10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                        TO

COMMISSION FILE NUMBER: 000-31977

CENTRAL VALLEY COMMUNITY BANCORP

(Exact name of registrant as specified in its charter)

California	77-0539125
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7100 N. Financial Dr., Suite 101, Fresno, California	93720
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number (559) 298-1775

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, no par value	CVCY	NASDAQ Capital Market
(Title of Each Class)	(Trading Symbol)	(Name of Each Exchange on which Registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Small reporting company	☒
		Emerging growth company	☐

1

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐ No  ☒

As of August 2, 2021 there were 11,984,214 shares of the registrant’s common stock outstanding.

2

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

2021 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART 1	FINANCIAL INFORMATION	2
ITEM 1	FINANCIAL STATEMENTS (Unaudited)	3
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	61
ITEM 4	CONTROLS AND PROCEDURES	61
PART II	OTHER INFORMATION	62
ITEM 1	LEGAL PROCEEDINGS	62
ITEM 1A	RISK FACTORS	62
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	62
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	62
ITEM 4	MINE SAFETY DISCLOSURES	62
ITEM 5	OTHER INFORMATION	62
ITEM 6	EXHIBITS	63
SIGNATURES		64

2

PART 1: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

 (Unaudited)

(In thousands, except share amounts)	June 30, 2021		December 31, 2020
ASSETS
Cash and due from banks	$	39,346	$	34,175
Interest-earning deposits in other banks	81,320		36,103
Total cash and cash equivalents	120,666		70,278
Available-for-sale debt securities	952,416		710,092
Equity securities	7,522		7,634
Loans, less allowance for credit losses of $10,439 at June 30, 2021 and $12,915 at December 31, 2020	1,059,506		1,089,432
Bank premises and equipment, net	8,465		8,228
Bank-owned life insurance	39,062		28,713
Federal Home Loan Bank stock	5,595		5,595
Goodwill	53,777		53,777
Core deposit intangibles	835		1,183
Accrued interest receivable and other assets	32,706		29,164
Total assets	$	2,280,550	$	2,004,096
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	899,406	$	824,889
Interest bearing	1,079,688		897,821
Total deposits	1,979,094		1,722,710
Junior subordinated deferrable interest debentures	5,155		5,155
Accrued interest payable and other liabilities	45,252		31,210
Total liabilities	2,029,501		1,759,075
Commitments and contingencies (Note 7)
Shareholders’ equity:
Preferred stock, no par value; 10,000,000 shares authorized, none issued and outstanding	—		—
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 12,329,089 at June 30, 2021 and 12,509,848 at December 31, 2020	75,265		79,416
Retained earnings	162,910		150,749
Accumulated other comprehensive income, net of tax	12,874		14,856
Total shareholders’ equity	251,049		245,021
Total liabilities and shareholders’ equity	$	2,280,550	$	2,004,096

See notes to unaudited consolidated financial statements.

3

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except share and per-share amounts)	2021		2020		2021		2020
INTEREST INCOME:
Interest and fees on loans	$	13,556	$	12,600	$	27,321	$	25,498
Interest on deposits in other banks	29		13		61		196
Interest and dividends on investment securities:
Taxable	3,361		2,959		6,094		6,225
Exempt from Federal income taxes	1,409		412		2,726		571
Total interest income	18,355		15,984		36,202		32,490
INTEREST EXPENSE:
Interest on deposits	252		374		520		806
Interest on junior subordinated deferrable interest debentures	22		36		46		81
Total interest expense	274		410		566		887
Net interest income before provision for credit losses	18,081		15,574		35,636		31,603
(REVERSAL OF) PROVISION FOR CREDIT LOSSES	(1,500)		3,000		(3,300)		4,375
Net interest income after provision for credit losses	19,581		12,574		38,936		27,228
NON-INTEREST INCOME:
Service charges	467		447		899		1,093
Appreciation in cash surrender value of bank-owned life insurance	176		176		349		358
Interchange fees	471		307		841		640
Net realized gains (losses) on sales of investment securities	(79)		(58)		(79)		4,140
Federal Home Loan Bank dividends	83		75		153		182
Loan placement fees	510		561		1,167		860
Other income	449		537		746		1,315
Total non-interest income	2,077		2,045		4,076		8,588
NON-INTEREST EXPENSES:
Salaries and employee benefits	6,979		6,812		13,917		14,324
Occupancy and equipment	1,201		1,139		2,314		2,283
Professional services	475		522		831		980
Data processing	625		554		1,242		890
Regulatory assessments	172		146		333		193
ATM/Debit card expenses	191		187		416		481
Information technology	611		602		1,170		1,210
Directors’ expenses	113		136		154		328
Advertising	128		167		257		340
Internet banking expense	84		182		208		378
Amortization of core deposit intangibles	173		173		347		347
Other	878		878		1,829		1,823
Total non-interest expenses	11,630		11,498		23,018		23,577
Income before provision for income taxes	10,028		3,121		19,994		12,239
Provision for income taxes	2,465		820		4,952		3,315
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Earnings per common share:
Basic earnings per share	$	0.61	$	0.18	$	1.20	$	0.71
Weighted average common shares used in basic computation	12,498,809		12,449,283		12,497,217		12,592,126
Diluted earnings per share	$	0.60	$	0.18	$	1.20	$	0.71
Weighted average common shares used in diluted computation	12,548,044		12,486,681		12,548,101		12,646,403
Cash dividend per common share	$	0.12	$	0.11	$	0.23	$	0.22

See notes to unaudited consolidated financial statements.

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands)	2021		2020		2021		2020
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Other Comprehensive Income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	10,729		12,366		(2,892)		10,679
Reclassification of net (gains) losses included in net income	79		58		79		(4,140)
Other comprehensive income, before tax	10,808		12,424		(2,813)		6,539
Tax effect	(3,196)		(3,673)		831		(1,933)
Total other comprehensive loss	7,612		8,751		(1,982)		4,606
Comprehensive income	$	15,175	$	11,052	$	13,060	$	13,530

See notes to unaudited consolidated financial statements.

5

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THREE MONTHS ENDED JUNE 30, 2021 AND 2020

 (Unaudited)

	Common Stock					Accumulated Other Comprehensive Income (Loss) (Net of Taxes)		Total Shareholders’ Equity
				Retained Earnings
(In thousands, except share amounts)	Shares	Amount
Balance, March 31, 2020	12,472,939	$	78,854	$	141,147	$	(1,328)	$	218,673
Net income	—	—		2,301		—		2,301
Other comprehensive income	—	—		—		8,751		8,751
Restricted stock granted net of forfeitures	14,090	—		—		—		—
Stock issued under employee stock purchase plan	4,348	58						58
Stock-based compensation expense	—	128		—		—		128
Cash dividend	—	—		(1,372)		—		(1,372)
Stock options exercised	3,220	19		—		—		19
Balance, June 30, 2020	12,494,597	$	79,059	$	142,076	$	7,423	$	228,558
Balance, March 31, 2021	12,524,609	$	79,732	$	156,851	$	5,262	$	241,845
Net income	—	—		7,563		—		7,563
Other comprehensive income	—	—		—		7,612		7,612
Restricted stock granted net of forfeitures	20,967	—		—		—		—
Stock issued under employee stock purchase plan	3,292	54		—		—		54
Stock-based compensation expense	—	109		—		—		109
Cash dividend	—	—		(1,504)		—		(1,504)
Stock options exercised	19,900	212		—		—		212
Repurchase and retirement of common stock	(239,679)	(4,842)		—		—		(4,842)
Balance, June 30, 2021	12,329,089	$	75,265	$	162,910	$	12,874	$	251,049

See notes to unaudited consolidated financial statements.

6

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2021 AND 2020

	Common Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss) (Net of Taxes)		Total Shareholders’ Equity
(In thousands, except share amounts)	Shares	Amount
Balance, January 1, 2020	13,052,407	$	89,379	$	135,932	$	2,817	228,128
Net income	—	—		8,924		—		8,924
Other comprehensive income	—	—		—		4,606		4,606
Stock issued under employee stock purchase plan	7,981	115		—		—		115
Stock awarded to employees	6,548	141		—		—		141
Restricted stock granted net of forfeitures	14,090	—		—		—		—
Stock-based compensation expense	—	248		—		—		248
Cash dividend	—	—		(2,780)		—		(2,780)
Repurchase and retirement of common stock	(621,379)	(11,052)		—		—		(11,052)
Stock options exercised	34,950	228		—		—		228
Balance, June 30, 2020	12,494,597	$	79,059	$	142,076	$	7,423	$	228,558
Balance, January 1, 2021	12,509,848	$	79,416	$	150,749	$	14,856	$	245,021
Net income	—	—		15,042		—		15,042
Other comprehensive income	—	—		—		(1,982)		(1,982)
Restricted stock granted net of forfeitures	20,720	—		—		—		—
Stock issued under employee stock purchase plan	7,671	110		—		—		110
Stock awarded to employees	10,529	158		—		—		158
Stock-based compensation expense	—	210		—		—		210
Cash dividend	—	—		(2,881)		—		(2,881)
Stock options exercised	20,000	213		—		—		213
Repurchase and retirement of common stock	(239,679)	(4,842)		—		—		(4,842)
Balance, June 30, 2021	12,329,089	$	75,265	$	162,910	$	12,874	$	251,049

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CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

	For the Six Months Ended June 30,
(In thousands)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	15,042	$	8,924
Adjustments to reconcile net income to net cash provided by operating activities:
Net (increase) decrease in deferred loan fees	1,222		(5,975)
Depreciation	467		462
Accretion	(693)		(666)
Amortization	3,578		2,128
Stock-based compensation	210		248
(Reversal of) provision for credit losses	(3,300)		4,375
Net realized losses (gains) on sales and calls of available-for-sale investment securities	79		(4,140)
Net gain on disposal of premises and equipment	(8)		(6)
Net change in equity securities	112		(183)
Increase in bank-owned life insurance, net of expenses	(349)		(198)
Net gain on bank-owned life insurance	—		(462)
Net increase in accrued interest receivable and other assets	(3,767)		(1,418)
Net increase in accrued interest payable and other liabilities	14,199		417
Benefit (provision) for deferred income taxes	983		(1,735)
Net cash provided by operating activities	27,775		1,771
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investment securities	(271,930)		(202,390)
Proceeds from sales or calls of available-for-sale investment securities	590		122,151
Proceeds from maturity and principal repayments of available-for-sale investment securities	23,660		16,103
Net decrease (increase) in loans	32,004		(176,105)
Purchases of premises and equipment	(704)		(101)
Purchases of bank-owned life insurance	(10,000)		(250)
FHLB stock redeemed	—		467
Proceeds from bank-owned life insurance	—		1,550
Proceeds from sale of premises and equipment	9		6
Net cash used in investing activities	(226,371)		(238,569)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, interest bearing and savings deposits	256,426		319,263
Net decrease in time deposits	(42)		(2,993)
Purchase and retirement of common stock	(4,842)		(11,052)
Proceeds from stock issued under employee stock purchase plan	110		115
Proceeds from exercise of stock options	213		228
Cash dividend payments on common stock	(2,881)		(2,780)
Net cash provided by financing activities	248,984		302,781
Increase in cash and cash equivalents	50,388		65,983
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	70,278		52,574
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	120,666	$	118,557

	For the Six Months Ended June 30,
(In thousands)	2021		2020
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest	$	576	$	937
Income taxes	$	6,105	$	2,810
Operating cash flows from operating leases	$	1,124	$	1,120

See notes to unaudited consolidated financial statements.

8

Note 1.  Basis of Presentation

The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation.  Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2020 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at June 30, 2021, and the results of its operations and its cash flows for the six-month interim periods ended June 30, 2021 and 2020 have been included. The results of operations for interim periods are not necessarily indicative of results for the full year.

     The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

     Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment, and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank.

Impact of New Financial Accounting Standards:

FASB Accounting Standards Update (ASU) 2016-13 - Measurement of Credit Losses on Financial Instruments (Subtopic 326): Financial Instruments - Credit Losses, commonly referred to as “CECL,” was issued June 2016. The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the contractual term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity (“HTM”) debt securities. Under the provisions of the update, credit losses recognized on available for sale (“AFS”) debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL, reserves will be established for purchased loans at the time of acquisition, the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL require organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. The FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. On August 15, 2019, the FASB issued a proposed Accounting Standards Update (ASU), “Financial Instruments -Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” that would provide private entities and certain small public companies additional time to implement the standards on CECL, leases, and hedging. The final ASU extends the effective date for SEC filers, such as the Company, that are classified as smaller reporting companies to January 1, 2023.

    The Company has formed an internal task force that is responsible for oversight of the Company’s implementation strategy for compliance with provisions of the new standard. The Company has also established a project management governance process to manage the implementation across affected disciplines. An external provider specializing in community bank loss driver and CECL reserving model design as well as other related consulting services has been retained, and we have begun to evaluate potential CECL modeling alternatives. As part of this process, the Company has determined potential loan pool segmentation and sub-segmentation under CECL, as well as begun to evaluate the key economic loss drivers for each segment. Further, the Company has begun developing internal controls around the CECL process, data, calculations and implementation. The Company presently plans to generate and evaluate model scenarios under CECL in tandem with its current reserving processes for interim and annual reporting periods during 2022 due to the fact the Company elected to delay

9

implementation of the CECL process as allowed by FASB. While the Company is currently unable to reasonably estimate the impact of adopting this new guidance, management expects the impact of adoption will be significantly influenced by the composition and quality of the Company’s loans as well as the economic conditions as of the date of adoption. The Company also anticipates changes to the processes and procedures for calculating the reserve for credit losses and continues to evaluate the potential impact on our consolidated financial statements.

    FASB Accounting Standards Update (ASU) 2020-04 - Reference Rate Reform (Subtopic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, was issued March 2020. This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements. The Company believes the adoption of this guidance on activities subsequent to June 30, 2021 through December 31, 2022 will not have a material impact on the consolidated financial statements.

    In April 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, (“the agencies”) issued a revised interagency statement encouraging financial institutions to work with customers affected by COVID-19 and providing additional information regarding loan modifications. The revised interagency statement clarifies the interaction between the interagency statement issued on March 22, 2020 and the temporary relief provided by Section 4013 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Section 4013 allows financial institutions to suspend the requirements to classify certain loan modifications as troubled debt restructurings (“TDRs”). The revised statement also provides supervisory interpretations on past due and nonaccrual regulatory reporting of loan modification programs and regulatory capital. This interagency guidance is expected to reduce the number of TDRs that will be reported in future periods; however, the amount is indeterminable and will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

Note 2.  Fair Value Measurements

Fair Value Hierarchy

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active markets that the entity has the ability to access as of the measurement date.

Level 2 —Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, we report the transfer at the beginning of the reporting period. The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):

10

	June 30, 2021
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	39,346	$	39,346	$	—	$	—	$	39,346
Interest-earning deposits in other banks	81,320		81,320		—		—		81,320
Available-for-sale debt securities	952,416		—		952,416		—		952,416
Equity securities	7,522		7,522		—		—		7,522
Loans, net	1,059,506		—		—		1,053,137		1,053,137
Federal Home Loan Bank stock	5,595		N/A		N/A		N/A		N/A
Accrued interest receivable	9,417		10		5,754		3,653		9,417
Financial liabilities:
Deposits	1,979,094		1,898,736		89,843		—		1,988,579
Junior subordinated deferrable interest debentures	5,155		—		—		4,234		4,234
Accrued interest payable	55		—		33		22		55

	December 31, 2020
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	34,175	$	34,175	$	—	$	—	$	34,175
Interest-earning deposits in other banks	36,103		36,103		—		—		36,103
Available-for-sale debt securities	710,092		—		710,092		—		710,092
Equity securities	7,634		7,634		—		—		7,634
Loans, net	1,089,432		—		—		1,087,124		1,087,124
Federal Home Loan Bank stock	5,595		N/A		N/A		N/A		N/A
Accrued interest receivable	8,834		9		3,617		5,208		8,834
Financial liabilities:
Deposits	1,722,710		1,691,647		90,008		—		1,781,655
Junior subordinated deferrable interest debentures	5,155		—		—		3,693		3,693
Accrued interest payable	65		—		41		24		65

These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments.  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 any of these estimates.

These estimates are made at a specific point in time based on relevant market data and information about the financial instruments.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors.  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 fair values presented.

    The methods and assumptions used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents — The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1.

(b) Investment Securities — Investment securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for investment securities classified in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

(c) Loans — Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Purchased credit

11

impaired (PCI) loans are measured at estimated fair value on the date of acquisition. Carrying value is calculated as the present value of expected cash flows and approximates fair value and included in Level 3. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are initially valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. The estimated fair values of financial instruments disclosed above follow the guidance in ASU 2016-01 which prescribes an “exit price” approach in estimating and disclosing fair value of financial instruments incorporating discounts for credit, liquidity, and marketability factors.

(d) FHLB Stock — It is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(e) Deposits — Fair value of demand deposit, savings, and money market accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification.

(f) Subordinated Debentures — The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(g) Accrued Interest Receivable/Payable — The fair value of accrued interest receivable and payable is based on the fair value hierarchy of the related asset or liability.

(h) Off-Balance Sheet Instruments — Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not considered significant for financial reporting purposes.

Assets Recorded at Fair Value

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2021:

Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis as of June 30, 2021 (in thousands). 

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Treasury securities	$	19,994	$	—	$	19,994	$	—
U.S. Government agencies	653		—		653		—
Obligations of states and political subdivisions	473,658		—		473,658		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	227,042		—		227,042		—
Private label mortgage and asset backed securities	180,781		—		180,781		—
Corporate debt securities	50,288		—		50,288		—
Equity securities	7,522		7,522		—		—
Total assets measured at fair value on a recurring basis	$	959,938	$	7,522	$	952,416	$	—

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    Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets.  Fair values for available-for-sale debt securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

    Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the six months ended June 30, 2021, no transfers between levels occurred.

There were no Level 3 assets measured at fair value on a recurring basis at or during the six months ended June 30, 2021. Also there were no liabilities measured at fair value on a recurring basis at June 30, 2021.

Non-recurring Basis

    The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at

fair value which was below cost at June 30, 2021.

    At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow methods as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the six months ended June 30, 2021.

    Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics. As of June 30, 2021, there were no loans measured using the fair value of the collateral for the collateral dependent loans.

    There were no charge-offs related to loans carried at fair value during the six months ended June 30, 2021 and 2020. Activity related to changes in the allowance for loan losses related to impaired loans for the three months ended June 30, 2021 and 2020 was not considered significant for disclosure purposes. There were no liabilities measured at fair value on a non-recurring basis at June 30, 2021.

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    The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2020:

Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2020 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Government agencies	$	680	$	—	$	680	$	—
Obligations of states and political subdivisions	379,565		—		379,565		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	216,298		—		216,298		—
Private label mortgage and asset backed securities	83,508		—		83,508		—
Corporate debt securities	30,041		—		30,041		—
Equity securities	7,634		7,634		—		—
Total assets measured at fair value on a recurring basis	$	717,726	$	7,634	$	710,092	$	—

    Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets.  Fair values for available-for-sale debt securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

     Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the year ended December 31, 2020, no transfers between levels occurred.

    There were no Level 3 assets measured at fair value on a recurring basis at or during the year ended December 31, 2020. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2020.

Non-recurring Basis

    The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis.  These include the following assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2020 (in thousands):

	Fair Value		Level 1		Level 2		Level 3
Impaired loans:
Real estate:
Real estate-construction and other land loans	$	1,260	$	—	$	—	$	1,260

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans

had a principal balance of $1,528,000 with a valuation allowance of $268,000 at December 31, 2020, and a resulting fair value

of $1,260,000. The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans.

There were no liabilities measured at fair value on a non-recurring basis at December 31, 2020.

Note 3.  Investments

The investment portfolio consists primarily of U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities (PLMABS), corporate debt securities, and obligations of states and political subdivisions securities.  As of June 30, 2021, $191,882,000 of these securities were held as collateral for borrowing arrangements, public funds, and for other purposes.

     The fair value of the available-for-sale investment portfolio reflected a net unrealized gain of $18,278,000 at June 30, 2021 compared to an unrealized gain of $21,091,000 at December 31, 2020. The unrealized gain/(loss) recorded is net of $5,404,000,000 and $6,235,000 in tax liabilities (benefits) as accumulated other comprehensive income (loss) within shareholders’ equity at June 30, 2021 and December 31, 2020, respectively.

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     The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands): 

	June 30, 2021
Available-for-Sale Securities	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Estimated  Fair Value
Debt securities:
U.S. Treasury securities	$	19,987	$	10	$	(3)	$	19,994
U.S. Government agencies	637		16		—		653
Obligations of states and political subdivisions	458,250		17,447		(2,039)		473,658
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	224,920		3,131		(1,009)		227,042
Private label mortgage and asset backed securities	180,844		1,293		(1,356)		180,781
Corporate debt securities	49,500		883		(95)		50,288
Total available-for-sale	$	934,138	$	22,780	$	(4,502)	$	952,416

	December 31, 2020
Available-for-Sale Securities	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Estimated Fair Value
Debt securities:
U.S. Government agencies	$	651	$	29	$	—	$	680
Obligations of states and political subdivisions	361,734		18,170		(339)		379,565
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	214,203		3,575		(1,480)		216,298
Private label mortgage and asset backed securities	82,413		1,337		(242)		83,508
Corporate debt securities	30,000		260		(219)		30,041
Total available-for-sale	$	689,001	$	23,371	$	(2,280)	$	710,092

    Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended June 30, 2021 and 2020 are shown below (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Available-for-Sale Securities	2021		2020		2021		2020
Proceeds from sales or calls	$	590	$	16,114	$	590	$	122,151
Gross realized gains from sales or calls	—		306		—		4,504
Gross realized losses from sales or calls	(79)		(364)		(79)		(364)

    As market interest rates or risks associated with a security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile is appropriate and beneficial to the Company.

    The provision for income taxes includes $1,224,000 income tax impact from the reclassification of unrealized net gains on securities to realized net gains on securities for the six months ended June 30, 2020.

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    Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands): 

	June 30, 2021
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale Securities	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Treasury securities	$	9,997	$	(3)	$	—	$	—	$	9,997	$	(3)
Obligations of states and political subdivisions	79,759		(2,039)		—		—		79,759		(2,039)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	47,184		(573)		52,818		(436)		100,002		(1,009)
Private label mortgage and asset backed securities	91,811		(1,327)		4,203		(29)		96,014		(1,356)
Corporate debt securities	16,405		(95)		—		—		16,405		(95)
Total available-for-sale	$	245,156	$	(4,037)	$	57,021	$	(465)	$	302,177	$	(4,502)

	December 31, 2020
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale Securities	Value		Losses		Value		Losses		Value		Losses
Debt securities:
Obligations of states and political subdivisions	$	36,209	$	(339)	$	—	$	—	$	36,209	$	(339)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	30,755		(385)		77,337		(1,095)		108,092		(1,480)
Private label mortgage and asset backed securities	25,407		(242)		—		—		25,407		(242)
Corporate debt securities	12,881		(119)		3,900		(100)		16,781		(219)
Total available-for-sale	$	105,252	$	(1,085)	$	81,237	$	(1,195)	$	186,489	$	(2,280)

     The Company periodically evaluates each investment security for other-than-temporary impairment, relying primarily on industry analyst reports, observation of market conditions, and interest rate fluctuations.  The portion of the impairment that is attributable to a shortage in the present value of expected future cash flows relative to the amortized cost should be recorded as a current period charge to earnings.  The discount rate in this analysis is the original yield expected at time of purchase.

     As of June 30, 2021, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI). The Company evaluated all individual available-for-sale investment securities with an unrealized loss at June 30, 2021 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at June 30, 2021 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $75,000.  The Company also analyzed any securities that may have been downgraded by credit rating agencies. 

    For those investment securities that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those investment securities.  There were no OTTI losses recorded during the six months ended June 30, 2021.

U.S. Treasury Securities

At June 30, 2021, the Company held two U.S. Treasury securities of which one security was in a loss position for less than 12 months. The unrealized loss on the Company’s investment in direct obligations of U.S. Treasury securities is associated with the general fluctuation of market interest rates and are not an indication of any deterioration in the credit quality of the security issuer. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized costs of the investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

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U.S. Government Agencies

    At June 30, 2021, the Company held one U.S. Government agency security which was in a gain position.

