Peoples Bancorp of North Carolina (PEBK) 10-Q 6 Aug 20 2020 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Jul. 31, 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	Jun. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-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	Q2
Document Fiscal Year Focus	2020

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Cash and due from banks, including reserve requirements of $0 at 6/30/20 and $13,210 at 12/31/19	$ 48,990	$ 48,337
Interest-bearing deposits	15,694	720
Federal funds sold	124,955	3,330
Cash and cash equivalents	189,639	52,387
Investment securities available for sale	207,469	195,746
Other investments	7,196	4,231
Total securities	214,665	199,977
Mortgage loans held for sale	10,594	4,417
Loans	966,543	849,874
Less allowance for loan losses	(9,433)	(6,680)
Net loans	957,110	843,194
Premises and equipment, net	18,480	18,604
Cash surrender value of life insurance	16,507	16,319
Right of use lease asset	3,367	3,622
Accrued interest receivable and other assets	15,519	16,362
Total assets	1,425,881	1,154,882
Deposits:
Noninterest-bearing demand	457,637	338,004
NOW, MMDA & savings	594,948	516,757
Time, $250,000 or more	24,477	34,269
Other time	77,267	77,487
Total deposits	1,154,329	966,517
Securities sold under agreements to repurchase	31,747	24,221
FHLB borrowings	70,000	0
Junior subordinated debentures	15,464	15,619
Lease liability	3,403	3,647
Accrued interest payable and other liabilities	13,897	10,758
Total liabilities	1,288,840	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 June 30, 2020 and 5,912,300 shares at December 31, 2019	56,871	59,813
Retained earnings	72,942	70,663
Accumulated other comprehensive income	7,228	3,644
Total shareholders' equity	137,041	134,120
Total liabilities and shareholders' equity	$ 1,425,881	$ 1,154,882

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 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		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest income:
Interest and fees on loans	$ 10,180	$ 10,894	$ 20,860	$ 21,513
Interest on due from banks	41	35	84	49
Interest on federal funds sold	22	0	145	0
Interest on investment securities:
U.S. Government sponsored enterprises	651	641	1,336	1,314
State and political subdivisions	684	760	1,325	1,594
Other	60	45	138	88
Total interest income	11,638	12,375	23,888	24,558
Interest expense:
NOW, MMDA & savings deposits	448	320	973	602
Time deposits	224	171	501	322
FHLB borrowings	102	3	166	49
Junior subordinated debentures	90	220	220	446
Other	48	67	93	119
Total interest expense	912	781	1,953	1,538
Net interest income	10,726	11,594	21,935	23,020
Provision for loan losses	1,417	77	2,938	255
Net interest income after provision for loan losses	9,309	11,517	18,997	22,765
Non-interest income:
Service charges	718	1,138	1,826	2,231
Other service charges and fees	162	177	355	346
Gain on sale of securities	457	0	457	231
Mortgage banking income	563	311	885	458
Insurance and brokerage commissions	205	205	447	436
Appraisal management fee income	1,734	1,112	3,084	1,974
Miscellaneous	1,400	1,442	2,780	2,829
Total non-interest income	5,239	4,385	9,834	8,505
Non-interest expense:
Salaries and employee benefits	5,535	5,718	11,259	11,365
Occupancy	1,861	1,811	3,782	3,548
Professional fees	414	429	747	718
Advertising	196	275	414	541
Debit card expense	258	239	488	466
FDIC insurance	48	80	88	152
Appraisal management fee expense	1,333	864	2,367	1,526
Other	1,807	1,828	3,756	3,844
Total non-interest expense	11,452	11,244	22,901	22,160
Earnings before income taxes	3,096	4,658	5,930	9,110
Income tax expense	535	845	1,002	1,630
Net earnings	$ 2,561	$ 3,813	$ 4,928	$ 7,480
Basic net earnings per share	$ 0.44	$ 0.64	$ 0.84	$ 1.25
Diluted net earnings per share	0.44	0.64	0.84	1.25
Cash dividends declared per share	$ 0.15	$ 0.14	$ 0.45	$ 0.38

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net earnings	$ 2,561	$ 3,813	$ 4,928	$ 7,480
Other comprehensive income:
Unrealized holding gains on securities available for sale	2,396	2,757	5,110	3,883
Reclassification adjustment for gains on securities available for sale included in net earnings	(457)	0	(457)	(231)
Total other comprehensive income, before income taxes	1,939	2,757	4,653	3,652
Income tax benefit related to other comprehensive income:
Unrealized holding gains on securities available for sale	550	634	1,174	892
Reclassification adjustment for gains on securities available for sale included in net earnings	(105)	0	(105)	(53)
Total income tax benefit related to other comprehensive income (loss)	445	634	1,069	839
Total other comprehensive income, net of tax	1,494	2,123	3,584	2,813
Total comprehensive income	$ 4,055	$ 5,936	$ 8,512	$ 10,293

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
Common stock repurchase, shares	(63,996)
Common stock repurchase, amount	$ (1,761)			(1,761)
Cash dividends declared on common stock		(832)		(832)
Restricted stock units exercised, shares	0
Restricted stock units exercised, amount	$ 0			0
Net earnings		3,813		3,813
Change in accumulated other comprehensive income, net of tax			2,123	2,123
Ending balance, shares at Jun. 30, 2019	5,933,140
Ending balance, amount at Jun. 30, 2019	$ 60,390	65,738	3,799	129,927
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
Cash dividends declared on common stock		(870)		(870)
Net earnings		2,561		2,561
Change in accumulated other comprehensive income, net of tax			1,494	1,491
Ending balance, shares at Jun. 30, 2020	5,787,504
Ending balance, amount at Jun. 30, 2020	$ 56,871	$ 72,942	$ 7,228	$ 137,041

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net earnings	$ 4,928	$ 7,480
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and accretion	2,017	1,926
Provision for loan losses	2,938	255
Deferred income taxes	(16)	(4)
Gain on sale of investment securities	(457)	(231)
Write-down of other real estate	0	17
Restricted stock expense	(75)	170
Proceeds from sales of mortgage loans held for sale	43,832	18,572
Origination of mortgage loans held for sale	(50,009)	(20,201)
Change in:
Cash surrender value of life insurance	(188)	(190)
Right of use lease asset	255	392
Other assets	(212)	1,202
Lease liability	(244)	(400)
Other liabilities	3,214	(3,596)
Net cash provided by operating activities	5,983	5,392
Cash flows from investing activities:
Purchases of investment securities available for sale	(37,340)	(21,405)
Proceeds from sales, calls and maturities of investment securities available for sale	20,592	23,707
Proceeds from paydowns of investment securities available for sale	9,305	6,354
Proceeds from paydowns on other investments	88	66
Purchases of FHLB stock	(3,031)	(1)
Net change in loans	(116,854)	(29,503)
Purchases of premises and equipment	(1,085)	(1,827)
Net cash used by investing activities	(128,325)	(22,609)
Cash flows from financing activities:
Net change in deposits	187,812	27,014
Net change in securities sold under agreement to repurchase	7,526	(10,362)
Proceeds from FHLB borrowings	70,000	89,000
Repayments of FHLB borrowings	0	(89,000)
Repayments of Junior Subordinated Debt	(155)	0
Proceeds from Fed Funds purchased	(6,935)	74,450
Repayments of Fed Funds purchased	6,935	(74,450)
Restricted stock units exercised	57	207
Common stock repurchased	(2,999)	(1,913)
Cash dividends paid on common stock	(2,647)	(2,277)
Net cash provided by financing activities	259,594	12,669
Net change in cash and cash equivalents	137,252	(4,548)
Cash and cash equivalents at beginning of period	52,387	43,370
Cash and cash equivalents at end of period	189,639	38,822
Cash paid during the period for:
Interest	1,909	1,529
Income taxes	796	1,616
Noncash investing and financing activities:
Change in unrealized gain on investment securities available for sale, net	3,584	2,813
Issuance of accrued restricted stock units	57	207
Transfers of loans to other real estate and repossessions	0	0
Initial recognition of lease right-of-use asset and lease liability recorded upon adoption of ASU 2016-02	$ 132	$ 4,401

