the Proxy Statement for the May 3, 2018 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 has applied 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 are not affected. Appraisal management fee income and expense from the Bank’s subsidiary, CBRES, was reported as a net amount prior to March 31, 2018, which was included in miscellaneous non-interest income. This income and expense is now reported on separate line items under non-interest income and non-interest expense. See below for additional information related to revenue generated from contracts with customers. Revenue and Method of Adoption The majority of our revenue is derived primarily from interest income from receivables (loans) and securities. Other revenues are derived from fees received in connection with deposit accounts, investment advisory, and appraisal services. On January 1, 2018, we adopted the requirements of ASU No. 2014-09. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASU No. 2014-09 using the modified retrospective transition approach which does not require restatement of prior periods. The method was selected as there were no material changes in the timing of revenue recognition resulting in no comparability issues with prior periods. This adoption method is considered a change in accounting principle requiring additional disclosure of the nature of and reason for the change, which is solely a result of the adoption of the required standard. When applying the modified retrospective approach under ASU No. 2014-09, the Company has elected, as a practical expedient, to apply this approach only to contracts that were not completed as of January 1, 2018. A completed contract is considered to be a contract for which all (or substantially all) of the revenue was recognized in accordance with revenue guidance that was in effect before January 1, 2018. There were no uncompleted contracts as of January 1, 2018 for which application of the new standard required an adjustment to retained earnings. The following disclosures involve our material income streams derived from contracts with customers which are within the scope of ASU No. 2014-09. Through our wholly-owned subsidiary, PIS, we contract with a registered investment advisor to perform investment advisory services on behalf of our customers. We receive commissions from this third party investment advisor based on the volume of business that our customers do with such investment advisor. Total revenue recognized from these contracts for the six months ended June 30, 2018 was $384,000. The Company utilizes third parties to contract with our customers to perform debit and credit card clearing services. These third parties pay us commissions based on the volume of transactions that they process on behalf of our customers. Total revenue recognized for the six months ended June 30, 2018 from the contract with these third parties was $1.9 million. Through our wholly-owned subsidiary, REAS, we provide property appraisal services for negotiated fee amounts on a per appraisal basis. Total revenue recognized for the six months ended June 30, 2018 from these contracts with customers was $278,000. Through our wholly-owned subsidiary, CBRES, we provide appraisal management services. Total revenue recognized for the six months ended June 30, 2018 from these contracts with customers was $1.6 million. Due to the nature of our relationship with the customers that we provide services, we do not incur costs to obtain contracts and there are no material incremental costs to fulfill these contracts that should be capitalized. Disaggregation of Revenue Contract Balances Performance Obligations Significant Judgements In January 2016, FASB issued ASU No. 2016-01, (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, FASB issued ASU No. 2016-02, (Topic 842): Leases 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 (at December 31, 2017, the future minimum lease payments were $4.8 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. ASU No. 2017-05 clarifies the scope of established guidance on nonfinancial asset derecognition (issued as part of the new revenue standard, ASU No. 2014-09, Revenue from Contracts with Customers), as well as the accounting for partial sales of nonfinancial assets. ASU No. 2017-05 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. 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 In September 2017, FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic In November 2017, FASB issued ASU No. 2017-14, Income Statement—Reporting Comprehensive, Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606) In February 2018, FASB issued ASU 2018-02, Income Statement (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities. ASU No. 2018-03 clarifies certain aspects of the guidance issued in ASU 2016-01. ASU No. 2018-03 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. In March 2018, FASB issued ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update) In March 2018, FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update) In May 2018, FASB issued ASU 2018-06, Codification Improvements to Topic 942: Financial Services—Depository and Lending. ASU No. 2018-06 eliminates a reference to the Office of the Comptroller of the Currency’s Banking Circular 202, Accounting for Net Deferred Tax Charges, from the Accounting Standards Codification. The Office of the Comptroller of the Currency published the guidance in 1985 but has since rescinded it. The amendments were effective upon issuance. The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. 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	6 Months Ended
	Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]
2. Investment Securities	Investment securities available for sale at June 30, 2018 and December 31, 2017 are as follows: (Dollars in thousands) June 30, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 46,213 321 813 45,721 U.S. Government sponsored enterprises 38,528 10 1,001 37,537 State and political subdivisions 122,930 2,749 144 125,535 Corporate bonds 1,000 12 - 1,012 Trust preferred securities 250 - - 250 Total $ 208,921 3,092 1,958 210,055 (Dollars in thousands) December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 53,124 814 329 53,609 U.S. Government sponsored enterprises 40,504 140 264 40,380 State and political subdivisions 129,276 4,310 16 133,570 Corporate bonds 1,500 12 - 1,512 Trust preferred securities 250 - - 250 Total $ 224,654 5,276 609 229,321 The current fair value and associated unrealized losses on investments in securities with unrealized losses at June 30, 2018 and December 31, 2017 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position. (Dollars in thousands) June 30, 2018 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 18,692 255 11,373 558 30,065 813 U.S. Government - sponsored enterprises 26,635 663 9,891 338 36,526 1,001 State and political subdivisions 9,760 117 964 27 10,724 144 Total $ 55,087 1,035 22,228 923 77,315 1,958 (Dollars in thousands) December 31, 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 $ 8,701 75 11,259 254 19,960 329 U.S. Government sponsored enterprises 12,661 98 10,067 166 22,728 264 State and political subdivisions 798 2 1,501 14 2,299 16 Total $ 22,160 175 22,827 434 44,987 609 At June 30, 2018, unrealized losses in the investment securities portfolio relating to debt securities totaled $2.0 million. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the June 30, 2018 tables above, 15 out of 153 securities issued by state and political subdivisions contained unrealized losses and 35 out of 43 securities issued by U.S. Government sponsored enterprises 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 June 30, 2018, 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. June 30, 2018 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 22,613 22,809 Due from one to five years 97,045 98,725 Due from five to ten years 37,351 37,068 Due after ten years 5,449 5,482 Mortgage-backed securities 46,213 45,721 Trust preferred securities 250 250 Total $ 208,921 210,055 Proceeds from sales of securities available for sale during the three and six months ended June 30, 2018 were $14.0 million and resulted in net gains of $50,000. No securities available for sale were sold during the three and six months ended June 30, 2017. Securities with a fair value of approximately $89.5 million and $105.6 million at June 30, 2018 and December 31, 2017, respectively, were pledged to secure public deposits and for other purposes as required by law.