Obligations of States and Political Subdivisions

    At June 30, 2021, the Company held 122 obligations of states and political subdivision securities of which 16 were in a loss position for less than 12 months. The unrealized losses on the Company’s investments in obligations of states and political subdivision securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations

    At June 30, 2021, the Company held 115 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations of which eight were in a loss position for less than 12 months and 11 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed or supported by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

Private Label Mortgage and Asset Backed Securities

    At June 30, 2021, the Company had a total of 49 Private Label Mortgage and Asset Backed Securities (PLMABS). 18 of the PLMABS securities were in a loss position for less than 12 months and two have been in loss for more than 12 months at June 30, 2021. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021. The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary.

Corporate Debt Securities

    At June 30, 2021, the Company held 14 corporate debt securities of which five were in a loss position for less than 12 months. The unrealized loss on the Company’s investments in corporate debt security was caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

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    The amortized cost and estimated fair value of available-for-sale investment securities at June 30, 2021 by contractual maturity is shown below (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2021
Available-for-Sale Securities	Amortized Cost		Estimated Fair Value
Within one year	$	304	$	305
After one year through five years	3,317		3,627
After five years through ten years	84,162		86,564
After ten years	390,454		403,156
	478,237		493,652
Investment securities not due at a single maturity date:
U.S. Government agencies	637		653
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	224,920		227,042
Private label mortgage and asset backed securities	180,844		180,781
Corporate debt securities	49,500		50,288
Total available-for-sale	$	934,138	$	952,416

Note 4.  Loans and Allowance for Credit Losses

Outstanding loans are summarized as follows:

Loan Type (Dollars in thousands)	June 30, 2021		% of Total Loans		December 31, 2020		% of Total Loans
Commercial:
Commercial and industrial	$	208,919	19.4	%	$	273,994	24.9	%
Agricultural production	32,918		3.1	%	21,971		2.0	%
Total commercial	241,837		22.5	%	295,965		26.9	%
Real estate:
Owner occupied	200,232		18.7	%	208,843		18.9	%
Real estate construction and other land loans	65,282		6.1	%	55,419		5.0	%
Commercial real estate	357,519		33.4	%	338,886		30.7	%
Agricultural real estate	88,110		8.2	%	84,258		7.6	%
Other real estate	29,750		2.8	%	28,718		2.6	%
Total real estate	740,893		69.2	%	716,124		64.8	%
Consumer:
Equity loans and lines of credit	51,364		4.8	%	55,634		5.0	%
Consumer and installment	37,241		3.5	%	37,236		3.3	%
Total consumer	88,605		8.3	%	92,870		8.3	%
Net deferred origination (fees) costs	(1,390)				(2,612)
Total gross loans	1,069,945		100.0	%	1,102,347		100.0	%
Allowance for credit losses	(10,439)				(12,915)
Total loans	$	1,059,506			$	1,089,432

    At June 30, 2021 and December 31, 2020, loans originated under Small Business Administration (SBA) programs totaling $23,685,000 and $24,220,000, respectively, were included in the real estate and commercial categories, of which, $18,029,000 or 76% and $18,180,000 or 75%, respectively, are secured by government guarantees. In addition, the Company participated in the SBA Paycheck Protection Program (PPP) to help provide loans to our business customers to provide them with additional working capital. At June 30, 2021, 630 PPP loans totaling $109,502,000 were outstanding and included in the commercial and industrial line item above. At December 31, 2020, 989 PPP loans totaling $192,916,000 were outstanding and included in the commercial and industrial line item above.

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Allowance for Credit Losses

    The allowance for credit losses (the “Allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The Allowance is established through a provision for credit losses which is charged to expense. Additions to the Allowance are expected to maintain the adequacy of the total Allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the Allowance. Cash received on previously charged-off credits is recorded as a recovery to the Allowance. The overall Allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired.

    For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer data) over the most recent 50 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole.

    The following table shows the summary of activities for the Allowance as of and for the three months ended June 30, 2021 and 2020 by portfolio segment (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, April 1, 2021	$	2,483	$	8,352	$	888	$	333	$	12,056
(Reversal) provision charged to operations	(307)		(1,302)		91		18		(1,500)
Charge-offs	—		—		(171)		—		(171)
Recoveries	34		—		20		—		54
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Allowance for credit losses:
Beginning balance, April 1, 2020	$	1,657	$	7,555	$	1,236	$	98	$	10,546
Provision charged to operations	7		2,834		76		83		3,000
Charge-offs	—		—		(80)		—		(80)
Recoveries	423		—		48		—		471
Ending balance, June 30, 2020	$	2,087	$	10,389	$	1,280	$	181	$	13,937

The following table shows the summary of activities for the Allowance as of and for the six months ended June 30, 2021 and 2020 by portfolio segment (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, January 1, 2021	$	2,019	$	9,174	$	1,091	$	631	$	12,915
Reversal charged to operations	(439)		(2,443)		(138)		(280)		(3,300)
Charge-offs	(31)		—		(197)		—		(228)
Recoveries	661		319		72		—		1,052
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Allowance for credit losses:
Beginning balance, January 1, 2020	$	1,428	$	6,769	$	897	$	36	$	9,130
Provision charged to operations	233		3,620		377		145		4,375
Charge-offs	(29)		—		(94)		—		(123)
Recoveries	455		—		100		—		555
Ending balance, June 30, 2020	$	2,087	$	10,389	$	1,280	$	181	$	13,937

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    The following is a summary of the Allowance by impairment methodology and portfolio segment as of June 30, 2021 and December 31, 2020 (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Ending balance: individually evaluated for impairment	$	865	$	10	$	5	$	—	$	880
Ending balance: collectively evaluated for impairment	$	1,345	$	7,040	$	823	$	351	$	9,559
Ending balance, December 31, 2020	$	2,019	$	9,174	$	1,091	$	631	$	12,915
Ending balance: individually evaluated for impairment	$	339	$	271	$	21	$	—	$	631
Ending balance: collectively evaluated for impairment	$	1,680	$	8,903	$	1,070	$	631	$	12,284

    The following table shows the ending balances of loans as of June 30, 2021 and December 31, 2020 by portfolio segment and by impairment methodology (in thousands):

	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, June 30, 2021	$	241,837	$	740,893	$	88,605	$	1,071,335
Ending balance: individually evaluated for impairment	$	6,503	$	971	$	1,065	$	8,539
Ending balance: collectively evaluated for impairment	$	235,334	$	739,922	$	87,540	$	1,062,796
Loans:
Ending balance, December 31, 2020	$	295,965	$	716,124	$	92,870	$	1,104,959
Ending balance: individually evaluated for impairment	$	7,402	$	2,616	$	1,168	$	11,186
Ending balance: collectively evaluated for impairment	$	288,563	$	713,508	$	91,702	$	1,093,773

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The following table shows the loan portfolio by class allocated by management’s internal risk ratings at June 30, 2021 (in thousands):

	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	196,108	$	745	$	12,066	$	—	$	208,919
Agricultural production	28,520		1,430		2,968		—		32,918
Real Estate:
Owner occupied	189,898		3,360		6,974		—		200,232
Real estate construction and other land loans	60,603		4,679		—		—		65,282
Commercial real estate	341,805		6,161		9,553		—		357,519
Agricultural real estate	84,870		2,087		1,153		—		88,110
Other real estate	29,589		—		161		—		29,750
Consumer:
Equity loans and lines of credit	51,116		248		—		—		51,364
Consumer and installment	37,178		—		63		—		37,241
Total	$	1,019,687	$	18,710	$	32,938	$	—	$	1,071,335

    The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2020 (in thousands):

	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	258,587	$	5,004	$	10,403	$	—	$	273,994
Agricultural production	18,289		377		3,305		—		21,971
Real Estate:
Owner occupied	197,721		3,870		7,252		—		208,843
Real estate construction and other land loans	50,560		1,622		3,237		—		55,419
Commercial real estate	314,710		14,537		9,639		—		338,886
Agricultural real estate	72,875		10,195		1,188		—		84,258
Other real estate	28,557		161		—		—		28,718
Consumer:
Equity loans and lines of credit	54,034		640		960		—		55,634
Consumer and installment	37,084		—		152		—		37,236
Total	$	1,032,417	$	36,406	$	36,136	$	—	$	1,104,959

21

The following table shows an aging analysis of the loan portfolio by class and the time past due at June 30, 2021 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than  90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non-accrual
Commercial:
Commercial and industrial	$	16	$	—	$	—	$	16	$	208,903	$	208,919	$	—	$	347
Agricultural production	—		—		—		—		32,918		32,918		—		1,205
Real estate:	—								—
Owner occupied	—		—		—		—		200,232		200,232		—		—
Real estate construction and other land loans	—		—		—		—		65,282		65,282		—		—
Commercial real estate	294		—		—		294		357,225		357,519		—		483
Agricultural real estate	—		—		—		—		88,110		88,110		—		—
Other real estate	—		—		—		—		29,750		29,750		—		—
Consumer:									—
Equity loans and lines of credit	—		—		—		—		51,364		51,364		—		—
Consumer and installment	81		—		—		81		37,160		37,241		—		—
Total	$	391	$	—	$	—	$	391	$	1,070,944	$	1,071,335	$	—	$	2,035

    The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2020 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than  90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non- accrual
Commercial:
Commercial and industrial	$	—	$	—	$	60	$	60	$	273,934	$	273,994	$	—	$	752
Agricultural production	—		—		—		—		21,971		21,971		—		—
Real estate:	—
Owner occupied	—		—		—		—		208,843		208,843		—		370
Real estate construction and other land loans	—		—		—		—		55,419		55,419		—		1,556
Commercial real estate	—		—		—		—		338,886		338,886		—		512
Agricultural real estate	—		—		—		—		84,258		84,258		—		—
Other real estate	—		—		—		—		28,718		28,718		—		—
Consumer:
Equity loans and lines of credit	—		24		—		24		55,610		55,634		—		—
Consumer and installment	5		—		—		5		37,231		37,236		—		88
Total	$	5	$	24	$	60	$	89	$	1,104,870	$	1,104,959	$	—	$	3,278

22

The following table shows information related to impaired loans by class at June 30, 2021 (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate:
Real estate construction and other land loans	$	316	$	316	$	—
Commercial real estate	483		544		—
Total real estate	799		860		—
Consumer:
Equity loans and lines of credit	140		176		—
Total with no related allowance recorded	939		1,036		—
With an allowance recorded:
Commercial:
Commercial and industrial	5,298		5,328		659
Agricultural production	1,205		1,248		206
Total commercial	6,503		6,576		865
Real estate:
Real estate construction and other land loans	—		—		—
Commercial real estate	142		143		3
Agricultural real estate	30		30		7
Total real estate	172		173		10
Consumer:
Equity loans and lines of credit	925		925		5
Total with an allowance recorded	7,600		7,674		880
Total	$	8,539	$	8,710	$	880

    The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

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    The following table shows information related to impaired loans by class at December 31, 2020 (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	60	$	61	$	—
Real estate:
Owner occupied	370		409		—
Real estate construction and other land loans	28		28		—
Commercial real estate	512		561		—
Total real estate	910		998		—
Consumer:
Equity loans and lines of credit	144		180		—
Total with no related allowance recorded	1,114		1,239		—
With an allowance recorded:
Commercial:
Commercial and industrial	7,342		7,373		339
Real estate:
Real estate construction and other land loans	1,528		1,552		268
Commercial real estate	148		149		3
Agricultural real estate	30		29		—
Total real estate	1,706		1,730		271
Consumer:
Equity loans and lines of credit	936		936		9
Consumer and installment	88		93		12
Total consumer	1,024		1,029		21
Total with an allowance recorded	10,072		10,132		631
Total	$	11,186	$	11,371	$	631

    The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

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The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended June 30, 2021 and 2020 (in thousands).

	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	—	$	—	$	7	$	—
Agricultural production	—		—		212		—
Total commercial	—		—		219		—
Real estate:
Owner occupied	—		—		401		—
Real estate construction and other land loans	333		5		—		—
Commercial real estate	490		—		848		—
Agricultural real estate	—		—		199		—
Total real estate	823		5		1,448		—
Consumer:
Equity loans and lines of credit	142		3		232		3
Total with no related allowance recorded	965		8		1,899		3
With an allowance recorded:
Commercial:
Commercial and industrial	5,831		67		11,516		171
Agricultural production	1,328				619		12
Total commercial	7,159		67		12,135		183
Real estate:
Real estate construction and other land loans	746		—		95		—
Commercial real estate	144		2		331		2
Agricultural real estate	30		1		28		1
Total real estate	920		3		454		3
Consumer:
Equity loans and lines of credit	928		14		957		14
Consumer and installment	—		—		38		—
Total consumer	928		14		995		14
Total with an allowance recorded	9,007		84		13,584		200
Total	$	9,972	$	92	$	15,483	$	203

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The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the six months ended June 30, 2021 and 2020 (in thousands).

	Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	9	$	—	$	71	$	—
Agricultural land and production	—		—		121		—
Total commercial	9		—		192		—
Real estate:
Owner occupied	103		—		407		—
Real estate construction and other land loans	201		11		—		—
Commercial real estate	498		—		959		—
Agricultural real estate	—		—		228		—
Total real estate	802		11		1,594		—
Consumer:
Equity loans and lines of credit	142		6		264		6
Total with no related allowance recorded	953		17		2,050		6
With an allowance recorded:
Commercial:
Commercial and industrial	6,475		153		6,589		344
Agricultural land and production	969		—		354		24
Total commercial	7,444		153		6,943		368
Real estate:
Real estate construction and other land loans	1,077		—		54		—
Commercial real estate	145		5		254		5
Agricultural real estate	30		1		26		1
Total real estate	1,252		6		334		6
Consumer:
Equity loans and lines of credit	931		27		1,052		28
Consumer and installment	25		—		24		—
Total consumer	956		27		1,076		28
Total with an allowance recorded	9,652		186		8,353		402
Total	$	10,605	$	203	$	10,403	$	408

Foregone interest on nonaccrual loans totaled $72,000 and $74,000 for the six month period ended June 30, 2021 and 2020, respectively. Foregone interest on nonaccrual loans totaled 34,000 and 55,000 for the three month period ended June 30, 2021 and 2020, respectively.

Troubled Debt Restructurings:

    As of June 30, 2021 and December 31, 2020, the Company has a recorded investment in troubled debt restructurings of $6,504,000 and $7,908,000, respectively. The Company has allocated $515,000 and $20,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2021 and December 31, 2020, respectively.

    During the six months ended June 30, 2021, one loan was modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses.

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As discussed in Note 1 to these financial statements, Section 4013 of the CARES Act and the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)” provided banks an option to elect to not account for certain loan modifications related to COVID-19 as TDRs as long as the borrowers were not more than 30 days past due as of December 31, 2019 or at the time of modification program implementation, respectively, and the borrowers meet other applicable criteria. The remaining TDRs disclosed below were not related to COVID-19 modifications. The Company executed loan deferrals on outstanding balances of approximately $1.37 million resulting from the COVID-19 pandemic that were not classified as a TDRs at June 30, 2021.

    The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2021 (in thousands):

Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification (2)		Post Modification Outstanding Recorded Investment (3)		Outstanding Recorded Investment
Real Estate:
Real estate-construction and other land loans	1	$	333	$	—	$	333	$	317

(1)Amounts represent the recorded investment in loans before recognizing effects of the Troubled Debt Restructurings, if any.

(2)Principal modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.

(3)Balance outstanding after principal modification, if any borrower reduction to recorded investment.

    The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2020 (in thousands):

Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification (2)		Post Modification Outstanding Recorded Investment (3)		Outstanding Recorded Investment
Commercial:
Commercial and Industrial	1	$	12,925	$	—	$	12,925	$	9,725
Agricultural production	1	850		—		850		775
Total	2	$	13,775	$	—	$	13,775	$	10,500

During the quarters ended June 30, 2021 and 2020, no loans were modified as troubled debt restructurings.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the six months ended and three months ended June 30, 2021 or June 30, 2020.

Note 5. Goodwill

Business combinations involving the Company’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill.  Total goodwill at June 30, 2021, was $53,777,000 consisting of $8,934,000, $14,643,000, $6,340,000, $10,394,000, and $13,466,000 representing the excess of the cost of Bank of Madera County, Service 1st Bancorp, Visalia Community Bank, Sierra Vista Bank, and Folsom Lake Bank, respectively, over the net of the amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the acquisition method of accounting.  The value of goodwill is ultimately derived from the Company’s ability to generate net earnings after the acquisitions and is not deductible for tax purposes. A significant decline in net earnings, among other factors, could be indicative of a decline in the fair value of goodwill and result in impairment.  For that reason, goodwill is assessed at least annually for impairment. The Company’s annual goodwill test is completed as of September 30 each year.

Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the first six months of 2021.

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Note 6. Borrowing Arrangements

As of June 30, 2021 and December 31, 2020, the Company had no Federal Home Loan Bank (“FHLB”) of San Francisco advances.

    Approximately $447,170,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $245,311,000 as of June 30, 2021. FHLB advances are also secured by investment securities with amortized costs totaling $151,000 and $169,000 and market values totaling $159,000 and $178,000 at June 30, 2021 and December 31, 2020, respectively.  The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral. As of June 30, 2021, and December 31, 2020 the Company had no Federal funds purchased.

Note 7.  Commitments and Contingencies

Financial Instruments With Off-Balance-Sheet Risk - In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract or notional amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for loans.

    Commitments to extend credit amounting to $316,702,000 and $326,179,000 were outstanding at June 30, 2021 and December 31, 2020, respectively. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract unless waived by the Bank. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

     Included in commitments to extend credit are undisbursed lines of credit totaling $306,144,000 and $314,774,000 at June 30, 2021 and December 31, 2020, respectively.  Undisbursed lines of credit include credits whereby customers can repay principal and request principal advances during the term of the loan at their discretion and most expire between one and 12 months.

     Included in undisbursed lines of credit are commitments for the undisbursed portions of construction loans totaling $52,007,000 and $79,669,000 as of June 30, 2021 and December 31, 2020, respectively. These commitments are agreements to lend to customers, subject to meeting certain construction progress requirements established in the contracts. The underlying construction loans have fixed expiration dates.

     Standby letters of credit and financial guarantees amounting to $10,558,000 and $11,405,000 were outstanding at June 30, 2021 and December 31, 2020, respectively. Standby letters of credit and financial guarantees are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private financial arrangements. Most standby letters of credit and guarantees carry a one year term or less. The fair value of the liability related to these standby letters of credit, which represents the fees received for their issuance, was not significant at June 30, 2021 or December 31, 2020.  The Company recognizes these fees as revenue over the term of the commitment or when the commitment is used.

    The Company generally requires collateral or other security to support financial instruments with credit risk. Management does not anticipate any material loss will result from the outstanding commitments to extend credit, standby letters of credit and financial guarantees. At June 30, 2021 and December 31, 2020, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $250,000. The contingent allocation for probable loan loss experience on unfunded obligations is calculated by management using an appropriate, systematic, and consistently applied process.  While related to credit losses, this allocation is not a part of the allowance for credit losses and is considered separately as a liability for accounting and regulatory reporting purposes, and is included in Other Liabilities on the Company’s balance sheet.

    In 2018, the Company sold its credit card portfolio to a third party vendor. Part of the sale of the portfolio was to provide a guarantee of certain accounts which as of June 30, 2021, the total guarantee was $2,475,000.

     The Company is subject to legal proceedings and claims which arise in the ordinary course of business.  In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or consolidated results of operations of the Company.

Note 8. Earnings Per Share

Basic earnings per share (EPS), which excludes dilution, is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options or restricted stock awards, result in the

28

issuance of common stock which shares in the earnings of the Company.  A reconciliation of the numerators and denominators of the basic and diluted EPS computations is as follows:

Basic Earnings Per Share	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except share and per share amounts)	2021		2020		2021		2020
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Weighted average shares outstanding	12,498,809		12,449,283		12,497,217		12,592,126
Basic earnings per share	$	0.61	$	0.18	$	1.20	$	0.71

Diluted Earnings Per Share	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except share and per share amounts)	2021		2020		2021		2020
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Weighted average shares outstanding	12,498,809		12,449,283		12,497,217		12,592,126
Effect of dilutive stock options	49,235		37,398		50,884		54,277
Weighted average shares of common stock and common stock equivalents	12,548,044		12,486,681		12,548,101		12,646,403
Diluted earnings per share	$	0.60	$	0.18	$	1.20	$	0.71

        No outstanding options or restricted stock awards were anti-dilutive for the six months ended June 30, 2021 and 2020.

Note 9.  Share-Based Compensation

The Company has four share-based compensation plans as described below. Share-based compensation cost recognized for those plans was $210,000 and $248,000 for the six months ended June 30, 2021 and 2020, respectively. The recognized tax expense (benefits) for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $46,000 and $72,000, respectively, for the six months ended June 30, 2021 and 2020.

     The Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan) was adopted in May 2005 and expired March 16, 2015. While outstanding arrangements to issue shares under this plan, including options, continue in force until their expiration, no new options will be granted under this plan.

    The Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan) was adopted in May 2015. In October 2017, the Company assumed the Folsom Lake Bank 2007 Equity Incentive Plan (2007 Plan). The plans provide for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. Both plans allow for performance awards that may be in the form of cash or shares of the Company, including restricted stock. Outstanding arrangements to issue shares under this plan including options, will continue in force until expiration according to their respective terms.

    Effective June 2, 2017, the Company adopted an Employee Stock Purchase Plan (ESPP) whereby our employees may purchase Company common stock through payroll deductions of between one percent and 15 percent of pay in each pay period. Shares are purchased at the end of each of the three-month offering periods at a 10 percent discount from the lower of the closing market price on the Offering Date (first trading day of each offering period) or the Investment Date (last trading day of each offering period). The Company reserved 500,000 common shares to be set aside for the ESPP, and there were 450,257 shares available for future purchase under the plan as of June 30, 2021.

Stock Option Plan

    The Company bases the fair value of the options granted on the date of grant using a Black-Scholes Merton option pricing model that uses assumptions based on expected option life and the level of estimated forfeitures, expected stock volatility, risk free interest rate, and dividend yield.  The expected term and level of estimated forfeitures of the Company’s options are based on the Company’s own historical experience.  Stock volatility is based on the historical volatility of the Company’s stock.  The risk-free rate is based on the U. S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of grant.  The compensation cost for options granted is based on the weighted average grant date fair value per share.

     No options to purchase shares of the Company’s common stock were granted during the six months ended June 30, 2021 and 2020.

29

    A summary of the combined activity of the Company’s stock option compensation plans for the six months ended June 30, 2021 follows (in thousands, except per share amounts): 

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding at December 31, 2020	77,070	$	10.06
Options exercised	(20,000)	$	10.63
Options outstanding at June 30, 2021	57,070	$	9.86	1.06	$	587
Options vested or expected to vest at June 30, 2021	57,070	$	9.86	1.06	$	587
Options exercisable at June 30, 2021	57,070	$	9.86	1.06	$	587

Information related to the stock option plan is as follows (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Intrinsic value of options exercised	$	204	$	32	$	206	$	381
Cash received from options exercised	$	212	$	19	$	213	$	228
Excess tax benefit realized for option exercises	$	46	$	—	$	46	$	72

    As of June 30, 2021, there was no remaining unrecognized compensation cost related to stock options granted under all plans. 

Restricted and Performance Common Stock Awards

    The 2015 Plan provides for the issuance of restricted common stock to directors and officers. In addition, performance awards may be granted in the form of cash or shares. Restricted common stock grants typically vest over a one to five-year period. Restricted common stock (all of which are shares of our common stock) is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant.

    The following table summarizes restricted stock and performance award activity for the six months ended June 30, 2021 as follows: 

	Shares	Weighted Average Grant-Date Fair Value
Nonvested outstanding shares at December 31, 2020	30,013	$	15.60
Granted	31,496	$	18.83
Vested	(30,834)	$	15.18
Forfeited	(247)	$	20.26
Nonvested outstanding shares at June 30, 2021	30,428	$	19.33

    The shares awarded to employees and directors under the restricted stock agreements vest on applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated. Performance common stock awards vest immediately.

