Peoples Bancorp of North Carolina (PEBK) 10-Q 8 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Document And Entity Information
Entity Registrant Name	PEOPLES BANCORP OF NORTH CAROLINA INC
Entity Central Index Key	0001093672
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	NC
Entity File Number	000-27205
Entity Common Stock, Shares Outstanding		5,787,504
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Cash and due from banks, including reserve requirements of $0 at 3/31/20 and $13,210 at 12/31/19	$ 46,164	$ 48,337
Interest-bearing deposits	20,705	720
Federal funds sold	36,650	3,330
Cash and cash equivalents	103,519	52,387
Investment securities available for sale	201,514	195,746
Other investments	7,229	4,231
Total securities	208,743	199,977
Mortgage loans held for sale	6,149	4,417
Loans	880,564	849,874
Less allowance for loan losses	(8,112)	(6,680)
Net loans	872,452	843,194
Premises and equipment, net	18,370	18,604
Cash surrender value of life insurance	16,414	16,319
Right of use lease asset	3,427	3,622
Accrued interest receivable and other assets	15,753	16,362
Total assets	1,244,827	1,154,882
Deposits:
Noninterest-bearing demand	349,513	338,004
NOW, MMDA & savings	535,366	516,757
Time, $250,000 or more	22,725	34,269
Other time	76,354	77,487
Total deposits	983,958	966,517
Securities sold under agreements to repurchase	28,535	24,221
FHLB borrowings	70,000	0
Junior subordinated debentures	15,464	15,619
Lease liability	3,458	3,647
Accrued interest payable and other liabilities	9,556	10,758
Total liabilities	1,110,971	1,020,762
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 5,787,504 shares at March 31, 2020 and 5,912,300 shares at December 31, 2019	56,871	59,813
Retained earnings	71,251	70,663
Accumulated other comprehensive income	5,734	3,644
Total shareholders' equity	133,856	134,120
Total liabilities and shareholders' equity	$ 1,244,827	$ 1,154,882

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Cash and due from banks, reserve requirements	$ 0	$ 13,210
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)	5,787,504	5,912,300
Common stock, shares outstanding (in shares)	5,787,504	5,912,300

Consolidated Statements of Earn

Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Interest income:
Interest and fees on loans	$ 10,680	$ 10,619
Interest on due from banks	43	14
Interest on federal funds sold	123	0
Interest on investment securities:
U.S. Government sponsored enterprises	685	673
State and political subdivisions	641	834
Other	78	43
Total interest income	12,250	12,183
Interest expense:
NOW, MMDA & savings deposits	525	282
Time deposits	277	151
FHLB borrowings	64	46
Junior subordinated debentures	130	226
Other	45	52
Total interest expense	1,041	757
Net interest income	11,209	11,426
Provision for loan losses	1,521	178
Net interest income after provision for loan losses	9,688	11,248
Non-interest income:
Service charges	1,108	1,093
Other service charges and fees	193	169
Gain on sale of securities	0	231
Mortgage banking income	322	147
Insurance and brokerage commissions	242	231
Appraisal management fee income	1,350	862
Miscellaneous	1,380	1,387
Total non-interest income	4,595	4,120
Non-interest expense:
Salaries and employee benefits	5,724	5,647
Occupancy	1,921	1,737
Professional fees	333	289
Advertising	218	266
Debit card expense	230	227
FDIC insurance	40	72
Appraisal management fee expense	1,034	662
Other	1,949	2,016
Total non-interest expense	11,449	10,916
Earnings before income taxes	2,834	4,452
Income tax expense	467	785
Net earnings	$ 2,367	$ 3,667
Basic net earnings per share	$ .40	$ 0.61
Diluted net earnings per share	.40	0.61
Cash dividends declared per share	$ .30	$ 0.24

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net earnings	$ 2,367	$ 3,667
Other comprehensive income:
Unrealized holding gains on securities available for sale	2,715	1,126
Reclassification adjustment for gains on securities available for sale included in net earnings	0	(231)
Total other comprehensive income, before income taxes	2,715	895
Income tax benefit related to other comprehensive income:
Unrealized holding gains on securities available for sale	625	258
Reclassification adjustment for gains on securities available for sale included in net earnings	0	(53)
Total income tax benefit related to other comprehensive income (loss)	625	205
Total other comprehensive income, net of tax	2,090	690
Total comprehensive income	$ 4,457	$ 4,357

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, 2018	5,995,256
Beginning balance, amount at Dec. 31, 2018	$ 62,096	$ 60,535	$ 986	$ 123,617
Common stock repurchase, shares	(5,518)
Common stock repurchase, amount	$ (152)			(152)
Cash dividends declared on common stock		(1,445)		(1,445)
Restricted stock units exercised, shares	7,398
Restricted stock units exercised, amount	$ 207			207
Net earnings		3,667		3,667
Change in accumulated other comprehensive income, net of tax			690	690
Ending balance, shares at Mar. 31, 2019	5,997,136
Ending balance, amount at Mar. 31, 2019	$ 62,151	62,757	1,676	126,584
Beginning balance, shares at Dec. 31, 2019	5,912,300
Beginning balance, amount at Dec. 31, 2019	$ 59,813	70,663	3,644	134,120
Common stock repurchase, shares	(126,800)
Common stock repurchase, amount	$ (2,999)			(2,999)
Cash dividends declared on common stock		(1,779)		(1,779)
Restricted stock units exercised, shares	2,004
Restricted stock units exercised, amount	$ 57			57
Net earnings		2,367		2,367
Change in accumulated other comprehensive income, net of tax			2,090	2,090
Ending balance, shares at Mar. 31, 2020	5,787,504
Ending balance, amount at Mar. 31, 2020	$ 56,871	$ 71,251	$ 5,734	$ 133,856

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net earnings	$ 2,367	$ 3,667
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and accretion	1,038	942
Provision for loan losses	1,521	178
Deferred income taxes	(8)	(2)
Gain on sale of investment securities	0	(231)
Restricted stock expense	(77)	110
Proceeds from sales of mortgage loans held for sale	14,876	6,098
Origination of mortgage loans held for sale	(16,608)	(5,779)
Change in:
Cash surrender value of life insurance	(95)	(95)
Right of use lease asset	195	200
Other assets	(8)	2,539
Lease liability	(189)	(200)
Other liabilities	(1,125)	(3,203)
Net cash provided by operating activities	1,887	4,224
Cash flows from investing activities:
Purchases of investment securities available for sale	(10,958)	(7,395)
Proceeds from sales, calls and maturities of investment securities available for sale	2,343	15,403
Proceeds from paydowns of investment securities available for sale	5,138	2,871
Proceeds from paydowns on other investments	44	33
Purchases of FHLB stock	(3,031)	(1)
Net change in loans	(30,779)	(19,596)
Purchases of premises and equipment	(391)	(342)
Net cash used in investing activities	(37,634)	(9,027)
Cash flows from financing activities:
Net change in deposits	17,441	30,901
Net change in securities sold under agreement to repurchase	4,314	(16,864)
Proceeds from FHLB borrowings	70,000	82,300
Repayments of FHLB borrowings	0	(82,300)
Proceeds from Fed Funds Purchased	6,935	25,065
Repayments of Fed Funds Purchased	(6,935)	(25,065)
Repayments of Junior Subordinated Debentures	(155)	0
Restricted stock units exercised	57	207
Common stock repurchased	(2,999)	(152)
Cash dividends paid on Series A preferred stock	0	0
Cash dividends paid on common stock	(1,779)	(1,445)
Net cash provided by financing activities	86,879	12,647
Net change in cash and cash equivalents	51,132	7,844
Cash and cash equivalents at beginning of period	52,387	43,370
Cash and cash equivalents at end of period	103,519	51,214
Cash paid during the period for:
Interest	994	737
Income taxes	0	0
Noncash investing and financing activities:
Change in unrealized gain on investment securities available for sale, net	2,090	690
Issuance of accrued restricted stock units	57	207
Initial recognition of lease right-of-use asset and lease liability recorded upon adoption of ASU 2016-02	$ 0	$ 4,401