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 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 table provides 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 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 did not 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 adoption of this guidance did not 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 did not 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 $446,000 and $435,000 for the six months ended June 30, 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 $2.0 million for the six months ended June 30, 2020 and 2019. 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 $388,000 and $304,000 for the six months ended June 30, 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 $3.1 million and $2.0 million for the six months ended June 30, 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 $115,000 for the six months ended June 30, 2020 and 2019. The following table provides a summary of ASU’s issued by the FASB that the Company has not adopted as of June 30, 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 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 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 GAAP 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	6 Months Ended
	Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]
2. Investment Securities	Investment securities available for sale at June 30, 2020 and December 31, 2019 are as follows: (Dollars in thousands) June 30, 2020 Amortized Gross Gross Estimated Mortgage-backed securities $ 74,338 3,362 39 77,661 U.S. Government sponsored enterprises 22,166 1,044 222 22,988 State and political subdivisions 101,329 5,241 — 106,570 Trust preferred securities 250 — — 250 Total $ 198,083 9,647 261 207,469 (Dollars in thousands) December 31, 2019 Amortized Gross Gross Estimated 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 June 30, 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) June 30, 2020 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized Mortgage-backed securities $ 10,857 39 — — 10,857 39 U.S. Government sponsored enterprises — — 4,454 222 4,454 222 Total $ 10,857 39 4,454 222 15,311 261 (Dollars in thousands) December 31, 2019 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized 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 June 30, 2020, unrealized losses in the investment securities portfolio relating to debt securities totaled $261,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the June 30, 2020 tables above, eight out of 63 securities issued by state and political subdivisions contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations of entities that issued each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed. The amortized cost and estimated fair value of investment securities available for sale at June 30, 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. June 30, 2020 (Dollars in thousands) Amortized Estimated Due within one year $ 9,933 10,127 Due from one to five years 48,311 50,935 Due from five to ten years 48,710 51,567 Due after ten years 16,541 16,929 Mortgage-backed securities 74,338 77,661 Trust preferred securities 250 250 Total $ 198,083 207,469 Proceeds from sales of securities available for sale during the six months ended June 30, 2020 were $17.0 million and resulted in net gains of $457,000. Proceeds from sales of securities available for sale during the six months ended June 30, 2019 were $12.3 million and resulted in net gains of $231,000. Securities with a fair value of approximately $70.0 million and $66.0 million at June 30, 2020 and December 31, 2019, respectively, were pledged to secure public deposits and for other purposes as required by law.

3. Loans

3. Loans	6 Months Ended
	Jun. 30, 2020
Receivables [Abstract]
3. Loans	Major classifications of loans at June 30, 2020 and December 31, 2019 are summarized as follows: (Dollars in thousands) June 30, December 31, Real estate loans: Construction and land development $ 110,077 92,596 Single-family residential 268,174 269,475 Single-family residential - Banco de la Gente non-traditional 29,325 30,793 Commercial 303,828 291,255 Multifamily and farmland 49,465 48,090 Total real estate loans 760,869 732,209 Loans not secured by real estate: Commercial loans 188,398 100,263 Farm loans 887 1,033 Consumer loans 7,545 8,432 All other loans 8,844 7,937 Total loans 966,543 849,874 Less allowance for loan losses 9,433 6,680 Total net loans $ 957,110 843,194 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 June 30, 2020, construction and land development loans comprised approximately 11% of the Bank’s total loan portfolio. ● Single-family residential loans – Declining home sales volumes, decreased real estate values and higher than normal levels of unemployment could contribute to losses on these loans. As of June 30, 2020, single-family residential loans comprised approximately 31% 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 June 30, 2020, commercial real estate loans comprised approximately 31% of the Bank’s total loan portfolio. ● Commercial loans – Repayment is generally dependent upon the successful operation of the borrower’s business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid or fluctuate in value based on the success of the business. As of June 30, 2020, commercial loans comprised approximately 19% of the Bank’s total loan portfolio, including $98.1 million in Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The following tables present an age analysis of past due loans, by loan type, as of June 30, 2020 and December 31, 2019: June 30, 2020 (Dollars in thousands) Loans 30-89 Loans 90 or Total Past Total Current Total Loans Accruing Real estate loans: Construction and land development $ — — — 110,077 110,077 — Single-family residential 1,030 371 1,401 266,773 268,174 — Single-family residential - Banco de la Gente non-traditional 1,556 263 1,819 27,506 29,325 — Commercial — 405 405 303,423 303,828 — Multifamily and farmland — — — 49,465 49,465 — Total real estate loans 2,586 1,039 3,625 757,244 760,869 — Loans not secured by real estate: Commercial loans — — — 188,398 188,398 — Farm loans — — — 887 887 — Consumer loans 27 18 45 7,500 7,545 — All other loans — — — 8,844 8,844 — Total loans $ 2,613 1,057 3,670 962,873 966,543 — December 31, 2019 (Dollars in thousands) Loans 30-89 Loans 90 or Total Past Total Current Total Loans Accruing 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 June 30, 2020 and December 31, 2019: (Dollars in thousands) June 30, December 31, Real estate loans: Construction and land development $ — — Single-family residential 1,401 1,378 Single-family residential - Banco de la Gente non-traditional 1,822 1,764 Commercial 476 256 Total real estate loans 3,699 3,398 Loans not secured by real estate: Commercial loans 276 122 Consumer loans 24 33 Total $ 3,999 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 $22.5 million, $21.3 million and $21.4 million at June 30, 2020, December 31, 2019 and June 30, 2019, respectively. Interest income recognized on accruing impaired loans was $635,000, $1.3 million, and $668,000 for the six months ended June 30, 2020, the year ended December 31, 2019 and the six months ended June 30, 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 June 30, 2020: June 30, 2020 (Dollars in thousands) Unpaid Recorded Recorded Recorded Related Real estate loans: Construction and land development $ 134 — 134 134 5 Single-family residential 5,414 391 4,579 4,970 20 Single-family residential - Banco de la Gente stated income 14,535 — 13,749 13,749 900 Commercial 3,005 739 2,248 2,987 14 Multifamily and farmland — — — — — Total impaired real estate loans 23,088 1,130 20,710 21,840 939 Loans not secured by real estate: Commercial loans 640 275 315 590 2 Consumer loans 70 — 66 66 1 Total impaired loans $ 23,798 1,405 21,091 22,496 942 The following table presents the average impaired loan balance and the interest income recognized by loan class for the three and six months ended June 30, 2020 and 2019. (Dollars in thousands) Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Average Interest Average Interest Average Interest Average Interest Real estate loans: Construction and land development $ 157 4 232 2 166 7 248 6 Single-family residential 4,778 59 4,214 57 4,734 118 4,826 118 Single-family residential - Banco de la Gente stated income 13,856 193 15,347 239 14,028 421 15,010 491 Commercial 3,115 43 1,739 22 2,700 72 1,801 45 Multifamily and farmland — — — — — — — — Total impaired real estate loans 21,906 299 21,532 320 21,628 618 21,885 660 Loans not secured by real estate: Commercial loans 643 6 114 3 487 15 106 4 Consumer loans 77 1 104 2 83 2 107 4 Total impaired loans $ 22,626 306 21,750 325 22,198 635 22,098 668 The following table presents impaired loans as of and for the year ended December 31, 2019: December 31, 2019 (Dollars in thousands) Unpaid Recorded Recorded Recorded Related Average YTD 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 and six months ended June 30, 2020 and 2019 were as follows: (Dollars in thousands) Real Estate Loans Construction Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer Unallocated Total Six months ended June 30, 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 ) — (109 ) — (257 ) — (378 ) Recoveries 2 25 — 34 — 26 — 106 — 193 Provision 840 514 41 719 (5 ) 375 — 175 279 2,938 Ending balance $ 1,531 1,813 1,114 2,051 115 980 — 162 1,667 9,433 Three months ended June 30, 2020: Allowance for loan losses: Beginning balance $ 1,293 1,713 1,084 1,799 118 1,017 — 180 908 8,112 Charge-offs — — — — — (78 ) — (90 ) — (168 ) Recoveries — 9 — 11 — — — 52 — 72 Provision 238 91 30 241 (3 ) 41 — 20 759 1,417 Ending balance $ 1,531 1,813 1,114 2,051 115 980 — 162 1,667 9,433 Allowance for loan losses at June 30, 2020: Ending balance: individually evaluated for impairment $ 2 5 894 11 — — — — — 912 Ending balance: collectively evaluated for impairment 1,529 1,808 220 2,040 115 980 — 162 1,667 8,521 Ending balance $ 1,531 1,813 1,114 2,051 115 980 — 162 1,667 9,433 Loans at June 30, 2020: Ending balance $ 110,077 268,174 29,325 303,828 49,465 188,398 887 16,389 — 966,543 Ending balance: individually evaluated for impairment $ 8 1,657 12,297 2,084 — 275 — — — 16,321 Ending balance: collectively evaluated for impairment $ 110,069 266,517 17,028 301,744 49,465 188,123 887 16,389 — 950,222 (Dollars in thousands) Real Estate Loans Construction Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer Unallocated Total Six months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 813 1,325 1,177 1,278 83 626 — 161 982 6,445 Charge-offs (21 ) (22 ) — — — (1 ) — (316 ) — (360 ) Recoveries 3 53 — 23 — 14 — 108 — 201 Provision (32 ) (44 ) (61 ) 33 27 (91 ) — 208 215 255 Ending balance $ 763 1,312 1,116 1,334 110 548 — 161 1,197 6,541 Three months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 831 1,256 1,174 1,292 98 610 — 162 1,138 6,561 Charge-offs (21 ) (9 ) — — — — — (166 ) — (196 ) Recoveries 2 5 — 19 — 8 — 65 — 99 Provision (49 ) 60 (58 ) 23 12 (70 ) — 100 59 77 Ending balance $ 763 1,312 1,116 1,334 110 548 — 161 1,197 6,541 Allowance for loan losses at June 30, 2019: Ending balance: individually evaluated for impairment $ — 2 970 12 — — — — — 984 Ending balance: collectively evaluated for impairment 763 1,310 146 1,322 110 548 — 161 1,197 5,557 Ending balance $ 763 1,312 1,116 1,334 110 548 — 161 1,197 6,541 Loans at June 30, 2019: Ending balance $ 86,920 264,724 32,499 281,895 44,065 103,466 1,060 18,738 — 833,367 Ending balance: individually evaluated for impairment $ 11 1,738 13,508 1,643 — 38 — — — 16,938 Ending balance: collectively evaluated for impairment $ 86,909 262,986 18,991 280,252 44,065 103,428 1,060 18,738 — 816,429 The provision for loan losses for the three months ended June 30, 2020 was $1.4 million, compared to $77,000 for the three months ended June 30, 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 economy from the COVID-19 pandemic and a $34.4 million increase in loans, excluding $98.1 million in SBA PPP loans, from June 30, 2019 to June 30, 2020. PPP loans are excluded from the ALLL as PPP loans are 100 percent guaranteed by SBA. The ALLL model also includes reserves on $120.6 million in loans with payment modifications made in 2020 as a result of the COVID-19 pandemic. The provision for loan losses for the six months ended June 30, 2020 was $2.9 million, compared to $255,000 for the six months ended June 30, 2019. The increase in the provision for loan losses is primarily attributable to increases in the qualitative factors applied in the Company’s ALLL model due to the impact to the economy from the COVID-19 pandemic and a $133.2 million increase in loans, excluding $98.1 million in SBA PPP loans, from June 30, 2019 to June 30, 2020. PPP loans are excluded from the ALLL as PPP loans are 100 percent guaranteed by SBA. The ALLL model also includes reserves on $120.6 million in loans with payment modifications made in 2020 as a result of the COVID-19 pandemic. Reserves associated with COVID-19 payment modifications increased $1.2 million from $439,000 at March 31, 2020 to $1.6 million at June 30, 2020. The Company utilizes an internal risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 8. These risk grades are evaluated on an ongoing basis. A description of the general characteristics of the eight risk grades is as follows: ● Risk Grade 1 – Excellent Quality: Loans are well above average quality and a minimal amount of credit risk exists. Certificates of deposit or cash secured loans or properly margined actively traded stock or bond secured loans would fall in this grade. ● Risk Grade 2 – High Quality: Loans are of good quality with risk levels well within the Company’s range of acceptability. The organization or individual is established with a history of successful performance though somewhat susceptible to economic changes. ● Risk Grade 3 – Good Quality: Loans of average quality with risk levels within the Company’s range of acceptability but higher than normal. This may be a new organization or an existing organization in a transitional phase (e.g. expansion, acquisition, market change). ● Risk Grade 4 – Management Attention: These loans have higher risk and servicing needs but still are acceptable. Evidence of marginal performance or deteriorating trends is observed. These are not problem credits presently, but may be in the future if the borrower is unable to change its present course. ● Risk Grade 5 – Watch: These loans are currently performing satisfactorily, but there has been some recent past due history on repayment and there are potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Company’s position at some future date. ● Risk Grade 6 – Substandard: A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged (if there is any). There is a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. ● Risk Grade 7 – Doubtful: Loans classified as Doubtful have all the weaknesses inherent in loans classified as Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off. ● Risk Grade 8 – Loss: Loans classified as Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be realized in the future. Loss is a temporary grade until the appropriate authority is obtained to charge the loan off. The following tables present the credit risk profile of each loan type based on internally assigned risk grades as of June 30, 2020 and December 31, 2019: June 30, 2020 (Dollars in thousands) Real Estate Loans Construction Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer All Total 1- Excellent Quality $ 138 13,742 — — — 742 — 626 — 15,248 2- High Quality 31,603 126,830 — 22,702 299 23,690 — 2,347 1,713 209,184 3- Good Quality 69,907 103,328 11,382 238,800 44,129 152,603 816 4,150 6,411 631,526 4- Management Attention 5,388 17,814 13,141 38,202 4,504 10,576 71 374 720 90,790 5- Watch 2,981 3,104 1,923 3,265 533 411 — 7 — 12,224 6- Substandard 60 3,356 2,879 859 — 376 — 41 — 7,571 7- Doubtful — — — — — — — — — — 8- Loss — — — — — — — — — — Total $ 110,077 268,174 29,325 303,828 49,465 188,398 887 7,545 8,844 966,543 December 31, 2019 (Dollars in thousands) Real Estate Loans Construction Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer All 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 $2.9 million and $4.3 million at June 30, 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 were no performing loans classified as TDR loans at June 30, 2020 and December 31, 2019. There were no new TDR modifications during the six months ended June 30, 2020 and 2019. There were no loans modified as TDR that defaulted during the six months ended June 30, 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. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security Act (“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 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 June 30, 2020, the Bank had originated $34.3 million in PPP loans during the second round of PPP funding. The Bank has received $4.0 million in fees from the SBA for PPP loans originated as of June 30, 2020. Total PPP loans originated as of June 30, 2020 amounted to $98.8 million. The Bank has continued to modify payments on loans due to the COVID-19 pandemic. At June 30, 2020, loans totaling $120.6 million had payment modifications due to the COVID-19 pandemic. Loans with payment modifications associated with the COVID-19 pandemic include $111.4 million in loans secured by real estate, $8.4 million in commercial loans not secured by real estate and $788,000 in consumer loans not secured by real estate at June 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 TDR 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.