        As of June 30, 2021, there were 30,428 shares of restricted stock that are nonvested and expected to vest. As of June 30, 2021, there was $458,000 of total unrecognized compensation cost related to nonvested restricted common stock awards.  Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted-average remaining period of 1.72 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $2,880,000 at June 30, 2021.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain matters discussed in this report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements contained herein that are not historical facts, such as statements regarding the Company’s current business strategy and the Company’s plans for future development and operations, are based upon current expectations.  These statements are forward-looking in nature and involve a number of risks and uncertainties.  Such risks and uncertainties include, but are not limited to (1) significant increases in competitive pressure in the banking industry; (2) the impact of changes in interest rates; (3) a decline in economic conditions in the Central Valley and the Greater Sacramento Region; (4) the Company’s ability to continue its internal growth at historical rates; (5) the Company’s ability to maintain its net interest margin; (6) the decline in quality of the Company’s earning assets; (7) a decline in credit quality; (8) changes in the regulatory environment; (9) fluctuations in the real estate market; (10) changes in business conditions and inflation; (11) changes in securities markets (12) risks associated with acquisitions, relating to difficulty in integrating combined operations and related negative impact on earnings, and incurrence of substantial expenses; (13) political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, drought, pandemic diseases or extreme weather events, any of which may affect services we use or affect our customers, employees or third parties with which we conduct business; (14) the uncertainties related to the Covid-19 pandemic including, but not limited to, the potential adverse effect of the pandemic on the economy, our employees and customers, and our financial performance; and (15) the impact of the federal CARES Act and the significant additional lending activities undertaken by the Company in connection with the Small Business Administration’s Paycheck Protection Program enacted thereunder, including risks to the Company with respect to the uncertain application by the Small Business Administration of new borrower and loan eligibility, forgiveness and audit criteria.  Therefore, the information set forth in such forward-looking statements should be carefully considered when evaluating the business prospects of the Company.

    When the Company uses in this Quarterly Report on Form 10-Q the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “commit,” “believe,” and similar expressions, the Company intends to identify forward-looking statements.  Such statements are not guarantees of performance and are subject to certain risks, uncertainties and assumptions, including those described in this Quarterly Report on Form 10-Q.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed.  The future results and shareholder values of the Company may differ materially from those expressed in these forward-looking statements.  Many of the factors that will determine these results and values are beyond the Company’s ability to control or predict.  For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

    The Securities and Exchange Commission (SEC) maintains a web site which contains reports, proxy statements, and other information pertaining to registrants that file electronically with the SEC, including the Company. The Internet address is: www.sec.gov. In addition, our periodic and current reports are available free of charge on our website at www.cvcb.com as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. We believe that the Company’s most critical accounting policies are those which the Company’s financial condition depends upon, and which involve the most complex or subjective decisions or assessments.

    There have been no material changes to the Company’s critical accounting policies during the six months ended June 30, 2021.  Please refer to the Company’s 2020 Annual Report to Shareholders on Form 10-K for a complete listing of critical accounting policies.

    This discussion should be read in conjunction with our unaudited condensed consolidated financial statements, including the notes thereto, appearing elsewhere in this report.

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OVERVIEW

Central Valley Community Bancorp (Company)

We are a central California-based bank holding company for a one-bank subsidiary, Central Valley Community Bank (Bank).  We provide traditional commercial banking services to small and medium-sized businesses and individuals in the communities along the Highway 99 corridor in the Fresno, El Dorado, Madera, Merced, Placer, Sacramento, Stanislaus, San Joaquin, and Tulare Counties of central California. As a bank holding company, the Company is subject to supervision, examination and regulation by the Federal Reserve Bank.

Central Valley Community Bank (Bank)

The Bank commenced operations in January 1980 as a state-chartered bank.  As a state-chartered bank, the Bank is subject to primary supervision, examination and regulation by the California Department of Financial Protection and Innovation (DFPI).  The Bank’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to the applicable limits thereof, and the Bank is subject to supervision, examination and regulations of the FDIC.

    The Bank is a member of the FDIC, which currently insures customer deposits in each member bank to a maximum of $250,000 per depositor.  For this insurance, the Bank is subject to the rules and regulations of the FDIC, and, as is the case with all insured banks, may be required to pay a quarterly statutory assessment.

    The Bank operates 20 full-service branches which serve the communities of Cameron Park, Clovis, Exeter, Folsom, Fresno, Gold River, Kerman, Lodi, Madera, Merced, Modesto, Oakhurst, Prather, Roseville, Sacramento, Stockton, and Visalia, California.  Additionally the Bank operates Real Estate, Agribusiness and SBA departments that originate loans in California. According to the June 30, 2020 FDIC data, the Bank’s branches in Fresno, Madera, San Joaquin, and Tulare Counties had a 3.40% combined deposit market share of all insured depositories. Our total market share in the other counties we operate in (El Dorado, Merced, Placer, Sacramento, and Stanislaus Counties), was less than 1.00% in 2020.

Dividend Declared

On July 21, 2021, the Board of Directors declared a $0.12 per share cash dividend payable on August 20, 2021 to shareholders of record as of August 6, 2021.

COVID-19 Pandemic

The COVID-19 pandemic has impacted the local economy in the San Joaquin Valley and greater Sacramento area. Federal, State and local shelter-in-place recommendations were enacted in our markets in March 2020, causing many businesses to close and workers to be furloughed or lose jobs. Essential purpose entities such as medical professionals, food and agricultural businesses, and transportation and logistical businesses were exempted from the closures; however, unemployment rates are increasing in our local market area as compared to the prior quarter end.

    The Company is closely monitoring the effects of the pandemic on our loan and deposit customers. Our management team is focused on assessing the risks in our loan portfolio and working with our customers to minimize our losses. While some industry segments are being more impacted by the COVID-19 pandemic than others, we believe that our credit risk related to the loans outstanding to customers in the higher risk categories is well managed. This is primarily due to the existence of SBA and other loan guarantee programs, personal guarantees, and adequate collateralization.

    Congress, the President, and the Federal Reserve have taken several actions designed to cushion the economic fallout. Most notably, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law at the end of March 2020 as a $2 trillion legislative package. The CARES Act provides that a qualified loan modification is exempt by law from classification as a Troubled Debt Restructuring pursuant to U.S. Generally Accepted Accounting Principles (GAAP). Pursuant to these new capabilities, we have implemented a loan program to allow customers who may be negatively impacted by the COVID-19 pandemic to defer loan principal and interest payments for up to 90 days.

    The CARES Act established a $349 billion loan program administered through the U.S. Small Business Administration (“SBA”), referred to as the Paycheck Protection Program (“PPP”). Under the PPP, small businesses, sole proprietorships, independent contractors, and self-employed individuals may apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. After the initial $349 billion in funds for the PPP was exhausted, an additional $310 billion in funding for PPP loans was authorized. As a preferred SBA lender, we are participating in the PPP to help provide loans to our business customers to provide them with additional working capital. The Company has worked diligently with the SBA to qualify clients to receive PPP loans. PPP borrowers who can demonstrate that the funding received has been used for certain purposes such as to cover payroll and rent costs and meet certain other requirements, can qualify for partial or full federal relief on loan principal and interest.

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Nonqualifying borrowers or borrowers who have not applied for forgiveness, who received loans under the CARES Act, are contractually obligated to begin making monthly repayments on principal and interest six months after their loans have funded.

On January 13, 2021, the SBA reopened the PPP for second draw loans to small businesses and non-profit organizations that did receive a loan through the initial PPP phase. At least $25 billion has been set aside for second draw PPP loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods. Generally speaking, businesses with more than 300 employees and/or less than a 25% reduction in gross receipts between comparable quarters in 2019 and 2020 are not eligible for second draw loans. Further, maximum loan amounts have been increased for accommodation and food service businesses. As of June 30, 2021 we have received approximately 512 applications totaling $78 million.

The federal bank regulatory agencies, along with their state counterparts, have issued guidance in response to the COVID-19 pandemic and have taken a number of unprecedented steps to help banks navigate the pandemic and mitigate its impact. These include, without limitation: requiring banks to focus on business continuity and pandemic planning; adding pandemic scenarios to stress testing; encouraging bank use of capital buffers and reserves in lending programs; permitting certain regulatory reporting extensions; reducing margin requirements on swaps; permitting certain otherwise prohibited investments in investment funds; issuing guidance to encourage banks to work with customers affected by the pandemic and encourage loan workouts; and providing credit under the Community Reinvestment Act (“CRA”) for certain pandemic related loans, investments and public service. Moreover, because of the need for social distancing measures, the agencies revamped the manner in which they conducted periodic examinations of their regular institutions, including making greater use of off-site reviews. The Federal Reserve also issued guidance encouraging banking institutions to utilize its discount window for loans and intraday credit extended by its Reserve Banks to help households and businesses impacted by the pandemic and announced numerous funding facilities. The FDIC has also acted to mitigate the deposit insurance assessment effects of participating in the PPP and the Federal Reserve’s PPP Liquidity Facility and Money Market Mutual Fund Liquidity Facility.

    Management is closely monitoring credit metrics. Additional resources have been shifted to credit administration to closely analyze higher risk segments within the loan portfolio, monitor and track loan payment deferrals and customer liquidity, and provide timely reporting to management and the board of directors. The management team continues to analyze economic conditions in our geographic markets and perform stress testing of our investment portfolio as well as our loan portfolio. Based on the Company’s capital levels, conservative underwriting policies, low loan-to-deposit ratio, loan concentration diversification, and suburban geographical marketplace, management expects to be able to manage the economic risks and uncertainties associated with the COVID-19 pandemic and remain adequately capitalized.

Capital and liquidity

While the Company believes that it has sufficient capital to withstand an extended economic recession brought about by COVID-19, its reported and regulatory capital ratios could be adversely impacted by further credit losses. The Company relies on cash on hand as well as dividends from its subsidiary bank to service its debt. If the Company’s capital deteriorates such that its subsidiary bank is unable to pay dividends to it for an extended period of time, the Company may not be able to service its debt.

    The Company maintains access to multiple sources of liquidity. Wholesale funding markets have remained open to us, but rates for short term funding have recently been volatile. If funding costs are elevated for an extended period of time, it could have an adverse effect on the Company’s net interest margin. If an extended recession caused large numbers of the Company’s deposit customers to withdraw their funds, the Company might become more reliant on volatile or more expensive sources of funding.

Asset valuation

Currently, the Company does not expect COVID-19 to affect its ability to account timely for the assets on its balance sheet; however, this could change in future periods. While certain valuation assumptions and judgments will change to account for pandemic-related circumstances such as widening credit spreads, the Company does not anticipate significant changes in methodology used to determine the fair value of assets measured in accordance with GAAP.

    COVID-19 could cause a further and sustained decline in the Company’s stock price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform a goodwill impairment test and result in an impairment charge being recorded for that period. In the event that the Company concludes that all or a portion of its goodwill is impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital or regulatory capital. Management considered the COVID-19 related economic downturn to be such a triggering event and therefore performed qualitative assessments at the end of the first, second and fourth quarters of 2020. Given the continued economic impact of the pandemic, management determined it appropriate to perform a quantitative test as of September 30, 2020. Management engaged a third party valuation specialist to assist with the performance of the quantitative goodwill impairment test in the third quarter of 2020. Based on this quantitative test, it was determined that the fair value of the reporting unit exceeded the carrying value as of September 30, 2020.

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Processes, controls and business continuity plan

The Company has invoked its Board approved Pandemic Preparedness Plan that includes a remote working strategy. The Company does not anticipate incurring additional material cost related to its continued deployment of the remote working strategy. No material operational or internal control challenges or risks have been identified to date. The Company does not anticipate significant challenges to its ability to maintain its systems and controls in light of the measures the Company has taken to prevent the spread of COVID-19. The Company does not currently face any material resource constraint through the implementation of its business continuity plans.

Lending operations and accommodations to borrowers

In keeping with regulatory guidance to work with borrowers during this unprecedented situation and as outlined in the CARES Act, the Company is executing a payment deferral program for its borrowing clients that are adversely affected by the pandemic. Depending on the demonstrated need of the client, the Company is deferring either the full loan payment or the principal component of the loan payment for up to 90 days. As of June 30, 2021, based on the Bank’s discussion with these customers, loan customers with deferred payments of principal, interest, or both on loans totaling approximately $1.4 million were outstanding. In accordance with interagency guidance issued in March 2020 and Section 4013 of the Cares Act, these short-term deferrals are not considered troubled debt restructurings.

    With the passage of the PPP administered by the SBA, the Company is actively participating in assisting its customers with applications for resources through the program. PPP loans have a two-year term and earn interest at 1%. The Company believes that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. During the year ended December 31, 2020 and the six months ended June 30, 2021, the Company closed 1,601 PPP loans representing $295,644,000 in funding. It is the Company’s understanding that loans funded through the PPP program are fully guaranteed by the U.S. government. Should those circumstances change, the Company could be required to establish additional allowance for credit losses through additional provision for credit losses charged to earnings.

Credit

The Company is working with customers directly affected by COVID-19. The Company is prepared to offer short-term assistance in accordance with regulatory guidelines. As a result of the current economic environment caused by COVID-19, the Company is engaging in more frequent communication with borrowers to better understand their situation and the challenges faced, allowing it to respond proactively as needs and issues arise. Should economic conditions worsen, the Company could experience further increases in its required allowance for credit losses and record additional provisions for credit losses. It is possible that the Company’s asset quality measures could worsen at future measurement periods if the effects of COVID-19 are prolonged.

Second Quarter of 2021

For the second quarter of 2021, our consolidated net income was $7,563,000 compared to $2,301,000 for the same period in 2020. Diluted EPS was $0.60 for the quarter ended June 30, 2021 compared to $0.18 for the same period in 2020. The increase in net income during the second quarter of 2021 compared to the same period in 2020 is primarily driven by a decrease in provision for credit losses of $4,500,000, an increase in net interest income of $2,507,000, and an increase in non-interest income of $32,000, partially offset by an increase in total non-interest expenses of $132,000, and an increase in the provision for income taxes of $1,645,000. During the quarter ended June 30, 2021, the Company recorded a $1,500,000 reversal of provision for credit losses, compared to a $3,000,000 provision during the quarter ended June 30, 2020. Throughout 2020 and the first six months of of 2021, we adjusted the economic risk factor methodology to incorporate the current economic implications from the COVID-19 pandemic.

    Net interest margin (fully tax equivalent basis) decreased to 3.60% for the quarter ended June 30, 2021 compared to 3.79% for the same period in 2020. The net interest margin period-to-period comparisons were impacted by the decrease in the yield on the average investment securities, offset by the increase in the yield on the loan portfolio, the increase in the effective yield on interest earning deposits in other banks and Federal Funds sold, and the decrease in the cost of total interest-bearing liabilities. The effective yield on average investment securities, including interest-earning deposits in other banks and Federal funds sold, decreased to 2.11% for the three months ended June 30, 2021, compared to 2.37% for the three months ended June 30, 2020. The effective yield on average loans increased to 5.04% for the three months ended June 30, 2021, compared to 4.71% for the three months ended June 30, 2020. The increase in the loan yield was impacted by Company’s issuance of PPP loans. Total average PPP loans, which have an annual interest rate of 1.00%, were $158,490,000 and $160,392,000 for the three months ended June 30, 2021 and 2020, respectively. The cost of deposits (calculated by dividing annualized interest

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expense on interest bearing deposits by total deposits), decreased to 0.05% for the quarter ended June 30, 2021 compared to 0.10% for the same period in 2020. 

    Non-interest income increased $32,000 or 1.56% to $2,077,000 for the quarter ended June 30, 2021 compared to $2,045,000 for the same period in 2020, primarily driven by an increase in interchange fees of $164,000, an increase in service charge income of $20,000, and a increase in Federal Home Loan Bank (“FHLB”) dividends of $8,000, offset by a decrease of $88,000 in other income, a decrease in loan placement fees of $51,000, and a decrease of $21,000 in net realized gains on sales and calls of investment securities. Non-interest expense for the quarter ended June 30, 2021 increased $132,000 or 1.15% from the comparable period due to increases in salaries and employee benefits, data processing, occupancy and equipment, personnel, regulatory assessments, appraisal fees, alarm monitoring, operating losses, information technology expenses, tax provision, postage, donations, education and training, armored courier fees, telephone expenses, loan related expenses, and ATM/debit card expenses, partially offset by decreases in professional services, internet banking expenses, risk management expenses, advertising, stationery and supplies, directors’ expenses, check printing, mileage and travel, and amortization of software.

    Annualized return on average equity (ROE) for the second quarter of 2021 increased to 12.25% compared to 4.14% for the same period in 2020. The increase in ROE reflects the increase in net income, as well as the increase in average shareholders’ equity compared to the prior year. Annualized return on average assets (ROA) was 1.36% and 0.51% for the quarter ended June 30, 2021 and 2020, respectively. Total average equity increased to $246,959,000 for the second quarter of 2021 compared to $222,479,000 for the second quarter of 2020. The Company declared and paid $0.12 per share in cash dividends to holders of common stock during the second quarter of 2021, compared to $0.11 in dividends declared and paid during the second quarter of 2020.

    Our average total assets increased $413,767,000 or 22.81% to $2,227,632,000 during the second quarter of 2021 compared to the same period in 2020.  Total average interest-earning assets increased $393,188,000 or 23.62% in the second quarter of 2021 compared to the same period of 2020.  Total average loans, including nonaccrual loans, increased $3,217,000 or 0.30% in the second quarter of 2021 compared to the same period in 2020. Average total investments and interest-earning deposits in other banks increased $391,002,000 or 66.35% in the period ended June 30, 2021 compared to the same period in 2020.  Average interest-bearing liabilities increased $251,149,000 or 31.06% in the period ended June 30, 2021 compared to the same period in 2020. Average non-interest bearing demand deposits increased 18.61% to $893,441,000 in 2021 compared to $753,265,000 in 2020.  The ratio of average non-interest bearing demand deposits to average total deposits was 45.86% in the second quarter of 2021 compared to 48.39% in 2020.

First Six Months of 2021

For the six months ended June 30, 2021, our consolidated net income was $15,042,000 compared to $8,924,000 for the same period in 2020.  Diluted EPS was $1.20 for the first six months of 2021 compared to $0.71 for the first six months of 2020.  Net income for the six-month period ended June 30, 2021 increased 68.56%, compared to the six-month period ended June 30, 2020, primarily driven by an increase in net interest income, an increase in loan placement fees, a decrease in non-interest expense, and a decrease in the provision for credit losses, partially offset by a decrease in net realized gains on sales and calls of investment securities, a decrease in service charge income, and an increase in provision for income taxes. Net interest income before the provision for credit losses increased $4,033,000 or 12.76%.  Net interest income during the first six months of 2021 and 2020 benefited by approximately $434,000 and $453,000, respectively, in nonrecurring income from prepayment penalties. Excluding these benefits, net interest income for the six months ended June 30, 2021, decreased by $4,570,000 compared to the six-month period ended June 30, 2020. Non-interest income decreased $4,512,000 or 52.54%, and non-interest expense decreased $559,000 or 2.37% in the first six months ended of 2021 compared to first six months ended of 2020. During the six months ended June 30, 2021, the Company recorded a reversal of provision for credit losses of $3,300,000 compared to $4,375,000 provision during same period in 2020. Net recoveries of previously charged-off loans totaling $824,000 and $432,000 during the six months ended June 30, 2021 and 2020, respectively.

Annualized return on average equity for the six months ended June 30, 2021 increased to 12.21% compared to 7.92% for the same period in 2020.  The increase in ROE reflects the increase in net income, notwithstanding the increase in average shareholders’ equity compared to the prior year. Annualized return on average assets was 1.39% and 1.05% for the six months ended June 30, 2021 and 2020, respectively.  Total average equity was $246,439,000 for the six months ended June 30, 2021 compared to $225,240,000 for the same period in 2020.  The change in shareholders’ equity was driven by the retention of earnings, net of dividends paid, the decrease in net unrealized gains on available-for-sale (AFS) securities, and share repurchases.

Our average total assets increased $460,232,000 or 26.98% in the first six months of 2021 compared to the same period in 2020.  Total average interest-earning assets increased $441,383,000 or 28.39% comparing the first six months of 2021 to the same period in 2020.  Average total loans, including nonaccrual loans, increased $79,727,000 or 7.97% comparing the first six months of 2021 to the same period in 2020. The effective yield on average loans decreased to 5.11% for the six months June 30, 2021, compared to 5.13% for the six months June 30, 2020. Total average PPP loans, which yield 1.00%,

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were $169,553,000 and $80,196,000 for the six months ended June 30, 2021 and 2020, respectively. Excluding PPP loans from total average loans, the effective yield on average loans for the six months ended June 30, 2021 and 2020 was 4.99% and 5.42%, respectively. Average total investments (securities and interest-earning deposits) increased $363,326,000, or 65.41% in the six-month period ended June 30, 2021 compared to the same period in 2020, with average interest-bearing liabilities decreasing $242,059,000 or 31.07% on a period to period comparison.

Our net interest margin (fully tax equivalent basis) for the first six months ended June 30, 2021 decreased to 3.67% compared to 4.11% for the same period in 2020. The decrease in net interest margin in the period-to-period comparison resulted primarily from a decrease in the effective yield on the Company’s average investment securities, the decrease in the yield on the loan portfolio, and the decrease in the effective yield on interest-earning deposits in other banks and Federal funds sold, partially offset by the decrease in the cost of total interest-bearing liabilities.  The effective yield on interest-earning assets decreased 49 basis points to 3.73% for the six-month period ended June 30, 2021 compared to 4.22% for the same period in 2020. For the six-month period ended June 30, 2021, the effective yield on investment securities, including Federal funds sold and interest-earning deposits in other banks, decreased 48 basis points, compared to the same period in the prior year, and the effective yield on loans decreased 2 basis points. The cost of total interest-bearing liabilities decreased 12 basis points to 0.11% compared to 0.23% for the same period in 2020.  The cost of total deposits, including noninterest bearing accounts decreased to 0.06% compared to 0.11% for the six months ended June 30, 2021 and 2020.

Net interest income before the reversal of provision for credit losses for the six months ended June 30, 2021 was $35,636,000 compared to $31,603,000 for the same period in 2020, an increase of $4,033,000 or 12.76%.  Net interest income increased as a result of yield changes, asset mix changes, and an increase in interest-bearing liabilities, offset by an increase in average earning assets. The Bank recovered $434,000 and $453,000, of foregone interest income and prepaid payment penalties in 2021 and 2020, respectively. The Bank had non-accrual loans totaling $2,035,000 at June 30, 2021, compared to $3,278,000 at December 31, 2020 and $2,406,000 at June 30, 2020.  The Company had no other real estate owned or repossessed assets at June 30, 2021, December 31, 2020, or June 30, 2020.

At June 30, 2021, we had total net loans of $1,059,506,000, total assets of $2,280,550,000, total deposits of $1,979,094,000, and shareholders’ equity of $251,049,000.

Key Factors in Evaluating Financial Condition and Operating Performance

As a publicly traded community bank holding company, we focus on several key factors including:

·                                          Return to our shareholders;

·                                          Return on average assets;

·                                          Development of revenue streams, including net interest income and non-interest income;

·                                          Asset quality;

·                                          Asset growth;

·                                          Capital adequacy;

·                                          Operating efficiency; and

·                                          Liquidity

Return to Our Shareholders

Our return to shareholders is determined in a ratio that measures the return on average equity (ROE).  ROE is a ratio that measures net income divided by average shareholders’ equity. Our annualized ROE was 12.21% for the six months ended June 30, 2021 compared to 8.85% for the year ended December 31, 2020 and 7.92% for the six months ended June 30, 2020.  Our net income for the six months ended June 30, 2021 increased $6,118,000 or 68.56% to $15,042,000 compared to $8,924,000 for the six months ended June 30, 2020, primarily driven by an increase in net interest income, a decrease in non-interest expenses, a reversal of the provision for credit losses, and an increase in loan placement fees, offset by a decrease in net realized gains on sales and calls of investment securities, an increase in provision for income taxes, and a decrease in service charge income. Net interest margin (NIM) decreased 44 basis points for the six-month period ended June 30, 2021 compared to the six months ended June 30, 2020.  Diluted EPS was $1.20 for the six months ended June 30, 2021 and $0.71 for the same period in 2020.