3. Loans

3. Loans	6 Months Ended
	Jun. 30, 2018
Receivables [Abstract]
3. Loans	Major classifications of loans at June 30, 2018 and December 31, 2017 are summarized as follows: (Dollars in thousands) June 30, 2018 December 31, 2017 Real estate loans: Construction and land development $ 79,769 84,987 Single-family residential 250,620 246,703 Single-family residential - Banco de la Gente stated income 35,847 37,249 Commercial 269,792 248,637 Multifamily and farmland 28,667 28,937 Total real estate loans 664,695 646,513 Loans not secured by real estate: Commercial loans 93,580 89,022 Farm loans 1,023 1,204 Consumer loans 9,422 9,888 All other loans 13,164 13,137 Total loans 781,884 759,764 Less allowance for loan losses 6,277 6,366 Total net loans $ 775,607 753,398 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 June 30, 2018, 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 June 30, 2018, single-family residential loans comprised approximately 37% 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 June 30, 2018, commercial real estate loans comprised approximately 35% 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 June 30, 2018, 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 June 30, 2018 and December 31, 2017: June 30, 2018 (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 $ 631 - 631 79,138 79,769 - Single-family residential 1,251 481 1,732 248,888 250,620 - Single-family residential - Banco de la Gente stated income 940 232 1,172 34,675 35,847 - Commercial 946 202 1,148 268,644 269,792 - Multifamily and farmland - - - 28,667 28,667 - Total real estate loans 3,768 915 4,683 660,012 664,695 - Loans not secured by real estate: Commercial loans 4 94 98 93,482 93,580 - Farm loans - - - 1,023 1,023 - Consumer loans 158 5 163 9,259 9,422 - All other loans - - - 13,164 13,164 - Total loans $ 3,930 1,014 4,944 776,940 781,884 - December 31, 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 $ 277 - 277 84,710 84,987 - Single-family residential 3,241 193 3,434 243,269 246,703 - Single-family residential - Banco de la Gente stated income 4,078 465 4,543 32,706 37,249 - Commercial 588 - 588 248,049 248,637 - Multifamily and farmland - 12 12 28,925 28,937 - Total real estate loans 8,184 670 8,854 637,659 646,513 - Loans not secured by real estate: Commercial loans 53 100 153 88,869 89,022 - Farm loans - - - 1,204 1,204 - Consumer loans 113 5 118 9,770 9,888 - All other loans - - - 13,137 13,137 - Total loans $ 8,350 775 9,125 750,639 759,764 - The following table presents non-accrual loans as of June 30, 2018 and December 31, 2017: (Dollars in thousands) June 30, 2018 December 31, 2017 Real estate loans: Construction and land development $ 123 14 Single-family residential 1,829 1,634 Single-family residential - Banco de la Gente stated income 1,467 1,543 Commercial 768 396 Multifamily and farmland - 12 Total real estate loans 4,187 3,599 Loans not secured by real estate: Commercial loans 94 100 Consumer loans 11 12 Total $ 4,292 3,711 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 $24.3 million, $24.6 million and $22.4 million at June 30, 2018, December 31, 2017 and June 30, 2017, respectively. Interest income recognized on accruing impaired loans was $697,000, $1.4 million, and $740,000 for the six months ended June 30, 2018, the year ended December 31, 2017 and the six months ended June 30, 2017, 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 June 30, 2018: June 30, 2018 (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 $ 357 - 357 357 8 Single-family residential 4,992 725 4,267 4,992 39 Single-family residential - Banco de la Gente stated income 16,213 - 16,213 16,213 1,082 Commercial 2,489 402 2,087 2,489 20 Multifamily and farmland - - - - - Total impaired real estate loans 24,051 1,127 22,924 24,051 1,149 Loans not secured by real estate: Commercial loans 96 94 2 96 - Consumer loans 133 - 133 133 2 Total impaired loans $ 24,280 1,221 23,059 24,280 1,151 The following table presents the average impaired loan balance and the interest income recognized by loan class for the three and six months ended June 30, 2018 and 2017. (Dollars in thousands) Three months ended Six months ended June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 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 $ 373 5 304 2 341 11 265 6 Single-family residential 6,306 66 4,595 63 6,325 135 5,185 131 Single-family residential - Banco de la Gente stated income 14,841 230 17,539 232 14,981 467 17,271 469 Commercial 2,304 42 3,831 66 2,359 80 3,778 125 Multifamily and farmland - - 45 - 4 - 56 - Total impaired real estate loans 23,824 343 26,314 363 24,010 693 26,555 731 Loans not secured by real estate: Commercial loans 98 - 129 3 100 - 95 3 Farm loans (non RE) - - - - - - - - Consumer loans 141 2 221 3 146 4 215 6 Total impaired loans $ 24,063 345 26,664 369 24,256 697 26,865 740 The following table presents impaired loans as of and for the year ended December 31, 2017: December 31, 2017 (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 - 277 277 6 253 17 Single-family residential 5,226 1,135 3,686 4,821 41 5,113 265 Single-family residential - Banco de la Gente stated income 17,360 - 16,805 16,805 1,149 16,867 920 Commercial 2,761 807 1,661 2,468 1 3,411 148 Multifamily and farmland 78 - 12 12 - 28 - Total impaired real estate loans 25,707 1,942 22,441 24,383 1,197 25,672 1,350 Loans not secured by real estate: Commercial loans 264 100 4 104 - 149 3 Consumer loans 158 - 154 154 2 194 9 Total impaired loans $ 26,129 2,042 22,599 24,641 1,199 26,015 1,362 Changes in the allowance for loan losses for the three and six months ended June 30, 2018 and 2017 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single- Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Six months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 804 1,812 1,280 1,193 72 574 - 155 476 6,366 Charge-offs - (43 ) - (271 ) (5 ) (2 ) - (186 ) - (507 ) Recoveries 3 27 - 7 1 16 - 102 - 156 Provision (139 ) (158 ) (47 ) 491 4 (1 ) - 79 33 262 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Three months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 651 1,640 1,265 1,298 73 706 - 136 604 6,373 Charge-offs - (43 ) - (271 ) - (2 ) - (85 ) - (401 ) Recoveries 1 22 - 4 - 8 - 39 - 74 Provision 16 19 (32 ) 389 (1 ) (125 ) - 60 (95 ) 231 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Allowance for loan losses at June 30, 2018: Ending balance: individually evaluated for impairment $ - 2 1,066 18 - - - - - 1,086 Ending balance: collectively evaluated for impairment 668 1,636 167 1,402 72 587 - 150 509 5,191 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Loans at June 30, 2018: Ending balance $ 79,769 250,620 35,847 269,792 28,667 93,580 1,023 22,586 - 781,884 Ending balance: individually evaluated for impairment $ 95 2,132 14,975 2,103 - 94 - - - 19,399 Ending balance: collectively evaluated for impairment $ 79,674 248,488 20,872 267,689 28,667 93,486 1,023 22,586 - 762,485 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single- Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Six months ended June 30, 2017: Allowance for loan losses: Beginning balance $ 1,152 2,126 1,377 1,593 52 675 - 204 371 7,550 Charge-offs - (44 ) - (66 ) - (37 ) - (182 ) - (329 ) Recoveries 10 16 - 14 - 15 - 78 - 133 Provision 21 (279 ) (84 ) (78 ) 23 51 - 58 101 (187 ) Ending balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Three months ended June 30, 2017: Allowance for loan losses: Beginning balance $ 969 2,003 1,328 1,655 73 628 - 178 429 7,263 Charge-offs - (24 ) - - (66 ) (35 ) - (73 ) - (198 ) Recoveries 3 9 - 6 - 7 - 28 - 53 Provision 211 (169 ) (35 ) (198 ) 68 104 - 25 43 49 Ending balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Allowance for loan losses at June 30, 2017: Ending balance: individually evaluated for impairment $ - - 1,103 65 - 27 - - - 1,195 Ending balance: collectively evaluated for impairment 1,183 1,819 190 1,398 75 677 - 158 472 5,972 Ending balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Loans at June 30, 2017: Ending balance $ 71,213 240,993 38,875 243,957 30,125 94,567 1,591 23,717 - 745,038 Ending balance: individually evaluated for impairment $ - 1,152 16,792 3,724 - 230 - - - 21,898 Ending balance: collectively evaluated for impairment $ 71,213 239,841 22,083 240,233 30,125 94,337 1,591 23,717 - 723,140 The provision for loan losses for the three months ended June 30, 2018 was an expense of $231,000, as compared to an expense of $49,000 for the three months ended June 30, 2017. The increase in the provision for loan losses is primarily attributable to a $36.9 million increase in loans from June 30, 2017 to June 30, 2018. The provision for loan losses for the six months ended June 30, 2018 was an expense of $262,000, as compared to a credit of $187,000 for the six months ended June 30, 2017. The increase in the provision for loan losses is primarily attributable to a $36.9 million increase in loans from June 30, 2017 to June 30, 2018. 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 June 30, 2018 and December 31, 2017: June 30, 2018 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single- Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 472 7,134 - - - 574 - 576 - 8,756 2- High Quality 20,688 125,870 - 29,624 477 23,450 - 3,305 2,259 205,673 3- Good Quality 49,044 91,359 14,373 218,439 25,325 61,998 870 4,909 10,128 476,445 4- Management Attention 4,411 18,816 14,727 17,868 1,750 7,168 153 590 777 66,260 5- Watch 4,884 3,996 3,112 3,093 1,115 283 - 20 - 16,503 6- Substandard 270 3,445 3,635 768 - 107 - 22 - 8,247 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 79,769 250,620 35,847 269,792 28,667 93,580 1,023 9,422 13,164 781,884 December 31, 2017 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single- Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 152 8,590 - - - 446 - 791 - 9,979 2- High Quality 20,593 120,331 - 34,360 561 17,559 - 3,475 2,410 199,289 3- Good Quality 53,586 89,120 14,955 196,439 25,306 65,626 1,085 5,012 9,925 461,054 4- Management Attention 4,313 20,648 15,113 13,727 1,912 5,051 119 562 802 62,247 5- Watch 6,060 4,796 3,357 3,671 1,146 223 - 23 - 19,276 6- Substandard 283 3,218 3,824 440 12 117 - 25 - 7,919 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 84,987 246,703 37,249 248,637 28,937 89,022 1,204 9,888 13,137 759,764 Current year TDR modifications, past due TDR loans and non-accrual TDR loans totaled $1.8 million and $4.5 million at June 30, 2018 and December 31, 2017, 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 was $33,000 and $21,000 in performing loans classified as TDR loans at June 30, 2018 and December 31, 2017, respectively. The following table presents an analysis of TDR loan modifications during the three and six months ended June 30, 2018. Three and six months ended June 30, 2018 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 1 $ 33 33 Total real estate TDR loans 1 33 33 Total TDR loans 1 $ 33 33 During the three and six months ended June 30, 2018, 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 new TDR modifications during the three and six months ended June 30, 2017. There were no loans modified as TDR that defaulted during the three and six months ended June 30, 2018 and 2017, 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	6 Months Ended
	Jun. 30, 2018
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 six months ended June 30, 2018 and 2017 is as follows: For the three months ended June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,176 5,995,256 $ 0.53 Effect of dilutive securities: Restricted stock units - 18,917 Diluted earnings per share $ 3,176 6,014,173 $ 0.53 For the six months ended June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 6,479 5,995,256 $ 1.08 Effect of dilutive securities: Restricted stock units - 17,964 Diluted earnings per share $ 6,479 6,013,220 $ 1.08 For the three months ended June 30, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,811 5,989,414 $ 0.47 Effect of dilutive securities: Restricted stock units - 95,171 Diluted earnings per share $ 2,811 6,084,585 $ 0.47 For the six months ended June 30, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 5,016 5,979,764 $ 0.84 Effect of dilutive securities: Restricted stock units - 93,664 Diluted earnings per share $ 5,016 6,073,428 $ 0.83 In November 2017, the Board of Directors of the Company declared a 10% stock dividend. As a result of the stock dividend, each shareholder received one new share of stock for every ten shares of stock they held as of the record date of December 4, 2017. The payable date for the stock dividend was December 15, 2017. All previously reported per share amounts have been restated to reflect this stock dividend.