4. Net Earnings Per Share

4. Net Earnings Per Share	6 Months Ended
	Jun. 30, 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 applicable period is used to compute equivalent shares. The reconciliation of the amounts used in the computation of both “basic earnings per share” and “diluted earnings per share” for the three and six months ended June 30, 2020 and 2019 is as follows: For the three months ended June 30, 2020 Net Weighted Per Basic earnings per share $ 2,561 5,787,504 $ 0.44 Effect of dilutive securities: Restricted stock units — 13,127 Diluted earnings per share $ 2,561 5,800,631 $ 0.44 For the six months ended June 30, 2020 Net Weighted Per Basic earnings per share $ 4,928 5,828,965 $ 0.84 Effect of dilutive securities: Restricted stock units — 13,284 Diluted earnings per share $ 4,928 5,842,249 $ 0.84 For the three months ended June 30, 2019 Net Weighted Per Basic earnings per share $ 3,813 5,940,556 $ 0.64 Effect of dilutive securities: Restricted stock units — 24,453 Diluted earnings per share $ 3,813 5,965,009 $ 0.64 For the six months ended June 30, 2019 Net Weighted Per Basic earnings per share $ 7,480 5,968,368 $ 1.25 Effect of dilutive securities: Restricted stock units — 24,412 Diluted earnings per share $ 7,480 5,992,780 $ 1.25

5. Stock-Based Compensation

5. Stock-Based Compensation	6 Months Ended
	Jun. 30, 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 “2009 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. The 2009 Plan expired on May 7, 2019 but still governs the rights and obligations of the parties for grants made thereunder. As of June 30, 2020, there were no outstanding shares under the 2009 Plan. The Company granted 16,583 restricted stock units under the 2009 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 2009 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 2009 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 2009 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 2009 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 2015 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 (four years from the grant date for the 2015, 2016, 2017, 2018 and 2019 grants). The amount of expense recorded each period reflects the changes in the Company’s stock price during such period. As of June 30, 2020, the total unrecognized compensation expense related to the restricted stock unit grants under the 2009 Plan was $97,000. The Company also has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2020 (the “2020 Plan”) whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 292,365 shares are currently reserved for possible issuance under the 2020 Plan. All stock-based rights under the 2020 Plan must be granted or awarded by May 7, 2030 (or ten years from the 2020 Plan effective date). The Company granted 7,635 restricted stock units under the 2020 Plan at a grant date fair value of $17.08 per share during the second quarter of 2020. The Company recognizes compensation expense on the restricted stock units over the period of time the restrictions are in place (four years from the grant date for 2020 grants). As of June 30, 2020, the total unrecognized compensation expense related to the restricted stock unit grants under the 2020 Plan was $226,000. The Company recognized a $75,000 credit to compensation expense for restricted stock unit awards granted under the 2009 Plan and 2020 Plan for the six months ended June 30, 2020 due to a reduction in the Company’s stock price from $32.85 per share at December 31, 2019, compared to $17.67 per share at June 30, 2020. The Company recognized compensation expense for restricted stock unit awards granted under the 2009 Plan of $170,000 for the six months ended June 30, 2019.