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Return on Average Assets

Our return on average assets (ROA) is a ratio that we use to compare our performance with other banks and bank holding companies.  Our annualized ROA for the six months ended June 30, 2021 was 1.39% compared to 1.11% for the year ended December 31, 2020 and 1.05% for the six months ended June 30, 2020.  The increase in ROA for the six months ended June 30, 2021 compared to June 30, 2020 was due to the increase in net income, notwithstanding the increase in average assets.  Average assets for the six months ended June 30, 2021 was $2,166,196,000 compared to $1,832,987,000 for the year ended December 31, 2020.  Median ROA for our peer group was 1.06% for the year ended December 31, 2020.  Peer group data from S&P Global Market Intelligence includes bank holding companies in central California with assets from $1 billion to $3.5 billion.

Development of Revenue Streams

Over the past several years, we have focused on not only improving net income, but improving the consistency of our revenue streams in order to create more predictable future earnings and reduce the effect of changes in our operating environment on our net income.  Specifically, we have focused on net interest income through a variety of processes, including increases in average interest earning assets, and minimizing the effects of the recent interest rate changes on our net interest margin.  The Company’s net interest margin (fully tax equivalent basis) decreased to 3.67% for the six months ended June 30, 2021, compared to 4.11% for the same period in 2020.  The decrease in net interest margin in the period-over-period comparison resulted primarily from the decrease in the effective yield on average investment securities (including interest-earning deposits in other banks and Federal funds sold), and a decrease in the yield on the Company’s loan portfolio. Interest-bearing liabilities continue to benefit from low interest rates. In comparing the two periods ending June 30, 2021 and 2020, the effective yield on total earning assets decreased 49 basis points, while the cost of total interest-bearing liabilities decreased 12 basis points and the cost of total deposits decreased to 0.06% compared to 0.11%.  Net interest income before the reversal of provision for credit losses for the six-month period ended June 30, 2021 was $35,636,000 compared to $31,603,000 for the same period in 2020.

    Our non-interest income generally consists of service charges and fees on deposit accounts, fee income from loan placements and other services, appreciation in cash surrender value of bank-owned life insurance, net gains from sales of investment securities, FHLB dividends, and other income. Non-interest income for the six months ended June 30, 2021 decreased $4,512,000 or 52.54%, to $4,076,000 compared to $8,588,000 for the six months ended June 30, 2020.  The decrease resulted primarily from decreases in net realized gains on sales and calls of investment securities, service charge income, gain related to the collection of life insurance proceeds, and FHLB dividends; offset by increases in loan placement fees, and interchange fees, compared to the comparable 2020 period. Further detail of non-interest income is provided below.

Asset Quality

For all banks and bank holding companies, asset quality has a significant impact on the overall financial condition and results of operations.  Asset quality is measured in terms of percentage of total loans and total assets and is a key element in estimating the future earnings of a company.  Total nonperforming assets were $2,035,000 and $3,278,000 at June 30, 2021 and December 31, 2020, respectively.  Nonperforming assets totaled 0.19% of gross loans as of June 30, 2021 and 0.30% of gross loans as of December 31, 2020. The ratio of nonperforming assets to total assets was 0.09% as of June 30, 2021 and 0.16% as of December 31, 2020. The nonperforming assets at June 30, 2021 and December 31, 2020 consisted of nonaccrual loans of $2,035,000 and $3,278,000, respectively. The Company had no other real estate owned (OREO) or repossessed assets at June 30, 2021 or December 31, 2020. Management maintains certain loans that have been brought current by the borrower (less than 30 days delinquent) on nonaccrual status until such time as management has determined that the loans are likely to remain current in future periods. 

    The allowance for credit losses as a percentage of outstanding loan balance was 0.98% as of June 30, 2021 and 1.17% as of December 31, 2020. The ratio of net charge-off (recovery) to average loans was (0.15)% as of June 30, 2021 and (0.05)% as of December 31, 2020.

Asset Growth

As revenues from both net interest income and non-interest income are a function of asset size, the growth in assets has a direct impact in increasing net income and therefore ROE and ROA.  The majority of our assets are loans and investment securities, and the majority of our liabilities are deposits, and therefore the ability to generate deposits as a funding source for loans and investments is fundamental to our asset growth.  Total assets increased by $276,454,000 or 13.79% during the six months ended June 30, 2021 to $2,280,550,000 compared to $2,004,096,000 as of December 31, 2020, primarily due to the Company’s participation in the PPP.  Total gross loans decreased by 2.94% or $32,402,000 to $1,069,945,000 as of June 30, 2021 compared to $1,102,347,000 as of December 31, 2020.  The gross loan decrease consisted of a decrease of $83,414,000 in the PPP loans, offset by an increase of $51,012,000 in non-PPP loan growth.Total deposits increased 14.88% to $1,979,094,000 as

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of June 30, 2021 compared to $1,722,710,000 as of December 31, 2020. The Company’s deposit balances for the six months ended June 30, 2021 increased through organic growth and PPP loan proceeds retained in customer deposit accounts. Our loan-to-deposit ratio at June 30, 2021 was 54.06% compared to 63.99% at December 31, 2020.  The loan-to-deposit ratio of our peers was 80.00% at December 31, 2020.  Further discussion of loans and deposits is below.

Capital Adequacy

Capital serves as a source of funds and helps protect depositors and shareholders against potential losses.  The Company has historically maintained substantial levels of capital.  The assessment of capital adequacy is dependent on several factors including asset quality, earnings trends, liquidity and economic conditions.  Maintenance of adequate capital levels is integral to providing stability to the Company.  The Company needs to maintain substantial levels of regulatory capital to give it flexibility in the changing regulatory environment and to respond to changes in the market and economic conditions including acquisition opportunities.

    The Company and the Bank are each subject to regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements may cause certain mandatory and discretionary actions by regulators that, if undertaken, could have a material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative and qualitative measures. These measures were established by bank regulatory agencies to ensure capital adequacy. As of August 30, 2018, bank holding companies with consolidated assets of less than $3 billion and banks like Central Valley Community Bank became subject to new capital requirements, and certain provisions of the new rules were phased in through 2019 under the Dodd-Frank Act and Basel III. As of June 30, 2021, the Bank met or exceeded all regulatory capital requirements inclusive of the capital buffer. The Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at June 30, 2021. The Company’s regulatory capital ratios are presented in the table in the “Capital” section below.

Operating Efficiency

Operating efficiency is the measure of how efficiently earnings before provision for credit losses and taxes are generated as a percentage of revenue.  When measuring operating efficiency, a lower ratio is more favorable.  The Company’s efficiency ratio (operating expenses, excluding amortization of intangibles and foreclosed property expense, divided by net interest income before provision for credit losses (computed on a tax equivalent basis) plus non-interest income, excluding gains and losses from sales of securities and OREO, and gains related to the collection of life insurance proceeds) was 55.96% for the six months ended June 30, 2021 compared to 65.00% for the six months ended June 30, 2020.  The improvement in the efficiency ratio was due to the growth in non-interest income along with the decrease in non-interest expense. Further discussion of the change in net interest income and decrease in operating expenses is below.

    The Company’s net interest income before provision for credit losses on a non tax-equivalent basis plus non-interest income, net of investment securities related gains, increased 13.36% to $40,516,000 for the first six months of 2021 compared to $35,740,000 for the same period in 2020, while operating expenses, net of losses on sale of assets, and amortization of core deposit intangibles, decreased 2.41% to $22,671,000 from $23,230,000 for the same period in 2020.

Liquidity

Liquidity management involves the Bank’s ability to meet cash flow requirements arising from fluctuations in deposit levels and demands of daily operations, which include providing for customers’ credit needs, funding of securities purchases, and ongoing repayment of borrowings.  Our liquidity is actively managed on a daily basis and reviewed periodically by our management and Directors’ Asset/Liability Committee.  This process is intended to ensure the maintenance of sufficient liquidity to meet our funding needs, including adequate cash flow for off-balance sheet commitments.  Our primary sources of liquidity are derived from financing activities which include the acceptance of customer and, to a lesser extent, broker deposits, Federal funds facilities and advances from the Federal Home Loan Bank of San Francisco (“FHLB”).  We have available unsecured lines of credit with correspondent banks totaling approximately $110,000,000 and secured borrowing lines of approximately $245,311,000 with the FHLB.  These funding sources are augmented by collection of principal and interest on loans, the routine maturities and pay downs of securities from our investment securities portfolio, the stability of our core deposits, and the ability to sell investment securities.  Primary uses of funds include origination and purchases of loans, withdrawals of and interest payments on deposits, purchases of investment securities, and payment of operating expenses.

We had liquid assets (cash and due from banks, interest-earning deposits in other banks, Federal funds sold, available-for-sale securities, and equity securities) totaling $1,080,604,000 or 47.38% of total assets at June 30, 2021 and $788,004,000 or 39.32% of total assets as of December 31, 2020.

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RESULTS OF OPERATIONS

Net Income for the Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020

Net income increased to $15,042,000 for the six months ended June 30, 2021 compared to $8,924,000 for the six months ended June 30, 2020.  Basic and diluted earnings per share for June 30, 2021 were $1.20 and $1.20, respectively. Basic and diluted earnings per share for the same period in 2020 were $0.71 and $0.71, respectively. Annualized ROE was 12.21% for the six months ended June 30, 2021 compared to 7.92% for the six months ended June 30, 2020.  Annualized ROA for the six months ended June 30, 2021 and 2020 was 1.39% and 1.05%, respectively.

    The increase in net income for the six months ended June 30, 2021 compared to the same period in 2020 was primarily driven by an increase in net interest income, a decrease in non-interest expense, a reversal of provision for credit losses, and an increase in loan placement fees, partially offset by a decrease in net realized gains on sales and calls of investment securities, an increase in provision for income taxes, and a decrease in service charge income. During the six months ended June 30, 2021, the Company recorded a $3,300,000 reversal of provision for credit losses, compared to a $4,375,000 provision during the six months ended June 30, 2020. The reversal of provision to the allowance for credit losses resulted from our assessment of the overall adequacy of the allowance for credit losses considering a number of factors as discussed in the “Allowance for Credit Losses” section. During the six months ended June 30, 2021, the Company adjusted the economic risk factor methodology to incorporate the current economic implications from the COVID-19 pandemic.

Interest Income and Expense

Net interest income is the most significant component of our income from operations.  Net interest income (the “interest rate spread”) is the difference between the gross interest and fees earned on the loan and investment portfolios and the interest paid on deposits and other borrowings.  Net interest income depends on the volume of and interest rate earned on interest earning assets and the volume of and interest rate paid on interest-bearing liabilities.

    The following table sets forth a summary of average balances with corresponding interest income and interest expense as well as average yield and cost information for the periods presented.  Average balances are derived from daily balances, and nonaccrual loans are not included as interest earning assets for purposes of this table.

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CENTRAL VALLEY COMMUNITY BANCORP

SCHEDULE OF AVERAGE BALANCES AND AVERAGE YIELDS AND RATES

	For the Six Months Ended June 30, 2021						For the Six Months Ended June 30, 2020
(Dollars in thousands)	Average Balance		Interest Income/ Expense		Average Interest Rate		Average Balance		Interest Income/ Expense		Average Interest Rate
ASSETS
Interest-earning deposits in other banks	$	121,848	$	61	0.10	%	$	56,037	$	196	0.70	%
Securities:
Taxable securities	570,132		6,094		2.14	%	466,498		6,225		2.67	%
Non-taxable securities (1)	226,843		3,450		3.04	%	32,962		723		4.39	%
Total investment securities	796,975		9,544		2.40	%	499,460		6,948		2.78	%
Total securities and interest-earning deposits	918,823		9,605		2.09	%	555,497		7,144		2.57	%
Loans (2) (3)	1,077,455		27,321		5.11	%	999,398		25,498		5.13	%
Total interest-earning assets	1,996,278		$	36,926	3.73	%	1,554,895		$	32,642	4.22	%
Allowance for credit losses	(12,687)						(10,013)
Nonaccrual loans	3,182						1,512
Cash and due from banks	35,356						24,784
Bank premises and equipment	8,349						7,455
Other assets	135,718						127,331
Total average assets	$	2,166,196					$	1,705,964
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Savings and NOW accounts	$	507,143	$	93	0.04	%	$	396,465	$	184	0.09	%
Money market accounts	418,781		320		0.15	%	286,653		281		0.20	%
Time certificates of deposit	89,955		107		0.24	%	90,702		341		0.76	%
Total interest-bearing deposits	1,015,879		520		0.10	%	773,820		806		0.21	%
Other borrowed funds	5,155		46		1.78	%	5,155		81		3.14	%
Total interest-bearing liabilities	1,021,034		$	566	0.11	%	778,975		$	887	0.23	%
Non-interest bearing demand deposits	869,386						671,723
Other liabilities	29,337						30,026
Shareholders’ equity	246,439						225,240
Total average liabilities and shareholders’ equity	$	2,166,196					$	1,705,964
Interest income and rate earned on average earning assets			$	36,926	3.73	%			$	32,642	4.22	%
Interest expense and interest cost related to average interest-bearing liabilities			566		0.11	%			887		0.23	%
Net interest income and net interest margin (4)			$	36,360	3.67	%			$	31,755	4.11	%

(1)Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $724 and $152 in 2021 and 2020, respectively.

(2)Loan interest income includes loan fees of $3,890 in 2021 and $226 in 2020.

(3)Average loans do not include nonaccrual loans but do include interest income recovered from previously charged off loans.

(4)Net interest margin is computed by dividing net interest income by total average interest-earning assets.

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The following table sets forth a summary of the changes in interest income and interest expense due to changes in average asset and liability balances (volume) and changes in average interest rates for the periods indicated.

Changes in Volume/Rate	For the Six Months Ended June 30, 2021 and 2020
(In thousands)	Volume		Rate		Net
Increase (decrease) due to changes in:
Interest income:
Interest-earning deposits in other banks	$	230	$	(365)	$	(135)
Investment securities:
Taxable	1,382		(1,513)		(131)
Non-taxable (1)	4,252		(1,525)		2,727
Total investment securities	5,634		(3,038)		2,596
Federal funds sold	—		—		—
Loans	1,991		(168)		1,823
Total earning assets (1)	7,855		(3,571)		4,284
Interest expense:
Deposits:
Savings, NOW and MMA	180		(232)		(52)
Time certificate of deposits	(2)		(232)		(234)
Total interest-bearing deposits	178		(464)		(286)
Other borrowed funds	(1)		(34)		(35)
Total interest-bearing liabilities	177		(498)		(321)
Net interest income (1)	$	7,678	$	(3,073)	$	4,605

(1)    Computed on a tax equivalent basis for securities exempt from federal income taxes.

Interest and fee income from loans increased $1,823,000 or 7.15% for the six months ended June 30, 2021 compared to the same period in 2020. Net interest income during the first six months of 2021 was positively impacted by an increase in average total loans of $78,057,000 or 7.81% to $1,077,455,000 compared to $999,398,000 for the same period in 2020. The yield on average loans, excluding nonaccrual loans, was 5.11% for the six months ended June 30, 2021 compared to 5.13% for the same period in 2020. Net interest income for the period ending June 30, 2021 was benefited by approximately $434,000 in nonrecurring income from prepayment penalties, compared to $453,000 recorded in the same period in 2020.  The impact to interest income from the accretion of the loan marks on acquired loans was $349,000 and $867,000 for the six months ended June 30, 2021 and 2020, respectively. The remaining balance of accretable loan marks on acquired loans as of June 30, 2021 was $2,247,000.

    Interest income from total investments on a non tax-equivalent basis (total investments include investment securities, Federal funds sold, interest bearing deposits in other banks, and other securities) increased $1,889,000 in the first six months of 2021 to $8,881,000 compared to $6,992,000 for the same period in 2020.  The yield on average total investments (total securities and interest-earning deposits) decreased 48 basis points to 2.09% for the six month period ended June 30, 2021 compared to 2.57% for the same period in 2020. Average total securities and interest-earning deposits for the first six months of 2021 increased $363,326,000 or 65.41% to $918,823,000 compared to $555,497,000 for the same period in 2020.  Income from investments represents 24.92% of net interest income for the first six months of 2021 compared to 22.12% for the same period in 2020.

    In an effort to increase yields, without accepting unreasonable risk, a significant portion of the investment portfolio is mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs).  At June 30, 2021, we held $407,823,000 or 42.82% of the total fair value of the investment portfolio in CMOs with an average yield of 1.57% as compared to $299,806,000 and $254,338,000 with average yields of 2.15% and 2.57% at December 31, 2020 and June 30, 2020, respectively.  We invest in CMOs and MBS as part of our overall strategy to increase our net interest margin.  CMOs and MBS by their nature react to changes in interest rates.  In a normal declining rate environment, prepayments from CMOs and MBS would be expected to increase and the expected life of the investment would be expected to shorten.  Conversely, if interest rates increase, prepayments normally would be expected to decline and the average life of the CMOs and MBS would be expected to extend.  However, in the current economic environment, prepayments may not behave according to historical norms.  Premium amortization and discount accretion of these investments affects our net interest income.  Management monitors the prepayment speed of these investments and adjusts premium amortization and discount accretion based on several factors.  These factors include the type of investment, the investment structure, interest rates, interest rates on new mortgage

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loans, expectation of interest rate changes, current economic conditions, the level of principal remaining on the bond, the bond coupon rate, the bond origination date, and volume of available bonds in market.  The calculation of premium amortization and discount accretion represents management’s reasonable estimate of principal pay downs inherent in the total investment portfolio.

    The net-of-tax unrealized gain on the investment portfolio was $12,874,000 at June 30, 2021 and is reflected in the Company’s equity.  At June 30, 2021, the average life of the investment portfolio was 5.22 years and the fair value of the portfolio reflected a net pre-tax unrealized gain of $18,278,000.  Management reviews fair value declines on individual investment securities to determine whether they represent an other-than-temporary impairment (OTTI). Refer to Note 3 of the Notes to Consolidated Financial Statements (unaudited) for more detail. For the six months ended June 30, 2021 and 2020, no OTTI was recorded.  Additional deterioration in the market values of our investment securities, if any, may require the Company to recognize OTTI losses in future periods.

    A component of the Company’s strategic plan has been to use its investment portfolio to offset, in part, its interest rate risk relating to variable rate loans.  At June 30, 2021, we estimate an immediate rate increase of 200 basis points would result in an estimated decrease in the market value of the investment portfolio by approximately $106,000,000 or 10.25%.  Conversely, with an immediate rate decrease of 200 basis points, the estimated increase in the market value of the investment portfolio would be $107,000,000 or 10.35%.  Our modeling environment assumes management would take no action during an immediate shock of 200 basis points.  However, the Company uses those increments to measure its interest rate risk in accordance with regulatory requirements and risk tolerance policy limits established by the Board of Directors to measure the possible future risk in the investment portfolio. 

    Management’s review of all investments before purchase includes an analysis of how the security will perform under several interest rate scenarios to monitor whether investments are consistent with our investment policy.  The policy addresses issues of average life, duration, concentration guidelines, prohibited investments, impairment, and prohibited practices.

    Total interest income on a non-tax equivalent basis for the six months ended June 30, 2021 increased $3,712,000 or 11.43% to $36,202,000 compared to $32,490,000 for the six months ended June 30, 2020.  The yield on interest earning assets decreased 49 basis points to 3.73% on a fully tax equivalent basis for the six months ended June 30, 2021 from 4.22% for the period ended June 30, 2020. The decrease was the result of yield changes, decrease in interest rates, and asset mix changes. Average interest earning assets increased to $1,996,278,000 for the six months ended June 30, 2021 compared to $1,554,895,000 for the six months ended June 30, 2020.  The $441,383,000 increase in average earning assets was attributed to the $363,326,000 increase in average investments and a $78,057,000 or 7.81% increase in average loans.

    Interest expense on deposits for the six months ended June 30, 2021 and 2020 was $520,000 and $806,000, respectively. The average interest rate on interest bearing deposits decreased to 0.10% for the six months ended June 30, 2021 compared to 0.21% for the same period ended June 30, 2020.  Average interest-bearing deposits increased 31.28% or $242,059,000 to $1,015,879,000 for the six months ended June 30, 2021 compared to $773,820,000 for the same period ended June 30, 2020.

    Average other borrowed funds were $5,155,000 with an effective rate of 1.78% for the six months ended June 30, 2021 compared to $5,155,000 with an effective rate of 3.14% for the six months ended June 30, 2020.  Total interest expense on other borrowed funds was $46,000 for the six months ended June 30, 2021 and $81,000 for the six months ended June 30, 2020.  Other borrowings include advances from the Federal Home Loan Bank (“FHLB”), advances on available unsecured lines of credit with correspondent banks, and junior subordinated deferrable interest debentures.  The debentures were acquired in the merger with Service 1st and carry a floating rate based on the three month LIBOR plus a margin of 1.60%.  The rates were 1.78% and 3.90% at June 30, 2021 and 2020, respectively.  See the section on “Financial Condition” for more detail.

    The cost of interest-bearing liabilities decreased 12 basis points to 0.11% for the six-month period ended June 30, 2021 compared to 0.23% for the same period in 2020. The cost of total deposits decreased to 0.06% compared to 0.11% for the six-month periods ended June 30, 2021 and 2020.  Average non-interest bearing demand deposits increased 29.43% to $869,386,000 in 2021 compared to $671,723,000 for 2020.  The ratio of average non-interest bearing demand deposits to average total deposits decreased to 46.11% in the six-month period ended June 30, 2021 compared to 46.47% for the same period in 2020.

Net Interest Income before Provision for Credit Losses

Net interest income before the reversal of provision for credit losses for the six months ended June 30, 2021 increased by $4,033,000 or 12.76% to $35,636,000 compared to $31,603,000 for the same period in 2020.  The increase was a result of yield changes, asset mix changes, an increase in average earning assets, offset by an increase in average interest bearing liabilities. The impact to interest income from the accretion of the loan marks on acquired loans was $349,000 and $867,000 for the six months ended June 30, 2021 and 2020, respectively. In addition, net interest income before the provision for credit losses for the six months ended June 30, 2021 was benefited by approximately $434,000 in nonrecurring income from prepayment penalties, as compared to $453,000 in nonrecurring income for the six months ended June 30, 2020. Excluding these reversals and benefits, net interest income for the six months ended June 30, 2021 increased by $4,570,000 compared to the six months ended June 30, 2020. Average interest earning assets were $1,996,278,000 for the six months ended June 30, 2021 with a net

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interest margin (fully tax equivalent basis) of 3.67% compared to $1,554,895,000 with a net interest margin (fully tax equivalent basis) of 4.11% for the six months ended June 30, 2020.  The $441,383,000 increase in average earning assets was attributed to the $363,326,000 increase in average total investments and the $78,057,000 or 7.81% increase in average loans.  For the six months ended June 30, 2021, the effective yield on investment securities including Federal funds sold and interest-earning deposits in other banks decreased 48 basis points. The effective yield on loans decreased 2 basis points. Average interest bearing liabilities increased 31.07% to $1,021,034,000 for the six months ended June 30, 2021, compared to $778,975,000 for the same period in 2020. 

Provision for Credit Losses

We provide for probable incurred credit losses through a charge to operating income based upon the composition of the loan portfolio, delinquency levels, historical losses, and nonperforming assets, economic and environmental conditions and other factors which, in management’s judgment, deserve recognition in estimating credit losses. Credit risk is inherent in the business of making loans. The Company establishes an allowance for credit losses on loans through charges to earnings, which are presented in the statements of income as the provision for credit losses on loans. Specifically identifiable and quantifiable known losses are promptly charged off against the allowance. Loans are charged off when they are considered uncollectible or when continuance as an active earning bank asset is not warranted.

    The establishment of an adequate credit allowance is based on an allowance model that utilizes qualitative and quantitative factors, historical losses, loan level risk ratings and portfolio management tools.  The Board of Directors has established initial responsibility for the accuracy of credit risk ratings with the individual credit officer and oversight from Credit Administration who ensures the accuracy of the risk ratings. Quarterly, the credit officers must certify the current risk ratings of the loans in their portfolio. Credit Administration reviews the certifications and reports to the Board of Directors Audit Committee. At least annually the loan portfolio, including risk ratings, is reviewed by a third party credit reviewer. Regulatory agencies also review the loan portfolio on a periodic basis. See “Allowance for Credit Losses” for more information on the Company’s Allowance for Loan Loss.

    Quarterly, the Chief Credit Officer (CCO) reviews the specific reserve calculations for all impaired credits.  Additionally, the CCO is responsible to ensure that the general reserves on non-impaired loans are properly set each quarter.  This process includes the utilization of loan delinquency reports, classified asset reports, collateral analysis and portfolio concentration reports to assist in accurately assessing credit risk and establishing appropriate reserves. 