5. Stock-Based Compensation

5. Stock-Based Compensation	6 Months Ended
	Jun. 30, 2018
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 280,933 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 (i.e., ten years from the Plan effective date). The Company granted 32,465 restricted stock units under the Plan at a grant date fair value of $7.18 per share during the first quarter of 2012, of which 5,891 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 in conjunction with the Company’s participation in the Capital Purchase Program under the Troubled Asset Relief Program. In July 2012, the Company granted 5,891 restricted stock units at a grant date fair value of $7.50 per share. The Company granted 29,475 restricted stock units under the Plan at a grant date fair value of $10.82 per share during the second quarter of 2013. The Company granted 23,162 restricted stock units under the Plan at a grant date fair value of $14.27 per share during the first quarter of 2014. The Company granted 16,583 restricted stock units under the Plan at a grant date fair value of $16.34 per share during the first quarter of 2015. The Company granted 5,544 restricted stock units under the Plan at a grant date fair value of $16.91 per share during the first quarter of 2016. The Company granted 4,114 restricted stock units under the Plan at a grant date fair value of $25.00 per share during the first quarter of 2017. The Company granted 3,725 restricted stock units under the Plan at a grant date fair value of $31.43 per share during the first quarter of 2018. The number of restricted stock units granted and grant date fair values have been restated to reflect the 10% stock dividend during the fourth 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, 2017 and 2018 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 June 30, 2018, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $334,000. The Company recognized compensation expense for restricted stock unit awards granted under the Plan of $139,000 and $471,000 for the six months ended June 30, 2018 and 2017, respectively.

6. Fair Value

6. Fair Value	6 Months Ended
	Jun. 30, 2018
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 methods of determining the fair value of assets and liabilities presented in this note are consistent with methodologies disclosed in Note 15 of the Company’s 2017 Form 10-K, except for the valuation of loans which was impacted by the adoption of ASU No. 2016-01. 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 In accordance with ASU No. 2016-01, the fair value of loans, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit, and nonperformance risk of the loans. 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 June 30, 2018 and December 31, 2017. (Dollars in thousands) June 30, 2018 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 45,721 - 45,721 - U.S. Government sponsored enterprises $ 37,537 - 37,537 - State and political subdivisions $ 125,535 - 125,535 - Corporate bonds $ 1,012 - 1,012 - Trust preferred securities $ 250 - - 250 (Dollars in thousands) December 31, 2017 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 53,609 - 53,609 - U.S. Government sponsored enterprises $ 40,380 - 40,380 - State and political subdivisions $ 133,570 - 133,570 - Corporate bonds $ 1,512 - 1,512 - Trust preferred securities $ 250 - - 250 The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the six months ended June 30, 2018. (Dollars in thousands) Investment Securities Level 3 Valuation Balance, beginning of period $ 250 Change in book value - Change in gain/(loss) realized and unrealized - Purchases/(sales and calls) - Transfers in and/or (out) of Level 3 - Balance, end of period $ 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 June 30, 2018 and December 31, 2017 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 June 30, 2018 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 671 - - 671 Impaired loans $ 23,129 - - 23,129 Other real estate $ 90 - - 90 (Dollars in thousands) Fair Value Measurements December 31, 2017 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 857 - - 857 Impaired loans $ 23,442 - - 23,442 Other real estate $ 118 - - 118 (Dollars in thousands) Fair Value June 30, 2018 Fair Value December 31, 2017 Valuation Technique Significant Unobservable Inputs General Range Mortgage loans held for sale $ 671 857 Rate lock commitment N/A N/A Impaired loans $ 23,129 23,442 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ 90 118 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 June 30, 2018 and December 31, 2017 are as follows: (Dollars in thousands) Fair Value Measurements at June 30, 2018 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 69,555 69,555 - - 69,555 Investment securities available for sale $ 210,055 - 209,805 250 210,055 Other investments $ 4,427 - - 4,427 4,427 Mortgage loans held for sale $ 671 - - 671 671 Loans, net $ 775,607 - - 769,227 769,227 Cash surrender value of life insurance $ 15,743 - 15,743 - 15,743 Liabilities: Deposits $ 915,012 - - 895,453 895,453 Securities sold under agreements to repurchase $ 46,570 - 46,570 - 46,570 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2017 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 57,304 57,304 - - 57,304 Investment securities available for sale $ 229,321 - 229,071 250 229,321 Other investments $ 1,830 - - 1,830 1,830 Mortgage loans held for sale $ 857 - - 857 857 Loans, net $ 753,398 - - 735,837 735,837 Cash surrender value of life insurance $ 15,552 - 15,552 - 15,552 Liabilities: Deposits $ 906,952 - - 894,932 894,932 Securities sold under agreements to repurchase $ 37,757 - 37,757 - 37,757 Junior subordinated debentures $ 20,619 - 20,619 - 20,619

7. Subsequent Events

7. Subsequent Events	6 Months Ended
	Jun. 30, 2018
Subsequent Events [Abstract]
7. 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.

2. Investment Securities (Table

2. Investment Securities (Tables)	6 Months Ended
	Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]
Investment securities available for sale	(Dollars in thousands) June 30, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 46,213 321 813 45,721 U.S. Government sponsored enterprises 38,528 10 1,001 37,537 State and political subdivisions 122,930 2,749 144 125,535 Corporate bonds 1,000 12 - 1,012 Trust preferred securities 250 - - 250 Total $ 208,921 3,092 1,958 210,055 (Dollars in thousands) December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 53,124 814 329 53,609 U.S. Government sponsored enterprises 40,504 140 264 40,380 State and political subdivisions 129,276 4,310 16 133,570 Corporate bonds 1,500 12 - 1,512 Trust preferred securities 250 - - 250 Total $ 224,654 5,276 609 229,321
Current fair value and associated unrealized losses on investments in securities with unrealized losses	(Dollars in thousands) June 30, 2018 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 18,692 255 11,373 558 30,065 813 U.S. Government - sponsored enterprises 26,635 663 9,891 338 36,526 1,001 State and political subdivisions 9,760 117 964 27 10,724 144 Total $ 55,087 1,035 22,228 923 77,315 1,958 (Dollars in thousands) December 31, 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 $ 8,701 75 11,259 254 19,960 329 U.S. Government sponsored enterprises 12,661 98 10,067 166 22,728 264 State and political subdivisions 798 2 1,501 14 2,299 16 Total $ 22,160 175 22,827 434 44,987 609
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity	June 30, 2018 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 22,613 22,809 Due from one to five years 97,045 98,725 Due from five to ten years 37,351 37,068 Due after ten years 5,449 5,482 Mortgage-backed securities 46,213 45,721 Trust preferred securities 250 250 Total $ 208,921 210,055