6. Fair Value

6. Fair Value	6 Months Ended
	Jun. 30, 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. 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 June 30, 2020 and December 31, 2019. (Dollars in thousands) June 30, 2020 Fair Value Level 1 Level 2 Level 3 Mortgage-backed securities $ 77,661 — 77,661 — U.S. Government sponsored enterprises $ 22,988 — 22,988 — State and political subdivisions $ 106,570 — 106,570 — Trust preferred securities $ 250 — — 250 (Dollars in thousands) December 31, 2019 Fair Value Level 1 Level 2 Level 3 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 six months ended June 30, 2020. (Dollars in thousands) Investment Level 3 Balance, beginning of period $ 250 Change in book value — Change in gain/(loss) realized and unrealized — Purchases/(sales and calls) — Transfers in and/or (out) of Level 3 — Balance, end of period $ 250 Change in unrealized gain/(loss) for assets still held in Level 3 $ — The fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis at June 30, 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 June 30, 2020 Level 1 Valuation Level 2 Valuation Level 3 Mortgage loans held for sale $ 10,594 — — 10,594 Impaired loans $ 21,554 — — 21,554 (Dollars in thousands) Fair Value Level 1 Level 2 Level 3 Mortgage loans held for sale $ 4,417 — — 4,417 Impaired loans $ 20,347 — — 20,347 (Dollars in thousands) Fair Value Fair Value Valuation Significant General Range of Mortgage loans held for sale $ 10,594 4,417 Rate lock commitment N/A N/A Impaired loans $ 21,554 20,347 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% The carrying amount and estimated fair value of financial instruments at June 30, 2020 and December 31, 2019 are as follows: (Dollars in thousands) Fair Value Measurements at June 30, 2020 Carrying Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 189,639 189,639 — — 189,639 Investment securities available for sale $ 207,469 — 207,219 250 207,469 Other investments $ 7,196 — — 7,196 7,196 Mortgage loans held for sale $ 10,594 — — 10,594 10,594 Loans, net $ 957,110 — — 949,158 949,158 Cash surrender value of life insurance $ 16,507 — 16,507 — 16,507 Liabilities: Deposits $ 1,154,329 — — 1,148,380 1,148,380 Securities sold under agreements to repurchase $ 31,747 — 31,747 — 31,747 FHLB borrowings $ 70,000 — — 69,974 69,974 Junior subordinated debentures $ 15,464 — 15,464 — 15,464 (Dollars in thousands) Fair Value Measurements at December 31, 2019 Carrying 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	6 Months Ended
	Jun. 30, 2020
Leases [Abstract]
7. Leases	As of June 30, 2020, the Company had operating ROU assets of $3.4 million and operating lease liabilities of $3.4 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 June 30, 2020 and 2019. (Dollars in thousands) June 30, June 30, Operating lease cost $ 443 $ 446 Other information: Cash paid for amounts included in the measurement of lease liabilities 432 433 Operating cash flows from operating leases — — Right-of-use assets obtained in exchange for new lease liabilities - operating leases 132 — Weighted-average remaining lease term - operating leases 7.03 7.05 Weighted-average discount rate - operating leases 3.13 % 3.17 % The following table presents lease maturities as of June 30, 2020 and December 31, 2019. Maturity Analysis of Operating Lease Liabilities: June 30, December 31, 2020 $ 420 $ 823 2021 822 793 2022 525 501 2023 416 393 2024 328 304 Thereafter 1,325 1,320 Total 3,836 4,134 Less: Imputed Interest (433 ) (487 ) Operating Lease Liability $ 3,403 $ 3,647

8. Subsequent Events

8. Subsequent Events	6 Months Ended
	Jun. 30, 2020
Subsequent Events [Abstract]
8. Subsequent Events	The Company has reviewed and evaluated subsequent events and transactions for material subsequent events through the date the financial statements are issued. Management has concluded that there were no material subsequent events.

2. Investment Securities (Table

2. Investment Securities (Tables)	6 Months Ended
	Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]
Investment securities available for sale	(Dollars in thousands) June 30, 2020 Amortized Gross Gross Estimated Mortgage-backed securities $ 74,338 3,362 39 77,661 U.S. Government sponsored enterprises 22,166 1,044 222 22,988 State and political subdivisions 101,329 5,241 — 106,570 Trust preferred securities 250 — — 250 Total $ 198,083 9,647 261 207,469 (Dollars in thousands) December 31, 2019 Amortized Gross Gross Estimated 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) June 30, 2020 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized Mortgage-backed securities $ 10,857 39 — — 10,857 39 U.S. Government sponsored enterprises — — 4,454 222 4,454 222 Total $ 10,857 39 4,454 222 15,311 261 (Dollars in thousands) December 31, 2019 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized 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	June 30, 2020 (Dollars in thousands) Amortized Estimated Due within one year $ 9,933 10,127 Due from one to five years 48,311 50,935 Due from five to ten years 48,710 51,567 Due after ten years 16,541 16,929 Mortgage-backed securities 74,338 77,661 Trust preferred securities 250 250 Total $ 198,083 207,469

3. Loans (Tables)

3. Loans (Tables)	6 Months Ended
	Jun. 30, 2020
Receivables [Abstract]
Major classifications of loans	(Dollars in thousands) June 30, December 31, Real estate loans: Construction and land development $ 110,077 92,596 Single-family residential 268,174 269,475 Single-family residential - Banco de la Gente non-traditional 29,325 30,793 Commercial 303,828 291,255 Multifamily and farmland 49,465 48,090 Total real estate loans 760,869 732,209 Loans not secured by real estate: Commercial loans 188,398 100,263 Farm loans 887 1,033 Consumer loans 7,545 8,432 All other loans 8,844 7,937 Total loans 966,543 849,874 Less allowance for loan losses 9,433 6,680 Total net loans $ 957,110 843,194
Age analysis of past due loans, by loan type	June 30, 2020 (Dollars in thousands) Loans 30-89 Loans 90 or Total Past Total Current Total Loans Accruing Real estate loans: Construction and land development $ — — — 110,077 110,077 — Single-family residential 1,030 371 1,401 266,773 268,174 — Single-family residential - Banco de la Gente non-traditional 1,556 263 1,819 27,506 29,325 — Commercial — 405 405 303,423 303,828 — Multifamily and farmland — — — 49,465 49,465 — Total real estate loans 2,586 1,039 3,625 757,244 760,869 — Loans not secured by real estate: Commercial loans — — — 188,398 188,398 — Farm loans — — — 887 887 — Consumer loans 27 18 45 7,500 7,545 — All other loans — — — 8,844 8,844 — Total loans $ 2,613 1,057 3,670 962,873 966,543 — December 31, 2019 (Dollars in thousands) Loans 30-89 Loans 90 or Total Past Total Current Total Loans Accruing 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) June 30, December 31, Real estate loans: Construction and land development $ — — Single-family residential 1,401 1,378 Single-family residential - Banco de la Gente non-traditional 1,822 1,764 Commercial 476 256 Total real estate loans 3,699 3,398 Loans not secured by real estate: Commercial loans 276 122 Consumer loans 24 33 Total $ 3,999 3,553
Impaired loans	The following table presents impaired loans as of June 30, 2020: June 30, 2020 (Dollars in thousands) Unpaid Recorded Recorded Recorded Related Real estate loans: Construction and land development $ 134 — 134 134 5 Single-family residential 5,414 391 4,579 4,970 20 Single-family residential - Banco de la Gente stated income 14,535 — 13,749 13,749 900 Commercial 3,005 739 2,248 2,987 14 Multifamily and farmland — — — — — Total impaired real estate loans 23,088 1,130 20,710 21,840 939 Loans not secured by real estate: Commercial loans 640 275 315 590 2 Consumer loans 70 — 66 66 1 Total impaired loans $ 23,798 1,405 21,091 22,496 942 The following table presents the average impaired loan balance and the interest income recognized by loan class for the three and six months ended June 30, 2020 and 2019. (Dollars in thousands) Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Average Interest Average Interest Average Interest Average Interest Real estate loans: Construction and land development $ 157 4 232 2 166 7 248 6 Single-family residential 4,778 59 4,214 57 4,734 118 4,826 118 Single-family residential - Banco de la Gente stated income 13,856 193 15,347 239 14,028 421 15,010 491 Commercial 3,115 43 1,739 22 2,700 72 1,801 45 Multifamily and farmland — — — — — — — — Total impaired real estate loans 21,906 299 21,532 320 21,628 618 21,885 660 Loans not secured by real estate: Commercial loans 643 6 114 3 487 15 106 4 Consumer loans 77 1 104 2 83 2 107 4 Total impaired loans $ 22,626 306 21,750 325 22,198 635 22,098 668 The following table presents impaired loans as of and for the year ended December 31, 2019: December 31, 2019 (Dollars in thousands) Unpaid Recorded Recorded Recorded Related Average YTD 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 Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer Unallocated Total Six months ended June 30, 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 ) — (109 ) — (257 ) — (378 ) Recoveries 2 25 — 34 — 26 — 106 — 193 Provision 840 514 41 719 (5 ) 375 — 175 279 2,938 Ending balance $ 1,531 1,813 1,114 2,051 115 980 — 162 1,667 9,433 Three months ended June 30, 2020: Allowance for loan losses: Beginning balance $ 1,293 1,713 1,084 1,799 118 1,017 — 180 908 8,112 Charge-offs — — — — — (78 ) — (90 ) — (168 ) Recoveries — 9 — 11 — — — 52 — 72 Provision 238 91 30 241 (3 ) 41 — 20 759 1,417 Ending balance $ 1,531 1,813 1,114 2,051 115 980 — 162 1,667 9,433 Allowance for loan losses at June 30, 2020: Ending balance: individually evaluated for impairment $ 2 5 894 11 — — — — — 912 Ending balance: collectively evaluated for impairment 1,529 1,808 220 2,040 115 980 — 162 1,667 8,521 Ending balance $ 1,531 1,813 1,114 2,051 115 980 — 162 1,667 9,433 Loans at June 30, 2020: Ending balance $ 110,077 268,174 29,325 303,828 49,465 188,398 887 16,389 — 966,543 Ending balance: individually evaluated for impairment $ 8 1,657 12,297 2,084 — 275 — — — 16,321 Ending balance: collectively evaluated for impairment $ 110,069 266,517 17,028 301,744 49,465 188,123 887 16,389 — 950,222 (Dollars in thousands) Real Estate Loans Construction Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer Unallocated Total Six months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 813 1,325 1,177 1,278 83 626 — 161 982 6,445 Charge-offs (21 ) (22 ) — — — (1 ) — (316 ) — (360 ) Recoveries 3 53 — 23 — 14 — 108 — 201 Provision (32 ) (44 ) (61 ) 33 27 (91 ) — 208 215 255 Ending balance $ 763 1,312 1,116 1,334 110 548 — 161 1,197 6,541 Three months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 831 1,256 1,174 1,292 98 610 — 162 1,138 6,561 Charge-offs (21 ) (9 ) — — — — — (166 ) — (196 ) Recoveries 2 5 — 19 — 8 — 65 — 99 Provision (49 ) 60 (58 ) 23 12 (70 ) — 100 59 77 Ending balance $ 763 1,312 1,116 1,334 110 548 — 161 1,197 6,541 Allowance for loan losses at June 30, 2019: Ending balance: individually evaluated for impairment $ — 2 970 12 — — — — — 984 Ending balance: collectively evaluated for impairment 763 1,310 146 1,322 110 548 — 161 1,197 5,557 Ending balance $ 763 1,312 1,116 1,334 110 548 — 161 1,197 6,541 Loans at June 30, 2019: Ending balance $ 86,920 264,724 32,499 281,895 44,065 103,466 1,060 18,738 — 833,367 Ending balance: individually evaluated for impairment $ 11 1,738 13,508 1,643 — 38 — — — 16,938 Ending balance: collectively evaluated for impairment $ 86,909 262,986 18,991 280,252 44,065 103,428 1,060 18,738 — 816,429
Credit risk profile of each loan type based on internally assigned risk grade	June 30, 2020 (Dollars in thousands) Real Estate Loans Construction Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer All Total 1- Excellent Quality $ 138 13,742 — — — 742 — 626 — 15,248 2- High Quality 31,603 126,830 — 22,702 299 23,690 — 2,347 1,713 209,184 3- Good Quality 69,907 103,328 11,382 238,800 44,129 152,603 816 4,150 6,411 631,526 4- Management Attention 5,388 17,814 13,141 38,202 4,504 10,576 71 374 720 90,790 5- Watch 2,981 3,104 1,923 3,265 533 411 — 7 — 12,224 6- Substandard 60 3,356 2,879 859 — 376 — 41 — 7,571 7- Doubtful — — — — — — — — — — 8- Loss — — — — — — — — — — Total $ 110,077 268,174 29,325 303,828 49,465 188,398 887 7,545 8,844 966,543 December 31, 2019 (Dollars in thousands) Real Estate Loans Construction Single-Family Single-Family Commercial Multifamily Commercial Farm Consumer All 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)	6 Months Ended
	Jun. 30, 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 June 30, 2020 Net Weighted Per Basic earnings per share $ 2,561 5,787,504 $ 0.44 Effect of dilutive securities: Restricted stock units — 13,127 Diluted earnings per share $ 2,561 5,800,631 $ 0.44 For the six months ended June 30, 2020 Net Weighted Per Basic earnings per share $ 4,928 5,828,965 $ 0.84 Effect of dilutive securities: Restricted stock units — 13,284 Diluted earnings per share $ 4,928 5,842,249 $ 0.84 For the three months ended June 30, 2019 Net Weighted Per Basic earnings per share $ 3,813 5,940,556 $ 0.64 Effect of dilutive securities: Restricted stock units — 24,453 Diluted earnings per share $ 3,813 5,965,009 $ 0.64 For the six months ended June 30, 2019 Net Weighted Per Basic earnings per share $ 7,480 5,968,368 $ 1.25 Effect of dilutive securities: Restricted stock units — 24,412 Diluted earnings per share $ 7,480 5,992,780 $ 1.25