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
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, 2019) 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 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 2019 Annual Report to Shareholders which is Appendix A to the Proxy Statement for the May 7, 2020 Annual Meeting of Shareholders. Recent Accounting Pronouncements The following tables provide a summary of Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) that the Company has recently adopted. Recently Adopted Accounting Guidance ASU Description Effective Date Effect on Financial Statements or Other Significant Matters 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) Incorporates recent SEC guidance which was issued in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulation. 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. ASU 2018-06: Codification Improvements to Topic 942: Financial Services—Depository and Lending Eliminates a reference to the Office of the Comptroller of the Currency’s Banking Circular 202, Accounting for Net Deferred Tax Charges, from the ASC. The Office of the Comptroller of the Currency published the guidance in 1985 but has since rescinded it. 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. ASU 2016-02: Leases Increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. January 1, 2019 See section titled "ASU 2016-02" below for a description of the effect on the Company’s results of operations, financial position and disclosures. ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2017-08: Premium Amortization on Purchased Callable Debt Securities Amended the requirements related to the amortization period for certain purchased callable debt securities held at a premium. January 1, 2019 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-11: Leases (Topic 842): Targeted Improvements Intended to reduce costs and ease implementation of ASU 2016-02. January 1, 2019 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-20: Narrow- Scope Improvements for Lessors Provides narrow-scope improvements for lessors, that provide relief in the accounting for sales, use and similar taxes, the accounting for other costs paid by a lessee that may benefit a lessor, and variable payments when contracts have lease and non-lease components. January 1, 2019 See comments for ASU 2016-02 below. ASU 2019-07: Codification Updates to SEC Sections Guidance updated for various Topics of the ASC to align the guidance in various SEC sections of the ASC with the requirements of certain SEC final rules. 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. ASU 2018-13: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) Updates the disclosure requirements on fair value measurements in ASC 820, Fair Value Measurement. January 1, 2020 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-18: Clarifying the Interaction between Topic 808 and Topic 606 Clarifies the interaction between the guidance for certain collaborative arrangements and the new revenue recognition financial accounting and reporting standard. January 1, 2020 Early adoption permitted The Company does not intend to adopt this guidance early. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-19: Leases (Topic 842): Codification Improvements Provides guidance to address concerns companies had raised about an accounting exception they would lose when assessing the fair value of underlying assets under the leases standard and clarify that lessees and lessors are exempt from a certain interim disclosure requirement associated with adopting the new standard. January 1, 2020 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2014-09 The Company has applied ASU 2014-09 using a modified retrospective approach. The Company’s revenue is comprised of net interest income and noninterest income. The scope of ASU 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 the Company’s 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, the Company adopted the requirements of ASU 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 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 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 the Company’s material income streams derived from contracts with customers which are within the scope of ASU 2014-09. Through the Company’s wholly-owned subsidiary, PIS, the Company contracts with a registered investment advisor to perform investment advisory services on behalf of the Company’s customers. The Company receives commissions from this third party investment advisor based on the volume of business that the Company’s customers do with such investment advisor. Total revenue recognized from these contracts was $241,000 and $231,000 for the three months ended March 31, 2020 and 2019, respectively. The Company utilizes third parties to contract with the Company’s customers to perform debit and credit card clearing services. These third parties pay the Company commissions based on the volume of transactions that they process on behalf of the Company’s customers. Total revenue recognized from these contracts with these third parties was $972,000 and $940,000 for the three months ended March 31, 2020 and 2019, respectively. Through the Company’s wholly-owned subsidiary, REAS, the Company provides property appraisal services for negotiated fee amounts on a per appraisal basis. Total revenue recognized from these contracts with customers was $181,000 and $156,000 for the three months ended March 31, 2020 and 2019, respectively. Through the Company’s wholly-owned subsidiary, CBRES, the Company provides appraisal management services. Total revenue recognized from these contracts with customers was $1.4 million and $862,000 for the three months ended March 31, 2020 and 2019, respectively. Due to the nature of the Company’s relationship with the customers that the Company provides services, the Company does 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 ASU 2016-02 On January 1, 2019, the Company adopted the requirements of ASU 2016-02, Leases (Topic 842). Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; and ASU 2018-11, Targeted Improvements. The purpose of Topic 842 is to increase transparency and comparability between organizations that enter into lease agreements. The key difference of Topic 842 from the previous guidance (Topic 840) is the recognition of a right-of-use (“ROU”) asset and lease liability on the statement of financial position for those leases previously classified as operating leases under the previous guidance. Topic 842 states that a contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company reviewed its material non-real estate contracts to determine if they included a lease and did not note any that would need to be considered under Topic 842. The Company’s lease agreements in which Topic 842 has been applied are primarily for retail branch real estate properties. These real estate leases have lease terms from less than 12 months to leases with options up to 15 years, and payment terms vary with some being fixed payments or based on a fixed annual increase while others are variable and the annual increases are based on market rates or other indexes. Initially transition from Topic 840 to Topic 842 required a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11, which, among other things, provided an additional transition method that would allow entities to not apply the initial guidance of ASU 2016-02 to the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company chose the transition method of adoption provided by ASU 2018-11, therefore, the Company will apply this standard to all existing leases as of the adoption date of January 1, 2019, recording a ROU asset and a lease liability and a cumulative-effect adjustment to the opening balance of retained earnings (if applicable) in the period of adoption. With this transition method, comparative prior period disclosures will be under the previous accounting guidance for leases (Topic 840). 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. Topic 842 provides a package of practical expedients in applying the lease standard to be chosen at the date of adoption. The Company has chosen to elect the package of practical expedients provided under ASU 2016-02 whereby it will not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. The Company has also chosen not to apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance). The Company will account for lease and non-lease components separately because such amounts are readily determinable under its lease contracts. Additionally, the Company has chosen to elect the use of hindsight, when applicable, in determining the lease term, in assessing the likelihood that a lessee purchase option will be exercised; and in assessing the impairment of ROU assets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determined that all of its leases are classified as operating leases under Topic 842. For operating and finance leases, lease liabilities are initially measured at commencement date based on the present value of lease payments not yet paid, discounted using the discount rate for the lease at the lease commencement date over the lease term. For operating and finance leases, ROU assets are measured at the commencement date as the amount of the initial liability, adjusted for lease payments made to the lessor at or before commencement date, minus incentives; and for any initial direct costs incurred by the lessee. Based on the transition method that the Company has chosen to follow, the initial application date of the lease term for all existing leases is January 1, 2019. For operating leases, after lease commencement, the lease liability is recorded at the present value of the unpaid lease payments discounted at the discount rate for the lease established at the commencement date. Lease expense is determined by the sum of the lease payments to be recognized on a straight-line basis over the lease term. The ROU asset is subsequently amortized as the difference between the straight line lease cost for the period and the periodic accretion of the lease liability. The lease term used for the calculation of the initial operating ROU asset and lease liability will include the initial lease term in addition to one renewal option the Company thinks it is reasonably certain to exercise or incur. Regarding the discount rate, Topic 842 requires that the implicit rate within the lease agreement be used if available. If not available, the Company should use its incremental borrowing rate in effect at the time of the lease commencement date. The Company utilized Federal Home Loan Bank (“FHLB”) Atlanta’s Fixed Rate Credit rates for terms consistent with the Company’s lease terms. The Company recorded operating ROU assets and operating lease liabilities of $4.4 million and $4.4 million, respectively at the commencement date of January 1, 2019. The Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of ASU 2016-02 did not have a material impact on the Company’s results of operations, financial position or disclosures. A director of the Company has a membership interest in a company that leases two branch facilities to the Bank. The Bank’s lease payments for these facilities totaled $58,000 for the three months ended March 31, 2020 and 2019. The following tables provide a summary of ASU’s issued by the FASB that the Company has not adopted as of March 31, 2020, which may impact the Company’s financial statements. Recently Issued Accounting Guidance Not Yet Adopted ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2016-13: Measurement of Credit Losses on Financial Instruments Provides guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. See ASU 2019-10 below. The Company will apply this guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company is still evaluating the impact of this guidance on its consolidated financial statements. The Company has formed a Current Expected Credit Losses (“CECL”) committee and implemented a model from a third-party vendor for running CECL calculations. The Company is currently developing CECL model assumptions and comparing results to current allowance for loan loss calculations. The Company plans to run parallel calculations leading up to the effective date of this guidance to ensure it is prepared for implementation by the effective date. 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. ASU 2018-14: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (Subtopic 715-20) Updates disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. January 1, 2021 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-19: Codification Improvements to Topic 326, Financial Instruments—Credit Losses Aligns the implementation date of the topic for annual financial statements of nonpublic companies with the implementation date for their interim financial statements. The guidance also clarifies that receivables arising from operating leases are not within the scope of the topic, but rather, should be accounted for in accordance with the leases topic. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU 2019-04: Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Addresses unintended issues accountants flagged when implementing ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-13, Measurement of Credit Losses on Financial Instruments, and ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2019-05: Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief Guidance to provide entities with an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU 2019-10: Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates Guidance to defer the effective dates for private companies, not-for-profit organizations, and certain smaller reporting companies applying standards on current expected credit losses (CECL), leases, hedging. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2019-11: Codification Improvements to Topic 326, Financial Instruments—Credit Losses Guidance that addresses issues raised by stakeholders during the implementation of ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments affect a variety of Topics in the ASC. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Guidance to simplify accounting for income taxes by removing specific technical exceptions that often produce information investors have a hard time understanding. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. January 1, 2021 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2020-01: Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force) Guidance to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. January 1, 2021 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2020-02: Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update) Guidance to add and amend SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 119 related to the new credit losses standard and comments by the SEC staff related to the revised effective date of the new leases standard. Effective upon issuance The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2020-03: Codification Improvements to Financial Instruments Guidance to clarify that the contractual term of a net investment in a lease, determined in accordance with the leases standard, should be the contractual term used to measure expected credit losses under ASC 326. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Guidance that provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be in effect for a limited time through December 31, 2022. March 12, 2020 through December 31, 2022 The adoption of this guidance is not expected to 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	3 Months Ended
	Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]
2. Investment Securities	Investment securities available for sale at March 31, 2020 and December 31, 2019 are as follows: (Dollars in thousands) March 31, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 80,815 3,391 130 84,076 U.S. Government sponsored enterprises 26,275 905 272 26,908 State and political subdivisions 86,726 3,691 137 90,280 Trust preferred securities 250 — — 250 Total $ 194,066 7,987 539 201,514 (Dollars in thousands) December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 77,812 1,371 227 78,956 U.S. Government sponsored enterprises 28,265 443 311 28,397 State and political subdivisions 84,686 3,657 200 88,143 Trust preferred securities 250 — — 250 Total $ 191,013 5,471 738 195,746 The current fair value and associated unrealized losses on investments in securities with unrealized losses at March 31, 2020 and December 31, 2019 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position. (Dollars in thousands) March 31, 2020 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 12,376 130 — — 12,376 130 U.S. Government sponsored enterprises — — 5,536 272 5,536 272 State and political subdivisions 8,465 137 — — 8,465 137 Total $ 20,841 267 5,536 272 26,377 539 (Dollars in thousands) December 31, 2019 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 28,395 177 6,351 50 34,746 227 U.S. Government sponsored enterprises 2,899 10 6,151 301 9,050 311 State and political subdivisions 7,367 200 — — 7,367 200 Total $ 38,661 387 12,502 351 51,163 738 At March 31, 2020, unrealized losses in the investment securities portfolio relating to debt securities totaled $539,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the March 31, 2020 tables above, eight out of 95 securities issued by state and political subdivisions contained unrealized losses and 10 out of 59 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 March 31, 2020, 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. March 31, 2020 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 6,679 6,770 Due from one to five years 54,189 56,595 Due from five to ten years 27,801 29,452 Due after ten years 24,332 24,371 Mortgage-backed securities 80,815 84,076 Trust preferred securities 250 250 Total $ 194,066 201,514 No securities available for sale were sold during the three months ended March 31, 2020. Proceeds from sales of securities available for sale during the three months ended March 31, 2019 were $12.3 million and resulted in net gains of $231,000. Securities with a fair value of approximately $69.5 million and $66.0 million at March 31, 2020 and December 31, 2019, respectively, were pledged to secure public deposits and for other purposes as required by law.