3. Loans (Tables)

3. Loans (Tables)	6 Months Ended
	Jun. 30, 2018
Receivables [Abstract]
Major classifications of loans	(Dollars in thousands) June 30, 2018 December 31, 2017 Real estate loans: Construction and land development $ 79,769 84,987 Single-family residential 250,620 246,703 Single-family residential - Banco de la Gente stated income 35,847 37,249 Commercial 269,792 248,637 Multifamily and farmland 28,667 28,937 Total real estate loans 664,695 646,513 Loans not secured by real estate: Commercial loans 93,580 89,022 Farm loans 1,023 1,204 Consumer loans 9,422 9,888 All other loans 13,164 13,137 Total loans 781,884 759,764 Less allowance for loan losses 6,277 6,366 Total net loans $ 775,607 753,398
Age analysis of past due loans, by loan type	June 30, 2018 (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 $ 631 - 631 79,138 79,769 - Single-family residential 1,251 481 1,732 248,888 250,620 - Single-family residential - Banco de la Gente stated income 940 232 1,172 34,675 35,847 - Commercial 946 202 1,148 268,644 269,792 - Multifamily and farmland - - - 28,667 28,667 - Total real estate loans 3,768 915 4,683 660,012 664,695 - Loans not secured by real estate: Commercial loans 4 94 98 93,482 93,580 - Farm loans - - - 1,023 1,023 - Consumer loans 158 5 163 9,259 9,422 - All other loans - - - 13,164 13,164 - Total loans $ 3,930 1,014 4,944 776,940 781,884 - December 31, 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 $ 277 - 277 84,710 84,987 - Single-family residential 3,241 193 3,434 243,269 246,703 - Single-family residential - Banco de la Gente stated income 4,078 465 4,543 32,706 37,249 - Commercial 588 - 588 248,049 248,637 - Multifamily and farmland - 12 12 28,925 28,937 - Total real estate loans 8,184 670 8,854 637,659 646,513 - Loans not secured by real estate: Commercial loans 53 100 153 88,869 89,022 - Farm loans - - - 1,204 1,204 - Consumer loans 113 5 118 9,770 9,888 - All other loans - - - 13,137 13,137 - Total loans $ 8,350 775 9,125 750,639 759,764 -
Non-accrual loans	(Dollars in thousands) June 30, 2018 December 31, 2017 Real estate loans: Construction and land development $ 123 14 Single-family residential 1,829 1,634 Single-family residential - Banco de la Gente stated income 1,467 1,543 Commercial 768 396 Multifamily and farmland - 12 Total real estate loans 4,187 3,599 Loans not secured by real estate: Commercial loans 94 100 Consumer loans 11 12 Total $ 4,292 3,711
Impaired loans	June 30, 2018 (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 $ 357 - 357 357 8 Single-family residential 4,992 725 4,267 4,992 39 Single-family residential - Banco de la Gente stated income 16,213 - 16,213 16,213 1,082 Commercial 2,489 402 2,087 2,489 20 Multifamily and farmland - - - - - Total impaired real estate loans 24,051 1,127 22,924 24,051 1,149 Loans not secured by real estate: Commercial loans 96 94 2 96 - Consumer loans 133 - 133 133 2 Total impaired loans $ 24,280 1,221 23,059 24,280 1,151 (Dollars in thousands) Three months ended Six months ended June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 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 $ 373 5 304 2 341 11 265 6 Single-family residential 6,306 66 4,595 63 6,325 135 5,185 131 Single-family residential - Banco de la Gente stated income 14,841 230 17,539 232 14,981 467 17,271 469 Commercial 2,304 42 3,831 66 2,359 80 3,778 125 Multifamily and farmland - - 45 - 4 - 56 - Total impaired real estate loans 23,824 343 26,314 363 24,010 693 26,555 731 Loans not secured by real estate: Commercial loans 98 - 129 3 100 - 95 3 Farm loans (non RE) - - - - - - - - Consumer loans 141 2 221 3 146 4 215 6 Total impaired loans $ 24,063 345 26,664 369 24,256 697 26,865 740 December 31, 2017 (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 - 277 277 6 253 17 Single-family residential 5,226 1,135 3,686 4,821 41 5,113 265 Single-family residential - Banco de la Gente stated income 17,360 - 16,805 16,805 1,149 16,867 920 Commercial 2,761 807 1,661 2,468 1 3,411 148 Multifamily and farmland 78 - 12 12 - 28 - Total impaired real estate loans 25,707 1,942 22,441 24,383 1,197 25,672 1,350 Loans not secured by real estate: Commercial loans 264 100 4 104 - 149 3 Consumer loans 158 - 154 154 2 194 9 Total impaired loans $ 26,129 2,042 22,599 24,641 1,199 26,015 1,362
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 Six months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 804 1,812 1,280 1,193 72 574 - 155 476 6,366 Charge-offs - (43 ) - (271 ) (5 ) (2 ) - (186 ) - (507 ) Recoveries 3 27 - 7 1 16 - 102 - 156 Provision (139 ) (158 ) (47 ) 491 4 (1 ) - 79 33 262 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Three months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 651 1,640 1,265 1,298 73 706 - 136 604 6,373 Charge-offs - (43 ) - (271 ) - (2 ) - (85 ) - (401 ) Recoveries 1 22 - 4 - 8 - 39 - 74 Provision 16 19 (32 ) 389 (1 ) (125 ) - 60 (95 ) 231 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Allowance for loan losses at June 30, 2018: Ending balance: individually evaluated for impairment $ - 2 1,066 18 - - - - - 1,086 Ending balance: collectively evaluated for impairment 668 1,636 167 1,402 72 587 - 150 509 5,191 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Loans at June 30, 2018: Ending balance $ 79,769 250,620 35,847 269,792 28,667 93,580 1,023 22,586 - 781,884 Ending balance: individually evaluated for impairment $ 95 2,132 14,975 2,103 - 94 - - - 19,399 Ending balance: collectively evaluated for impairment $ 79,674 248,488 20,872 267,689 28,667 93,486 1,023 22,586 - 762,485 (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 Six months ended June 30, 2017: Allowance for loan losses: Beginning balance $ 1,152 2,126 1,377 1,593 52 675 - 204 371 7,550 Charge-offs - (44 ) - (66 ) - (37 ) - (182 ) - (329 ) Recoveries 10 16 - 14 - 15 - 78 - 133 Provision 21 (279 ) (84 ) (78 ) 23 51 - 58 101 (187 ) Ending balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Three months ended June 30, 2017: Allowance for loan losses: Beginning balance $ 969 2,003 1,328 1,655 73 628 - 178 429 7,263 Charge-offs - (24 ) - - (66 ) (35 ) - (73 ) - (198 ) Recoveries 3 9 - 6 - 7 - 28 - 53 Provision 211 (169 ) (35 ) (198 ) 68 104 - 25 43 49 Ending balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Allowance for loan losses at June 30, 2017: Ending balance: individually evaluated for impairment $ - - 1,103 65 - 27 - - - 1,195 Ending balance: collectively evaluated for impairment 1,183 1,819 190 1,398 75 677 - 158 472 5,972 Ending balance $ 1,183 1,819 1,293 1,463 75 704 - 158 472 7,167 Loans at June 30, 2017: Ending balance $ 71,213 240,993 38,875 243,957 30,125 94,567 1,591 23,717 - 745,038 Ending balance: individually evaluated for impairment $ - 1,152 16,792 3,724 - 230 - - - 21,898 Ending balance: collectively evaluated for impairment $ 71,213 239,841 22,083 240,233 30,125 94,337 1,591 23,717 - 723,140
Credit risk profile of each loan type based on internally assigned risk grade	June 30, 2018 (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 $ 472 7,134 - - - 574 - 576 - 8,756 2- High Quality 20,688 125,870 - 29,624 477 23,450 - 3,305 2,259 205,673 3- Good Quality 49,044 91,359 14,373 218,439 25,325 61,998 870 4,909 10,128 476,445 4- Management Attention 4,411 18,816 14,727 17,868 1,750 7,168 153 590 777 66,260 5- Watch 4,884 3,996 3,112 3,093 1,115 283 - 20 - 16,503 6- Substandard 270 3,445 3,635 768 - 107 - 22 - 8,247 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 79,769 250,620 35,847 269,792 28,667 93,580 1,023 9,422 13,164 781,884 December 31, 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 $ 152 8,590 - - - 446 - 791 - 9,979 2- High Quality 20,593 120,331 - 34,360 561 17,559 - 3,475 2,410 199,289 3- Good Quality 53,586 89,120 14,955 196,439 25,306 65,626 1,085 5,012 9,925 461,054 4- Management Attention 4,313 20,648 15,113 13,727 1,912 5,051 119 562 802 62,247 5- Watch 6,060 4,796 3,357 3,671 1,146 223 - 23 - 19,276 6- Substandard 283 3,218 3,824 440 12 117 - 25 - 7,919 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 84,987 246,703 37,249 248,637 28,937 89,022 1,204 9,888 13,137 759,764
Analysis of TDR loans by loan type	Three and six months ended June 30, 2018 (Dollars in thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Real estate loans Single-family residential 1 $ 33 33 Total real estate TDR loans 1 33 33 Total TDR loans 1 $ 33 33