6. Fair Value (Tables)

6. Fair Value (Tables)	6 Months Ended
	Jun. 30, 2020
Fair Value Disclosures [Abstract]
Available for sale securities measured at fair value on a recurring basis	(Dollars in thousands) June 30, 2020 Fair Value Level 1 Level 2 Level 3 Mortgage-backed securities $ 77,661 — 77,661 — U.S. Government sponsored enterprises $ 22,988 — 22,988 — State and political subdivisions $ 106,570 — 106,570 — Trust preferred securities $ 250 — — 250 (Dollars in thousands) December 31, 2019 Fair Value Level 1 Level 2 Level 3 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 Level 3 Balance, beginning of period $ 250 Change in book value — Change in gain/(loss) realized and unrealized — Purchases/(sales and calls) — Transfers in and/or (out) of Level 3 — Balance, end of period $ 250 Change in unrealized gain/(loss) for assets still held in Level 3 $ —
Fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis	(Dollars in thousands) Fair Value Measurements June 30, 2020 Level 1 Valuation Level 2 Valuation Level 3 Mortgage loans held for sale $ 10,594 — — 10,594 Impaired loans $ 21,554 — — 21,554 (Dollars in thousands) Fair Value Level 1 Level 2 Level 3 Mortgage loans held for sale $ 4,417 — — 4,417 Impaired loans $ 20,347 — — 20,347 (Dollars in thousands) Fair Value Fair Value Valuation Significant General Range of Mortgage loans held for sale $ 10,594 4,417 Rate lock commitment N/A N/A Impaired loans $ 21,554 20,347 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25%
Carrying amount and estimated fair value of the Company's financial instruments	(Dollars in thousands) Fair Value Measurements at June 30, 2020 Carrying Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 189,639 189,639 — — 189,639 Investment securities available for sale $ 207,469 — 207,219 250 207,469 Other investments $ 7,196 — — 7,196 7,196 Mortgage loans held for sale $ 10,594 — — 10,594 10,594 Loans, net $ 957,110 — — 949,158 949,158 Cash surrender value of life insurance $ 16,507 — 16,507 — 16,507 Liabilities: Deposits $ 1,154,329 — — 1,148,380 1,148,380 Securities sold under agreements to repurchase $ 31,747 — 31,747 — 31,747 FHLB borrowings $ 70,000 — — 69,974 69,974 Junior subordinated debentures $ 15,464 — 15,464 — 15,464 (Dollars in thousands) Fair Value Measurements at December 31, 2019 Carrying 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)	6 Months Ended
	Jun. 30, 2020
Leases [Abstract]
Lease expense	(Dollars in thousands) June 30, June 30, Operating lease cost $ 443 $ 446 Other information: Cash paid for amounts included in the measurement of lease liabilities 432 433 Operating cash flows from operating leases — — Right-of-use assets obtained in exchange for new lease liabilities - operating leases 132 — Weighted-average remaining lease term - operating leases 7.03 7.05 Weighted-average discount rate - operating leases 3.13 % 3.17 %
Maturity analysis of operating lease liabilities	Maturity Analysis of Operating Lease Liabilities: June 30, December 31, 2020 $ 420 $ 823 2021 822 793 2022 525 501 2023 416 393 2024 328 304 Thereafter 1,325 1,320 Total 3,836 4,134 Less: Imputed Interest (433 ) (487 ) Operating Lease Liability $ 3,403 $ 3,647

2. Investment Securities (Detai

2. Investment Securities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Investment Securities Available for Sale
Amortized cost	$ 198,083	$ 191,013
Estimated fair value	207,469	195,746
Mortgage-Backed Securities
Investment Securities Available for Sale
Amortized cost	74,338	77,812
Gross unrealized gains	3,362	1,371
Gross unrealized losses	39	227
Estimated fair value	77,661	78,956
U.S. Government Sponsored Enterprises
Investment Securities Available for Sale
Amortized cost	22,166	28,265
Gross unrealized gains	1,044	443
Gross unrealized losses	222	311
Estimated fair value	22,988	28,397
State and Political Subdivisions
Investment Securities Available for Sale
Amortized cost	101,329	84,686
Gross unrealized gains	5,241	3,657
Gross unrealized losses	0	200
Estimated fair value	106,570	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	9,647	5,471
Gross unrealized losses	$ 261	$ 738

2. Investment securities (Det_2

2. Investment securities (Details 1) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Investment Securities With Continuous Unrealized Loss Position
Less than 12 months, fair value	$ 10,857	$ 38,661
Less than 12 months, unrealized losses	39	387
12 months or more, fair value	4,454	12,502
12 months or more, unrealized losses	222	351
Total, fair value	15,311	51,163
Total, unrealized losses	261	738
Mortgage-Backed Securities
Investment Securities With Continuous Unrealized Loss Position
Less than 12 months, fair value	10,857	28,395
Less than 12 months, unrealized losses	39	177
12 months or more, fair value	0	6,351
12 months or more, unrealized losses	0	50
Total, fair value	10,857	34,746
Total, unrealized losses	39	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	4,454	6,151
12 months or more, unrealized losses	222	301
Total, fair value	4,454	9,050
Total, unrealized losses	$ 222	311
State and Political Subdivisions
Investment Securities With Continuous Unrealized Loss Position
Less than 12 months, fair value		7,367
Less than 12 months, unrealized losses		200
12 months or more, fair value		0
12 months or more, unrealized losses		0
Total, fair value		7,367
Total, unrealized losses		$ 200