    The allowance for credit losses is reviewed at least quarterly by the Board of Directors Audit Committee and by the Board of Directors.  General reserves are allocated to loan portfolio categories using percentages which are based on both historical risk elements such as delinquencies and losses and predictive risk elements such as economic, competitive and environmental factors.  We have adopted the specific reserve approach to allocate reserves to each impaired credit for the purpose of estimating potential loss exposure.  Although the allowance for credit losses is allocated to various portfolio categories, it is general in nature and available for the loan portfolio in its entirety.  Changes in the allowance for credit losses may be required based on the results of independent loan portfolio examinations, regulatory agency examinations, or our own internal review process.  Additions are also required when, in management’s judgment, the allowance does not properly reflect the portfolio’s probable loss exposure. Management believes that all adjustments, if any, to the allowance for credit losses are supported by the timely and consistent application of methodologies and processes resulting in detailed documentation of the allowance calculation and other portfolio trending analysis.

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    The allocation of the allowance for credit losses is set forth below (in thousands):

Loan Type	June 30, 2021		December 31, 2020
Commercial:
Commercial and industrial	$	1,753	$	1,764
Agricultural production	457		255
Total commercial	2,210		2,019
Real estate:
Owner occupied	1,396		2,128
Real estate construction and other land loans	1,101		1,204
Commercial real estate	3,794		4,781
Agricultural real estate	625		838
Other real estate	134		223
Total real estate	7,050		9,174
Consumer:
Equity loans and lines of credit	332		457
Consumer and installment	496		634
Total consumer	828		1,091
Unallocated reserves	351		631
Total allowance for credit losses	$	10,439	$	12,915

    Loans are charged to the allowance for credit losses when the loans are deemed uncollectible.  It is the policy of management to make additions to the allowance so that it remains adequate to cover all probable incurred credit losses that exist in the portfolio at that time. We assign qualitative and environmental factors (Q factors) to each loan category. Q factors include reserves held for the effects of lending policies, economic trends, and portfolio trends along with other dynamics which may cause additional stress to the portfolio.

    Managing high-risk credits includes developing a business strategy with the customer to mitigate our potential losses. Management continues to monitor these credits with a view to identifying as early as possible when, and to what extent, additional provisions may be necessary. Management believes that the level of allowance for loan losses allocated to commercial and real estate loans has been adjusted accordingly.

     During the six months ended June 30, 2021, the Company recorded a $3,300,000 reversal of provision for credit losses, compared to a $4,375,000 provision during the six months ended June 30, 2020. The reversal of provision to the allowance for credit losses resulted from our assessment of the overall adequacy of the allowance for credit losses considering a number of factors as discussed in the “Allowance for Credit Losses” section. During the six months ended June 30, 2021, the Company adjusted the economic risk factor methodology to incorporate the current economic implications from the COVID-19 pandemic.

    The Company had net recoveries totaling $824,000 for the six months ended June 30, 2021, and $432,000 for the same period in 2020.

    Nonperforming loans, consisting entirely of nonaccrual loans, were $2,035,000 and $3,278,000 at June 30, 2021 and December 31, 2020, respectively, and $2,406,000 at June 30, 2020.  Nonperforming loans as a percentage of total loans were 0.19% at June 30, 2021 compared to 0.30% at December 31, 2020 and 0.21% at June 30, 2020.  The Company had no other real estate owned (OREO) at June 30, 2021 or December 31, 2020. The Company held no repossessed assets at June 30, 2021 or December 31, 2020.

    The annualized net charge-off (recovery) ratio, which reflects net charge-offs (recoveries) to average loans was (0.15)% for the six months ended June 30, 2021, and (0.09)% for the same period in 2020.

    Economic pressures may negatively impact the financial condition of borrowers to whom the Company has extended credit and as a result when negative economic conditions are anticipated, we may be required to make significant provisions to the allowance for credit losses. The Bank conducts banking operations principally in California’s Central Valley. The Central Valley is largely dependent on agriculture. The agricultural economy in the Central Valley is therefore important to our business, financial performance and results of operations. We are also dependent in a large part upon the business activity, population growth, income levels and real estate activity in this market area. A downturn in agriculture and the agricultural related businesses could have a material adverse effect our business, results of operations and financial condition. The agricultural industry has been affected by declines in prices and the changes in yields on various crops and other agricultural commodities. Similarly, weaker prices could reduce the cash flows generated by farms and the value of agricultural land in our local markets and thereby increase the risk of default by our borrowers or reduce the foreclosure value of agricultural land and equipment that serve as collateral of our loans. Further declines in commodity prices or collateral values may increase the

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incidence of default by our borrowers. Moreover, weaker prices might threaten farming operations in the Central Valley, reducing market demand for agricultural lending. In particular, farm income has seen recent declines, and in line with the downturn in farm income, farmland prices are coming under pressure.

    We have been and will continue to be proactive in looking for signs of deterioration within the loan portfolio in an effort to manage credit quality and work with borrowers where possible to mitigate losses. As of June 30, 2021, there were $32.9 million in classified loans of which $1.2 million related to agricultural real estate, $12.1 million to commercial and industrial loans, $3.0 million to agricultural production, $7.0 million to real estate owner occupied, $9.6 million in commercial real estate. This compares to $36.1 million in classified loans of which $1.2 million related to agricultural real estate, $10.4 million to commercial and industrial loans, $3.3 million to agricultural production, $7.3 million to real estate owner occupied, $9.6 million to commercial real estate, $1.0 million to consumer equity and lines of credit, and $3.2 million to real estate construction and other land loans as of December 31, 2020.

    As of June 30, 2021, we believe, based on all current and available information, the allowance for credit losses is adequate to absorb probable incurred losses within the loan portfolio.  However, no assurance can be given that we may not sustain charge-offs which are in excess of the allowance in any given period.  Refer to the “Allowance for Credit Losses” section for further information.

Net Interest Income after Provision for Credit Losses

Net interest income, after the provision for credit losses, was $38,936,000 for the six months period ended June 30, 2021 and $27,228,000 for the same period in 2020.

Non-Interest Income

Non-interest income is comprised of customer service charges, loan placement fees, net gains on sales and calls of investment securities, appreciation in cash surrender value of bank-owned life insurance, FHLB dividends, and other income.  Non-interest income was $4,076,000 for the six months ended June 30, 2021 compared to $8,588,000 for the same period in 2020.  The $4,512,000 or 52.54% decrease in non-interest income during the six months ended June 30, 2021 was primarily driven by a decrease of $4,219,000 in net realized gains on sales and calls of investment securities, a decrease in service charge income of $194,000, a decrease of $569,000 in other income, and a decrease in FHLB dividends of $29,000, offset by an increase in loan placement fees of $307,000 and an increase of $201,000 in interchange fees.

    During the six months ended June 30, 2021, we realized a net loss on calls of investment securities of $79,000 compared to a $4,140,000 net gain for the same period in 2020.  The net gains realized on sales and calls of investment securities in 2020 were the result of a partial restructuring of the investment portfolio designed to improve the future performance of the portfolio.

    Customer service charges decreased $194,000 or 17.75% to $899,000 for the first six months of 2021 compared to $1,093,000 for the same period in 2020. Interchange fees increased $201,000 to $841,000 the first six months of 2021 compared to $640,000 for the same period in 2020. Loan placement fees increased $307,000 or 35.70% to $1,167,000 for the first six months of 2021 compared to $860,000 for the same period in 2020. Other income decreased $569,000 the first six months of 2021 compared to the same period in 2020. The decrease in other income resulted from a $463,000 gain recorded the first six months of 2020 related to the collection of life insurance proceeds.

    The Bank holds stock from the Federal Home Loan Bank (“FHLB”) of San Francisco in conjunction with our borrowing capacity and generally earns quarterly dividends.  We currently hold $5,595,000 in FHLB stock.  We received dividends totaling $153,000 in the six months ended June 30, 2021, compared to $182,000 for the same period in 2020.

Non-Interest Expenses

Salaries and employee benefits, occupancy and equipment, information technology, regulatory assessments, professional services, Internet banking, and data processing are the major categories of non-interest expenses.  Non-interest expenses decreased $559,000 or 2.37% to $23,018,000 for the six months ended June 30, 2021, compared to $23,577,000 for the six months ended June 30, 2020.  The net decrease for the first six months of 2021 was primarily the result of decreases in salaries and employee benefits of $407,000, directors’ expenses of $174,000, internet banking of $170,000, professional services of $149,000, advertising of $83,000, ATM/Debit card expenses of $65,000, information technology of $40,000, amortization of software of $47,000, stationary and supplies of $44,000, and operating losses of $19,000, partially offset by increases in data processing expenses of $352,000, regulatory assessments of $140,000, personnel of $131,000, occupancy and equipment expenses of $31,000, and donations of $26,000.

    The Company’s efficiency ratio, measured as the percentage of non-interest expenses (exclusive of amortization of core deposit intangible assets and foreclosure expenses) to net interest income before provision for credit losses (calculated on a fully tax equivalent basis) plus non-interest income (exclusive of net realized gains on sales and calls of investments, OREO

45

related gains and losses, and gains related to the collection of life insurance proceeds) was 55.96% for the six months ended June 30, 2021 compared to 65.00% for the six months ended June 30, 2020. The decrease in the efficiency ratio was due to the decrease in non-interest expense as well as the growth in non-interest income.

    Salaries and employee benefits decreased $407,000 or 2.84% to $13,917,000 for the first six months of 2021 compared to $14,324,000 for the six months ended June 30, 2020.  Full time equivalent employees were 261 for the six months ended June 30, 2021, compared to 270 for the six months ended June 30, 2020. The decrease in total salaries and employee benefits was the result of a decrease of $1,286,000 in officers’ expenses related to the change in the discount rate used to calculate the liability for salary continuation, deferred compensation, and split dollar plans; offset by an increase of approximately $879,000 in salaries and benefits and a decrease in loan issuance costs of $769,000. A portion of the salaries and benefits increase was related to $172,000 paid and/or accrued for severance pay.

    Occupancy and equipment expense increased $31,000 or 1.36% to $2,314,000 for the six months ended June 30, 2021 compared to $2,283,000 for the six months ended June 30, 2020. The Company made no changes in its depreciation expense methodology. The Company operated 20 full-service offices at June 30, 2021 and at June 30, 2020.

    Data processing expense increased to $1,242,000 for the six months ended June 30, 2021 compared to $890,000 for the same period in 2020. Regulatory assessments increased to $333,000 for the six months ended June 30, 2021 compared to $193,000 for the same period in 2020.  The assessment base for calculating the amount owed is average assets minus average tangible equity.

    Professional services decreased by $149,000 in the first six months of 2021 compared to the same period in 2020. Personnel expense included an accrual of $136,000 for an executive search firm to find a replacement for our retiring chief executive officer.

The following table shows significant components of other non-interest expense as a percentage of average assets.

	For the Six Months Ended June 30,
	2021				2020
(Dollars in thousands)	Other Expense		% Average Assets		Other Expense		% Average Assets
Stationery/supplies	$	83	0.01	%	$	127	0.01	%
Amortization of software	41		—	%	88		0.01	%
Postage	98		0.01	%	98		0.01	%
Risk management expense	51		—	%	94		0.01	%
Shareholder services	61		0.01	%	65		0.01	%
Personnel other	207		0.02	%	76		0.01	%
Armored courier fees	141		0.01	%	140		0.02	%
Telephone	99		0.01	%	98		0.01	%
Alarm	73		0.01	%	43		0.01	%
Donations	104		0.01	%	78		0.01	%
Education/training	66		0.01	%	77		0.01	%
Loan related expenses	23		—	%	24		—	%
General insurance	92		0.01	%	82		0.01	%
Travel and mileage expense	25		—	%	87		0.01	%
Operating losses	47		—	%	66		0.01	%
Other	618		0.06	%	580		0.07	%
Total other non-interest expense	$	1,829	0.17	%	$	1,823	0.21	%

Provision for Income Taxes

Our effective income tax rate was 24.77% for the six months ended June 30, 2021 compared to 27.09% for the six months ended June 30, 2020. The Company reported an income tax provision of $4,952,000 for the six months ended June 30, 2021, compared to $3,315,000 for the six months ended June 30, 2020.  The effective tax rate was affected by the increase in tax-exempt interest. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense in the consolidated statements of income. If deemed necessary, the Company maintains a reserve for uncertain income taxes where the merits of the position taken or the amount of the position that would be ultimately sustained upon

46

examination do not meet a more-likely-than-not criteria. As of June 30, 2021 and December 31, 2020, there was no reserve for uncertain tax positions.

Net Income for the Second Quarter of 2021 Compared to the Second Quarter of 2020

Net income increased to $7,563,000 for the quarter ended June 30, 2021 compared to $2,301,000 for the quarter ended June 30, 2020.  Basic earnings per share was $0.61 for the quarter ended June 30, 2021 compared to $0.18 for the same period in 2020. Diluted earnings per share was $0.60 for the quarter ended June 30, 2021 compared to $0.18 for the same period in 2020. Annualized ROE was 12.25% for the quarter ended June 30, 2021 compared to 4.14% for the quarter ended June 30, 2020.  Annualized ROA for the three months ended June 30, 2021 was 1.36% compared to 0.51% for the quarter ended June 30, 2020.

The increase in net income during the second quarter of 2021 compared to the same period in 2020 is primarily due to a decrease in provision for credit losses of $4,500,000, an increase in net interest income before the provision for credit losses of $2,507,000, and an increase in total non-interest income of $32,000, partially offset by an increase in the provision for income taxes of $1,645,000 and an increase in non-interest expenses of $132,000. During the quarter ended June 30, 2021, the Company recorded a $1,500,000 reversal of provision for credit losses, compared to a $3,000,000 provision during the quarter ended June 30, 2020. Non-interest income increased $32,000 or 1.56% to $2,077,000 for the quarter ended June 30, 2021 compared to $2,045,000 in the same period in 2020. During the second quarter of 2021 interchange fees increased $164,000, service charge income increased $20,000 and Federal Home Loan Bank dividends increased $8,000, offset by a decrease in placement fees of $51,000, a decrease in other income of $88,000, and a decrease in net realized gains on sales and calls of investment securities of $21,000, compared to the same period in 2020. For the quarter ended June 30, 2020, non-interest income included a $166,000 gain related to the collection of tax-exempt life insurance proceeds.

Interest Income and Expense

The following table sets forth a summary of average balances with corresponding interest income and interest expense as well as average yield and cost information for the periods presented.  Average balances are derived from daily balances, and non-accrual loans are not included as interest earning assets for purposes of this table.

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CENTRAL VALLEY COMMUNITY BANCORP

SCHEDULE OF AVERAGE BALANCES AND AVERAGE YIELDS AND RATES

	For the Three Months Ended June 30, 2021						For the Three Months Ended June 30, 2020
(Dollars in thousands)	Average Balance		Interest Income/ Expense		Average Interest Rate		Average Balance		Interest Income/ Expense		Average Interest Rate
ASSETS
Interest-earning deposits in other banks	$	114,590	$	29	0.10	%	$	58,277	$	13	0.09	%
Securities
Taxable securities	629,284		3,361		2.14	%	481,439		2,960		2.46	%
Non-taxable securities (1)	236,455		1,784		3.02	%	49,611		522		4.21	%
Total investment securities	865,739		5,145		2.38	%	531,050		3,482		2.62	%
Total securities and interest-earning deposits	980,329		5,174		2.11	%	589,327		3,495		2.37	%
Loans (2) (3)	1,077,774		13,556		5.04	%	1,075,588		12,600		4.71	%
Total interest-earning assets	2,058,103		$	18,730	3.65	%	1,664,915		$	16,095	3.89	%
Allowance for credit losses	(11,928)						(10,783)
Non-accrual loans	2,651						1,620
Cash and due from banks	35,997						23,963
Bank premises and equipment	8,416						7,358
Other assets	134,393						126,792
Total average assets	$	2,227,632					$	1,813,865
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Savings and NOW accounts	$	522,209	$	45	0.03	%	$	415,793	$	83	0.08	%
Money market accounts	441,623		160		0.15	%	297,725		137		0.19	%
Time certificates of deposit	90,735		47		0.21	%	89,900		154		0.69	%
Total interest-bearing deposits	1,054,567		252		0.10	%	803,418		374		0.19	%
Other borrowed funds	5,155		22		1.71	%	5,155		36		2.79	%
Total interest-bearing liabilities	1,059,722		$	274	0.10	%	808,573		$	410	0.20	%
Non-interest bearing demand deposits	893,441						753,265
Other liabilities	27,510						29,548
Shareholders’ equity	246,959						222,479
Total average liabilities and shareholders’ equity	$	2,227,632					$	1,813,865
Interest income and rate earned on average earning assets			$	18,730	3.65	%			$	16,095	3.89	%
Interest expense and interest cost related to average interest-bearing liabilities			274		0.10	%			410		0.20	%
Net interest income and net interest margin (4)			$	18,456	3.60	%			$	15,685	3.79	%

(1)Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $375 and $109 in 2021 and 2020, respectively.

(2)Loan interest income includes loan fees of $1,821 in 2021 and $291 in 2020.

(3)Average loans do not include non-accrual loans but do include interest income recovered from previously charged off loans.

(4)Net interest margin is computed by dividing net interest income by total average interest-earning assets.

The following table sets forth a summary of the changes in interest income and interest expense due to changes in average asset and liability balances (volume) and changes in average interest rates for the periods indicated. The change in interest due to both rate and volume has been allocated to the change in rate.

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Changes in Volume/Rate	For the Three Months Ended June 30, 2021 and 2020
(In thousands)	Volume		Rate		Net
Increase (decrease) due to changes in:
Interest income:
Interest-earning deposits in other banks	$	12	$	4	$	16
Investment securities:
Taxable	908		(507)		401
Non-taxable (1)	1,965		(703)		1,262
Total investment securities	2,873		(1,210)		1,663
Federal funds sold	—		—		—
Loans	25		931		956
Total earning assets (1)	2,910		(275)		2,635
Interest expense:
Deposits:
Savings, NOW and MMA	87		(102)		(15)
Time certificate of deposits	1		(108)		(107)
Total interest-bearing deposits	88		(210)		(122)
Other borrowed funds	—		(14)		(14)
Total interest-bearing liabilities	88		(224)		(136)
Net interest income (1)	$	2,822	$	(51)	$	2,771

(1)    Computed on a tax equivalent basis for securities exempt from federal income taxes.

Interest and fee income from loans increased $956,000 or 7.59% to $13,556,000 for the second quarter of 2021 compared to $12,600,000 for the same period in 2020.  Total average loans, including nonaccrual loans, for the second quarter of 2021 increased $3,217,000 or 0.30% to $1,080,425,000 compared to $1,077,208,000 for the same period in 2020.  Yield on the loan portfolio, excluding nonaccrual loans, was 5.04% and 4.71% for the second quarters ending June 30, 2021 and 2020, respectively.  Net interest income during the second quarters of 2021 and 2020 benefited by approximately $4,000 and $288,000, respectively, in nonrecurring income from prepayment penalties and payoff of loans previously on nonaccrual status. The accretion of the loan marks on acquired loans increased interest income by $176,000 and $174,000 during the quarters ended June 30, 2021 and 2020, respectively.

Income from investments represents 26.54% of net interest income for the second quarter of 2021 compared to 21.73% for the same quarter in 2020. Interest income from total investments on a non tax equivalent basis (total investments include investment securities, Federal funds sold, interest bearing deposits with other banks, and other securities) increased $1,415,000 in the second quarter of 2021 to $4,799,000 compared to $3,384,000, for the same period in 2020.  The yield on average total investments decreased 26 basis points to 2.11% on a fully tax equivalent basis for the second quarter of 2021 compared to 2.37% on a fully tax equivalent basis for the second quarter of 2020. Average total investments and interest bearing deposits in other banks for the second quarter of 2021 increased $391,002,000 or 66.35% to $980,329,000 compared to $589,327,000 for the second quarter of 2020.

Total interest income for the second quarter of 2021 increased $2,371,000 or 14.83% to $18,355,000 compared to $15,984,000 for the second quarter ended June 30, 2020.  The yield on interest earning assets decreased to 3.65% on a fully tax equivalent basis for the second quarter ended June 30, 2021 from 3.89% on a fully tax equivalent basis for the second quarter ended June 30, 2020.  Average interest earning assets increased to $2,058,103,000 for the second quarter ended June 30, 2021 compared to $1,664,915,000 for the second quarter ended June 30, 2020.  The $393,188,000 increase in average earning assets was attributed to the $2,186,000 increase in average loans and the $391,002,000 increase in total investments.

Interest expense on deposits for the quarter ended June 30, 2021 decreased $122,000 or 32.62% to $252,000 compared to $374,000 for the quarter ended June 30, 2020.  The cost of deposits, calculated by dividing annualized interest expense on interest bearing deposits by total deposits, was 0.05% and 0.10% for the quarters ended June 30, 2021 and 2020, respectively.  Average interest bearing deposits increased 31.26% or $251,149,000 in the second quarter of 2021 compared to the same period in 2020.  Average interest-bearing deposits were $1,054,567,000 for the quarter ended June 30, 2021, with an effective rate paid of 0.10%, compared to $803,418,000 for the same period in 2020, with an effective rate paid of 0.19%.

Average other borrowed funds totaled $5,155,000 for the quarter ended June 30, 2021, with an effective rate of 1.71% for the quarter ended June 30, 2021 compared to $5,155,000 and 2.79% for the quarter ended June 30, 2020.  As a result, interest expense on borrowed funds decreased $14,000 to $22,000 for the quarter ended June 30, 2021, from $36,000 for the

49

quarter ended June 30, 2020.  Other borrowings are comprised of advances from the Federal Home Loan Bank, junior subordinated deferrable interest debentures and advances on available unsecured lines of credit with correspondent banks.

The cost of our interest bearing liabilities was 0.10% and 0.20% for the quarters ended June 30, 2021 and 2020.  The cost of total deposits was 0.05% and 0.10% for the quarters ended June 30, 2021 and 2020.  Average non-interest bearing demand deposits increased 18.61% to $893,441,000 for the quarter ended June 30, 2021 compared to $753,265,000 for the quarter ended June 30, 2020.  The ratio of average non-interest bearing demand deposits to average total deposits was 45.86% in the second quarter of 2021 compared to 48.39% for the same period in 2020.

Net Interest Income before Provision for Credit Losses

Net interest income before provision for credit losses for the quarter ended June 30, 2021, increased $2,507,000 or 16.10% to $18,081,000 compared to $15,574,000 for the quarter ended June 30, 2020.  The increase was due to asset mix changes, and the increase in average interest earning assets, partially offset by an increase in average interest-bearing liabilities. Average interest earning assets were $2,058,103,000 for the quarter ended June 30, 2021, with a net interest margin (fully tax equivalent basis) of 3.60% compared to $1,664,915,000 with a net interest margin (fully tax equivalent basis) of 3.79% for the quarter ended June 30, 2020.  The $393,188,000 increase in average earning assets can be attributed to the $3,217,000 increase in loans, and the $391,002,000 increase in total investments.  Average interest bearing liabilities increased 31.06% to $1,059,722,000 for the quarter ended June 30, 2021 compared to $808,573,000 for the same period in 2020.

Provision for Credit Losses

During the quarter ended June 30, 2021, the Company recorded a $1,500,000 reversal of provision for credit losses, compared to $3,000,000 provision during the quarter ended June 30, 2020.  The annualized net charge-off (recovery) ratio, which reflects net charge-offs (recoveries) to average loans, was 0.04% for the quarter ended June 30, 2021 compared to (0.15)% for the quarter ended June 30, 2020.  During the quarter ended June 30, 2021, the Company had net charge-offs totaling $117,000 compared to net recoveries of $391,000 for the same period in 2020. Gross recoveries of previously charged off loan balances during the quarters ended June 30, 2021 and 2020 were $54,000 and $471,000, respectively. Gross charge-offs during the quarters ended June 30, 2021 and 2020 were $171,000 and $80,000, respectively. The majority of the loans charged off were previously classified and sufficient specific reserves related to these impaired credits were held in the allowance for credit losses in reporting periods prior to the date of charge-off.