4. Net Earnings Per Share (Tabl

4. Net Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2018
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 June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,176 5,995,256 $ 0.53 Effect of dilutive securities: Restricted stock units - 18,917 Diluted earnings per share $ 3,176 6,014,173 $ 0.53 For the six months ended June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 6,479 5,995,256 $ 1.08 Effect of dilutive securities: Restricted stock units - 17,964 Diluted earnings per share $ 6,479 6,013,220 $ 1.08 For the three months ended June 30, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,811 5,989,414 $ 0.47 Effect of dilutive securities: Restricted stock units - 95,171 Diluted earnings per share $ 2,811 6,084,585 $ 0.47 For the six months ended June 30, 2017 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 5,016 5,979,764 $ 0.84 Effect of dilutive securities: Restricted stock units - 93,664 Diluted earnings per share $ 5,016 6,073,428 $ 0.83

6. Fair Value (Tables)

6. Fair Value (Tables)	6 Months Ended
	Jun. 30, 2018
Fair Value Disclosures [Abstract]
Available for sale securities measured at fair value on a recurring basis	(Dollars in thousands) June 30, 2018 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 45,721 - 45,721 - U.S. Government sponsored enterprises $ 37,537 - 37,537 - State and political subdivisions $ 125,535 - 125,535 - Corporate bonds $ 1,012 - 1,012 - Trust preferred securities $ 250 - - 250 (Dollars in thousands) December 31, 2017 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 53,609 - 53,609 - U.S. Government sponsored enterprises $ 40,380 - 40,380 - State and political subdivisions $ 133,570 - 133,570 - Corporate bonds $ 1,512 - 1,512 - Trust preferred securities $ 250 - - 250
Fair value measurements of investment securities available for sale using Level 3 significant unobservable inputs	(Dollars in thousands) Investment Securities Level 3 Valuation Balance, beginning of period $ 250 Change in book value - Change in gain/(loss) realized and unrealized - Purchases/(sales and calls) - Transfers in and/or (out) of Level 3 - Balance, end of period $ 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) Fair Value Measurements June 30, 2018 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 671 - - 671 Impaired loans $ 23,129 - - 23,129 Other real estate $ 90 - - 90 (Dollars in thousands) Fair Value Measurements December 31, 2017 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 857 - - 857 Impaired loans $ 23,442 - - 23,442 Other real estate $ 118 - - 118 (Dollars in thousands) Fair Value June 30, 2018 Fair Value December 31, 2017 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 671 857 Rate lock commitment N/A N/A Impaired loans $ 23,129 23,442 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ 90 118 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 June 30, 2018 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 69,555 69,555 - - 69,555 Investment securities available for sale $ 210,055 - 209,805 250 210,055 Other investments $ 4,427 - - 4,427 4,427 Mortgage loans held for sale $ 671 - - 671 671 Loans, net $ 775,607 - - 769,227 769,227 Cash surrender value of life insurance $ 15,743 - 15,743 - 15,743 Liabilities: Deposits $ 915,012 - - 895,453 895,453 Securities sold under agreements to repurchase $ 46,570 - 46,570 - 46,570 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2017 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 57,304 57,304 - - 57,304 Investment securities available for sale $ 229,321 - 229,071 250 229,321 Other investments $ 1,830 - - 1,830 1,830 Mortgage loans held for sale $ 857 - - 857 857 Loans, net $ 753,398 - - 735,837 735,837 Cash surrender value of life insurance $ 15,552 - 15,552 - 15,552 Liabilities: Deposits $ 906,952 - - 894,932 894,932 Securities sold under agreements to repurchase $ 37,757 - 37,757 - 37,757 Junior subordinated debentures $ 20,619 - 20,619 - 20,619

2. Investment Securities (Detai

2. Investment Securities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Investment securities available for sale
Amortized Cost	$ 208,921
Estimated Fair Value	210,055	$ 229,321
Mortgage-backed securities
Investment securities available for sale
Amortized Cost	46,213	53,124
Gross Unrealized Gains	321	814
Gross Unrealized Losses	813	329
Estimated Fair Value	45,721	53,609
U.S. Government sponsored enterprises
Investment securities available for sale
Amortized Cost	38,528	40,504
Gross Unrealized Gains	10	140
Gross Unrealized Losses	1,001	264
Estimated Fair Value	37,537	40,380
State and political subdivisions
Investment securities available for sale
Amortized Cost	122,930	129,276
Gross Unrealized Gains	2,749	4,310
Gross Unrealized Losses	144	16
Estimated Fair Value	125,535	133,570
Corporate bonds
Investment securities available for sale
Amortized Cost	1,000	1,500
Gross Unrealized Gains	12	12
Gross Unrealized Losses	0	0
Estimated Fair Value	1,012	1,512
Trust preferred securities
Investment securities available for sale
Amortized Cost	250	250
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	250	250
Total
Investment securities available for sale
Amortized Cost	208,921	224,654
Gross Unrealized Gains	3,092	5,276
Gross Unrealized Losses	1,958	609
Estimated Fair Value	$ 210,055	$ 229,321

2. Investment securities, Conti

2. Investment securities, Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	$ 55,087	$ 22,160
Less than 12 Months, Unrealized Losses	1,035	175
12 Months or More, Fair Value	22,228	22,827
12 Months or More, Unrealized Losses	923	434
Total, Fair Value	77,315	44,987
Total, Unrealized Losses	1,958	609
Mortgage-backed securities
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	18,692	8,701
Less than 12 Months, Unrealized Losses	255	75
12 Months or More, Fair Value	11,373	11,259
12 Months or More, Unrealized Losses	558	254
Total, Fair Value	30,065	19,960
Total, Unrealized Losses	813	329
U.S. Government sponsored enterprises
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	26,635	12,661
Less than 12 Months, Unrealized Losses	663	98
12 Months or More, Fair Value	9,891	10,067
12 Months or More, Unrealized Losses	338	166
Total, Fair Value	36,526	22,728
Total, Unrealized Losses	1,001	264
State and political subdivisions
Investment securities with continuous unrealized loss position
Less than 12 Months, Fair Value	9,760	798
Less than 12 Months, Unrealized Losses	117	2
12 Months or More, Fair Value	964	1,501
12 Months or More, Unrealized Losses	27	14
Total, Fair Value	10,724	2,299
Total, Unrealized Losses	$ 144	$ 16

2. Investment securities, Contr

2. Investment securities, Contractual Maturity (Details) $ in Thousands	Jun. 30, 2018USD ($)
Amortized Cost
Due within one year	$ 22,613
Due from one to five years	97,045
Due from five to ten years	37,351
Due after ten years	5,449
Mortgage-backed securities	46,213
Trust preferred securities	250
Total	208,921
Estimated Fair Value
Due within one year	22,809
Due from one to five years	98,725
Due from five to ten years	37,068
Due after ten years	5,482
Mortgage-backed securities	45,721
Trust preferred securities	250
Total	$ 210,055

2. Investment Securities (Det22

2. Investment Securities (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Pledged to secure public deposits	$ 89,500	$ 105,600