3. Loans

3. Loans	3 Months Ended
	Mar. 31, 2020
Receivables [Abstract]
3. Loans	Major classifications of loans at March 31, 2020 and December 31, 2019 are summarized as follows: (Dollars in thousands) March 31, 2020 December 31, 2019 Real estate loans: Construction and land development $ 105,939 92,596 Single-family residential 271,489 269,475 Single-family residential - Banco de la Gente non-traditional 29,887 30,793 Commercial 301,490 291,255 Multifamily and farmland 48,191 48,090 Total real estate loans 756,996 732,209 Loans not secured by real estate: Commercial loans 104,221 100,263 Farm loans 1,044 1,033 Consumer loans 8,241 8,432 All other loans 10,062 7,937 Total loans 880,564 849,874 Less allowance for loan losses 8,112 6,680 Total net loans $ 872,452 843,194 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 March 31, 2020, construction and land development loans comprised approximately 12% 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 March 31, 2020, single-family residential loans comprised approximately 34% of the Bank’s total loan portfolio, and include Banco’s non-traditional single-family residential loans, which were approximately 3% 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 March 31, 2020, commercial real estate loans comprised approximately 34% of the Bank’s total loan portfolio. ● Commercial loans – Repayment is generally dependent upon the successful operation of the borrower’s business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid or fluctuate in value based on the success of the business. As of March 31, 2020, 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 March 31, 2020 and December 31, 2019: March 31, 2020 (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 $ 1,055 — 1,055 104,884 105,939 — Single-family residential 5,559 268 5,827 265,662 271,489 34 Single-family residential - Banco de la Gente non-traditional 5,366 455 5,821 24,066 29,887 — Commercial 1,526 175 1,701 299,789 301,490 — Multifamily and farmland — — — 48,191 48,191 — Total real estate loans 13,506 898 14,404 742,592 756,996 34 Loans not secured by real estate: Commercial loans 702 254 956 103,265 104,221 — Farm loans 93 — 93 951 1,044 — Consumer loans 119 3 122 8,119 8,241 — All other loans — — — 10,062 10,062 — Total loans $ 14,420 1,155 15,575 864,989 880,564 34 December 31, 2019 (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 $ 803 — 803 91,793 92,596 — Single-family residential 3,000 126 3,126 266,349 269,475 — Single-family residential - Banco de la Gente non-traditional 4,834 413 5,247 25,546 30,793 — Commercial 504 176 680 290,575 291,255 — Multifamily and farmland — — — 48,090 48,090 — Total real estate loans 9,141 715 9,856 722,353 732,209 — Loans not secured by real estate: Commercial loans 432 — 432 99,831 100,263 — Farm loans — — — 1,033 1,033 — Consumer loans 170 22 192 8,240 8,432 — All other loans — — — 7,937 7,937 — Total loans $ 9,743 737 10,480 839,394 849,874 — The following table presents non-accrual loans as of March 31, 2020 and December 31, 2019: (Dollars in thousands) March 31, 2020 December 31, 2019 Real estate loans: Construction and land development $ — — Single-family residential 1,132 1,378 Single-family residential - Banco de la Gente non-traditional 1,946 1,764 Commercial 476 256 Total real estate loans 3,554 3,398 Loans not secured by real estate: Commercial loans 378 122 Consumer loans 34 33 Total $ 3,966 3,553 At each reporting period, the Bank determines which loans are impaired. Accordingly, the Bank’s impaired loans are reported at their estimated fair value on a non-recurring basis. An allowance for each impaired loan that is collateral-dependent is calculated based on the fair value of its collateral. The fair value of the collateral is based on appraisals performed by REAS, a subsidiary of the Bank. REAS is staffed by certified appraisers that also perform appraisals for other companies. Factors, including the assumptions and techniques utilized by the appraiser, are considered by management. If the recorded investment in the impaired loan exceeds the measure of fair value of the collateral, a valuation allowance is recorded as a component of the allowance for loan losses. An allowance for each impaired loan that is not collateral dependent is calculated based on the present value of projected cash flows. If the recorded investment in the impaired loan exceeds the present value of projected cash flows, a valuation allowance is recorded as a component of the allowance for loan losses. Impaired loans under $250,000 are not individually evaluated for impairment with the exception of the Bank’s troubled debt restructured (“TDR”) loans in the residential mortgage loan portfolio, which are individually evaluated for impairment. Accruing impaired loans were $22.8 million, $21.3 million and $22.1 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. Interest income recognized on accruing impaired loans was $329,000, $1.3 million, and $342,000 for the three months ended March 31, 2020, the year ended December 31, 2019 and the three months ended March 31, 2019, 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 March 31, 2020: March 31, 2020 (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 $ 180 — 180 180 8 182 3 Single-family residential 5,027 397 4,189 4,586 36 4,615 58 Single-family residential - Banco de la Gente non-traditional 14,767 1,034 12,930 13,964 926 14,168 228 Commercial 3,260 — 3,243 3,243 19 2,557 29 Multifamily and farmland — — — — — — — Total impaired real estate loans 23,234 1,431 20,542 21,973 989 21,522 318 Loans not secured by real estate: Commercial loans 702 90 606 696 35 436 9 Consumer loans 92 — 87 87 2 91 2 Total impaired loans $ 24,028 1,521 21,235 22,756 1,026 22,049 329 The following table presents impaired loans as of and for the year ended December 31, 2019: December 31, 2019 (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 $ 183 — 183 183 7 231 12 Single-family residential 5,152 403 4,243 4,646 36 4,678 269 Single-family residential - Banco de la Gente non-traditional 15,165 — 14,371 14,371 944 14,925 956 Commercial 1,879 — 1,871 1,871 7 1,822 91 Total impaired real estate loans 22,379 403 20,668 21,071 994 21,656 1,328 Loans not secured by real estate: Commercial loans 180 92 84 176 — 134 9 Consumer loans 100 — 96 96 2 105 7 Total impaired loans $ 22,659 495 20,848 21,343 996 21,895 1,344 Changes in the allowance for loan losses for the three months ended March 31, 2020 and 2019 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Three months ended March 31, 2020 Allowance for loan losses: Beginning balance $ 694 1,274 1,073 1,305 120 688 — 138 1,388 6,680 Charge-offs (5 ) — — (7 ) — (31 ) — (167 ) — (210 ) Recoveries 2 16 — 23 — 25 — 55 — 121 Provision 602 423 11 478 (2 ) 335 — 154 (480 ) 1,521 Ending balance $ 1,293 1,713 1,084 1,799 118 1,017 — 180 908 8,112 Allowance for loan losses March 31, 2020 Ending balance: individually evaluated for impairment $ 2 6 906 9 — 29 — — — 952 Ending balance: collectively evaluated for impairment 1,291 1,707 178 1,790 118 988 — 180 908 7,160 Ending balance $ 1,293 1,713 1,084 1,799 118 1,017 — 180 908 8,112 Loans March 31, 2020: Ending balance $ 105,939 271,489 29,887 301,490 48,191 104,221 1,044 18,303 — 880,564 Ending balance: individually evaluated for impairment $ 8 1,678 12,489 2,095 — 344 — — — 16,614 Ending balance: collectively evaluated for impairment $ 105,931 269,811 17,398 299,395 48,191 103,877 1,044 18,303 — 863,950 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Three months ended March 31, 2019 Allowance for loan losses: Beginning balance $ 813 1,325 1,177 1,278 83 626 — 161 982 6,445 Charge-offs — (13 ) — — — (1 ) — (150 ) — (164 ) Recoveries 1 48 — 4 — 6 — 43 — 102 Provision 17 (104 ) (3 ) 10 15 (21 ) — 108 156 178 Ending balance $ 831 1,256 1,174 1,292 98 610 — 162 1,138 6,561 Allowance for loan losses March 31, 2019 Ending balance: individually evaluated for impairment $ — 2 1,008 13 — — — — — 1,023 Ending balance: collectively evaluated for impairment 831 1,254 166 1,279 98 610 — 162 1,138 5,538 Ending balance $ 831 1,256 1,174 1,292 98 610 — 162 1,138 6,561 Loans March 31, 2019: Ending balance $ 95,219 255,338 33,717 278,619 39,106 101,572 984 19,002 — 823,557 Ending balance: individually evaluated for impairment $ 95 1,758 14,127 1,658 — 63 — — — 17,701 Ending balance: collectively evaluated for impairment $ 95,124 253,580 19,590 276,961 39,106 101,509 984 19,002 — 805,856 The provision for loan losses for the three months ended March 31, 2020 was $1.5 million, compared to $178,000 for the three months ended March 31, 2019. The increase in the provision for loan losses is primarily attributable to increases in the qualitative factors applied in the Company’s Allowance for Loan and Lease Losses (“ALLL”) model due to the impact to the current economic implications and rising unemployment rate from the COVID-19 pandemic and a $57.0 million increase in loans from March 31, 2019 to March 31, 2020. The ALLL model also includes reserves on $57.4 million in loans with payment modifications made in March 2020 as a result of the COVID-19 pandemic. Loans with payment modifications associated with the COVID-19 pandemic include $51.5 million in loans secured by real estate, $5.1 million in commercial loans not secured by real estate and $764,000 in consumer loans not secured by real estate at March 31, 2020. These payment modifications are primarily interest only payments for three to six months. Loan payment modifications associated with the COVID-19 pandemic are not classified as TDR due to Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which provides that a qualified loan modification is exempt by law from classification as a TDR pursuant to GAAP. 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 March 31, 2020 and December 31, 2019: March 31, 2020 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 65 8,378 — — — 353 — 672 — 9,468 2- High Quality 33,845 129,848 — 22,109 220 20,070 — 2,523 1,785 210,400 3- Good Quality 63,525 108,720 11,685 237,118 42,810 75,457 964 4,558 7,557 552,394 4- Management Attention 5,454 18,167 13,351 38,116 4,626 7,625 80 435 720 88,574 5- Watch 2,988 3,405 1,938 3,289 535 288 — 8 — 12,451 6- Substandard 62 2,971 2,913 858 — 428 — 45 — 7,277 7- Doubtful — — — — — — — — — — 8- Loss — — — — — — — — — — Total $ 105,939 271,489 29,887 301,490 48,191 104,221 1,044 8,241 10,062 880,564 December 31, 2019 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ — 8,819 — — — 330 — 693 — 9,842 2- High Quality 32,029 128,757 — 21,829 256 20,480 — 2,708 1,860 207,919 3- Good Quality 52,009 107,246 12,103 231,003 42,527 72,417 948 4,517 5,352 528,122 4- Management Attention 5,487 18,409 13,737 35,095 4,764 6,420 85 458 725 85,180 5- Watch 3,007 3,196 2,027 3,072 543 492 — 8 — 12,345 6- Substandard 64 3,048 2,926 256 — 124 — 48 — 6,466 7- Doubtful — — — — — — — — — — 8- Loss — — — — — — — — — — Total $ 92,596 269,475 30,793 291,255 48,090 100,263 1,033 8,432 7,937 849,874 Current year TDR modifications, past due TDR loans and non-accrual TDR loans totaled $4.8 million and $4.3 million at March 31, 2020 and December 31, 2019, 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 zero in performing loans classified as TDR loans at March 31, 2020 and December 31, 2019. There were no new TDR modifications during the three months ended March 31, 2020 and 2019. There were no loans modified as TDR that defaulted during the three months ended March 31, 2020 and 2019, 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	3 Months Ended
	Mar. 31, 2020
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 months ended March 31, 2020 and 2019 is as follows: For the three months ended March 31, 2020 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,367 5,869,938 $ 0.40 Effect of dilutive securities: Restricted stock units — 13,440 Diluted earnings per share $ 2,367 5,883,378 $ 0.40 For the three months ended March 31, 2019 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,667 5,996,488 $ 0.61 Effect of dilutive securities: Restricted stock units — 24,369 Diluted earnings per share $ 3,667 6,020,857 $ 0.61