Non-Interest Income

Non-interest income was $2,077,000 for the quarter ended June 30, 2021 compared to $2,045,000 for the same period ended June 30, 2020.  The $32,000 or 1.56% increase in non-interest income for the quarter ended June 30, 2021 was primarily due to recording a $164,000 increase in interchange fees, a $20,000 increase in service charge income, and a $8,000 increase in Federal Home Loan Bank dividends, partially offset by a $88,000 decrease in other income, a $51,000 decrease in loan placement fees, and a $21,000 decrease in net realized gains on sales and calls of investment securities,

Customer service charges increased $20,000 or 4.47% to $467,000 for the second quarter of 2021 compared to $447,000 for the same period in 2020, due primarily to an increase in overdraft fee income.  Other income decreased $88,000 or 16.39% to $449,000 for the second quarter of 2021 compared to $537,000 for the same period in 2020. For the quarter ended June 30, 2020, other income included a $166,000 gain related to the collection of tax-exempt life insurance proceeds.  

Non-Interest Expenses

Salaries and employee benefits, occupancy and equipment, regulatory assessments, data processing, acquisition and integration expenses, Internet banking, license and maintenance contracts, and professional services are the major categories of non-interest expenses.  Non-interest expenses increased $132,000 or 1.15% to $11,630,000 for the quarter ended June 30, 2021 compared to $11,498,000 for the same period in 2020. The net increase quarter over quarter was a result of a increases in salaries and employee benefits of $167,000, increases in data processing expense of $71,000, increases in occupancy and equipment expenses of $62,000, increases in regulatory assessments of $26,000, increases in appraisal fees of $25,000, increases in alarm monitoring expenses of 15,000, increases in operating losses of $10,000, and increases in Information technology expenses of $9,000. The increases were partially offset by the decreases in Internet banking expenses of $98,000, the decreases in professional services of $47,000, the decreases in advertising expenses of $39,000, the decreases in stationery and supplies of $29,000, the decreases in directors’ expenses of $23,000, and the decreases in amortization of software of $14,000 . During the quarter ended June 30, 2021, nonrecurring expenses included $106,000 related to PPP loan forgiveness processing.

The Company’s efficiency ratio decreased to 55.58% for the second quarter of 2021 compared to 64.27% for the second quarter of 2020. The improvement in the efficiency ratio is due to the growth in operating revenue outpacing the increase in non-interest expense.

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Salaries and employee benefits increased $167,000 or 2.45% to $6,979,000 for the second quarter of 2021 compared to $6,812,000 for the second quarter of 2020.  The number of full time equivalent (FTE) employees as of June 30, 2021, December 31, 2020 and June 30, 2020 was 247, 273, and 265, respectively.

Other non-interest expenses included increases of $20,000 in donations, $18,000 in personnel expenses, $8,000 in education/training expenses, $4,000 in telephone expenses, and $3,000 in armored courier expenses, partially offset by decreases of $29,000 in stationary and supplies, $14,000 in amortization of software, $13,000 in risk management expense, and $13,000 in check printing expense, as compared to the same period in 2020.

Provision for Income Taxes

The effective income tax rate was 24.58% for the second quarter of 2021 compared to 26.27% for the same period in 2020.  Provision for income taxes totaled $2,465,000 and $820,000 for the quarters ended June 30, 2021 and 2020, respectively.  The 2021 effective tax rate was affected by the increase in tax-exempt interest, as well as the reversal of provision for credit losses. The 2020 effective tax rate was affected by the large provision for credit losses which resulted in lower pretax and taxable income, as well as the gain related to the collection of life insurance proceeds.

FINANCIAL CONDITION

Summary of Changes in Consolidated Balance Sheets

June 30, 2021 compared to December 31, 2020

Total assets were $2,280,550,000 as of June 30, 2021, compared to $2,004,096,000 at December 31, 2020, an increase of 13.79% or $276,454,000.  Total gross loans were $1,069,945,000 at June 30, 2021, compared to $1,102,347,000 at December 31, 2020, a decrease of $32,402,000 or 2.94%.  The total investment portfolio (including Federal funds sold and interest-earning deposits in other banks) increased 38.13% or $287,429,000 to $1,041,258,000 at June 30, 2021 compared to $753,829,000 at December 31, 2020.  Total deposits increased 14.88% or $256,384,000 to $1,979,094,000 at June 30, 2021, compared to $1,722,710,000 at December 31, 2020.  Shareholders’ equity increased $6,028,000 or 2.46% to $251,049,000 at June 30, 2021, compared to $245,021,000 at December 31, 2020. The increase in shareholders’ equity was driven by the retention of earnings, net of dividends paid, the decrease in unrealized gains on available-for-sale (AFS) securities, and share repurchases. Accrued interest payable and other liabilities was $45,252,000 at June 30, 2021, compared to $31,210,000 at December 31, 2020, a increase of $14,042,000.

Fair Value

The Company measures the fair values of its financial instruments utilizing a hierarchical framework associated with the level of observable pricing scenarios utilized in measuring financial instruments at fair value.  The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of the observable pricing scenario.  Financial instruments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of observable pricing and a lesser degree of judgment utilized in measuring fair value.  Conversely, financial instruments rarely traded or not quoted will generally have little or no observable pricing and a higher degree of judgment utilized in measuring fair value.  Observable pricing scenarios are impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction. See Note 2 of the Notes to Consolidated Financial Statements (unaudited) for additional information about the level of pricing transparency associated with financial instruments carried at fair value.

Investments

Our investment portfolio consists primarily of U.S. Government sponsored entities and agencies collateralized by residential mortgage backed obligations, private label mortgage and asset backed securities (PLMABS), corporate debt securities, and obligations of states and political subdivision securities and are classified at the date of acquisition as available for sale or held to maturity.  As of June 30, 2021, investment securities with a fair value of $191,882,000, or 20.15% of our investment securities portfolio, were held as collateral for public funds, short and long-term borrowings, treasury, tax, and for other purposes.  Our investment policies are established by the Board of Directors and implemented by management.  Our policies are designed primarily to provide and maintain liquidity, to enable us to meet our pledging requirements for public money and borrowing arrangements, to generate a favorable return on investments without incurring undue interest rate and credit risk, and to complement our lending activities.

    The level of our investment portfolio as a percentage of our total earning assets is generally considered higher than our peers due primarily to a comparatively low loan-to-deposit ratio.  Our loan-to-deposit ratio at June 30, 2021 was 54.06%

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compared to 63.99% at December 31, 2020.  The loan-to-deposit ratio of our peers was 80.00% at December 31, 2020.  The total investment portfolio, including Federal funds sold and interest-earning deposits in other banks, increased 38.13% or $287,429,000 to $1,041,258,000 at June 30, 2021, from $753,829,000 at December 31, 2020.  The fair value of the available-for-sale investment portfolio reflected a net unrealized gain of $18,278,000 at June 30, 2021, compared to a net unrealized gain of $21,091,000 at December 31, 2020.

    The Board and management have had periodic discussions about our strategy for risk management in dealing with potential losses should interest rates begin to rise. We have been managing the portfolio with an objective of optimizing risk and return in various interest rate scenarios. We do not attempt to predict future interest rates, but we analyze the cash flows of our investment portfolio in different interest rate scenarios in connection with the rest of our balance sheet to design an investment portfolio that optimizes performance. 

    The Company periodically evaluates each investment security for other-than-temporary impairment, relying primarily on industry analyst reports, observation of market conditions, and interest rate fluctuations.  The portion of the impairment that is attributable to a shortage in the present value of expected future cash flows relative to the amortized cost should be recorded as a current period charge to earnings.  The discount rate in this analysis is the original yield expected at time of purchase.

    Management evaluated all available-for-sale investment securities with an unrealized loss at June 30, 2021 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at June 30, 2021 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $75,000.  Management also analyzed any securities that may have been downgraded by credit rating agencies. 

     For those securities that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those securities.  There were no OTTI losses recorded during the six months ended June 30, 2020.

At June 30, 2021, the Company held two U.S. Treasury securities of which one security was in a loss position for less than 12 months. The unrealized loss on the Company’s investment in direct obligations of U.S. Treasury securities is associated with the general fluctuation of market interest rates and are not an indication of any deterioration in the credit quality of the security issuer. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized costs of the investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

    At June 30, 2021, the Company held one U.S. Government agency security which was in a gain position.

    At June 30, 2021, the Company held 122 obligations of states and political subdivision securities of which 16 were in a loss position for less than 12 months. The unrealized losses on the Company’s investments in obligations of states and political subdivision securities and corporate debt securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

    At June 30, 2021, the Company held 115 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations of which eight were in a loss position for less than 12 months and 11 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

    At June 30, 2021, the Company had a total of 49 Private Label Mortgage and Asset Backed Securities (PLMABS) with a remaining principal balance of $180,844,000 and a net unrealized loss of approximately $63,000.  18 of the PLMABS securities were in a loss position for less than 12 months and two has been in loss for more than 12 months at June 30, 2021. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021. The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary.

At June 30, 2021, the Company held 14 corporate debt securities of which five were in a loss position for less than 12 months. The unrealized loss on the Company’s investments in corporate debt security was caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

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    See Note 3 of the Notes to Consolidated Financial Statements (unaudited) included in this report for carrying values and estimated fair values of our investment securities portfolio.

Loans

Total gross loans decreased $32,402,000 or 2.94% to $1,069,945,000 as of June 30, 2021, compared to $1,102,347,000 as of December 31, 2020.

    The following table sets forth information concerning the composition of our loan portfolio at the dates indicated:

Loan Type (Dollars in thousands)	June 30, 2021		% of Total Loans		December 31, 2020		% of Total Loans
Commercial:
Commercial and industrial	$	208,919	19.4	%	$	273,994	24.9	%
Agricultural production	32,918		3.1	%	21,971		2.0	%
Total commercial	241,837		22.5	%	295,965		26.9	%
Real estate:
Owner occupied	200,232		18.7	%	208,843		18.9	%
Real estate construction and other land loans	65,282		6.1	%	55,419		5.0	%
Commercial real estate	357,519		33.4	%	338,886		30.7	%
Agricultural real estate	88,110		8.2	%	84,258		7.6	%
Other real estate	29,750		2.8	%	28,718		2.6	%
Total real estate	740,893		69.2	%	716,124		64.8	%
Consumer:
Equity loans and lines of credit	51,364		4.8	%	55,634		5.0	%
Consumer and installment	37,241		3.5	%	37,236		3.3	%
Total consumer	88,605		8.3	%	92,870		8.3	%
Net deferred origination costs	(1,390)				(2,612)
Total gross loans	1,069,945		100.0	%	1,102,347		100.0	%
Allowance for credit losses	(10,439)				(12,915)
Total loans	$	1,059,506			$	1,089,432

    As of June 30, 2021, in management’s judgment, a concentration of loans existed in commercial loans and loans collateralized by real estate, representing approximately 96.5% of total loans.  This level of concentration of commercial loans and loans collateralized by real estate is consistent with 96.7% of total loans at December 31, 2020.  Although management believes the loans within this concentration have no more than the normal risk of collectibility, a substantial decline in the performance of the economy in general or a decline in real estate values in our primary market areas, in particular, could have an adverse impact on collectibility, increase the level of real estate-related non-performing loans, or have other adverse effects which alone or in the aggregate could have a material adverse effect on our business, financial condition, results of operations and cash flows.  The Company does not engage in any sub-prime mortgage lending activities.

    At June 30, 2021, loans acquired in the Folsom Lake Bank (FLB), Sierra Vista Bank (SVB) and Visalia Community Bank (VCB) acquisitions had a balance of $109,932,000, of which $2,374,000 were commercial loans, $98,912,000 were real estate loans, and $8,646,000 were consumer loans. At December 31, 2020, loans acquired in the FLB, SVB and VCB acquisitions had a balance of $127,186,000, of which $2,529,000 were commercial loans, $110,616,000 were real estate loans, and $14,041,000 were consumer loans.

    We believe that our commercial real estate loan underwriting policies and practices result in prudent extensions of credit, but recognize that our lending activities result in relatively high reported commercial real estate lending levels.  Commercial real estate loans include certain loans which represent low to moderate risk and certain loans with higher risks. Contributing to the commercial and industrial loan growth was the issuance of PPP loans. As of June 30, 2021, gross loans included $109,502,000 in PPP loans which are fully guaranteed by the SBA.

    The Board of Directors review and approve concentration limits and exceptions to limitations of concentration are reported to the Board of Directors at least quarterly.

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Nonperforming Assets

Nonperforming assets consist of nonperforming loans, other real estate owned (OREO), and repossessed assets.  Nonperforming loans are those loans which have (i) been placed on nonaccrual status; (ii) been classified as doubtful under our asset classification system; or (iii) become contractually past due 90 days or more with respect to principal or interest and have not been restructured or otherwise placed on nonaccrual status.  A loan is classified as nonaccrual when (i) it is maintained on a cash basis because of deterioration in the financial condition of the borrower; (ii) payment in full of principal or interest under the original contractual terms is not expected; or (iii) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection.

    At June 30, 2021, total nonperforming assets totaled $2,035,000, or 0.09% of total assets, compared to $3,278,000, or 0.16% of total assets at December 31, 2020.  Total nonperforming assets at June 30, 2021, included nonaccrual loans totaling $2,035,000, no OREO, and no other repossessed assets. Nonperforming assets at December 31, 2020 consisted of $3,278,000 in nonaccrual loans, no OREO, and no other repossessed assets. At June 30, 2021 and December 31, 2020, we had no loan considered to be a troubled debt restructuring (“TDRs”) included in nonaccrual loans.

    A summary of nonperforming loans at June 30, 2021 and December 31, 2020 is set forth below.  The Company had no loans past due more than 90 days and still accruing interest at June 30, 2021 or at December 31, 2020.  Management can give no assurance that nonaccrual and other nonperforming loans will not increase in the future.

Composition of Nonperforming Loans

(In thousands)	June 30, 2021			December 31, 2020
Nonaccrual loans:
Commercial and industrial	$	348		$	752
Owner occupied real estate	—			370
Real estate construction and other land loans	—			1,556
Agricultural real estate	1,204			—
Commercial real estate	483			512
Consumer and installment	—			88
Total nonaccrual	2,035			3,278
Accruing loans past due 90 days or more	—			—
Total nonperforming loans	$	2,035		$	3,278
Ratio of nonperforming loans to total loans	0.19		%	0.30		%
Ratio of allowance for credit losses to nonperforming loans	513.0		%	394.0		%
Loans considered to be impaired	$	8,539		$	11,186
Related allowance for credit losses on impaired loans	$	880		$	631

    We measure our impaired loans by using the fair value of the collateral if the loan is collateral dependent and the present value of the expected future cash flows discounted at the loan’s original contractual interest rate if the loan is not collateral dependent.  As of June 30, 2021 and December 31, 2020, we had impaired loans totaling $8,539,000 and $11,186,000, respectively.  For collateral dependent loans secured by real estate, we obtain external valuations which are updated at least annually to determine the fair value of the collateral, and we record a charge-off for the difference between the book value of the loan and the appraised value less selling costs value of the collateral, unless there is an extenuating circumstance that may positively affect the amount collected. We perform quarterly internal reviews on substandard loans. We place loans on nonaccrual status and classify them as impaired when it becomes probable that we will not receive interest and principal under the original contractual terms, or when loans are delinquent 90 days or more unless the loan is both well secured and in the process of collection.  Management maintains certain loans that have been brought current by the borrower (less than 30 days delinquent) on nonaccrual status until such time as management has determined that the loans are likely to remain current in future periods.

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    The following table provides a reconciliation of the change in nonaccrual loans for the first six months of 2021.

(In thousands)	Balance, December 31, 2020		Additions  to Nonaccrual Loans		Net Pay Downs		Transfers to Foreclosed Collateral and  OREO		Returns to Accrual Status		Charge- Offs		Balance, June 30, 2021
Nonaccrual loans:
Commercial and industrial	$	752	$	—	$	(350)	$	—	$	(55)	$	—	$	347
Agricultural land and industrial	—		2,141		(936)		—		—		—		1,205
Real estate	882		—		(225)		—		(174)		—		483
Real estate construction and other land loans	1,556		—		(1,531)		—		(25)		—		—
Consumer	88		—		(2)		—		(86)		—		—
Total nonaccrual	$	3,278	$	2,141	$	(3,044)	$	—	$	(340)	$	—	$	2,035

    OREO represents real property taken either through foreclosure or through a deed in lieu thereof from the borrower.  OREO is initially recorded at fair value less costs to sell and thereafter carried at the lower of cost or fair value, less selling costs. We had no OREO properties at June 30, 2021 or December 31, 2020. The Company held no repossessed assets at June 30, 2021 or December 31, 2020.

Allowance for Credit Losses

We have established a methodology for determining the adequacy of the allowance for credit losses made up of general and specific allocations.  The methodology is set forth in a formal policy and takes into consideration the need for an overall allowance for credit losses as well as specific allowances that are tied to individual loans.  The allowance for credit losses is an estimate of probable incurred credit losses in the Company’s loan portfolio. The allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired.

    For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer loss data) over the most recent 50 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses incurred in the portfolio taken as a whole. Management has determined that the most recent 50 quarters was an appropriate look back period based on several factors including the current global economic uncertainty and various national and local economic indicators, and a time period sufficient to capture enough data due to the size of the portfolio to produce statistically accurate historical loss calculations. We believe this period is an appropriate look back period.

    In originating loans, we recognize that losses will be experienced and that the risk of loss will vary with, among other things, the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the collateral securing the loan.  The allowance is increased by provisions charged against earnings and recoveries, and reduced by net loan charge-offs.  Loans are charged off when they are deemed to be uncollectible, or partially charged off when portions of a loan are deemed to be uncollectible.  Recoveries are generally recorded only when cash payments are received.

    The allowance for credit losses is maintained to cover probable incurred credit losses in the loan portfolio.  The responsibility for the review of our assets and the determination of the adequacy lies with management and our Audit Committee.  They delegate the authority to the Chief Credit Officer (CCO) to determine the loss reserve ratio for each type of asset and to review, at least quarterly, the adequacy of the allowance based on an evaluation of the portfolio, past experience, prevailing market conditions, amount of government guarantees, concentration in loan types and other relevant factors.

    The allowance for credit losses is an estimate of the probable incurred credit losses in our loan and lease portfolio.  The allowance is based on principles of accounting: (i) losses accrued for on loans when they are probable of occurring and can be reasonably estimated and (ii) losses accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance.

    Management adheres to an internal asset review system and loss allowance methodology designed to provide for timely recognition of problem assets and adequate valuation allowances to cover probable incurred losses.  The Bank’s asset monitoring process includes the use of asset classifications to segregate the assets, largely loans, into various risk categories.  The Bank uses the various asset classifications as a means of measuring risk and determining the adequacy of valuation allowances by using a nine-grade system to classify assets.  In general, all credit facilities exceeding 90 days of delinquency require classification and are placed on nonaccrual.

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    The following table sets forth information regarding our allowance for credit losses at the dates and for the periods indicated:

	For the Six Months Ended June 30,			For the Year Ended December 31,			For the Six Months Ended June 30,
(Dollars in thousands)	2021			2020			2020
Balance, beginning of period	$	12,915		$	9,130		$	9,130
(Reversal of) provision for credit losses	(3,300)			3,275			4,375
Losses charged to allowance	(228)			(229)			(123)
Recoveries	1,052			739			555
Balance, end of period	$	10,439		$	12,915		$	13,937
Allowance for credit losses to total loans at end of period	0.98		%	1.17		%	1.24		%

Managing credits identified through the risk evaluation methodology includes developing a business strategy with the customer to mitigate our losses.  Our management continues to monitor these credits with a view to identifying as early as possible when, and to what extent, additional provisions may be necessary.  Risks and uncertainties exist in all lending transactions and our management and Board of Directors’ Loan Committee have established reserve levels based on economic uncertainties and other risks that exist as of each reporting period.

The allowance for credit losses is reviewed at least quarterly by the Bank’s and our Board of Directors’ Audit Committee.  Reserves are allocated to loan portfolio segments using percentages which are based on both historical risk elements such as delinquencies and losses and predictive risk elements such as economic, competitive and environmental factors.  We have adopted the specific reserve approach to allocate reserves to each impaired asset for the purpose of estimating potential loss exposure. At the onset of COVID we established a dedicated qualitative factor to address the lagging effect on our quantitative data. We have begun reducing that factor’s impact on the ALLL given the passage of time. We adjusted the economic risk factor methodology to incorporate the improving economic conditions and decreasing unemployment rate. Although the allowance for credit losses is allocated to various portfolio categories, it is general in nature and available for the loan portfolio in its entirety.  Additions may be required based on the results of independent loan portfolio examinations, regulatory agency examinations, or our own internal review process.  Additions are also required when, in management’s judgment, the reserve does not properly reflect the potential loss exposure.

    As of June 30, 2021, the balance in the allowance for credit losses (ALLL) was $10,439,000 compared to $12,915,000 as of December 31, 2020.  The decrease is attributed to the reversal of provision of $3,300,000 during the six months ended June 30, 2021.  The balance of undisbursed commitments to extend credit on construction and other loans and letters of credit was $316,702,000 as of June 30, 2021, compared to $326,179,000 as of December 31, 2020.  At June 30, 2021 and December 31, 2020, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $250,000. The contingent allocation for probable loan loss experience on unfunded obligations is calculated by management using appropriate, systematic, and consistently applied processes.  While related to credit losses, this allocation is not a part of the ALLL and is considered separately as a liability for accounting and regulatory reporting purposes.

    As of June 30, 2021, the ALLL was 0.98% of total gross loans compared to 1.17% as of December 31, 2020.  Total loans include FLB, SVB and VCB loans that were recorded at fair value in connection with the acquisitions, with values of $109,932,000 at June 30, 2021 and $127,186,000 at December 31, 2020. Excluding these FLB, SVB and VCB loans from the calculation, the ALLL to total gross loans was 1.09% and 1.32% at June 30, 2021 and December 31, 2020, respectively and general reserves associated with non-impaired loans to total non-impaired loans was 1.13% and 1.41%, respectively. As of June 30, 2021, gross loans included $109,502,000 related to PPP loans which are fully guaranteed by the SBA. Excluding PPP loans and the acquired loans from the calculation, the allowance for credit losses to total gross loans was 1.23% and 1.65% as of June 30, 2021 and December 31, 2020, respectively. The Company believes the allowance for credit losses is adequate to provide for probable incurred credit losses within the loan portfolio at June 30, 2021. The loan portfolios acquired in the mergers were booked at fair value with no associated allocation in the ALLL.  The size of the fair value discount remains adequate for all non-impaired acquired loans.

    The Company’s loan portfolio balances for the six months ended June 30, 2021 increased through organic growth.  Management believes that the change in the allowance for credit losses to total loans ratio is directionally consistent with the composition of loans and the level of nonperforming and classified loans, and by the general economic conditions experienced in the central California communities serviced by the Company, partially offset by recent improvements in real estate collateral values.

    Assumptions regarding the collateral value of various under-performing loans may affect the level and allocation of the allowance for credit losses in future periods.  The allowance may also be affected by trends in the amount of charge-offs experienced or expected trends within different loan portfolios. However, the total reserve rates on non-impaired loans include qualitative factors which are systematically derived and consistently applied to reflect conservatively estimated losses from loss contingencies at the date of the financial statements. Based on the above considerations and given recent changes in historical

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charge-off rates included in the ALLL modeling and the changes in other factors, management determined that the ALLL was appropriate as of June 30, 2021. However, no assurance can be given that the Company may not sustain charge-offs which are in excess of the allowance in any given period.

    The following table illustrates and sets forth additional analysis which portrays the trends that are occurring in the loan portfolio.

	June 30, 2021				December 31, 2020				June 30, 2020
(Dollars in thousands)	Balance		% to Total Loans		Balance		% to Total Loans		Balance		% to Total Loans
Impaired loans with specific reserves	$	7,600	0.71	%	$	10,072	0.91	%	$	12,555	1.12	%
Past due loans	391		0.04	%	89		0.01	%	853		0.08	%
Nonaccrual loans	2,035		0.19	%	3,278		0.30	%	2,406		0.21	%

Goodwill and Intangible Assets

Business combinations involving the Company’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill.  Total goodwill at June 30, 2021, was $53,777,000 consisting of $8,934,000, $14,643,000, $6,340,000, $10,394,000, and $13,466,000 representing the excess of the cost of Bank of Madera County, Service 1st Bancorp, Visalia Community Bank, Sierra Vista Bank, and Folsom Lake Bank, respectively, over the net of the amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the purchase method of accounting.  The value of goodwill is ultimately derived from the Company’s ability to generate net earnings after the acquisitions and is not deductible for tax purposes. The fair values of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability.  A significant decline in net earnings, among other factors, could be indicative of a decline in the fair value of goodwill and result in impairment.  For that reason, goodwill is assessed at least annually for impairment.