3. Loans (Details)

3. Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Major classifications
Total loans	$ 781,884		$ 759,764	$ 745,038
Less allowance for loan losses	6,277	$ 6,373	6,366	7,167	$ 7,263	$ 7,550
Total net loans	775,607		753,398
Construction and land development
Major classifications
Total loans	79,769		84,987	71,213
Less allowance for loan losses	668	651	804	1,183	969	1,152
Single-family residential
Major classifications
Total loans	250,620		246,703	240,993
Less allowance for loan losses	1,638	1,640	1,812	1,819	2,003	2,126
Single-family residential - Banco de la Gente stated income
Major classifications
Total loans	35,847		37,249	38,875
Less allowance for loan losses	1,233	1,265	1,280	1,293	1,328	1,377
Commercial
Major classifications
Total loans	269,792		248,637	243,957
Less allowance for loan losses	1,420	1,298	1,193	1,463	1,655	1,593
Multifamily and Farmland
Major classifications
Total loans	28,667		28,937	30,125
Less allowance for loan losses	72	73	72	75	73	52
Total real estate loans
Major classifications
Total loans	664,695		646,513
Commercial loans (not secured by real estate)
Major classifications
Total loans	93,580		89,022	94,567
Less allowance for loan losses	587	706	574	704	628	675
Farm loans (not secured by real estate)
Major classifications
Total loans	1,023		1,204	1,591
Less allowance for loan losses	0	$ 0	0	$ 0	$ 0	$ 0
Consumer loans (not secured by real estate)
Major classifications
Total loans	9,422		9,888
All other loans (not secured by real estate)
Major classifications
Total loans	$ 13,164		$ 13,137

3. Loans, Past Due (Details)

3. Loans, Past Due (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Past due loans
Loans 30-89 Days Past Due	$ 3,930	$ 8,350
Loans 90 or More Days Past Due	1,014	775
Total Past Due Loans	4,944	9,125
Total Current Loans	776,940	750,639
Total loans	781,884	759,764	$ 745,038
Accruing Loans 90 or More Days Past Due	0	0
Construction and land development
Past due loans
Loans 30-89 Days Past Due	631	277
Loans 90 or More Days Past Due	0	0
Total Past Due Loans	631	277
Total Current Loans	79,138	84,710
Total loans	79,769	84,987
Accruing Loans 90 or More Days Past Due	0	0
Single-family residential
Past due loans
Loans 30-89 Days Past Due	1,251	3,241
Loans 90 or More Days Past Due	481	193
Total Past Due Loans	1,732	3,434
Total Current Loans	248,888	243,269
Total loans	250,620	246,703
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	940	4,078
Loans 90 or More Days Past Due	232	465
Total Past Due Loans	1,172	4,543
Total Current Loans	34,675	32,706
Total loans	35,847	37,249
Accruing Loans 90 or More Days Past Due	0	0
Commercial
Past due loans
Loans 30-89 Days Past Due	946	588
Loans 90 or More Days Past Due	202	0
Total Past Due Loans	1,148	588
Total Current Loans	268,644	248,049
Total loans	269,792	248,637
Accruing Loans 90 or More Days Past Due	0	0
Multifamily and Farmland
Past due loans
Loans 30-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	12
Total Past Due Loans	0	12
Total Current Loans	28,667	28,925
Total loans	28,667	28,937
Accruing Loans 90 or More Days Past Due	0	0
Total real estate loans
Past due loans
Loans 30-89 Days Past Due	3,768	8,184
Loans 90 or More Days Past Due	915	670
Total Past Due Loans	4,683	8,854
Total Current Loans	660,012	637,659
Total loans	664,695	646,513
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	4	53
Loans 90 or More Days Past Due	94	100
Total Past Due Loans	98	153
Total Current Loans	93,482	88,869
Total loans	93,580	89,022
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	1,023	1,204
Total loans	1,023	1,204
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	158	113
Loans 90 or More Days Past Due	5	5
Total Past Due Loans	163	118
Total Current Loans	9,259	9,770
Total loans	9,422	9,888
Accruing Loans 90 or More Days Past Due	0	0
All other loans (not secured by real estate)
Past due loans
Loans 30-89 Days Past Due	0	0
Loans 90 or More Days Past Due	0	0
Total Past Due Loans	0	0
Total Current Loans	13,164	13,137
Total loans	13,164	13,137
Accruing Loans 90 or More Days Past Due	$ 0	$ 0

3. Loans, Nonaccrual (Details)

3. Loans, Nonaccrual (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Non-accrual loans
Non-accrual loans	$ 4,292	$ 3,711
Construction and land development
Non-accrual loans
Non-accrual loans	123	14
Single-family residential
Non-accrual loans
Non-accrual loans	1,829	1,634
Single-family residential - Banco de la Gente stated income
Non-accrual loans
Non-accrual loans	1,467	1,543
Commercial
Non-accrual loans
Non-accrual loans	768	396
Multifamily and Farmland
Non-accrual loans
Non-accrual loans	0	12
Total real estate loans
Non-accrual loans
Non-accrual loans	4,187	3,599
Commercial loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	94	100
Consumer loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	$ 11	$ 12

3. Loans, Impaired (Details)

3. Loans, Impaired (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Impaired loans
Unpaid Contractual Principal Balance	$ 24,280		$ 24,280		$ 26,129
Recorded Investment With No Allowance	1,221		1,221		2,042
Recorded Investment With Allowance	23,059		23,059		22,599
Recorded Investment in Impaired Loans	24,280		24,280		24,641
Related Allowance	1,151		1,151		1,199
Average Outstanding Impaired Loans	24,063	$ 26,664	24,256	$ 26,865	26,015
Interest Income Recognized	345	369	697	740	1,362
Construction and land development
Impaired loans
Unpaid Contractual Principal Balance	357		357		282
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	357		357		277
Recorded Investment in Impaired Loans	357		357		277
Related Allowance	8		8		6
Average Outstanding Impaired Loans	373	304	341	265	253
Interest Income Recognized	5	2	11	6	17
Single-family residential
Impaired loans
Unpaid Contractual Principal Balance	4,992		4,992		5,226
Recorded Investment With No Allowance	725		725		1,135
Recorded Investment With Allowance	4,267		4,267		3,686
Recorded Investment in Impaired Loans	4,992		4,992		4,821
Related Allowance	39		39		41
Average Outstanding Impaired Loans	6,306	4,595	6,325	5,185	5,113
Interest Income Recognized	66	63	135	131	265
Single-family residential - Banco de la Gente stated income
Impaired loans
Unpaid Contractual Principal Balance	16,213		16,213		17,360
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	16,213		16,213		16,805
Recorded Investment in Impaired Loans	16,213		16,213		16,805
Related Allowance	1,082		1,082		1,149
Average Outstanding Impaired Loans	14,841	17,539	14,981	17,271	16,867
Interest Income Recognized	230	232	467	469	920
Commercial
Impaired loans
Unpaid Contractual Principal Balance	2,489		2,489		2,761
Recorded Investment With No Allowance	402		402		807
Recorded Investment With Allowance	2,087		2,087		1,661
Recorded Investment in Impaired Loans	2,489		2,489		2,468
Related Allowance	20		20		1
Average Outstanding Impaired Loans	2,304	3,831	2,359	3,778	3,411
Interest Income Recognized	42	66	80	125	148
Multifamily and Farmland
Impaired loans
Unpaid Contractual Principal Balance	0		0		78
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	0		0		12
Recorded Investment in Impaired Loans	0		0		12
Related Allowance	0		0		0
Average Outstanding Impaired Loans	0	45	4	56	28
Interest Income Recognized	0	0	0	0	0
Total real estate loans
Impaired loans
Unpaid Contractual Principal Balance	24,051		24,051		25,707
Recorded Investment With No Allowance	1,127		1,127		1,942
Recorded Investment With Allowance	22,924		22,924		22,441
Recorded Investment in Impaired Loans	24,051		24,051		24,383
Related Allowance	1,149		1,149		1,197
Average Outstanding Impaired Loans	23,824	26,314	24,010	26,555	25,672
Interest Income Recognized	343	363	693	731	1,350
Commercial loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	96		96		264
Recorded Investment With No Allowance	94		94		100
Recorded Investment With Allowance	2		2		4
Recorded Investment in Impaired Loans	96		96		104
Related Allowance	0		0		0
Average Outstanding Impaired Loans	98	129	100	95	149
Interest Income Recognized	0	3	0	3	3
Consumer loans (not secured by real estate)
Impaired loans
Unpaid Contractual Principal Balance	133		133		158
Recorded Investment With No Allowance	0		0		0
Recorded Investment With Allowance	133		133		154
Recorded Investment in Impaired Loans	133		133		154
Related Allowance	2		2		2
Average Outstanding Impaired Loans	141	221	146	215	194
Interest Income Recognized	2	3	4	6	$ 9
Farm loans (not secured by real estate)
Impaired loans
Average Outstanding Impaired Loans	0	0	0	0
Interest Income Recognized	$ 0	$ 0	$ 0	$ 0