5. Stock-Based Compensation

5. Stock-Based Compensation	3 Months Ended
	Mar. 31, 2020
Share-based Payment Arrangement [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. No shares were available for issuance under the Plan at March 31, 2020 as all stock-based rights under the Plan must have been 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 Company granted 5,290 restricted stock units under the Plan at a grant date fair value of $28.43 per share during the first quarter of 2019. The number of restricted stock units granted and grant date fair values for the restricted stock units granted in 2012 through 2017 have been restated to reflect the 10% stock dividend that was paid in 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, 2018 and 2019 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 March 31, 2020, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $129,000. The Company recognized a $77,000 credit to compensation expense for restricted stock unit awards granted under the Plan for the three months ended March 31, 2020 due to a reduction in the Company’s stock price from $32.85 per share at December 31, 2019, compared to $20.36 per share at March 31, 2020. The Company recognized compensation expense for restricted stock unit awards granted under the Plan of $110,000 for the three months ended March 31, 2019.

6. Fair Value

6. Fair Value	3 Months Ended
	Mar. 31, 2020
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 16 of the Company’s 2019 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 3 fair value category. Securities Sold Under Agreements to Repurchase For securities sold under agreements to repurchase, the carrying value is a reasonable estimate of fair value. Securities sold under agreements to repurchase are reported in the Level 2 fair value category. FHLB Borrowings The fair value of FHLB borrowings is estimated based upon discounted future cash flows using a discount rate comparable to the current market rate for such borrowings. FHLB borrowings are reported in the Level 3 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 March 31, 2020 and December 31, 2019. (Dollars in thousands) March 31, 2020 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 84,076 — 84,076 — U.S. Government sponsored enterprises $ 26,908 — 26,908 — State and political subdivisions $ 90,280 — 90,280 — Trust preferred securities $ 250 — — 250 December 31, 2019 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 78,956 — 78,956 — U.S. Government sponsored enterprises $ 28,397 — 28,397 — State and political subdivisions $ 88,143 — 88,143 — 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 three months ended March 31, 2020. (Dollars in thousands) Investment Securities Available for Sale 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 March 31, 2020 and December 31, 2019 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 March 31, 2020 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 6,149 — — 6,149 Impaired loans $ 21,730 — — 21,730 Other real estate $ — — — — (Dollars in thousands) Fair Value Measurements December 31, 2019 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 4,417 — — 4,417 Impaired loans $ 20,347 — — 20,347 Other real estate $ — — — — (Dollars in thousands) Fair Value September 30, 2019 Fair Value December 31, 2018 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 6,149 4,417 Rate lock commitment N/A N/A Impaired loans $ 21,730 20,347 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ — — 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 March 31, 2020 and December 31, 2019 are as follows: (Dollars in thousands) Fair Value Measurements at March 31, 2020 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 103,519 103,519 — — 103,519 Investment securities available for sale $ 201,514 — 201,264 250 201,514 Other investments $ 7,229 — — 7,229 7,229 Mortgage loans held for sale $ 6,149 — — 6,149 6,149 Loans, net $ 872,452 — — 846,684 846,684 Cash surrender value of life insurance $ 16,414 — 16,414 — 16,414 Liabilities: Deposits $ 983,958 — — 989,131 989,131 Securities sold under agreements to repurchase $ 28,535 — 28,535 — 28,535 FHLB borrowings $ 70,000 — — 69,929 69,929 Junior subordinated debentures $ 15,464 — 15,464 — 15,464 (Dollars in thousands) Fair Value Measurements at December 31, 2019 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 52,387 52,387 — — 52,387 Investment securities available for sale $ 195,746 — 195,496 250 195,746 Other investments $ 4,231 — — 4,231 4,231 Mortgage loans held for sale $ 4,417 — — 4,417 4,417 Loans, net $ 843,194 — — 819,397 819,397 Cash surrender value of life insurance $ 16,319 — 16,319 — 16,319 Liabilities: Deposits $ 966,517 — — 955,766 955,766 Securities sold under agreements to repurchase $ 24,221 — 24,221 — 24,221 Junior subordinated debentures $ 15,619 — 15,619 — 15,619

7. Leases

7. Leases	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
7. Leases	As of March 31, 2020 the Company had operating ROU assets of $3.4 million and operating lease liabilities of $3.5 million. The Company maintains operating leases on land and buildings for some of the Bank’s branch facilities and loan production offices. Most leases include one option to renew, with renewal terms extending up to 15 years. The exercise of renewal options is based on the judgment of management as to whether or not the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. As allowed by ASU 2016-02, leases with a term of 12 months or less are not recorded on the balance sheet and instead are recognized in lease expense on a straight-line basis over the lease term. The following table presents lease cost and other lease information as of March 31, 2020 and 2019. (Dollars in thousands) March 31, 2020 March 31, 2019 Operating lease cost $ 224 221 Other information: Cash paid for amounts included in the measurement of lease liabilities 218 214 Operating cash flows from operating leases — — Right-of-use assets obtained in exchange for new lease liabilities - operating leases — — Weighted-average remaining lease term - operating leases 7.20 7.59 Weighted-average discount rate - operating leases 3.20 % 3.16 % The following table presents lease maturities as of March 31, 2020 and December 31, 2019. Maturity Analysis of Operating Lease Liabilities: March 31, 2020 December 31, 2019 2020 $ 605 $ 823 2021 793 793 2022 501 501 2023 393 393 2024 304 304 Thereafter 1,320 1,320 Total 3,916 4,134 Less: Imputed Interest (458 ) (487 ) Operating Lease Liability $ 3,458 $ 3,647

8. Subsequent Events

8. Subsequent Events	3 Months Ended
	Mar. 31, 2020
Subsequent Events [Abstract]
8. Subsequent Events	The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q were issued. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread throughout the United States and around the world. The declaration of a global pandemic indicates that almost all public commerce and related business activities must be, to varying degrees, curtailed with the goal of decreasing the rate of new infections. The outbreak of COVID-19 could adversely impact a broad range of industries in which the Company’s customers operate and impair their ability to fulfill their financial obligations to the Company. On March 3, 2020, the Federal Open Market Committee (“FOMC”) reduced the target federal funds rate by 50 basis points to 1.00% to 1.25%. This rate was further reduced to a target range of 0% to 0.25% on March 16, 2020. These reductions in interest rates and other effects of the COVID-19 outbreak may adversely affect the Company’s financial condition and results of operations. As a result of the spread of the COVID-19, economic uncertainties have arisen which are likely to negatively impact net interest income and noninterest income. Other financial impacts could occur though such potential impacts are unknown at this time. The Bank has continued to modify payments on loans due to the COVID-19 pandemic. Loans modified in April 2020 totaled $50.7 million. At April 30, 2020, loans totaling $108.1 million had payment modifications due to the COVID-19 pandemic. Loans with payment modifications associated with the COVID-19 pandemic include $100.8 million in loans secured by real estate, $6.4 million in commercial loans not secured by real estate and $822,000 in consumer loans not secured by real estate at April 30, 2020. These payment modifications are primarily interest only payments for three to six months. Loan payment modifications associated with the COVID-19 pandemic are not classified as TDRs due to Section 4013 of the CARES Act, which provides that a qualified loan modification is exempt by law from classification as a TDR pursuant to GAAP. O n March 27, 2020, President Trump signed the CARES Act, which established a $2 trillion economic stimulus package, including cash payments to individuals, supplemental unemployment insurance benefits and a $349 billion loan program administered through the U.S. Small Business Administration (SBA), referred to as the paycheck protection program (“PPP”). Under the PPP, small businesses, sole proprietorships, independent contractors and self-employed individuals may apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. The Bank is participating as a lender in the PPP. The Bank originated $64.5 million in PPP loans during the initial round of PPP funding. A second round of PPP funding, signed into law by President Trump on April 24, 2020, provided $320 billion additional funding for the PPP. As of April 30, 2020 the Bank had originated $25.9 million in PPP loans during the second round of PPP funding. The Bank expects to receive approximately $3.6 million in fees from the SBA for PPP loans originated as of April 30, 2020. Total PPP loans originated as of April 30, 2020 amounted to $90.4 million.