During March 2020, the COVID-19 pandemic emerged and began impacting the state and local economies in our market due to local shelter-in-place orders and restrictions on businesses which caused many nonessential businesses to close and workers to be temporarily unemployed. COVID-19 could cause a further and sustained decline in the Company’s stock price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform a goodwill impairment test and result in an impairment charge being recorded for that period. In the event that the Company concludes that all or a portion of its goodwill is impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital or regulatory capital. Management considered the COVID-19 related economic downturn to be such a triggering event and therefore performed qualitative assessments at the end of the first, second and fourth quarters of 2020. Given the continued economic impact of the pandemic, management determined it appropriate to perform a quantitative test as of September 30, 2020. Management engaged a third party valuation specialist to assist with the performance of the quantitative goodwill impairment test in the third quarter of 2020. Significant assumptions inherent in the valuation methodologies for goodwill that were employed and included, but were not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry. Based on this quantitative test, it was determined that the fair value of the reporting unit exceeded the carrying value as of September 30, 2020.

Goodwill is assessed for impairment between annual tests if a triggering event occurs or circumstances change that may cause the fair value of a reporting unit to decline below its carrying amount. Management considers the entire Company to be one reporting unit. No such events or circumstances arose during the first six months of 2021. Changes in the economic environment, operations of the reporting unit or other adverse events could result in future impairment charges which could have a material adverse impact on the Company’s operating results.

    The intangible assets represent the estimated fair value of the core deposit relationships acquired in the 2017 acquisition of Folsom Lake Bank of $1,879,000, the 2016 acquisition of Sierra Vista Bank of $508,000, and the 2013 acquisition of Visalia Community Bank of $1,365,000.  Core deposit intangibles are being amortized using the straight-line method (which approximates the effective interest method) over estimated lives of five to 10 years from the date of acquisition.  The carrying value of intangible assets at June 30, 2021 was $835,000, net of $2,744,000 in accumulated amortization expense.  The carrying value at December 31, 2020 was $1,183,000, net of $2,569,000 accumulated amortization expense.  We evaluate the remaining useful lives quarterly to determine whether events or circumstances warrant a revision to the remaining periods of amortization.  Based on the evaluation, no changes to the remaining useful lives was required in the first six months of 2021.  Amortization expense recognized was $347,000 and $347,000 for the six months ended June 30, 2021 and June 30, 2020, respectively.

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    The following table summarizes the Company’s estimated remaining core deposit intangible amortization expense for each of the next five years (in thousands):

Years Ended	Estimated Core Deposit Intangible Amortization
2021	$	314
2022	455
2023	66
	$	835

Deposits and Borrowings

The Bank’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable legal limits. All of a depositor’s accounts at an insured depository institution, including all non-interest bearing transactions accounts, are insured by the FDIC up to standard maximum deposit insurance amount of $250,000 for each deposit insurance ownership category.

    Total deposits increased $256,384,000 or 14.88% to $1,979,094,000 as of June 30, 2021, compared to $1,722,710,000 as of December 31, 2020.  Interest-bearing deposits increased $181,867,000 or 20.26% to $1,079,688,000 as of June 30, 2021, compared to $897,821,000 as of December 31, 2020.  Non-interest bearing deposits increased $74,517,000 or 9.03% to $899,406,000 as of June 30, 2021, compared to $824,889,000 as of December 31, 2020.  Average non-interest bearing deposits to average total deposits was 46.11% for the six months ended June 30, 2021 compared to 46.47% for the same period in 2020. The Company’s deposit balances for the six months ended June 30, 2021 increased through organic growth and PPP loan proceeds retained in customer deposit accounts.

    The composition of the deposits and average interest rates paid at June 30, 2021 and December 31, 2020 is summarized in the table below.

(Dollars in thousands)	June 30, 2021		% of Total Deposits		Average Effective Rate		December 31, 2020		% of Total Deposits		Average Effective Rate
NOW accounts	$	354,820	17.9	%	0.05	%	$	310,697	18.0	%	0.11	%
MMA accounts	444,083		22.4	%	0.15	%	341,088		19.8	%	0.18	%
Time deposits	89,805		4.5	%	0.24	%	89,846		5.2	%	0.65	%
Savings deposits	190,980		9.7	%	0.01	%	156,190		9.1	%	0.02	%
Total interest-bearing	1,079,688		54.5	%	0.11	%	897,821		52.1	%	0.18	%
Non-interest bearing	899,406		45.5	%			824,889		47.9	%
Total deposits	$	1,979,094	100.0	%			$	1,722,710	100.0	%

Other Borrowings

As of June 30, 2021 and December 31, 2020, the Company had no Federal Home Loan Bank (“FHLB”) of San Francisco advances. We maintain a line of credit with the FHLB collateralized by government securities and loans. Refer to the Liquidity section below for further discussion of FHLB advances.

Capital

Capital serves as a source of funds and helps protect depositors and shareholders against potential losses.  Historically, the primary source of capital for the Company has been through retained earnings. 

The Company has historically maintained substantial levels of capital.  The assessment of capital adequacy is dependent on several factors including asset quality, earnings trends, liquidity and economic conditions.  Maintenance of adequate capital levels is integral to providing stability to the Company.  The Company needs to maintain substantial levels of regulatory capital to give it maximum flexibility in the changing regulatory environment and to respond to changes in the market and economic conditions.

Our shareholders’ equity was $251,049,000 at June 30, 2021, compared to $245,021,000 at December 31, 2020.  The increase from December 31, 2020 in shareholders’ equity is the result of a an increase in retained earnings from net income of $15,042,000, the exercise of stock options of $213,000, stock issued under the employee stock purchase plan of $110,000, the effect of share based compensation expense of $210,000, and stock awarded to employees of $158,000, offset by a decrease in accumulated other comprehensive income (AOCI) of $1,982,000, common stock cash dividends of $2,881,000, and stock repurchases of $4,842,000.

58

    On March 17, 2021, the Board of Directors of the Company approved the adoption of a program to effect repurchases of the Company’s common stock with the intent to purchase up to $12 million worth of the Company’s outstanding common stock.  During the six months ended June 30, 2021, the Company repurchased and retired 239,679 shares at an approximate cost of $4,842,000. The share repurchase plan began on March 18, 2021 and will end on March 17, 2022.

    During the first six months of 2021, the Company declared and paid $2,881,000 in cash dividends ($0.23 per common share) to holders of common stock. The Company declared and paid a total of $5,530,000 in cash dividends ($0.44 per common share) to holders of common stock during the year ended December 31, 2020.

    Management considers capital requirements as part of its strategic planning process.  The strategic plan calls for continuing increases in assets and liabilities, and the capital required may therefore be in excess of retained earnings.  The ability to obtain capital is dependent upon the capital markets as well as our performance.  Management regularly evaluates sources of capital and the timing required to meet its strategic objectives. 

    The Board of Governors, the FDIC and other federal banking agencies have issued risk-based capital adequacy

guidelines intended to provide a measure of capital adequacy that reflects the degree of risk associated with a banking

organization’s operations for both transactions reported on the balance sheet as assets, and transactions, such as letters of

credit and recourse arrangements, which are reported as off-balance-sheet items.

    The following table presents the Company’s regulatory capital ratios as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)
June 30, 2021	Amount		Ratio
Tier 1 Leverage Ratio	$	186,712	8.63	%
Common Equity Tier 1 Ratio (CET 1)	$	181,712	13.43	%
Tier 1 Risk-Based Capital Ratio	$	186,712	13.80	%
Total Risk-Based Capital Ratio	$	197,401	14.58	%
December 31, 2020
Tier 1 Leverage Ratio	$	178,407	9.28	%
Common Equity Tier 1 Ratio (CET 1)	$	173,407	14.10	%
Tier 1 Risk-Based Capital Ratio	$	178,407	14.50	%
Total Risk-Based Capital Ratio	$	191,572	15.58	%

The following table presents the Bank’s regulatory capital ratios as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	Actual Ratio				Minimum regulatory requirement (1)				Minimum requirement for “Well-Capitalized”  Institution
June 30, 2021	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 Leverage Ratio	$	184,081	8.51	%	$	86,499	4.00	%	$	108,124	5.00	%
Common Equity Tier 1 Ratio (CET 1)	$	184,081	13.61	%	$	60,868	4.50	%	$	87,921	6.50	%
Tier 1 Risk-Based Capital Ratio	$	184,081	13.61	%	$	81,158	6.00	%	$	108,210	8.00	%
Total Risk-Based Capital Ratio	$	194,770	14.40	%	$	108,210	8.00	%	$	135,263	10.00	%
December 31, 2020
Tier 1 Leverage Ratio	$	177,269	9.23	%	$	76,852	4.00	%	$	96,065	5.00	%
Common Equity Tier 1 Ratio (CET 1)	$	177,269	14.41	%	$	55,346	7.00	%	$	79,945	6.50	%
Tier 1 Risk-Based Capital Ratio	$	177,269	14.41	%	$	73,795	8.50	%	$	98,394	8.00	%
Total Risk-Based Capital Ratio	$	190,434	15.48	%	$	98,394	10.50	%	$	122,992	10.00	%
(1) The minimum regulatory requirement threshold includes the capital conservation buffer of 2.50%.

The Company succeeded to all of the rights and obligations of the Service 1st Capital Trust I, a Delaware business trust, in connection with the acquisition of Service 1st as of November 12, 2008.  The Trust was formed on August 17, 2006 for the sole purpose of issuing trust preferred securities fully and unconditionally guaranteed by Service 1st.  Under applicable regulatory guidance, the amount of trust preferred securities that is eligible as Tier 1 capital is limited to 25% of the Company’s Tier 1 capital on a pro forma basis.  At June 30, 2021, all of the trust preferred securities that have been issued qualify as Tier 1 capital.  The trust preferred securities mature on October 7, 2036, are redeemable at the Company’s option beginning five years

59

after issuance, and require quarterly distributions by the Trust to the holder of the trust preferred securities at a variable interest rate which will adjust quarterly to equal the three month LIBOR plus 1.60%.

The Trust used the proceeds from the sale of the trust preferred securities to purchase approximately $5,155,000 in aggregate principal amount of Service 1st’s junior subordinated notes (the Notes).  The Notes bear interest at the same variable interest rate during the same quarterly periods as the trust preferred securities.  The Notes are redeemable by the Company on any January 7, April 7, July 7, or October 7 on or after October 7, 2012 or at any time within 90 days following the occurrence of certain events, such as: (i) a change in the regulatory capital treatment of the Notes; (ii) in the event the Trust is deemed an investment company; or (iii) upon the occurrence of certain adverse tax events.  In each such case, the Company may redeem the Notes for their aggregate principal amount, plus any accrued but unpaid interest.

The Notes may be declared immediately due and payable at the election of the trustee or holders of 25% of the aggregate principal amount of outstanding Notes in the event that the Company defaults in the payment of any interest following the nonpayment of any such interest for 20 or more consecutive quarterly periods.  Holders of the trust preferred securities are entitled to a cumulative cash distribution on the liquidation amount of $1,000 per security.  For each January 7, April 7, July 7 or October 7 of each year, the rate will be adjusted to equal the three month LIBOR plus 1.60%.  As of June 30, 2021, the rate was 1.78%. 

Liquidity

Liquidity management involves our ability to meet cash flow requirements arising from fluctuations in deposit levels and demands of daily operations, which include funding of securities purchases, providing for customers’ credit needs and ongoing repayment of borrowings.  Our liquidity is actively managed on a daily basis and reviewed periodically by our management and Board of Director’s Asset/Liability Committees.  This process is intended to ensure the maintenance of sufficient funds to meet our needs, including adequate cash flow for off-balance sheet commitments.

    Our primary sources of liquidity are derived from financing activities which include the acceptance of customer and, to a lesser extent, broker deposits, Federal funds facilities with correspondent banks, and advances from the Federal Home Loan Bank of San Francisco.  These funding sources are augmented by payments of principal and interest on loans, the routine maturities and pay downs of securities from the securities portfolio, the stability of our core deposits and the ability to sell investment securities.  As of June 30, 2021, the Company had unpledged securities totaling $768,056,000 available as a secondary source of liquidity and total cash and cash equivalents of $120,666,000.  Cash and cash equivalents at June 30, 2021 increased 71.70% compared to $70,278,000 at December 31, 2020.  Primary uses of funds include withdrawal of and interest payments on deposits, originations and purchases of loans, purchases of investment securities, and payment of operating expenses.

    As a means of augmenting our liquidity, we have established federal funds lines with our correspondent banks.  At June 30, 2021, our available borrowing capacity includes approximately $110,000,000 in unsecured credit lines with our correspondent banks, $245,311,000 in unused FHLB secured advances and a $11,480,000 secured credit line at the Federal Reserve Bank.  We believe our liquidity sources to be stable and adequate.  At June 30, 2021, we were not aware of any information that was reasonably likely to have a material effect on our liquidity position.

60

    The following table reflects the Company’s credit lines, balances outstanding, and pledged collateral at June 30, 2021 and December 31, 2020:

Credit Lines (In thousands)	June 30, 2021		December 31, 2020
Unsecured Credit Lines
(interest rate varies with market):
Credit limit	$	110,000	$	110,000
Balance outstanding	$	—	$	—
Federal Home Loan Bank
(interest rate at prevailing interest rate):
Credit limit	$	245,311	$	235,371
Balance outstanding	$	—	$	—
Collateral pledged	$	447,321	$	435,152
Fair value of collateral	$	390,874	$	379,831
Federal Reserve Bank
(interest rate at prevailing discount interest rate):
Credit limit	$	11,480	$	13,323
Balance outstanding	$	—	$	—
Collateral pledged	$	11,892	$	13,538
Fair value of collateral	$	11,804	$	13,703

    The liquidity of the parent company, Central Valley Community Bancorp, is primarily dependent on the payment of cash dividends by its subsidiary, Central Valley Community Bank, subject to limitations imposed by California statutes and the regulations.

OFF-BALANCE SHEET ITEMS

In the ordinary course of business, the Company is a party to financial instruments with off-balance risk.  These financial instruments include commitments to extend credit and standby letters of credit.  Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received.  For an expanded discussion of these financial instruments, refer to Note 7of the Notes to Consolidated Financial Statements included herein and Note 13 of the Notes to Consolidated Financial Statements in the Company’s 2020 Annual Report on Form 10-K.

    In the ordinary course of business, the Company is party to various operating leases.  For a fuller discussion of these financial instruments, refer to Note 10 of the Notes to Consolidated Financial Statements in the Company’s 2020 Annual Report on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our results of operations are highly dependent upon our ability to manage interest rate risk. We consider interest rate risk to be a significant market risk that could have a material effect on our financial condition and results of operations. Interest rate risk is measured and assessed on a quarterly basis. In our opinion, there has not been a material change in our interest rate risk exposure since the information disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, management, including the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures with respect to the information generated for use in this Quarterly Report. The evaluation was based in part upon reports provided by a number of executives.  Based upon, and as of the date of the evaluation of the disclosure controls and procedures, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed by the Company in the reports that it files or submits is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

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    There was no change in the Company’s internal controls over financial reporting during the quarter ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

    In designing and evaluating disclosure controls and procedures, the Company’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurances of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None to report.

ITEM 1A. RISK FACTORS

In addition to the other information contained in this Quarterly Report on Form 10-Q, the following risk factors represent material updates and additions to the risk factors previously disclosed in our Annual Report on Form 10- K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission. Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition or results of operations. Further, to the extent that any of the information contained in this Quarterly Report on Form 10-Q constitutes forward-looking statements, the cautionary statement identifying important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

A summary of the repurchase activity of the Company’s common stock for the six months ended June 30, 2021 follows.

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans (1) (2)	Approximate dollar value of shares that may yet be purchased under current plans (in thousands)
06/1/2021 - 06/30/2021	239,679	$	20.17	239,679	$	7,158,000
Total	239,679	$	20.17	239,679

(1) The Company approved a stock repurchase program effective March 17, 2021 with the intent to purchase up to $12,000,000 of the Company’s outstanding common stock, or approximately 636,943 shares. During the six months ended June 30, 2021, the Company repurchased and retired a total of 239,679 shares at an approximate cost of $20.17 per share.

(2) All share repurchases were effected in accordance with the safe harbor provisions of Rule 10b-18 of the Securities Exchange Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None to report.

ITEM 4. MINE SAFETY DISCLOSURES

None to report.

ITEM 5. OTHER INFORMATION

None to report.

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ITEM 6 EXHIBITS

3.1	Amended and Restated Articles of Incorporation of Central Valley Community Bancorp (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 16, 2010).
3.2	Bylaws of the Company as amended (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 6, 2016).
10.93	Executive Salary Continuation Agreement by and between Central Valley Community Bank and Patrick Luis, dated July 1, 2021.*
10.94	Life Insurance Endorsement Method Split Dollar Plan Agreement by and between Central Valley Community Bank and Patrick Luis, dated July 1, 2021.*
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934.
32.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation document
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Link Document
•Management contract and compensatory plans.

63

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Central Valley Community Bancorp
Date: August 4, 2021	/s/ James M. Ford
	James M. Ford
	President and Chief Executive Officer
Date: August 4, 2021	/s/ David A. Kinross
	David A. Kinross
	Executive Vice President and Chief Financial Officer

64

EX-10.93

EXHIBIT 10.93

EXECUTIVE SALARY CONTINUATION AGREEMENT

This Executive Salary Continuation Agreement (the “Agreement”) is made effective July 1, 2021 (the “Effective Date”), and is entered into by and between Central Valley Community Bank (the “Bank”) and Patrick Luis (the “Executive”), each a “Party” and together the “Parties.”

RECITALS

A.The Executive is a valued executive of the Bank, and currently serves as the Bank’s EVP Chief Credit Officer.

B.The Bank’s Board of Directors (the “Board”) has determined that the Executive’s services to the Bank are valuable. The Bank and the Executive desire to enter into this Agreement under which the Bank has agreed to make certain payments to the Executive following the termination of employment.

C.The Parties intend that this Agreement shall constitute an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The parties further intend that this Agreement shall constitute a nonqualified deferred compensation arrangement under the Internal Revenue Code (“Code”). The Executive is fully advised of the Bank’s financial status and has had substantial input in the design of and benefits provided under this Agreement.

AGREEMENT

In consideration of the mutual promises, covenants, and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

I.EMPLOYMENT

The Bank agrees to employ the Executive in such capacity as the Bank may from time to time determine. The Executive will continue in the employ of the Bank in such capacity and with such duties and responsibilities as may be assigned to him, and with such compensation as may be determined from time to time by the Board. Subject to the terms of this Agreement and any current or future employment agreement between the Bank and the Executive, either the Bank or the Executive may terminate the employment relationship at any time, for any reason or for no reason.

II.FRINGE BENEFITS

The salary continuation benefits provided by this Agreement are granted by the Bank as a fringe benefit to the Executive and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Executive has no option to take any current payment or bonus in lieu of salary continuation benefits.

    1

EXHIBIT 10.93

III.RETIREMENT BENEFIT

If the Executive Retires on or after October 5, 2025, the Bank shall pay the Executive an annual retirement benefit equal to Forty Thousand Dollars and No/100 ($40,000.00), in equal monthly installments (each of which shall be 1/12 of the annual benefit), for a period of sixty (60) months, commencing on the first day of the month following the date of the Executive’s Retirement. Beginning with the thirteenth month that benefits are paid, and continuing thereafter until paid in full, the annual benefit shall be increased each year by three percent (3%) from the previous year’s benefit to account for cost of living increases. In the event of the Executive’s death prior to the date all payments have been made, Section IV of this Agreement shall control. Any benefit payable under this Section shall be subject to reduction or elimination as provided in Section VII.

For purposes of this Section, “Retirement” and “Retire” mean that the Executive remains in the continuous employ of the Bank from the Effective Date and then retires from active employment (and his Employment Terminates) with the Bank, after October 5, 2025.

If the Executive Terminates Employment before October 5, 2025, this Agreement shall immediately terminate and the Executive shall not be entitled to receive any benefits under this Agreement.

IV.DEATH BENEFIT

In the event of the Executive’s death, no benefits shall be payable hereunder and this Agreement shall automatically terminate. If the Executive is already in pay status at the time of his death, no further payments will be made, and his right to any additional payments will terminate. Notwithstanding the foregoing, in the event that the Policy(ies) described in that certain Life Insurance Endorsement Method Split Dollar Agreement between the Bank and the Executive of even date herewith (the “Split Dollar Agreement”) is/are surrendered, lapse or are otherwise terminated by the Bank, and the Bank does not replace such Policy(ies) with other comparable life insurance, such that no death benefits are payable under the Split Dollar Agreement, then in the event of the Executive’s death, the Executive’s beneficiaries under the Split Dollar Agreement shall be entitled to the payment of the benefits, if any, described in Section VI(A) or VI(B) of the Split Dollar Agreement, as applicable, in lieu of any other benefit under this Agreement.

V.TERMINATION OF EMPLOYMENT

A.Definitions and Construction.

“Termination of Employment” or “Employment Terminates” means that the Executive’s employment with the Bank is terminated and the Executive actually separates from service with the Bank and does not continue in his prior capacity. Termination of Employment does not include the Executive’s military leave, sick leave or other bona fide leave of absence (such as temporary employment with the government) if the period of leave does not exceed six months, or if longer, so long as his right to reemployment with the Bank is provided either in contract or by statute. Notwithstanding the foregoing, Executive’s employment shall be deemed to have terminated, and Executive shall have suffered an Employment Termination, when the Parties reasonably anticipate that Executive will have a permanent reduction in the level of bona fide

    2

EXHIBIT 10.93

services provided to the Bank, to a level of service that is less than fifty percent (50%) of the average level of bona fide services provided by Executive to the Bank in the immediately preceding thirty-six (36) month period. Notwithstanding anything to the contrary, the terms “Termination of Employment” and “Employment Terminates” shall be construed in accordance with Code Section 409A, together with regulations and guidance promulgated thereunder, as amended from time to time (collectively referred to as “Code Section 409A”).

B.Termination of Employment For Cause.

In the event the Executive’s Employment Terminates For Cause, then this Agreement shall immediately terminate and the Executive shall forfeit all benefits and shall not be entitled to receive any benefits under this Agreement. “For Cause” shall mean any of the following actions by the Executive that result in an adverse effect on the Bank: (1) gross negligence or gross neglect; (2) the commission of a felony or gross misdemeanor involving moral turpitude, fraud, or dishonesty; (3) the willful violation of any law, rule, or regulation (other than a traffic violation or similar offense); (4) an intentional failure to perform stated duties; or (5) a breach of fiduciary duty involving personal profit. If a dispute arises as to whether Termination of Employment was For Cause, such dispute shall be resolved by arbitration as set forth in this Agreement.

VI.CHANGE IN CONTROL

Upon a Change In Control, the Bank shall pay the Executive a lump sum payment equal to the present value (calculated using the assumptions set forth in Section IX(K), determined as of the date of payment) of one hundred percent (100%) of the benefit that the Executive would have received under Section III(A) had the Executive been employed by the Bank until October 5, 2025. The lump sum payment shall be made on the first day of the month following the date of Change In Control. The payment of a lump sum pursuant to this Section shall be in lieu of any other benefit under this Agreement. Any benefit payable under this Section shall be subject to reduction or elimination as provided in Section VII.

A “Change In Control” shall be deemed to have occurred on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Bank that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Bank. However, if any one person or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Bank, the acquisition of additional stock by the same person or persons will not be considered to cause a Change In Control. Further, an increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Bank acquires its stock in exchange for property will not be considered to cause a Change In Control. Transfers of Bank stock on account of death, gift, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a Change In Control. For purposes of this Section, the term “Bank” shall include any holding company, meaning any corporation that is a majority shareholder of the Bank. A “Change In Control” shall be interpreted in accordance with the definition of “Change in Ownership” under Code Section 409A, and to the extent that an event or series of events does not constitute a

    3

EXHIBIT 10.93

“Change in Ownership” under Code Section 409A, the event or series of events will not constitute a “Change In Control” under this Agreement.