3. Loans, Allowance for Loan Lo

3. Loans, Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Allowance for loan losses
Beginning balance	$ 6,373	$ 7,263	$ 6,366	$ 7,550
Charge-offs	(401)	(198)	(507)	(329)
Recoveries	74	53	156	133
Provision	231	49	262	(187)
Ending balance	6,277	7,167	6,277	7,167
Ending balance: individually evaluated for impairments	1,086	1,195	1,086	1,195
Ending balance: collectively evaluated for impairments	5,191	5,972	5,191	5,972
Ending balance	6,277	7,167	6,277	7,167
Loans
Ending balance	781,884	745,038	781,884	745,038
Ending balance: individually evaluated for impairment	19,399	21,898	19,399	21,898
Ending balance: collectively evaluated for impairment	762,485	723,140	762,485	723,140
Construction and land development
Allowance for loan losses
Beginning balance	651	969	804	1,152
Charge-offs	0	0	0	0
Recoveries	1	3	3	10
Provision	16	211	(139)	21
Ending balance	668	1,183	668	1,183
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	668	1,183	668	1,183
Ending balance	668	1,183	668	1,183
Loans
Ending balance	79,769	71,213	79,769	71,213
Ending balance: individually evaluated for impairment	95	0	95	0
Ending balance: collectively evaluated for impairment	79,674	71,213	79,674	71,213
Single-family residential
Allowance for loan losses
Beginning balance	1,640	2,003	1,812	2,126
Charge-offs	(43)	(24)	(43)	(44)
Recoveries	22	9	27	16
Provision	19	(169)	(158)	(279)
Ending balance	1,638	1,819	1,638	1,819
Ending balance: individually evaluated for impairments	2	0	2	0
Ending balance: collectively evaluated for impairments	1,636	1,819	1,636	1,819
Ending balance	1,638	1,819	1,638	1,819
Loans
Ending balance	250,620	240,993	250,620	240,993
Ending balance: individually evaluated for impairment	2,132	1,152	2,132	1,152
Ending balance: collectively evaluated for impairment	248,488	239,841	248,488	239,841
Single-family residential - Banco de la Gente stated income
Allowance for loan losses
Beginning balance	1,265	1,328	1,280	1,377
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	(32)	(35)	(47)	(84)
Ending balance	1,233	1,293	1,233	1,293
Ending balance: individually evaluated for impairments	1,066	1,103	1,066	1,103
Ending balance: collectively evaluated for impairments	167	190	167	190
Ending balance	1,233	1,293	1,233	1,293
Loans
Ending balance	35,847	38,875	35,847	38,875
Ending balance: individually evaluated for impairment	14,975	16,792	14,975	16,792
Ending balance: collectively evaluated for impairment	20,872	22,083	20,872	22,083
Commercial
Allowance for loan losses
Beginning balance	1,298	1,655	1,193	1,593
Charge-offs	(271)	0	(271)	(66)
Recoveries	4	6	7	14
Provision	389	(198)	491	(78)
Ending balance	1,420	1,463	1,420	1,463
Ending balance: individually evaluated for impairments	18	65	18	65
Ending balance: collectively evaluated for impairments	1,402	1,398	1,402	1,398
Ending balance	1,420	1,463	1,420	1,463
Loans
Ending balance	269,792	243,957	269,792	243,957
Ending balance: individually evaluated for impairment	2,103	3,724	2,103	3,724
Ending balance: collectively evaluated for impairment	267,689	240,233	267,689	240,233
Multifamily and Farmland
Allowance for loan losses
Beginning balance	73	73	72	52
Charge-offs	0	(66)	(5)	0
Recoveries	0	0	1	0
Provision	(1)	68	4	23
Ending balance	72	75	72	75
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	72	75	72	75
Ending balance	72	75	72	75
Loans
Ending balance	28,667	30,125	28,667	30,125
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	28,667	30,125	28,667	30,125
Commercial loans (not secured by real estate)
Allowance for loan losses
Beginning balance	706	628	574	675
Charge-offs	(2)	(35)	(2)	(37)
Recoveries	8	7	16	15
Provision	(125)	104	(1)	51
Ending balance	587	704	587	704
Ending balance: individually evaluated for impairments	0	27	0	27
Ending balance: collectively evaluated for impairments	587	677	587	677
Ending balance	587	704	587	704
Loans
Ending balance	93,580	94,567	93,580	94,567
Ending balance: individually evaluated for impairment	94	230	94	230
Ending balance: collectively evaluated for impairment	93,486	94,337	93,486	94,337
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	1,023	1,591	1,023	1,591
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	1,023	1,591	1,023	1,591
Consumer And All Other Loans
Allowance for loan losses
Beginning balance	136	178	155	204
Charge-offs	(85)	(73)	(186)	(182)
Recoveries	39	28	102	78
Provision	60	25	79	58
Ending balance	150	158	150	158
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	150	158	150	158
Ending balance	150	158	150	158
Loans
Ending balance	22,586	23,717	22,586	23,717
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	22,586	23,717	22,586	23,717
Unallocated
Allowance for loan losses
Beginning balance	604	429	476	371
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	(95)	43	33	101
Ending balance	509	472	509	472
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	509	472	509	472
Ending balance	509	472	509	472
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	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Credit risk profile
Total Loans	$ 781,884	$ 759,764	$ 745,038
Excellent Quality
Credit risk profile
Total Loans	8,756	9,979
High Quality
Credit risk profile
Total Loans	205,673	199,289
Good Quality
Credit risk profile
Total Loans	476,445	461,054
Management Attention
Credit risk profile
Total Loans	66,260	62,247
Watch
Credit risk profile
Total Loans	16,503	19,276
Substandard
Credit risk profile
Total Loans	8,247	7,919
Doubtful
Credit risk profile
Total Loans	0	0
Loss
Credit risk profile
Total Loans	0	0
Construction and land development
Credit risk profile
Total Loans	79,769	84,987
Single-family residential
Credit risk profile
Total Loans	250,620	246,703
Single-family residential - Banco de la Gente stated income
Credit risk profile
Total Loans	35,847	37,249
Commercial
Credit risk profile
Total Loans	269,792	248,637
Multifamily and Farmland
Credit risk profile
Total Loans	28,667	28,937
Commercial loans (not secured by real estate)
Credit risk profile
Total Loans	93,580	89,022
Farm loans (not secured by real estate)
Credit risk profile
Total Loans	1,023	1,204
Consumer loans (not secured by real estate)
Credit risk profile
Total Loans	9,422	9,888
All other loans (not secured by real estate)
Credit risk profile
Total Loans	13,164	13,137
Construction and land development
Credit risk profile
Total Loans	79,769	84,987	71,213
Construction and land development | Excellent Quality
Credit risk profile
Total Loans	472	152
Construction and land development | High Quality
Credit risk profile
Total Loans	20,688	20,593
Construction and land development | Good Quality
Credit risk profile
Total Loans	49,044	53,586
Construction and land development | Management Attention
Credit risk profile
Total Loans	4,411	4,313
Construction and land development | Watch
Credit risk profile
Total Loans	4,884	6,060
Construction and land development | Substandard
Credit risk profile
Total Loans	270	283
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	250,620	246,703	240,993
Single-family residential | Excellent Quality
Credit risk profile
Total Loans	7,134	8,590
Single-family residential | High Quality
Credit risk profile
Total Loans	125,870	120,331
Single-family residential | Good Quality
Credit risk profile
Total Loans	91,359	89,120
Single-family residential | Management Attention
Credit risk profile
Total Loans	18,816	20,648
Single-family residential | Watch
Credit risk profile
Total Loans	3,996	4,796
Single-family residential | Substandard
Credit risk profile
Total Loans	3,445	3,218
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	35,847	37,249	38,875
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	14,373	14,955
Single-family residential - Banco de la Gente stated income | Management Attention
Credit risk profile
Total Loans	14,727	15,113
Single-family residential - Banco de la Gente stated income | Watch
Credit risk profile
Total Loans	3,112	3,357
Single-family residential - Banco de la Gente stated income | Substandard
Credit risk profile
Total Loans	3,635	3,824
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	269,792	248,637	243,957
Commercial | Excellent Quality
Credit risk profile
Total Loans	0	0
Commercial | High Quality
Credit risk profile
Total Loans	29,624	34,360
Commercial | Good Quality
Credit risk profile
Total Loans	218,439	196,439
Commercial | Management Attention
Credit risk profile
Total Loans	17,868	13,727
Commercial | Watch
Credit risk profile
Total Loans	3,093	3,671
Commercial | Substandard
Credit risk profile
Total Loans	768	440
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	28,667	28,937	30,125
Multifamily and Farmland | Excellent Quality
Credit risk profile
Total Loans	0	0
Multifamily and Farmland | High Quality
Credit risk profile
Total Loans	477	561
Multifamily and Farmland | Good Quality
Credit risk profile
Total Loans	25,325	25,306
Multifamily and Farmland | Management Attention
Credit risk profile
Total Loans	1,750	1,912
Multifamily and Farmland | Watch
Credit risk profile
Total Loans	1,115	1,146
Multifamily and Farmland | Substandard
Credit risk profile
Total Loans	0	12
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	93,580	89,022	94,567
Commercial loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	574	446
Commercial loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	23,450	17,559
Commercial loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	61,998	65,626
Commercial loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	7,168	5,051
Commercial loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	283	223
Commercial loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	107	117
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	1,023	1,204	$ 1,591
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	870	1,085
Farm loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	153	119
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	9,422	9,888
Consumer loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total Loans	576	791
Consumer loans (not secured by real estate) | High Quality
Credit risk profile
Total Loans	3,305	3,475
Consumer loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	4,909	5,012
Consumer loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	590	562
Consumer loans (not secured by real estate) | Watch
Credit risk profile
Total Loans	20	23
Consumer loans (not secured by real estate) | Substandard
Credit risk profile
Total Loans	22	25
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	0
All other loans (not secured by real estate)
Credit risk profile
Total Loans	13,164	13,137
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	2,259	2,410
All other loans (not secured by real estate) | Good Quality
Credit risk profile
Total Loans	10,128	9,925
All other loans (not secured by real estate) | Management Attention
Credit risk profile
Total Loans	777	802
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	6 Months Ended
	Jun. 30, 2018USD ($)Integer	Jun. 30, 2018USD ($)Integer
Single-family residential TDR
TDR Loans
Number of Contracts | Integer	1	1
Pre-Modification Outstanding Recorded Investment	$ 33	$ 33
Post-Modification Outstanding Recorded Investment	$ 33	$ 33
Total real estate TDR loans
TDR Loans
Number of Contracts | Integer	1	1
Pre-Modification Outstanding Recorded Investment	$ 33	$ 33
Post-Modification Outstanding Recorded Investment	$ 33	$ 33
Total TDR Loans
TDR Loans
Number of Contracts | Integer	1	1
Pre-Modification Outstanding Recorded Investment	$ 33	$ 33
Post-Modification Outstanding Recorded Investment	$ 33	$ 33