2. Investment Securities (Table

2. Investment Securities (Tables)	3 Months Ended
	Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Investment securities available for sale	(Dollars in thousands) March 31, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 80,815 3,391 130 84,076 U.S. Government sponsored enterprises 26,275 905 272 26,908 State and political subdivisions 86,726 3,691 137 90,280 Trust preferred securities 250 — — 250 Total $ 194,066 7,987 539 201,514 (Dollars in thousands) December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 77,812 1,371 227 78,956 U.S. Government sponsored enterprises 28,265 443 311 28,397 State and political subdivisions 84,686 3,657 200 88,143 Trust preferred securities 250 — — 250 Total $ 191,013 5,471 738 195,746
Current fair value and associated unrealized losses on investments in securities with unrealized losses	(Dollars in thousands) March 31, 2020 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 12,376 130 — — 12,376 130 U.S. Government sponsored enterprises — — 5,536 272 5,536 272 State and political subdivisions 8,465 137 — — 8,465 137 Total $ 20,841 267 5,536 272 26,377 539 (Dollars in thousands) December 31, 2019 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 28,395 177 6,351 50 34,746 227 U.S. Government sponsored enterprises 2,899 10 6,151 301 9,050 311 State and political subdivisions 7,367 200 — — 7,367 200 Total $ 38,661 387 12,502 351 51,163 738
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity	March 31, 2020 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 6,679 6,770 Due from one to five years 54,189 56,595 Due from five to ten years 27,801 29,452 Due after ten years 24,332 24,371 Mortgage-backed securities 80,815 84,076 Trust preferred securities 250 250 Total $ 194,066 201,514

3. Loans (Tables)

3. Loans (Tables)	3 Months Ended
	Mar. 31, 2020
Receivables [Abstract]
Major classifications of loans	(Dollars in thousands) March 31, 2020 December 31, 2019 Real estate loans: Construction and land development $ 105,939 92,596 Single-family residential 271,489 269,475 Single-family residential - Banco de la Gente non-traditional 29,887 30,793 Commercial 301,490 291,255 Multifamily and farmland 48,191 48,090 Total real estate loans 756,996 732,209 Loans not secured by real estate: Commercial loans 104,221 100,263 Farm loans 1,044 1,033 Consumer loans 8,241 8,432 All other loans 10,062 7,937 Total loans 880,564 849,874 Less allowance for loan losses 8,112 6,680 Total net loans $ 872,452 843,194
Age analysis of past due loans, by loan type	March 31, 2020 (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 $ 1,055 — 1,055 104,884 105,939 — Single-family residential 5,559 268 5,827 265,662 271,489 34 Single-family residential - Banco de la Gente non-traditional 5,366 455 5,821 24,066 29,887 — Commercial 1,526 175 1,701 299,789 301,490 — Multifamily and farmland — — — 48,191 48,191 — Total real estate loans 13,506 898 14,404 742,592 756,996 34 Loans not secured by real estate: Commercial loans 702 254 956 103,265 104,221 — Farm loans 93 — 93 951 1,044 — Consumer loans 119 3 122 8,119 8,241 — All other loans — — — 10,062 10,062 — Total loans $ 14,420 1,155 15,575 864,989 880,564 34 December 31, 2019 (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 $ 803 — 803 91,793 92,596 — Single-family residential 3,000 126 3,126 266,349 269,475 — Single-family residential - Banco de la Gente non-traditional 4,834 413 5,247 25,546 30,793 — Commercial 504 176 680 290,575 291,255 — Multifamily and farmland — — — 48,090 48,090 — Total real estate loans 9,141 715 9,856 722,353 732,209 — Loans not secured by real estate: Commercial loans 432 — 432 99,831 100,263 — Farm loans — — — 1,033 1,033 — Consumer loans 170 22 192 8,240 8,432 — All other loans — — — 7,937 7,937 — Total loans $ 9,743 737 10,480 839,394 849,874 —
Non-accrual loans	(Dollars in thousands) March 31, 2020 December 31, 2019 Real estate loans: Construction and land development $ — — Single-family residential 1,132 1,378 Single-family residential - Banco de la Gente non-traditional 1,946 1,764 Commercial 476 256 Total real estate loans 3,554 3,398 Loans not secured by real estate: Commercial loans 378 122 Consumer loans 34 33 Total $ 3,966 3,553
Impaired loans	March 31, 2020 (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 $ 180 — 180 180 8 182 3 Single-family residential 5,027 397 4,189 4,586 36 4,615 58 Single-family residential - Banco de la Gente non-traditional 14,767 1,034 12,930 13,964 926 14,168 228 Commercial 3,260 — 3,243 3,243 19 2,557 29 Multifamily and farmland — — — — — — — Total impaired real estate loans 23,234 1,431 20,542 21,973 989 21,522 318 Loans not secured by real estate: Commercial loans 702 90 606 696 35 436 9 Consumer loans 92 — 87 87 2 91 2 Total impaired loans $ 24,028 1,521 21,235 22,756 1,026 22,049 329 December 31, 2019 (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 $ 183 — 183 183 7 231 12 Single-family residential 5,152 403 4,243 4,646 36 4,678 269 Single-family residential - Banco de la Gente non-traditional 15,165 — 14,371 14,371 944 14,925 956 Commercial 1,879 — 1,871 1,871 7 1,822 91 Total impaired real estate loans 22,379 403 20,668 21,071 994 21,656 1,328 Loans not secured by real estate: Commercial loans 180 92 84 176 — 134 9 Consumer loans 100 — 96 96 2 105 7 Total impaired loans $ 22,659 495 20,848 21,343 996 21,895 1,344
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 non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Three months ended March 31, 2020 Allowance for loan losses: Beginning balance $ 694 1,274 1,073 1,305 120 688 — 138 1,388 6,680 Charge-offs (5 ) — — (7 ) — (31 ) — (167 ) — (210 ) Recoveries 2 16 — 23 — 25 — 55 — 121 Provision 602 423 11 478 (2 ) 335 — 154 (480 ) 1,521 Ending balance $ 1,293 1,713 1,084 1,799 118 1,017 — 180 908 8,112 Allowance for loan losses March 31, 2020 Ending balance: individually evaluated for impairment $ 2 6 906 9 — 29 — — — 952 Ending balance: collectively evaluated for impairment 1,291 1,707 178 1,790 118 988 — 180 908 7,160 Ending balance $ 1,293 1,713 1,084 1,799 118 1,017 — 180 908 8,112 Loans March 31, 2020: Ending balance $ 105,939 271,489 29,887 301,490 48,191 104,221 1,044 18,303 — 880,564 Ending balance: individually evaluated for impairment $ 8 1,678 12,489 2,095 — 344 — — — 16,614 Ending balance: collectively evaluated for impairment $ 105,931 269,811 17,398 299,395 48,191 103,877 1,044 18,303 — 863,950 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Three months ended March 31, 2019 Allowance for loan losses: Beginning balance $ 813 1,325 1,177 1,278 83 626 — 161 982 6,445 Charge-offs — (13 ) — — — (1 ) — (150 ) — (164 ) Recoveries 1 48 — 4 — 6 — 43 — 102 Provision 17 (104 ) (3 ) 10 15 (21 ) — 108 156 178 Ending balance $ 831 1,256 1,174 1,292 98 610 — 162 1,138 6,561 Allowance for loan losses March 31, 2019 Ending balance: individually evaluated for impairment $ — 2 1,008 13 — — — — — 1,023 Ending balance: collectively evaluated for impairment 831 1,254 166 1,279 98 610 — 162 1,138 5,538 Ending balance $ 831 1,256 1,174 1,292 98 610 — 162 1,138 6,561 Loans March 31, 2019: Ending balance $ 95,219 255,338 33,717 278,619 39,106 101,572 984 19,002 — 823,557 Ending balance: individually evaluated for impairment $ 95 1,758 14,127 1,658 — 63 — — — 17,701 Ending balance: collectively evaluated for impairment $ 95,124 253,580 19,590 276,961 39,106 101,509 984 19,002 — 805,856
Credit risk profile of each loan type based on internally assigned risk grade	March 31, 2020 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 65 8,378 — — — 353 — 672 — 9,468 2- High Quality 33,845 129,848 — 22,109 220 20,070 — 2,523 1,785 210,400 3- Good Quality 63,525 108,720 11,685 237,118 42,810 75,457 964 4,558 7,557 552,394 4- Management Attention 5,454 18,167 13,351 38,116 4,626 7,625 80 435 720 88,574 5- Watch 2,988 3,405 1,938 3,289 535 288 — 8 — 12,451 6- Substandard 62 2,971 2,913 858 — 428 — 45 — 7,277 7- Doubtful — — — — — — — — — — 8- Loss — — — — — — — — — — Total $ 105,939 271,489 29,887 301,490 48,191 104,221 1,044 8,241 10,062 880,564 December 31, 2019 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ — 8,819 — — — 330 — 693 — 9,842 2- High Quality 32,029 128,757 — 21,829 256 20,480 — 2,708 1,860 207,919 3- Good Quality 52,009 107,246 12,103 231,003 42,527 72,417 948 4,517 5,352 528,122 4- Management Attention 5,487 18,409 13,737 35,095 4,764 6,420 85 458 725 85,180 5- Watch 3,007 3,196 2,027 3,072 543 492 — 8 — 12,345 6- Substandard 64 3,048 2,926 256 — 124 — 48 — 6,466 7- Doubtful — — — — — — — — — — 8- Loss — — — — — — — — — — Total $ 92,596 269,475 30,793 291,255 48,090 100,263 1,033 8,432 7,937 849,874

4. Net Earnings Per Share (Tabl

4. Net Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2020
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 March 31, 2020 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 2,367 5,869,938 $ 0.40 Effect of dilutive securities: Restricted stock units — 13,440 Diluted earnings per share $ 2,367 5,883,378 $ 0.40 For the three months ended March 31, 2019 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,667 5,996,488 $ 0.61 Effect of dilutive securities: Restricted stock units — 24,369 Diluted earnings per share $ 3,667 6,020,857 $ 0.61