2. Investment securities (Det_3

2. Investment securities (Details 2) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Amortized Cost
Due within one year	$ 9,933
Due from one to five years	48,311
Due from five to ten years	48,710
Due after ten years	16,541
Mortgage-backed securities	74,338
Trust preferred securities	250
Total	198,083	$ 191,013
Estimated Fair Value
Due within one year	10,127
Due from one to five years	50,935
Due from five to ten years	51,567
Due after ten years	16,929
Mortgage-backed securities	77,661
Trust preferred securities	250
Total	$ 207,469

2. Investment Securities (Det_4

2. Investment Securities (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]
Unrealized losses in the investment securites portfolio relating to debt securities	$ 261
Proceeds from sales of investment securities available for sale	17,000	$ 12,300
Gains on sales of available for sale securities	457	$ 231
Securities pledged to secure public deposits	$ 70,000		$ 66,000

3. Loans (Details)

3. Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Major Classifications
Total loans	$ 966,543		$ 849,874	$ 833,367
Less allowance for loan losses	9,433	$ 8,112	6,680	6,541	$ 6,561	$ 6,445
Total net loans	957,110		843,194
Construction and Land Development
Major Classifications
Total loans	110,077		92,596	86,920
Less allowance for loan losses	1,531	1,293	694	763	831	813
Single-Family Residential
Major Classifications
Total loans	268,174		269,475	264,724
Less allowance for loan losses	1,813	1,713	1,274	1,312	1,256	1,325
Single-Family Residential - Banco de la Gente Non-Tradtional
Major Classifications
Total loans	29,325		30,793	32,499
Less allowance for loan losses	1,114	1,084	1,073	1,116	1,174	1,177
Commercial
Major Classifications
Total loans	303,828		291,255	281,895
Less allowance for loan losses	2,051	1,799	1,305	1,334	1,292	1,278
Multifamily and Farmland
Major Classifications
Total loans	49,465		48,090	44,065
Less allowance for loan losses	115	118	120	110	98	83
Total Real Estate Loans
Major Classifications
Total loans	760,869		732,209
Commercial Loans (Not Secured by Real Estate)
Major Classifications
Total loans	188,398		100,263	103,466
Less allowance for loan losses	980	1,017	688	548	610	626
Farm Loans (Not Secured by Real Estate)
Major Classifications
Total loans	887		1,033	1,060
Less allowance for loan losses	0	$ 0	0	$ 0	$ 0	$ 0
Consumer Loans (Not Secured by Real Estate)
Major Classifications
Total loans	7,545		8,432
All Other Loans (Not Secured by Real Estate)
Major Classifications
Total loans	$ 8,844		$ 7,937

3. Loans (Details 1)

3. Loans (Details 1) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019
Past Due Loans
Loans 30-89 days past due	$ 2,613	$ 9,743
Loans 90 or more days past due	1,057	737
Total past due loans	3,670	10,480
Total current loans	962,873	839,394
Total loans	966,543	849,874	$ 833,367
Accruing loans 90 or more days past due	0	0
Construction and Land Development
Past Due Loans
Loans 30-89 days past due	0	803
Loans 90 or more days past due	0	0
Total past due loans	0	803
Total current loans	110,077	91,793
Total loans	110,077	92,596
Accruing loans 90 or more days past due	0	0
Single-Family Residential
Past Due Loans
Loans 30-89 days past due	1,030	3,000
Loans 90 or more days past due	371	126
Total past due loans	1,401	3,126
Total current loans	266,773	266,349
Total loans	268,174	269,475
Accruing loans 90 or more days past due	0	0
Single-Family Residential - Banco de la Gente Non-Tradtional
Past Due Loans
Loans 30-89 days past due	1,556	4,834
Loans 90 or more days past due	263	413
Total past due loans	1,819	5,247
Total current loans	27,506	25,546
Total loans	29,325	30,793
Accruing loans 90 or more days past due	0	0
Commercial
Past Due Loans
Loans 30-89 days past due	0	504
Loans 90 or more days past due	405	176
Total past due loans	405	680
Total current loans	303,423	290,575
Total loans	303,828	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	49,465	48,090
Total loans	49,465	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	2,586	9,141
Loans 90 or more days past due	1,039	715
Total past due loans	3,625	9,856
Total current loans	757,244	722,353
Total loans	760,869	732,209
Accruing loans 90 or more days past due	0	0
Commercial Loans (Not Secured by Real Estate)
Past Due Loans
Loans 30-89 days past due	0	432
Loans 90 or more days past due	0	0
Total past due loans	0	432
Total current loans	188,398	99,831
Total loans	188,398	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	0	0
Loans 90 or more days past due	0	0
Total past due loans	0	0
Total current loans	887	1,033
Total loans	887	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	27	170
Loans 90 or more days past due	18	22
Total past due loans	45	192
Total current loans	7,500	8,240
Total loans	7,545	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	8,844	7,937
Total loans	8,844	7,937
Accruing loans 90 or more days past due	$ 0	$ 0

3. Loans (Details 2)

3. Loans (Details 2) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Non-Accrual Loans
Non-accrual loans	$ 3,999	$ 3,553
Construction and Land Development
Non-Accrual Loans
Non-accrual loans	0	0
Single-Family Residential
Non-Accrual Loans
Non-accrual loans	1,401	1,378
Single-Family Residential - Banco de la Gente Non-Tradtional
Non-Accrual Loans
Non-accrual loans	1,822	1,764
Commercial
Non-Accrual Loans
Non-accrual loans	476	256
Total Real Estate Loans
Non-Accrual Loans
Non-accrual loans	3,699	3,398
Commercial Loans (Not Secured by Real Estate)
Non-Accrual Loans
Non-accrual loans	276	122
Consumer Loans (Not Secured by Real Estate)
Non-Accrual Loans
Non-accrual loans	$ 24	$ 33

3. Loans (Details 3)

3. Loans (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Impaired Loans
Unpaid contractual principal balance	$ 23,798		$ 23,798		$ 22,659
Recorded investment with no allowance	1,405		1,405		495
Recorded investment with allowance	21,091		21,091		20,848
Recorded investment in impaired loans	22,496		22,496		21,343
Related allowance	942		942		996
Average outstanding impaired loans	22,626	$ 21,750	22,198	$ 22,098	21,895
Interest income recognized	306	325	635	668	1,344
Construction and Land Development
Impaired Loans
Unpaid contractual principal balance	134		134		183
Recorded investment with no allowance	0		0		0
Recorded investment with allowance	134		134		183
Recorded investment in impaired loans	134		134		183
Related allowance	5		5		7
Average outstanding impaired loans	157	232	166	248	231
Interest income recognized	4	2	7	6	12
Single-Family Residential
Impaired Loans
Unpaid contractual principal balance	5,414		5,414		5,152
Recorded investment with no allowance	391		391		403
Recorded investment with allowance	4,579		4,579		4,243
Recorded investment in impaired loans	4,970		4,970		4,646
Related allowance	20		20		36
Average outstanding impaired loans	4,778	4,214	4,734	4,826	4,678
Interest income recognized	59	57	118	118	269
Single-Family Residential - Banco de la Gente Non-Tradtional
Impaired Loans
Unpaid contractual principal balance	14,535		14,535		15,165
Recorded investment with no allowance	0		0		0
Recorded investment with allowance	13,749		13,749		14,371
Recorded investment in impaired loans	13,749		13,749		14,371
Related allowance	900		900		944
Average outstanding impaired loans	13,856	15,347	14,028	15,010	14,925
Interest income recognized	193	239	421	491	956
Commercial
Impaired Loans
Unpaid contractual principal balance	3,005		3,005		1,879
Recorded investment with no allowance	739		739		0
Recorded investment with allowance	2,248		2,248		1,871
Recorded investment in impaired loans	2,987		2,987		1,871
Related allowance	14		14		7
Average outstanding impaired loans	3,115	1,739	2,700	1,801	1,822
Interest income recognized	43	22	72	45	91
Multifamily and Farmland
Impaired Loans
Unpaid contractual principal balance	0		0		0
Recorded investment with no allowance	0		0		0
Recorded investment with allowance	0		0		0
Recorded investment in impaired loans	0		0		0
Related allowance	0		0		0
Average outstanding impaired loans	0	0	0	0	0
Interest income recognized	0	0	0	0	0
Total Real Estate Loans
Impaired Loans
Unpaid contractual principal balance	23,088		23,088		22,379
Recorded investment with no allowance	1,130		1,130		403
Recorded investment with allowance	20,710		20,710		20,668
Recorded investment in impaired loans	21,840		21,840		21,071
Related allowance	939		939		994
Average outstanding impaired loans	21,906	21,532	21,628	21,885	21,656
Interest income recognized	299	320	618	660	1,328
Commercial Loans (Not Secured by Real Estate)
Impaired Loans
Unpaid contractual principal balance	640		640		180
Recorded investment with no allowance	275		275		92
Recorded investment with allowance	315		315		84
Recorded investment in impaired loans	590		590		176
Related allowance	2		2		0
Average outstanding impaired loans	643	114	487	106	134
Interest income recognized	6	3	15	4	9
Consumer Loans (Not Secured by Real Estate)
Impaired Loans
Unpaid contractual principal balance	70		70		100
Recorded investment with no allowance	0		0		0
Recorded investment with allowance	66		66		96
Recorded investment in impaired loans	66		66		96
Related allowance	1		1		2
Average outstanding impaired loans	77	104	83	107	105
Interest income recognized	$ 1	$ 2	$ 2	$ 4	$ 7