3. Loans (Details Narrative)

3. Loans (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
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	37.00%		37.00%
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	35.00%		35.00%
Percentage of commercial loans in Bank's loan portfolio	12.00%		12.00%
Accruing impaired loans	$ 24,300	$ 22,400	$ 24,300	$ 22,400	$ 24,600
Interest income recognized on accruing impaired loans	345	369	697	740	1,362
Provision for loan losses	(231)	$ (49)	(262)	$ 187
TDR loans modified, past-due TDR loans and non-accrual TDR Loans	$ 1,800		$ 1,800		$ 4,500

4. Net Earnings Per Share (Deta

4. Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net Earnings
Basic earnings per share	$ 3,176	$ 2,811	$ 6,479	$ 5,016
Effect of dilutive securities: Restricted stock units	0	0	0	0
Diluted earnings per share	$ 3,176	$ 2,811	$ 6,479	$ 5,016
Weighted Average Number of Shares
Basic earnings per share (in shares)	5,995,256	5,989,414	5,995,256	5,979,764
Effect of dilutive securities: Restricted stock units (in shares)	18,917	95,171	17,964	93,664
Diluted earnings per share (in shares)	6,014,173	6,084,585	6,013,220	6,073,428
Per Share Amount
Basic earnings per share	$ 0.53	$ 0.47	$ 1.08	$ 0.84
Diluted earnings per share	$ 0.53	$ 0.47	$ 1.08	$ 0.83

5. Stock-Based Compensation (De

5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Unrecognized compensation cost	$ 334
Recognized compensation expense	$ 139	$ 471

6. Fair Value, Level of Hierarc

6. Fair Value, Level of Hierarchy (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Estimated Fair Value	$ 210,055	$ 229,321
Level 1
Estimated Fair Value	0	0
Level 2
Estimated Fair Value	209,805	229,071
Level 3
Estimated Fair Value	250	250
Mortgage-backed securities
Estimated Fair Value	45,721	53,609
Mortgage-backed securities | Level 1
Estimated Fair Value	0	0
Mortgage-backed securities | Level 2
Estimated Fair Value	45,721	53,609
Mortgage-backed securities | Level 3
Estimated Fair Value	0	0
U.S. Government sponsored enterprises
Estimated Fair Value	37,537	40,380
U.S. Government sponsored enterprises | Level 1
Estimated Fair Value	0	0
U.S. Government sponsored enterprises | Level 2
Estimated Fair Value	37,537	40,380
U.S. Government sponsored enterprises | Level 3
Estimated Fair Value	0	0
State and political subdivisions
Estimated Fair Value	125,535	133,570
State and political subdivisions | Level 1
Estimated Fair Value	0	0
State and political subdivisions | Level 2
Estimated Fair Value	125,535	133,570
State and political subdivisions | Level 3
Estimated Fair Value	0	0
Corporate bonds
Estimated Fair Value	1,012	1,512
Corporate bonds | Level 1
Estimated Fair Value	0	0
Corporate bonds | Level 2
Estimated Fair Value	1,012	1,512
Corporate bonds | Level 3
Estimated Fair Value	0	0
Trust preferred securities
Estimated Fair Value	250	250
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	$ 250

6. Fair Value, Level 3 Valuatio

6. Fair Value, Level 3 Valuation (Details) - Level 3 $ in Thousands	6 Months Ended
	Jun. 30, 2018USD ($)
Investment Securities Available for Sale Level 3 Valuation
Balance, beginning of period	$ 250
Change in book value	0
Change in gain/(loss) realized and unrealized	0
Purchases/(sales and calls)	0
Transfers in and/or (out) of Level 3	0
Balance, end of period	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	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Mortgage loans held for sale	$ 671	$ 857
Impaired loans	23,129	23,442
Other real estate	$ 90	118
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	671	857
Impaired loans	23,129	23,442
Other real estate	$ 90	$ 118

6. Fair Value, Financial Instru

6. Fair Value, Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets:
Cash and cash equivalents	$ 69,555	$ 57,304
Investment securities available for sale	210,055	229,321
Other investments	4,427	1,830
Mortgage loans held for sale	671	857
Loans, net	775,607	753,398
Cash surrender value of life insurance	15,743	15,552
Liabilities:
Deposits	915,012	906,952
Securities sold under agreements to repurchase	46,570	37,757
Junior subordinated debentures	20,619	20,619
Estimated Fair Value
Assets:
Cash and cash equivalents	69,555	57,304
Investment securities available for sale	210,055	229,321
Other investments	4,427	1,830
Mortgage loans held for sale	671	857
Loans, net	769,227	735,837
Cash surrender value of life insurance	15,743	15,552
Liabilities:
Deposits	895,453	894,932
Securities sold under agreements to repurchase	46,570	37,757
Junior subordinated debentures	20,619	20,619
Level 1
Assets:
Cash and cash equivalents	69,555	57,304
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
Junior subordinated debentures	0	0
Level 2
Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	209,805	229,071
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	15,743	15,552
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	46,570	37,757
Junior subordinated debentures	20,619	20,619
Level 3
Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	250	250
Other investments	4,427	1,830
Mortgage loans held for sale	671	857
Loans, net	769,227	735,837
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	895,453	894,932
Securities sold under agreements to repurchase	0	0
Junior subordinated debentures	$ 0	$ 0