6. Fair Value (Tables)

6. Fair Value (Tables)	3 Months Ended
	Mar. 31, 2020
Fair Value Disclosures [Abstract]
Available for sale securities measured at fair value on a recurring basis	(Dollars in thousands) March 31, 2020 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 84,076 — 84,076 — U.S. Government sponsored enterprises $ 26,908 — 26,908 — State and political subdivisions $ 90,280 — 90,280 — Trust preferred securities $ 250 — — 250 December 31, 2019 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 78,956 — 78,956 — U.S. Government sponsored enterprises $ 28,397 — 28,397 — State and political subdivisions $ 88,143 — 88,143 — 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 Available for Sale 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 March 31, 2020 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 6,149 — — 6,149 Impaired loans $ 21,730 — — 21,730 Other real estate $ — — — — (Dollars in thousands) Fair Value Measurements December 31, 2019 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 4,417 — — 4,417 Impaired loans $ 20,347 — — 20,347 Other real estate $ — — — — (Dollars in thousands) Fair Value September 30, 2019 Fair Value December 31, 2018 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 6,149 4,417 Rate lock commitment N/A N/A Impaired loans $ 21,730 20,347 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ — — 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 March 31, 2020 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 103,519 103,519 — — 103,519 Investment securities available for sale $ 201,514 — 201,264 250 201,514 Other investments $ 7,229 — — 7,229 7,229 Mortgage loans held for sale $ 6,149 — — 6,149 6,149 Loans, net $ 872,452 — — 846,684 846,684 Cash surrender value of life insurance $ 16,414 — 16,414 — 16,414 Liabilities: Deposits $ 983,958 — — 989,131 989,131 Securities sold under agreements to repurchase $ 28,535 — 28,535 — 28,535 FHLB borrowings $ 70,000 — — 69,929 69,929 Junior subordinated debentures $ 15,464 — 15,464 — 15,464 (Dollars in thousands) Fair Value Measurements at December 31, 2019 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 52,387 52,387 — — 52,387 Investment securities available for sale $ 195,746 — 195,496 250 195,746 Other investments $ 4,231 — — 4,231 4,231 Mortgage loans held for sale $ 4,417 — — 4,417 4,417 Loans, net $ 843,194 — — 819,397 819,397 Cash surrender value of life insurance $ 16,319 — 16,319 — 16,319 Liabilities: Deposits $ 966,517 — — 955,766 955,766 Securities sold under agreements to repurchase $ 24,221 — 24,221 — 24,221 Junior subordinated debentures $ 15,619 — 15,619 — 15,619

7. Leases (Tables)

7. Leases (Tables)	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Lease expense	(Dollars in thousands) March 31, 2020 March 31, 2019 Operating lease cost $ 224 221 Other information: Cash paid for amounts included in the measurement of lease liabilities 218 214 Operating cash flows from operating leases — — Right-of-use assets obtained in exchange for new lease liabilities - operating leases — — Weighted-average remaining lease term - operating leases 7.20 7.59 Weighted-average discount rate - operating leases 3.20 % 3.16 %
Maturity analysis of operating lease liabilities	Maturity Analysis of Operating Lease Liabilities: March 31, 2020 December 31, 2019 2020 $ 605 $ 823 2021 793 793 2022 501 501 2023 393 393 2024 304 304 Thereafter 1,320 1,320 Total 3,916 4,134 Less: Imputed Interest (458 ) (487 ) Operating Lease Liability $ 3,458 $ 3,647

2. Investment Securities (Detai

2. Investment Securities (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Investment securities available for sale
Amortized cost	$ 194,066	$ 191,013
Estimated fair value	201,514	195,746
Mortgage-backed securities
Investment securities available for sale
Amortized cost	80,815	77,812
Gross unrealized gains	3,391	1,371
Gross unrealized losses	130	227
Estimated fair value	84,076	78,956
U.S. Government sponsored enterprises
Investment securities available for sale
Amortized cost	26,275	28,265
Gross unrealized gains	905	443
Gross unrealized losses	272	311
Estimated fair value	26,908	28,397
State and political subdivisions
Investment securities available for sale
Amortized cost	86,726	84,686
Gross unrealized gains	3,691	3,657
Gross unrealized losses	137	200
Estimated fair value	90,280	88,143
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
Gross unrealized gains	7,987	5,471
Gross unrealized losses	$ 539	$ 738

2. Investment securities (Det_2

2. Investment securities (Details 1) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Investment securities with continuous unrealized loss position
Less than 12 months, fair value	$ 20,841	$ 38,661
Less than 12 months, unrealized losses	267	387
12 months or more, fair value	5,536	12,502
12 months or more, unrealized losses	272	351
Total, fair value	26,377	51,163
Total, unrealized losses	539	738
Mortgage-backed securities
Investment securities with continuous unrealized loss position
Less than 12 months, fair value	12,376	28,395
Less than 12 months, unrealized losses	130	177
12 months or more, fair value	0	6,351
12 months or more, unrealized losses	0	50
Total, fair value	12,376	34,746
Total, unrealized losses	130	227
U.S. Government sponsored enterprises
Investment securities with continuous unrealized loss position
Less than 12 months, fair value	0	2,899
Less than 12 months, unrealized losses	0	10
12 months or more, fair value	5,536	6,151
12 months or more, unrealized losses	272	301
Total, fair value	5,536	9,050
Total, unrealized losses	272	311
State and political subdivisions
Investment securities with continuous unrealized loss position
Less than 12 months, fair value	8,465	7,367
Less than 12 months, unrealized losses	137	200
12 months or more, fair value	0	0
12 months or more, unrealized losses	0	0
Total, fair value	8,465	7,367
Total, unrealized losses	$ 137	$ 200

2. Investment securities (Det_3

2. Investment securities (Details 2) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Amortized Cost
Due within one year	$ 6,679
Due from one to five years	54,189
Due from five to ten years	27,801
Due after ten years	24,332
Mortgage-backed securities	80,815
Trust preferred securities	250
Total	194,066	$ 191,013
Estimated Fair Value
Due within one year	6,770
Due from one to five years	56,595
Due from five to ten years	29,452
Due after ten years	24,371
Mortgage-backed securities	84,076
Trust preferred securities	250
Total	$ 201,514

2. Investment Securities (Det_4

2. Investment Securities (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]
Unrealized losses in the investment securites portfolio relating to debt securities	$ 539
Proceeds from sales of investment securities available for sale	12,300
Gains on sales of available for sale securities	231
Securities pledged to secure public deposits	$ 69,500	$ 66,000

3. Loans (Details)

3. Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Major classifications
Total loans	$ 880,564	$ 849,874	$ 823,557
Less allowance for loan losses	8,112	6,680	6,561	$ 6,445
Total net loans	872,452	843,194
Construction and land development
Major classifications
Total loans	105,939	92,596	95,219
Less allowance for loan losses	1,293	694	831	813
Single-family residential
Major classifications
Total loans	271,489	269,475	255,338
Less allowance for loan losses	1,713	1,274	1,256	1,325
Single-family residential - Banco de la Gente non-tradtional
Major classifications
Total loans	29,887	30,793	33,717
Less allowance for loan losses	1,084	1,073	1,174	1,177
Commercial
Major classifications
Total loans	301,490	291,255	278,619
Less allowance for loan losses	1,799	1,305	1,292	1,278
Multifamily and Farmland
Major classifications
Total loans	48,191	48,090	39,106
Less allowance for loan losses	118	120	98	83
Total real estate loans
Major classifications
Total loans	756,996	732,209
Commercial loans (not secured by real estate)
Major classifications
Total loans	104,221	100,263	101,572
Less allowance for loan losses	1,017	688	610	626
Farm loans (not secured by real estate)
Major classifications
Total loans	1,044	1,033	984
Less allowance for loan losses	0	0	$ 0	$ 0
Consumer loans (not secured by real estate)
Major classifications
Total loans	8,241	8,432
All other loans (not secured by real estate)
Major classifications
Total loans	$ 10,062	$ 7,937

3. Loans (Details 1)

3. Loans (Details 1) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Past due loans
Loans 30-89 days past due	$ 14,420	$ 9,743
Loans 90 or more days past due	1,155	737
Total past due loans	15,575	10,480
Total current loans	864,989	839,394
Total loans	880,564	849,874	$ 823,557
Accruing loans 90 or more days past due	34	0
Construction and land development
Past due loans
Loans 30-89 days past due	1,055	803
Loans 90 or more days past due	0	0
Total past due loans	1,055	803
Total current loans	104,884	91,793
Total loans	105,939	92,596
Accruing loans 90 or more days past due	0	0
Single-family residential
Past due loans
Loans 30-89 days past due	5,559	3,000
Loans 90 or more days past due	268	126
Total past due loans	5,827	3,126
Total current loans	265,662	266,349
Total loans	271,489	269,475
Accruing loans 90 or more days past due	34	0
Single-family residential - Banco de la Gente non-tradtional
Past due loans
Loans 30-89 days past due	5,366	4,834
Loans 90 or more days past due	455	413
Total past due loans	5,821	5,247
Total current loans	24,066	25,546
Total loans	29,887	30,793
Accruing loans 90 or more days past due	0	0
Commercial
Past due loans
Loans 30-89 days past due	1,526	504
Loans 90 or more days past due	175	176
Total past due loans	1,701	680
Total current loans	299,789	290,575
Total loans	301,490	291,255
Accruing loans 90 or more days past due	0	0
Multifamily and Farmland
Past due loans
Loans 30-89 days past due	0	0
Loans 90 or more days past due	0	0
Total past due loans	0	0
Total current loans	48,191	48,090
Total loans	48,191	48,090
Accruing loans 90 or more days past due	0	0
Total real estate loans
Past due loans
Loans 30-89 days past due	13,506	9,141
Loans 90 or more days past due	898	715
Total past due loans	14,404	9,856
Total current loans	742,592	722,353
Total loans	756,996	732,209
Accruing loans 90 or more days past due	34	0
Commercial loans (not secured by real estate)
Past due loans
Loans 30-89 days past due	702	432
Loans 90 or more days past due	254	0
Total past due loans	956	432
Total current loans	103,265	99,831
Total loans	104,221	100,263
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	93	0
Loans 90 or more days past due	0	0
Total past due loans	93	0
Total current loans	951	1,033
Total loans	1,044	1,033
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	119	170
Loans 90 or more days past due	3	22
Total past due loans	122	192
Total current loans	8,119	8,240
Total loans	8,241	8,432
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	10,062	7,937
Total loans	10,062	7,937
Accruing loans 90 or more days past due	$ 0	$ 0