3. Loans (Details 4)

3. Loans (Details 4) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Allowance for Loan Losses
Beginning balance	$ 8,112	$ 6,561	$ 6,680	$ 6,445
Charge-offs	(168)	(196)	(378)	(360)
Recoveries	72	99	193	201
Provision	1,417	77	2,938	255
Ending balance	9,433	6,541	9,433	6,541
Ending balance: individually evaluated for impairments	912	984	912	984
Ending balance: collectively evaluated for impairments	8,521	5,557	8,521	5,557
Ending balance	9,433	6,541	9,433	6,541
Loans
Ending balance	966,543	833,367	966,543	833,367
Ending balance: individually evaluated for impairment	16,321	16,938	16,321	16,938
Ending balance: collectively evaluated for impairment	950,222	816,429	950,222	816,429
Construction and Land Development
Allowance for Loan Losses
Beginning balance	1,293	831	694	813
Charge-offs	0	(21)	(5)	(21)
Recoveries	0	2	2	3
Provision	238	(49)	840	(32)
Ending balance	1,531	763	1,531	763
Ending balance: individually evaluated for impairments	2	0	2	0
Ending balance: collectively evaluated for impairments	1,529	763	1,529	763
Ending balance	1,531	763	1,531	763
Loans
Ending balance	110,077	86,920	110,077	86,920
Ending balance: individually evaluated for impairment	8	11	8	11
Ending balance: collectively evaluated for impairment	110,069	86,909	110,069	86,909
Single-Family Residential
Allowance for Loan Losses
Beginning balance	1,713	1,256	1,274	1,325
Charge-offs	0	(9)	0	(22)
Recoveries	9	5	25	53
Provision	91	60	514	(44)
Ending balance	1,813	1,312	1,813	1,312
Ending balance: individually evaluated for impairments	5	2	5	2
Ending balance: collectively evaluated for impairments	1,808	1,310	1,808	1,310
Ending balance	1,813	1,312	1,813	1,312
Loans
Ending balance	268,174	264,724	268,174	264,724
Ending balance: individually evaluated for impairment	1,657	1,738	1,657	1,738
Ending balance: collectively evaluated for impairment	266,517	262,986	266,517	262,986
Single-Family Residential - Banco de la Gente Non-Tradtional
Allowance for Loan Losses
Beginning balance	1,084	1,174	1,073	1,177
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	30	(58)	41	(61)
Ending balance	1,114	1,116	1,114	1,116
Ending balance: individually evaluated for impairments	894	970	894	970
Ending balance: collectively evaluated for impairments	220	146	220	146
Ending balance	1,114	1,116	1,114	1,116
Loans
Ending balance	29,325	32,499	29,325	32,499
Ending balance: individually evaluated for impairment	12,297	13,508	12,297	13,508
Ending balance: collectively evaluated for impairment	17,028	18,991	17,028	18,991
Commercial
Allowance for Loan Losses
Beginning balance	1,799	1,292	1,305	1,278
Charge-offs	0	0	(7)	0
Recoveries	11	19	34	23
Provision	241	23	719	33
Ending balance	2,051	1,334	2,051	1,334
Ending balance: individually evaluated for impairments	11	12	11	12
Ending balance: collectively evaluated for impairments	2,040	1,322	2,040	1,322
Ending balance	2,051	1,334	2,051	1,334
Loans
Ending balance	303,828	281,895	303,828	281,895
Ending balance: individually evaluated for impairment	2,084	1,643	2,084	1,643
Ending balance: collectively evaluated for impairment	301,744	280,252	301,744	280,252
Multifamily and Farmland
Allowance for Loan Losses
Beginning balance	118	98	120	83
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	(3)	12	(5)	27
Ending balance	115	110	115	110
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	115	110	115	110
Ending balance	115	110	115	110
Loans
Ending balance	49,465	44,065	49,465	44,065
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	49,465	44,065	49,465	44,065
Commercial Loans (Not Secured by Real Estate)
Allowance for Loan Losses
Beginning balance	1,017	610	688	626
Charge-offs	(78)	0	(109)	(1)
Recoveries	0	8	26	14
Provision	41	(70)	375	(91)
Ending balance	980	548	980	548
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	980	548	980	548
Ending balance	980	548	980	548
Loans
Ending balance	188,398	103,466	188,398	103,466
Ending balance: individually evaluated for impairment	275	38	275	38
Ending balance: collectively evaluated for impairment	188,123	103,428	188,123	103,428
Farm Loans (Not Secured by Real Estate)
Allowance for Loan Losses
Beginning balance	0	0	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	0	0	0	0
Ending balance	0	0	0	0
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	0	0	0	0
Ending balance	0	0	0	0
Loans
Ending balance	887	1,060	887	1,060
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	887	1,060	887	1,060
Consumer And All Other Loans
Allowance for Loan Losses
Beginning balance	180	162	138	161
Charge-offs	(90)	(166)	(257)	(316)
Recoveries	52	65	106	108
Provision	20	100	175	208
Ending balance	162	161	162	161
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	162	161	162	161
Ending balance	162	161	162	161
Loans
Ending balance	16,389	18,738	16,389	18,738
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	16,389	18,738	16,389	18,738
Unallocated
Allowance for Loan Losses
Beginning balance	908	1,138	1,388	982
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	759	59	279	215
Ending balance	1,667	1,197	1,667	1,197
Ending balance: individually evaluated for impairments	0	0	0	0
Ending balance: collectively evaluated for impairments	1,667	1,197	1,667	1,197
Ending balance	1,667	1,197	1,667	1,197
Loans
Ending balance	0	0	0	0
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	$ 0	$ 0	$ 0	$ 0