3. Loans (Details 2)

3. Loans (Details 2) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Non-accrual loans
Non-accrual loans	$ 3,966	$ 3,553
Construction and land development
Non-accrual loans
Non-accrual loans	0	0
Single-family residential
Non-accrual loans
Non-accrual loans	1,132	1,378
Single-family residential - Banco de la Gente non-tradtional
Non-accrual loans
Non-accrual loans	1,946	1,764
Commercial
Non-accrual loans
Non-accrual loans	476	256
Total real estate loans
Non-accrual loans
Non-accrual loans	3,554	3,398
Commercial loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	378	122
Consumer loans (not secured by real estate)
Non-accrual loans
Non-accrual loans	$ 34	$ 33

3. Loans (Details 3)

3. Loans (Details 3) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Impaired loans
Unpaid contractual principal balance	$ 24,028		$ 22,659
Recorded investment with no allowance	1,521		495
Recorded investment with allowance	21,235		20,848
Recorded investment in impaired loans	22,756		21,343
Related allowance	1,026		996
Average outstanding impaired loans	22,049		21,895
Interest income recognized	329	$ 342	1,344
Construction and land development
Impaired loans
Unpaid contractual principal balance	180		183
Recorded investment with no allowance	0		0
Recorded investment with allowance	180		183
Recorded investment in impaired loans	180		183
Related allowance	8		7
Average outstanding impaired loans	182		231
Interest income recognized	3		12
Single-family residential
Impaired loans
Unpaid contractual principal balance	5,027		5,152
Recorded investment with no allowance	397		403
Recorded investment with allowance	4,189		4,243
Recorded investment in impaired loans	4,586		4,646
Related allowance	36		36
Average outstanding impaired loans	4,615		4,678
Interest income recognized	58		269
Single-family residential - Banco de la Gente non-tradtional
Impaired loans
Unpaid contractual principal balance	14,767		15,165
Recorded investment with no allowance	1,034		0
Recorded investment with allowance	12,930		14,371
Recorded investment in impaired loans	13,964		14,371
Related allowance	926		944
Average outstanding impaired loans	14,168		14,925
Interest income recognized	228		956
Commercial
Impaired loans
Unpaid contractual principal balance	3,260		1,879
Recorded investment with no allowance	0		0
Recorded investment with allowance	3,243		1,871
Recorded investment in impaired loans	3,243		1,871
Related allowance	19		7
Average outstanding impaired loans	2,557		1,822
Interest income recognized	29		91
Multifamily and Farmland
Impaired loans
Unpaid contractual principal balance	0		0
Recorded investment with no allowance	0		0
Recorded investment with allowance	0		0
Recorded investment in impaired loans	0		0
Related allowance	0		0
Average outstanding impaired loans	0		0
Interest income recognized	0		0
Total real estate loans
Impaired loans
Unpaid contractual principal balance	23,234		22,379
Recorded investment with no allowance	1,431		403
Recorded investment with allowance	20,542		20,668
Recorded investment in impaired loans	21,973		21,071
Related allowance	989		994
Average outstanding impaired loans	21,522		21,656
Interest income recognized	318		1,328
Commercial loans (not secured by real estate)
Impaired loans
Unpaid contractual principal balance	702		180
Recorded investment with no allowance	90		92
Recorded investment with allowance	606		84
Recorded investment in impaired loans	696		176
Related allowance	35		0
Average outstanding impaired loans	436		134
Interest income recognized	9		9
Consumer loans (not secured by real estate)
Impaired loans
Unpaid contractual principal balance	92		100
Recorded investment with no allowance	0		0
Recorded investment with allowance	87		96
Recorded investment in impaired loans	87		96
Related allowance	2		2
Average outstanding impaired loans	91		105
Interest income recognized	$ 2		$ 7

3. Loans (Details 4)

3. Loans (Details 4) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Allowance for loan losses
Beginning balance	$ 6,680	$ 6,445
Charge-offs	(210)	(164)
Recoveries	121	102
Provision	1,521	178
Ending balance	8,112	6,561
Ending balance: individually evaluated for impairments	952	1,023
Ending balance: collectively evaluated for impairments	7,160	5,538
Ending balance	8,112	6,561
Loans
Ending balance	880,564	823,557
Ending balance: individually evaluated for impairment	16,614	17,701
Ending balance: collectively evaluated for impairment	863,950	805,856
Construction and land development
Allowance for loan losses
Beginning balance	694	813
Charge-offs	(5)	0
Recoveries	2	1
Provision	602	17
Ending balance	1,293	831
Ending balance: individually evaluated for impairments	2	0
Ending balance: collectively evaluated for impairments	1,291	831
Ending balance	1,293	831
Loans
Ending balance	105,939	95,219
Ending balance: individually evaluated for impairment	8	95
Ending balance: collectively evaluated for impairment	105,931	95,124
Single-family residential
Allowance for loan losses
Beginning balance	1,274	1,325
Charge-offs	0	(13)
Recoveries	16	48
Provision	423	(104)
Ending balance	1,713	1,256
Ending balance: individually evaluated for impairments	6	2
Ending balance: collectively evaluated for impairments	1,707	1,254
Ending balance	1,713	1,256
Loans
Ending balance	271,489	255,338
Ending balance: individually evaluated for impairment	1,678	1,758
Ending balance: collectively evaluated for impairment	269,811	253,580
Single-family residential - Banco de la Gente non-tradtional
Allowance for loan losses
Beginning balance	1,073	1,177
Charge-offs	0	0
Recoveries	0	0
Provision	11	(3)
Ending balance	1,084	1,174
Ending balance: individually evaluated for impairments	906	1,008
Ending balance: collectively evaluated for impairments	178	166
Ending balance	1,084	1,174
Loans
Ending balance	29,887	33,717
Ending balance: individually evaluated for impairment	12,489	14,127
Ending balance: collectively evaluated for impairment	17,398	19,590
Commercial
Allowance for loan losses
Beginning balance	1,305	1,278
Charge-offs	(7)	0
Recoveries	23	4
Provision	478	10
Ending balance	1,799	1,292
Ending balance: individually evaluated for impairments	9	13
Ending balance: collectively evaluated for impairments	1,790	1,279
Ending balance	1,799	1,292
Loans
Ending balance	301,490	278,619
Ending balance: individually evaluated for impairment	2,095	1,658
Ending balance: collectively evaluated for impairment	299,395	276,961
Multifamily and Farmland
Allowance for loan losses
Beginning balance	120	83
Charge-offs	0	0
Recoveries	0	0
Provision	(2)	15
Ending balance	118	98
Ending balance: individually evaluated for impairments	0	0
Ending balance: collectively evaluated for impairments	118	98
Ending balance	118	98
Loans
Ending balance	48,191	39,106
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	48,191	39,106
Commercial loans (not secured by real estate)
Allowance for loan losses
Beginning balance	688	626
Charge-offs	(31)	(1)
Recoveries	25	6
Provision	335	(21)
Ending balance	1,017	610
Ending balance: individually evaluated for impairments	29	0
Ending balance: collectively evaluated for impairments	988	610
Ending balance	1,017	610
Loans
Ending balance	104,221	101,572
Ending balance: individually evaluated for impairment	344	63
Ending balance: collectively evaluated for impairment	103,877	101,509
Farm loans (not secured by real estate)
Allowance for loan losses
Beginning balance	0	0
Charge-offs	0	0
Recoveries	0	0
Provision	0	0
Ending balance	0	0
Ending balance: individually evaluated for impairments	0	0
Ending balance: collectively evaluated for impairments	0	0
Ending balance	0	0
Loans
Ending balance	1,044	984
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	1,044	984
Consumer And All Other Loans
Allowance for loan losses
Beginning balance	138	161
Charge-offs	(167)	(150)
Recoveries	55	43
Provision	154	108
Ending balance	180	162
Ending balance: individually evaluated for impairments	0	0
Ending balance: collectively evaluated for impairments	180	162
Ending balance	180	162
Loans
Ending balance	18,303	19,002
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	18,303	19,002
Unallocated
Allowance for loan losses
Beginning balance	1,388	982
Charge-offs	0	0
Recoveries	0	0
Provision	(480)	156
Ending balance	908	1,138
Ending balance: individually evaluated for impairments	0	0
Ending balance: collectively evaluated for impairments	908	1,138
Ending balance	908	1,138
Loans
Ending balance	0	0
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	$ 0	$ 0