3. Loans (Details 5)

3. Loans (Details 5) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019
Credit Risk Profile
Total loans	$ 966,543	$ 849,874	$ 833,367
Excellent Quality
Credit Risk Profile
Total loans	15,248	9,842
High Quality
Credit Risk Profile
Total loans	209,184	207,919
Good Quality
Credit Risk Profile
Total loans	631,526	528,122
Management Attention
Credit Risk Profile
Total loans	90,790	85,180
Watch
Credit Risk Profile
Total loans	12,224	12,345
Substandard
Credit Risk Profile
Total loans	7,571	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	110,077	92,596
Single-Family Residential
Credit Risk Profile
Total loans	268,174	269,475
Single-Family Residential - Banco de la Gente Non-Tradtional
Credit Risk Profile
Total loans	29,325	30,793
Commercial
Credit Risk Profile
Total loans	303,828	291,255
Multifamily and Farmland
Credit Risk Profile
Total loans	49,465	48,090
Commercial Loans (Not Secured by Real Estate)
Credit Risk Profile
Total loans	188,398	100,263
Farm Loans (Not Secured by Real Estate)
Credit Risk Profile
Total loans	887	1,033
Consumer Loans (Not Secured by Real Estate)
Credit Risk Profile
Total loans	7,545	8,432
All Other Loans (Not Secured by Real Estate)
Credit Risk Profile
Total loans	8,844	7,937
Construction and Land Development
Credit Risk Profile
Total loans	110,077	92,596	86,920
Construction and Land Development | Excellent Quality
Credit Risk Profile
Total loans	138	0
Construction and Land Development | High Quality
Credit Risk Profile
Total loans	31,603	32,029
Construction and Land Development | Good Quality
Credit Risk Profile
Total loans	69,907	52,009
Construction and Land Development | Management Attention
Credit Risk Profile
Total loans	5,388	5,487
Construction and Land Development | Watch
Credit Risk Profile
Total loans	2,981	3,007
Construction and Land Development | Substandard
Credit Risk Profile
Total loans	60	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	268,174	269,475	264,724
Single-Family Residential | Excellent Quality
Credit Risk Profile
Total loans	13,742	8,819
Single-Family Residential | High Quality
Credit Risk Profile
Total loans	126,830	128,757
Single-Family Residential | Good Quality
Credit Risk Profile
Total loans	103,328	107,246
Single-Family Residential | Management Attention
Credit Risk Profile
Total loans	17,814	18,409
Single-Family Residential | Watch
Credit Risk Profile
Total loans	3,104	3,196
Single-Family Residential | Substandard
Credit Risk Profile
Total loans	3,356	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	29,325	30,793	32,499
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	11,382	12,103
Single-Family Residential - Banco de la Gente Non-Tradtional | Management Attention
Credit Risk Profile
Total loans	13,141	13,737
Single-Family Residential - Banco de la Gente Non-Tradtional | Watch
Credit Risk Profile
Total loans	1,923	2,027
Single-Family Residential - Banco de la Gente Non-Tradtional | Substandard
Credit Risk Profile
Total loans	2,879	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	303,828	291,255	281,895
Commercial | Excellent Quality
Credit Risk Profile
Total loans	0	0
Commercial | High Quality
Credit Risk Profile
Total loans	22,702	21,829
Commercial | Good Quality
Credit Risk Profile
Total loans	238,800	231,003
Commercial | Management Attention
Credit Risk Profile
Total loans	38,202	35,095
Commercial | Watch
Credit Risk Profile
Total loans	3,265	3,072
Commercial | Substandard
Credit Risk Profile
Total loans	859	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	49,465	48,090	44,065
Multifamily and Farmland | Excellent Quality
Credit Risk Profile
Total loans	0	0
Multifamily and Farmland | High Quality
Credit Risk Profile
Total loans	299	256
Multifamily and Farmland | Good Quality
Credit Risk Profile
Total loans	44,129	42,527
Multifamily and Farmland | Management Attention
Credit Risk Profile
Total loans	4,504	4,764
Multifamily and Farmland | Watch
Credit Risk Profile
Total loans	533	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	188,398	100,263	103,466
Commercial Loans (Not Secured by Real Estate) | Excellent Quality
Credit Risk Profile
Total loans	742	330
Commercial Loans (Not Secured by Real Estate) | High Quality
Credit Risk Profile
Total loans	23,690	20,480
Commercial Loans (Not Secured by Real Estate) | Good Quality
Credit Risk Profile
Total loans	152,603	72,417
Commercial Loans (Not Secured by Real Estate) | Management Attention
Credit Risk Profile
Total loans	10,576	6,420
Commercial Loans (Not Secured by Real Estate) | Watch
Credit Risk Profile
Total loans	411	492
Commercial Loans (Not Secured by Real Estate) | Substandard
Credit Risk Profile
Total loans	376	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	887	1,033	$ 1,060
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	816	948
Farm Loans (Not Secured by Real Estate) | Management Attention
Credit Risk Profile
Total loans	71	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	7,545	8,432
Consumer Loans (Not Secured by Real Estate) | Excellent Quality
Credit Risk Profile
Total loans	626	693
Consumer Loans (Not Secured by Real Estate) | High Quality
Credit Risk Profile
Total loans	2,347	2,708
Consumer Loans (Not Secured by Real Estate) | Good Quality
Credit Risk Profile
Total loans	4,150	4,517
Consumer Loans (Not Secured by Real Estate) | Management Attention
Credit Risk Profile
Total loans	374	458
Consumer Loans (Not Secured by Real Estate) | Watch
Credit Risk Profile
Total loans	7	8
Consumer Loans (Not Secured by Real Estate) | Substandard
Credit Risk Profile
Total loans	41	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	8,844	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	1,713	1,860
All Other Loans (Not Secured by Real Estate) | Good Quality
Credit Risk Profile
Total loans	6,411	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		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Receivables [Abstract]
Percentage of construction and land development loans in Bank's loan portfolio	11.00%		11.00%
Percentage of single-family residential loans in Bank's loan portfolio	31.00%		31.00%
Percentage of Single-family residential - Banco de la Gente stated income loans in Bank's loan portfolio	3.00%		3.00%
Percentage of commercial real estate loans in Bank's loan portfolio	31.00%		31.00%
Percentage of commercial loans in Bank's loan portfolio	19.00%		19.00%
Accruing impaired loans	$ 22,500	$ 21,400	$ 22,500	$ 21,400	$ 21,300
Interest income recognized on accruing impaired loans	306	325	635	668	1,344
Provision for loan losses	1,400	$ 77	2,900	255
TDR loans modified, past-due TDR loans and non-accrual TDR Loans	2,900		2,900		4,300
Performing loans classified as TDR loans	$ 0		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		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net Earnings
Basic earnings per share	$ 2,561	$ 3,813	$ 4,928	$ 7,480
Effect of dilutive securities: restricted stock units	0	0	0	0
Diluted earnings per share	$ 2,561	$ 3,813	$ 4,928	$ 7,480
Weighted Average Number of Shares
Basic earnings per share (in shares)	5,787,504	5,940,556	5,828,965	5,968,368
Effect of dilutive securities: restricted stock units (in shares)	13,127	24,453	13,284	24,412
Diluted earnings per share (in shares)	5,800,631	5,965,009	5,842,249	5,992,780
Per Share Amount
Basic earnings per share	$ 0.44	$ 0.64	$ 0.84	$ 1.25
Diluted earnings per share	$ 0.44	$ 0.64	$ 0.84	$ 1.25

5. Stock-Based Compensation (De

5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
2009 Plan
Unrecognized compensation cost	$ 97
Recognized compensation expense	75	$ 170
2020 Plan
Unrecognized compensation cost	$ 226

6. Fair Value (Details)

6. Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Estimated fair value	$ 207,469	$ 195,746
Level 1
Estimated fair value	0	0
Level 2
Estimated fair value	207,219	195,496
Level 3
Estimated fair value	250	250
Mortgage-Backed Securities
Estimated fair value	77,661	78,956
Mortgage-Backed Securities | Level 1
Estimated fair value	0	0
Mortgage-Backed Securities | Level 2
Estimated fair value	77,661	78,956
Mortgage-Backed Securities | Level 3
Estimated fair value	0	0
U.S. Government Sponsored Enterprises
Estimated fair value	22,988	28,397
U.S. Government Sponsored Enterprises | Level 1
Estimated fair value	0	0
U.S. Government Sponsored Enterprises | Level 2
Estimated fair value	22,988	28,397
U.S. Government Sponsored Enterprises | Level 3
Estimated fair value	0	0
State and Political Subdivisions
Estimated fair value	106,570	88,143
State and Political Subdivisions | Level 1
Estimated fair value	0	0
State and Political Subdivisions | Level 2
Estimated fair value	106,570	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	6 Months Ended
	Jun. 30, 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	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Mortgage loans held for sale	$ 10,594	$ 4,417
Impaired loans	$ 21,554	20,347
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%
Level 1
Mortgage loans held for sale	$ 0	0
Impaired loans	0	0
Level 2
Mortgage loans held for sale	0	0
Impaired loans	0	0
Level 3
Mortgage loans held for sale	10,594	4,417
Impaired loans	$ 21,554	$ 20,347

6. Fair Value (Details 3)

6. Fair Value (Details 3) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets:
Cash and cash equivalents	$ 189,639	$ 52,387
Investment securities available for sale	207,469	195,746
Other investments	7,196	4,231
Mortgage loans held for sale	10,594	4,417
Loans, net	957,110	843,194
Cash surrender value of life insurance	16,507	16,319
Liabilities:
Deposits	1,154,329	966,517
Securities sold under agreements to repurchase	31,747	24,221
FHLB borrowings	70,000	0
Junior subordinated debentures	15,464	15,619
Estimated Fair Value
Assets:
Cash and cash equivalents	189,639	52,387
Investment securities available for sale	207,469	195,746
Other investments	7,196	4,231
Mortgage loans held for sale	10,594	4,417
Loans, net	949,158	819,397
Cash surrender value of life insurance	16,507	16,319
Liabilities:
Deposits	1,148,380	955,766
Securities sold under agreements to repurchase	31,747	24,221
FHLB borrowings	69,974	0
Junior subordinated debentures	15,464	15,619
Level 1
Assets:
Cash and cash equivalents	189,639	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	207,219	195,496
Other investments	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Cash surrender value of life insurance	16,507	16,319
Liabilities:
Deposits	0	0
Securities sold under agreements to repurchase	31,747	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	7,196	4,231
Mortgage loans held for sale	10,594	4,417
Loans, net	949,158	819,397
Cash surrender value of life insurance	0	0
Liabilities:
Deposits	1,148,380	955,766
Securities sold under agreements to repurchase	0	0
FHLB borrowings	69,974	0
Junior subordinated debentures	$ 0	$ 0

7. Leases (Details)

7. Leases (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 443	$ 446
Cash paid for amounts included in the measurement of lease liabilities	432	433
Operating cash flows from operating leases	0	0
Right-of-use assets obtained in exchange for new lease liabilities - operating leases	$ 132	$ 0
Weighted-average remaining lease term - operating leases	7 years 11 days	7 years 18 days
Weighted-average discount rate - operating leases	3.13%	3.17%

7. Leases (Details 1)

7. Leases (Details 1) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2020	$ 420	$ 823
2021	822	793
2022	525	501
2023	416	393
2024	328	304
Thereafter	1,325	1,320
Total	3,836	4,134
Less: imputed interest	(433)	(487)
Operating lease liability	$ 3,403	$ 3,647

7. Leases (Details Narrative)

7. Leases (Details Narrative) $ in Thousands	Jun. 30, 2020USD ($)
Leases
Operating ROU assets	$ 3,400
Operating lease liabilities	$ 3,400