3. Loans (Details 5)

3. Loans (Details 5) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Credit risk profile
Total loans	$ 880,564	$ 849,874	$ 823,557
Excellent Quality
Credit risk profile
Total loans	9,468	9,842
High Quality
Credit risk profile
Total loans	210,400	207,919
Good Quality
Credit risk profile
Total loans	552,394	528,122
Management Attention
Credit risk profile
Total loans	88,574	85,180
Watch
Credit risk profile
Total loans	12,451	12,345
Substandard
Credit risk profile
Total loans	7,277	6,466
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	105,939	92,596
Single-family residential
Credit risk profile
Total loans	271,489	269,475
Single-family residential - Banco de la Gente non-tradtional
Credit risk profile
Total loans	29,887	30,793
Commercial
Credit risk profile
Total loans	301,490	291,255
Multifamily and Farmland
Credit risk profile
Total loans	48,191	48,090
Commercial loans (not secured by real estate)
Credit risk profile
Total loans	104,221	100,263
Farm loans (not secured by real estate)
Credit risk profile
Total loans	1,044	1,033
Consumer loans (not secured by real estate)
Credit risk profile
Total loans	8,241	8,432
All other loans (not secured by real estate)
Credit risk profile
Total loans	10,062	7,937
Construction and land development
Credit risk profile
Total loans	105,939	92,596	95,219
Construction and land development | Excellent Quality
Credit risk profile
Total loans	65	0
Construction and land development | High Quality
Credit risk profile
Total loans	33,845	32,029
Construction and land development | Good Quality
Credit risk profile
Total loans	63,525	52,009
Construction and land development | Management Attention
Credit risk profile
Total loans	5,454	5,487
Construction and land development | Watch
Credit risk profile
Total loans	2,988	3,007
Construction and land development | Substandard
Credit risk profile
Total loans	62	64
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	271,489	269,475	255,338
Single-family residential | Excellent Quality
Credit risk profile
Total loans	8,378	8,819
Single-family residential | High Quality
Credit risk profile
Total loans	129,848	128,757
Single-family residential | Good Quality
Credit risk profile
Total loans	108,720	107,246
Single-family residential | Management Attention
Credit risk profile
Total loans	18,167	18,409
Single-family residential | Watch
Credit risk profile
Total loans	3,405	3,196
Single-family residential | Substandard
Credit risk profile
Total loans	2,971	3,048
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 non-tradtional
Credit risk profile
Total loans	29,887	30,793	33,717
Single-family residential - Banco de la Gente non-tradtional | Excellent Quality
Credit risk profile
Total loans	0	0
Single-family residential - Banco de la Gente non-tradtional | High Quality
Credit risk profile
Total loans	0	0
Single-family residential - Banco de la Gente non-tradtional | Good Quality
Credit risk profile
Total loans	11,685	12,103
Single-family residential - Banco de la Gente non-tradtional | Management Attention
Credit risk profile
Total loans	13,351	13,737
Single-family residential - Banco de la Gente non-tradtional | Watch
Credit risk profile
Total loans	1,938	2,027
Single-family residential - Banco de la Gente non-tradtional | Substandard
Credit risk profile
Total loans	2,913	2,926
Single-family residential - Banco de la Gente non-tradtional | Doubtful
Credit risk profile
Total loans	0	0
Single-family residential - Banco de la Gente non-tradtional | Loss
Credit risk profile
Total loans	0	0
Commercial
Credit risk profile
Total loans	301,490	291,255	278,619
Commercial | Excellent Quality
Credit risk profile
Total loans	0	0
Commercial | High Quality
Credit risk profile
Total loans	22,109	21,829
Commercial | Good Quality
Credit risk profile
Total loans	237,118	231,003
Commercial | Management Attention
Credit risk profile
Total loans	38,116	35,095
Commercial | Watch
Credit risk profile
Total loans	3,289	3,072
Commercial | Substandard
Credit risk profile
Total loans	858	256
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	48,191	48,090	39,106
Multifamily and Farmland | Excellent Quality
Credit risk profile
Total loans	0	0
Multifamily and Farmland | High Quality
Credit risk profile
Total loans	220	256
Multifamily and Farmland | Good Quality
Credit risk profile
Total loans	42,810	42,527
Multifamily and Farmland | Management Attention
Credit risk profile
Total loans	4,626	4,764
Multifamily and Farmland | Watch
Credit risk profile
Total loans	535	543
Multifamily and Farmland | Substandard
Credit risk profile
Total loans	0	0
Multifamily and Farmland | Doubtful
Credit risk profile
Total loans	0	0
Multifamily and Farmland | Loss
Credit risk profile
Total loans	0	0
Commercial loans (not secured by real estate)
Credit risk profile
Total loans	104,221	100,263	101,572
Commercial loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total loans	353	330
Commercial loans (not secured by real estate) | High Quality
Credit risk profile
Total loans	20,070	20,480
Commercial loans (not secured by real estate) | Good Quality
Credit risk profile
Total loans	75,457	72,417
Commercial loans (not secured by real estate) | Management Attention
Credit risk profile
Total loans	7,625	6,420
Commercial loans (not secured by real estate) | Watch
Credit risk profile
Total loans	288	492
Commercial loans (not secured by real estate) | Substandard
Credit risk profile
Total loans	428	124
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	1,044	1,033	$ 984
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	964	948
Farm loans (not secured by real estate) | Management Attention
Credit risk profile
Total loans	80	85
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	8,241	8,432
Consumer loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total loans	672	693
Consumer loans (not secured by real estate) | High Quality
Credit risk profile
Total loans	2,523	2,708
Consumer loans (not secured by real estate) | Good Quality
Credit risk profile
Total loans	4,558	4,517
Consumer loans (not secured by real estate) | Management Attention
Credit risk profile
Total loans	435	458
Consumer loans (not secured by real estate) | Watch
Credit risk profile
Total loans	8	8
Consumer loans (not secured by real estate) | Substandard
Credit risk profile
Total loans	45	48
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	10,062	7,937
All other loans (not secured by real estate) | Excellent Quality
Credit risk profile
Total loans	0	0
All other loans (not secured by real estate) | High Quality
Credit risk profile
Total loans	1,785	1,860
All other loans (not secured by real estate) | Good Quality
Credit risk profile
Total loans	7,557	5,352
All other loans (not secured by real estate) | Management Attention
Credit risk profile
Total loans	720	725
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 (Details Narrative)

3. Loans (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Receivables [Abstract]
Percentage of construction and land development loans in Bank's loan portfolio	12.00%
Percentage of single-family residential loans in Bank's loan portfolio	34.00%
Percentage of Single-family residential - Banco de la Gente stated income loans in Bank's loan portfolio	3.00%
Percentage of commercial real estate loans in Bank's loan portfolio	34.00%
Percentage of commercial loans in Bank's loan portfolio	12.00%
Accruing impaired loans	$ 22,800	$ 22,100	$ 21,300
Interest income recognized on accruing impaired loans	329	342	1,344
Provision for loan losses	1,500	178
TDR loans modified, past-due TDR loans and non-accrual TDR Loans	4,800		4,300
Performing loans classified as TDR loans	0		$ 0
Loans modified considered to be new TDR loans	$ 0	$ 0

4. Net Earnings Per Share (Deta

4. Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net Earnings
Basic earnings per share	$ 2,367	$ 3,667
Effect of dilutive securities: restricted stock units	0	0
Diluted earnings per share	$ 2,367	$ 3,667
Weighted Average Number of Shares
Basic earnings per share (in shares)	5,869,938	5,996,488
Effect of dilutive securities: restricted stock units (in shares)	13,440	24,369
Diluted earnings per share (in shares)	5,883,378	6,020,857
Per Share Amount
Basic earnings per share	$ .40	$ 0.61
Diluted earnings per share	$ .40	$ 0.61

5. Stock-Based Compensation (De

5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Payment Arrangement [Abstract]
Unrecognized compensation cost	$ 129
Recognized compensation expense	$ 77	$ 110

6. Fair Value (Details)

6. Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Estimated fair value	$ 201,514	$ 195,746
Level 1
Estimated fair value	0	0
Level 2
Estimated fair value	201,264	195,496
Level 3
Estimated fair value	250	250
Mortgage-backed securities
Estimated fair value	84,076	78,956
Mortgage-backed securities | Level 1
Estimated fair value	0	0
Mortgage-backed securities | Level 2
Estimated fair value	84,076	78,956
Mortgage-backed securities | Level 3
Estimated fair value	0	0
U.S. Government sponsored enterprises
Estimated fair value	26,908	28,397
U.S. Government sponsored enterprises | Level 1
Estimated fair value	0	0
U.S. Government sponsored enterprises | Level 2
Estimated fair value	26,908	28,397
U.S. Government sponsored enterprises | Level 3
Estimated fair value	0	0
State and political subdivisions
Estimated fair value	90,280	88,143
State and political subdivisions | Level 1
Estimated fair value	0	0
State and political subdivisions | Level 2
Estimated fair value	90,280	88,143
State and political subdivisions | 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 (Details 1)

6. Fair Value (Details 1) - Level 3 $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)
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 (Details 2)

6. Fair Value (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Mortgage loans held for sale	$ 6,149	$ 4,417
Impaired loans	21,730	20,347
Other real estate	$ 0	0
Mortgage loans held for sale
Valuation technique	Rate lock commitment
Significant unobservable inputs	N/A
General range of significant unobservable input values	N/A
Impaired loans
Valuation technique	Appraised value and discounted cash flows
Significant unobservable inputs	Discounts to reflect current market conditions and ultimate collectability
General range of significant unobservable input values	0 - 25%
Other real estate
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	6,149	4,417
Impaired loans	21,730	20,347
Other real estate	$ 0	$ 0

6. Fair Value (Details 3)

6. Fair Value (Details 3) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets:
Cash and cash equivalents	$ 103,519	$ 52,387
Investment securities available for sale	201,514	195,746
Other investments	7,229	4,231
Mortgage loans held for sale	6,149	4,417
Loans, net	872,452	843,194
Cash surrender value of life insurance	16,414	16,319
Liabilities:
Deposits	983,958	966,517
Securities sold under agreements to repurchase	28,535	24,221
FHLB borrowings	70,000	0
Junior subordinated debentures	15,464	15,619
Estimated Fair Value
Assets:
Cash and cash equivalents	103,519	52,387
Investment securities available for sale	201,514	195,746
Other investments	7,229	4,231
Mortgage loans held for sale	6,149	4,417
Loans, net	846,684	819,397
Cash surrender value of life insurance	16,414	16,319
Liabilities:
Deposits	989,131	955,766
Securities sold under agreements to repurchase	28,535	24,221
FHLB borrowings	69,929	0
Junior subordinated debentures	15,464	15,619
Level 1
Assets:
Cash and cash equivalents	103,519	52,387
Investment securities available for sale	0	0
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	0	0
FHLB borrowings	0	0
Junior subordinated debentures	0	0
Level 2
Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	201,264	195,496
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	16,414	16,319
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	28,535	24,221
FHLB borrowings	0	0
Junior subordinated debentures	15,464	15,619
Level 3
Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	250	250
Other investments	7,229	4,231
Mortgage loans held for sale	6,149	4,417
Loans, net	846,684	819,397
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	989,131	955,766
Securities sold under agreements to repurchase	0	0
FHLB borrowings	69,929	0
Junior subordinated debentures	$ 0	$ 0

7. Leases (Details)

7. Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leases [Abstract]
Operating lease cost	$ 224	$ 221
Cash paid for amounts included in the measurement of lease liabilities	218	214
Operating cash flows from operating leases	0	0
Right-of-use assets obtained in exchange for new lease liabilities - operating leases	$ 0	$ 0
Weighted-average remaining lease term - operating leases	7 years 2 months 12 days	7 years 7 months 2 days
Weighted-average discount rate - operating leases	3.20%	3.16%

7. Leases (Details 1)

7. Leases (Details 1) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
2020	$ 605	$ 823
2021	793	793
2022	501	501
2023	393	393
2024	304	304
Thereafter	1,320	1,320
Total	3,916	4,134
Less: imputed interest	(458)	(487)
Operating lease liability	$ 3,458	$ 3,647

7. Leases (Details Narrative)

7. Leases (Details Narrative) $ in Thousands	Mar. 31, 2020USD ($)
Leases
Operating ROU assets	$ 3,400
Operating lease liabilities	$ 3,500