    4

EXHIBIT 10.93

VII.LEGAL AND REGULATORY RESTRICTIONS ON BENEFIT PAYMENTS

Benefit payments under this Agreement are subject to any restrictions imposed by applicable state or federal laws, rules, regulations, or orders or directives issued by regulatory authorities (referred to as “Payment Restrictions”). Bank shall not be required to make any payment to Executive or take any other action under this Agreement if such payment or action will or reasonably could result in any violation of any Payment Restrictions, including but not limited to the specific Payment Restrictions described in subsections (A) and (B) below.

A.Restrictions on Contracts and Payments for Insured Depository Institutions in Troubled Status.

The parties acknowledge and agree that while the restrictions contained in the Federal Deposit Insurance Act, Section 18(k) [12 U.S.C. §1828(k)], relating to contracts for and payment of executive compensation and benefits by insured depository institutions in “troubled” condition, do not currently apply to the Bank or the Executive, such provisions could apply in the future.

B.Delayed Payments to Certain Executives Under Code Section 409A.

If Executive is a Specified Employee as of the date of Termination of Employment, payments under this Agreement may not be made before the date that is six months after Termination of Employment (or, if earlier than the end of the six-month period, the date of death of the Executive). Payments to which the Executive would otherwise be entitled during the first six months following Termination of Employment, but for this Six-Month Delay provision, shall be accumulated and paid on the first day of the seventh month following Termination of Employment.

(i)Specified Employee.

Executive shall be deemed to be a “Specified Employee” if, as of the date of Executive’s Termination of Employment, Executive is a Key Employee of the Bank and the Bank (or its holding company, Central Valley Community Bancorp) has stock which is publicly traded on an established securities market or otherwise.

(ii)Key Employee.

If Executive meets each of the requirements of Internal Revenue Code Section 416(i)(1)(A)(i), (ii), and (iii) (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during a twelve month period ending on December 31 (the “Specified Employee Identification Date”), then Executive shall be treated as a Key Employee for the entire twelve month period beginning on the following April 1. Such April 1 date shall be the “Specified Employee Effective Date” for purposes of Section 409A.

C.Clawback.

In the event that any Payment Restrictions or any contractual arrangement with or required by a regulatory authority require Bank to seek or demand repayment or return of any payments made to Executive under this Agreement for any reason, Executive agrees to repay to Bank the aggregate amount of such payments no later than thirty (30) days following Executive’s receipt

    5

EXHIBIT 10.93

of a written notice from Bank indicating that payments received by Executive under this Agreement are subject to recapture or clawback.

VIII.RESTRICTIONS ON FUNDING

The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Agreement. To the extent the Executive or any successor in interest becomes eligible to receive benefits under this Agreement, he or she shall be and remain a general creditor of the Bank in the same manner as any other creditor having a general claim for unpaid compensation. The Bank reserves the absolute right, in its sole discretion, to purchase life insurance in conjunction with the benefits provided under this Agreement. The Bank further reserves the absolute right, in its sole discretion, to establish a grantor trust which may be used to hold Bank assets to be maintained as reserves against the Bank’s unfunded, unsecured obligations hereunder. Such reserves shall at all times be subject to the claims of the Bank’s creditors. If a trust or other vehicle is established, the Bank’s obligations hereunder shall be reduced to the extent assets are utilized to meet its obligations. Any trust established by the Bank and the assets held in trust shall conform in substance to the terms of the model trust described in Revenue Procedure 92-64, 1992-33 IRB 11 (8-17-92). The Bank reserves the absolute right, in its sole discretion, to terminate any life insurance purchased or any grantor trust established for these purposes at any time, in whole or in part. At no time shall the Executive have any lien or right, title or interest in or to any specific investment or to any assets of the Bank. If the Bank elects to invest in a life insurance, disability or annuity policy upon the life of the Executive, then the Executive shall assist the Bank by freely submitting to a physical exam and supplying such additional information necessary to obtain such insurance or annuities.

IX.MISCELLANEOUS

A.Prohibition Against Alienation or Assignment.

The Executive, his surviving spouse, and any other beneficiary(ies) under this Agreement shall not have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any benefit which may become payable hereunder. No benefits shall be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or the Executive’s beneficiary(ies), or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts to assign, commute, hypothecate, transfer or dispose of the benefits which may become payable hereunder, the Bank’s liabilities shall forthwith cease and terminate.

B.Binding Obligation of the Bank and Any Successor in Interest.

The Bank shall not merge or consolidate into or with another bank or sell substantially all of its assets to another bank, firm or person until such bank, firm or person agrees, in writing, to assume and discharge the Bank’s duties and obligations under this Agreement. This Agreement shall be binding upon the Parties, their successors, beneficiaries, heirs and personal representatives.

C.Amendment or Revocation.

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EXHIBIT 10.93

It is agreed by and between the Parties that, during the lifetime of the Executive, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Executive and the Bank.

D.Gender.

Whenever in this Agreement words are used in the masculine, feminine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

E.Effect on Other Bank Benefit Plans.

Except as provided in Section VII, nothing contained in this Agreement shall affect the Executive’s rights or shall create any rights to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan sponsored or offered by the Bank.

F.Headings.

Headings and subheadings in this Agreement are inserted for reference and convenience only and shall not be deemed a part of this Agreement.

G.Applicable Law.

The validity and interpretation of this Agreement shall be governed by applicable federal law and the laws of the State of California.

H.Partial Invalidity.

If any term, provision, covenant, or condition of this Agreement is determined by an arbitrator or a court to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant, or condition invalid, void, or unenforceable, and the Agreement shall remain in full force and effect notwithstanding such partial invalidity.

I.Not a Contract of Employment.

This Agreement shall not be deemed to constitute a contract of employment between the Parties, nor shall any provision hereof restrict the right of the Bank to discharge the Executive or restrict the right of the Executive to terminate employment.

J.Effective Date.

This Agreement shall be effective on the Effective Date specified above.

K.Present Value.

All present value calculations under this Agreement shall be based on the following discount rate:

    7

EXHIBIT 10.93

Discount Rate:    The discount rate as used in the calculations for this Agreement shall comply with the accounting standards contained in ASC 715. The initial rate shall be three and 2/100 percent (3.02%) and shall be adjusted quarterly.

L.Contradiction in Terms of Agreement and Exhibits.

If there is a contradiction in the terms of this Agreement and the exhibits attached hereto with respect to the benefits payable, then the terms set forth in the Agreement shall control.

X.ERISA PROVISIONS

A.Named Fiduciary and Plan Administrator.

The “Named Fiduciary and Plan Administrator” of this Agreement shall be Central Valley Community Bank. The Board, in its discretion, may appoint one or more individuals to serve in this capacity. As Named Fiduciary and Plan Administrator, the Bank shall be responsible for the management, control and administration of the Agreement. The Named Fiduciary may delegate to others certain aspects of the management and operation, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

B.Claims Procedure and Arbitration.

In the event a dispute arises with respect to benefits under this Agreement and the disputed benefits are not paid, then the Executive or his beneficiaries may make a written claim to the Named Fiduciary and Plan Administrator named above within sixty (60) days from the date payments are refused. The Named Fiduciary and Plan Administrator shall review the written claim and, if the claim is denied in whole or in part, they shall respond in writing within sixty (60) days of receipt of such claim, stating specific reasons for the denial, and providing references to the provisions of this Agreement upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimant(s) if a further review of the claim is desired. A claim shall be deemed denied if the Named Fiduciary and Plan Administrator fail to take any action within the prescribed sixty (60) day period.

If claimants desire a second review they shall notify the Named Fiduciary and Plan Administrator in writing within sixty (60) days of the initial claim denial. Claimants may review this Agreement or any documents relating thereto and submit any written issues and comments that may be appropriate. In their sole discretion, the Named Fiduciary and Plan Administrator shall then review the second claim and provide a written decision within sixty (60) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of this Agreement upon which the decision is based.

If claimants continue to dispute the benefit denial based upon completed performance of this Agreement or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the claimants. The arbitrator shall operate under any generally

    8

EXHIBIT 10.93

recognized set of arbitration rules. The Parties agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination.

Where a dispute arises as to benefits forfeited as a result of the Bank’s discharge of the Executive For Cause, such dispute shall likewise be submitted to arbitration as described above and the Parties agree to be bound by the arbitrator’s decision.

XI.TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR REGULATIONS

The Bank is entering into this Agreement upon the assumption that certain existing tax laws, rules and regulations will continue in effect in their current form. If any such assumptions should change and the change has a detrimental effect on this Agreement, then the Bank reserves the right to terminate or modify this Agreement. This paragraph shall become null and void effective immediately upon a Change In Control.

XII.CODE SECTION 280G

Notwithstanding any provision of this Agreement to the contrary, if all or a portion of any benefit payment under this Agreement, alone or together with any other compensation or benefit, will be a non-deductible expense to the Bank by reason of Code Section 280G, the Bank shall reduce the benefits payable under this Agreement as necessary to avoid the application of Section 280G. The Bank shall have the power to reduce benefits payable under this Agreement to zero, if necessary.

XIII.USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT

In further consideration of this Agreement, Executive agrees not to use Bank’s trade secrets and confidential information to compete with Bank at any time, directly or indirectly.  As further consideration, for a period of one (1) year following termination of his employment, Executive agrees not to solicit, directly or indirectly, (A) any employees of Bank or consultants to Bank who are located within the state of California to terminate such employment or consulting arrangement or to work for anyone in competition with Bank; and (B) any Bank customers who are known to Executive as a result of his employment with Bank. In the event that Executive breaches his obligations under this section, Bank shall have the right, in its sole discretion, to not pay any benefit due Executive under this Agreement.

XIV.PROHIBITION AGAINST ACCELERATION

Notwithstanding anything to the contrary, neither the time nor the scheduling of payments under this Agreement may be accelerated unless such acceleration is permissible under Code Section 409A, other applicable law and the terms of this Agreement.

IN WITNESS WHEREOF, the Parties acknowledge that each has carefully read this Agreement and executed the original on the date written below and that, upon execution, each has received a conforming copy.

    9

EXHIBIT 10.93

BANK: CENTRAL VALLEY COMMUNITY BANK By:     James Ford     President and Chief Executive Officer Dated:    July 1, 2021                 EXECUTIVE: PATRICK LUIS Patrick Luis Dated:    July 1, 2021                

    10

EXHIBIT 10.93

EXHIBIT A

BENEFICIARY DESIGNATION

I, Patrick Luis, designate the following as beneficiary of benefits under the Executive Salary Continuation Agreement payable following my death:

    Primary Beneficiary:    

    Contingent Beneficiary:    

NOTE:To name a trust as beneficiary, please provide the name of the trustee and the exact date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new written designation with Central Valley Community Bank. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary, in the event of the dissolution of our marriage.

Dated:    July 1, 2021        

Patrick Luis
EVP, Chief Credit Officer

ACCEPTED by Central Valley Community Bank

Dated:    July 1, 2021                By:

    James Ford

    President and Chief Executive Officer

    11

EX-10.94

EXHIBIT 10.94

LIFE INSURANCE SPLIT DOLLAR

ENDORSEMENT METHOD AGREEMENT

Insurers and Policy Numbers:        Mass Mutual Insurance

                        Policy #39159856

                        Protective Life Insurance

                        Policy #85300605

Bank:                        Central Valley Community Bank

Insured:                    Patrick Luis

Relationship of Insured to Bank:        EVP Chief Credit Officer

This Life Insurance Split Dollar Endorsement Method Agreement (the “Agreement”) is made effective as of July 1, 2021, and is entered into by and between Central Valley Community Bank (the “Bank”) and Patrick Luis (the “Insured”), each a “Party” and together the “Parties.”

AGREEMENT

The respective rights and duties of the Bank and the Insured in the above-referenced policy shall be pursuant to the terms set forth below:

I.DEFINITIONS

Refer to the policy contract for the definition of all terms in this Agreement.

II.POLICY TITLE AND OWNERSHIP

Title and ownership shall reside in the Bank for its use and for the use of the Insured in accordance with this Agreement. The Bank alone may, to the extent of its interest, exercise the right to borrow or withdraw on the policy cash values. Where the Bank and the Insured (or assignee, with the consent of the Insured) mutually agree to exercise the right to increase the coverage under the subject Split Dollar policy, then, in such event, the rights, duties and benefits of the parties to such increased coverage shall continue to be subject to the terms of this Agreement.

III.BENEFICIARY DESIGNATION RIGHTS

The Insured (or assignee) shall have the right and power to designate a beneficiary or beneficiaries to receive the Insured’s share of the proceeds payable upon the death of the Insured, and to elect and change a payment option for such beneficiary, subject to any right or interest the Bank may have in such proceeds, as provided in this Agreement.

- 1 -

EXHIBIT 10.94

IV.PREMIUM PAYMENT METHOD

The Bank intends to pay an amount equal to the planned premiums and any other premium payments that might become necessary to keep the policy in force.

V.TAXABLE BENEFIT

Annually the Insured will receive a taxable benefit equal to the assumed cost of insurance as required by the Internal Revenue Service. The Bank (or its administrator) will report to the Insured the amount of imputed income each year on Form W-2 or its equivalent.

VI.DIVISION OF DEATH PROCEEDS

Subject to Paragraphs VII and IX herein, the division of the death proceeds of the policy is as follows:

A.Upon death of the Insured prior to a Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of the Retirement Benefit under that certain Executive Salary Continuation Agreement between the Bank and Insured dated of even date herewith (the “Salary Continuation Agreement”), assuming that the payments would begin on the date of death and continue for sixty months, or one hundred percent (100%) of the total proceeds of the policy as of the date of death, whichever amount is less. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement.

B.Upon death of the Insured following Retirement or Termination of Employment with the Bank, the Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to a lump sum payment equal to the present value of one hundred percent (100%) of the sum of all remaining payments, if any, that would have been made under the Salary Continuation Agreement but for the Insured’s death, or one hundred percent (100%) of the total proceeds of the policy as of the date of death, whichever amount is less. If no benefits are payable to the Insured pursuant to the Salary Continuation Agreement following Termination of Employment, no benefit shall be payable under this Agreement. Present value calculations shall be made using the assumptions set forth in Section IX(K) of the Salary Continuation Agreement.

C.The Bank shall be entitled to the remainder of such proceeds.

D.The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bears to the total proceeds, excluding any such interest.

E.For purposes of this Agreement, “Termination of Employment”, “Retirement”, “Retirement Benefit” and “Change In Control” shall have the same meanings as set forth in the Salary Continuation Agreement.

- 2 -

EXHIBIT 10.94

- 3 -

EXHIBIT 10.94

VII.DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

During the Insured’s life, the Bank shall at all times be entitled to an amount equal to the policy’s cash value, as that term is defined in the policy contract, less any policy loans and unpaid interest or cash withdrawals previously incurred by the Bank and any applicable surrender charges. Such cash value shall be determined as of the date of surrender. Notwithstanding the foregoing, upon Insured’s death, the proceeds of the policy shall first be used to satisfy the obligations to Insured’s beneficiaries set forth in Paragraph VI.

VIII.RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS

In the event the policy involves an endowment or annuity element, the Bank’s right and interest in any endowment proceeds or annuity benefits, on expiration of the deferment period, shall be determined under the provisions of this Agreement by regarding such endowment proceeds or the commuted value of such annuity benefits as the policy’s cash value. Such endowment proceeds or annuity benefits shall be considered to be like death proceeds for the purposes of division under this Agreement.

IX.TERMINATION OF AGREEMENT

This Agreement shall terminate upon the occurrence of any one of the following:

1.In the event benefits become payable to the Insured following a Change In Control pursuant to Section VI of the Salary Continuation Agreement;

2.The Insured shall be discharged from employment with the Bank for cause. The term for “cause” shall mean any of the following that result in an adverse effect on the Bank: (i) gross negligence or gross neglect; (ii) the commission of a felony or gross misdemeanor involving moral turpitude, fraud, or dishonesty; (iii) the willful violation of any law, rule, or regulation (other than a traffic violation or similar offense); (iv) an intentional failure to perform stated duties; or (v) a breach of fiduciary duty involving personal profit; or

3.Surrender, lapse, or other termination of the Policy by the Bank.

Upon termination of this Agreement pursuant to (2) or (3) above, the Insured (or assignee) shall have a fifteen (15) day option to receive from the Bank an absolute assignment of the policy in consideration of a cash payment to the Bank, whereupon this Agreement shall terminate. Such cash payment referred to above shall be the greater of:

(a)    The Bank’s share of the cash value of the policy on the date of such assignment, as defined in this Agreement; or

(b)    The amount of the premiums which have been paid by the Bank prior to the date of such assignment, plus interest.

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EXHIBIT 10.94

If within said fifteen (15) day period, the Insured fails to exercise the option, fails to tender the required cash payment, or dies, then the option shall terminate, and the Insured (or assignee) agrees that all of the Insured’s rights, interest and claims in the policy shall terminate as of the date of the termination of this Agreement.

The Insured expressly agrees that this Agreement shall constitute sufficient written notice to the Insured of the Insured’s option to receive an absolute assignment of the policy as set forth herein.

Except as provided above, this Agreement shall terminate upon distribution of the death benefit proceeds in accordance with Paragraph VI above.

X.INSURED’S OR ASSIGNEE’S ASSIGNMENT RIGHTS

The Insured may not, without the written consent of the Bank, assign to any individual, trust or other organization, any right, title or interest in the subject policy nor any rights, options, privileges or duties created under this Agreement.

XI.AGREEMENT BINDING UPON THE PARTIES

This Agreement shall bind the Insured and the Bank, their heirs, successors, personal representatives and assigns.

XII.ERISA PROVISIONS

The following provisions are part of this Agreement and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”):

A.Named Fiduciary and Plan Administrator

The “Named Fiduciary and Plan Administrator” of this Life Insurance Split Dollar Endorsement Method Agreement shall be Central Valley Community Bank. As Named Fiduciary and Plan Administrator, the Bank shall be responsible for the management, control, and administration of this Agreement as established herein. The Named Fiduciary may delegate to others certain management and operational responsibilities, including the employment of advisors and the delegation of any ministerial duties to qualified individuals.

B.Funding Policy

The funding policy for this Agreement shall be to maintain the subject policy in force by paying, when due, all premiums required.

C.Basis of Payment of Benefits

Direct payment by the Insurer is the basis of payment of benefits under this Agreement, with those benefits in turn being based on the payment of premiums as provided in this Agreement.

D.Claim Procedures

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EXHIBIT 10.94

Claim forms or claim information as to the subject policy can be obtained by contacting NFP at (831) 373-4614. When the Named Fiduciary has a claim which may be covered under the provisions described in the insurance policy, he or she should contact the office named above, and either complete a claim form and forward it to an authorized representative of the Insurer or advise the Named Fiduciary what further requirements are necessary. The Insurer will evaluate and make a decision as to payment. If the claim is payable, a benefit check will be issued in accordance with the terms of this Agreement.

In the event that a claim is not eligible under the policy, the Insurer will notify the Named Fiduciary of the denial pursuant to the requirements under the terms of the policy. If the Named Fiduciary is dissatisfied with the denial of the claim and wishes to contest such claim denial, he or she should contact the office named above and they will assist in making inquiry to the Insurer. All objections to the Insurer's actions should be in writing and submitted to the office named above for transmittal to the Insurer.

XIII.GENDER

Whenever in this Agreement words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

XIV.INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

The Insurer shall not be deemed a party to this Agreement, but will respect the rights of the parties as herein developed upon receiving an executed copy of this Agreement. Payment or other performance in accordance with the policy provisions shall fully discharge the Insurer for any and all liability.

XV.AMENDMENT OR REVOCATION

It is agreed by and between the parties hereto that, during the lifetime of the Insured, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Insured and the Bank, provided however that following a Change in Control of the Bank (as that term is defined in the Salary Continuation Agreement), this Agreement may only be modified by the mutual consent of the Bank and Insured.

XVI.EFFECTIVE DATE

The Effective Date of this Agreement shall be the date first stated above.

XVII.SEVERABILITY AND INTERPRETATION

If a provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nonetheless be enforceable according to their terms. Further, in the event that any provision is held to be overbroad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to law and enforced as amended.

- 6 -

EXHIBIT 10.94

XVIII.APPLICABLE LAW

The validity and interpretation of this Agreement shall be governed by applicable federal law and the laws of the State of California.

XIX.USE OF TRADE SECRETS AND SOLICITATION AFTER TERMINATION OF EMPLOYMENT

In further consideration of this Agreement, Executive agrees not to use Bank's trade secrets and confidential information to compete with Bank at any time, directly or indirectly. As further consideration, for a period of one (1) year following termination of his employment, Executive agrees not to solicit, directly or indirectly, (A) any employees of Bank or consultants to Bank who are located within the state of California to terminate such employment or consulting arrangement or to work for anyone in competition with Bank; and (B) any Bank customers who are known to Executive as a result of his employment with Bank. In the event that Executive breaches his obligations under this section, Bank shall have the right, in its sole discretion, to not pay any benefit due Executive under this Agreement.

Executed at Fresno, California on July 1, 2021.

BANK CENTRAL VALLEY COMMUNITY BANK By: James Ford President and Chief Executive Officer INSURED PATRICK LUIS Patrick Luis EVP Chief Credit Officer

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EXHIBIT 10.94

- 8 -

BENEFICIARY DESIGNATION FORM

FOR LIFE INSURANCE SPLIT DOLLAR

ENDORSEMENT METHOD AGREEMENT

PRIMARY DESIGNATION:

Name                Address                Relationship

SECONDARY (CONTINGENT) DESIGNATION:

All sums payable under the Life Insurance Split Dollar Endorsement Method Agreement by reason of my death shall be paid to the Primary Beneficiary, if he or she survives me, and if no Primary Beneficiary shall survive me, then to the Secondary (Contingent) Beneficiary.

    July 1, 2021            

Patrick Luis                            Date

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a) [SECTION 302] CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, James M. Ford, certify that:

1.I have reviewed this Annual Report on Form 10-Q for the Quarter Ended June 30, 2021 of CENTRAL VALLEY COMMUNITY BANCORP;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) & 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ James M. Ford	Date: August 4, 2021
James M. Ford,

President and Chief Executive Officer (principal executive officer)

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a) [SECTION 302] CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, David A. Kinross, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2021 of CENTRAL VALLEY COMMUNITY BANCORP;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) & 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ David A. Kinross	Date: August 4, 2021
David A. Kinross,

Executive Vice President and Chief Financial Officer (principal accounting officer and principal financial officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Central Valley Community Bancorp (CVCB) on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, James M. Ford, President and Chief Executive Officer of CVCB, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CVCB.

A signed original of this written statement required by Section 906 has been provided to Central Valley Community Bancorp and will be retained by Central Valley Community Bancorp and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: August 4, 2021

/s/ James M. Ford

JAMES M. FORD

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Central Valley Community Bancorp (CVCB) on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David A. Kinross, Executive Vice President and Chief Financial Officer of CVCB, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CVCB.

A signed original of this written statement required by Section 906 has been provided to Central Valley Community Bancorp and will be retained by Central Valley Community Bancorp and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: August 4, 2021

/s/ David A. Kinross

DAVID A. KINROSS

Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 02, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-31977
Entity Registrant Name	CENTRAL VALLEY COMMUNITY BANCORP
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	77-0539125
Entity Address, Postal Zip Code	93720
City Area Code	559
Local Phone Number	298-1775
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	CVCY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,984,214
Entity Central Index Key	0001127371
Document Period End Date	Jun. 30, 2021
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Address, Address Line One	7100 N. Financial Dr., Suite 101
Entity Address, City or Town	Fresno
Entity Address, State or Province	CA

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
ASSETS
Cash and due from banks	$ 39,346	$ 34,175
Interest-earning deposits in other banks	81,320	36,103
Total cash and cash equivalents	120,666	70,278
Available-for-sale debt securities	952,416	710,092
Equity securities	7,522	7,634
Loans, less allowance for credit losses of $10,439 at June 30, 2021 and $12,915 at December 31, 2020	1,059,506	1,089,432
Bank premises and equipment, net	8,465	8,228
Bank-owned life insurance	39,062	28,713
Federal Home Loan Bank stock	5,595	5,595
Goodwill	53,777	53,777
Core deposit intangibles	835	1,183
Accrued interest receivable and other assets	32,706	29,164
Total assets	2,280,550	2,004,096
Deposits:
Non-interest bearing	899,406	824,889
Interest bearing	1,079,688	897,821
Total deposits	1,979,094	1,722,710
Junior subordinated deferrable interest debentures	5,155	5,155
Accrued interest payable and other liabilities	45,252	31,210
Total liabilities	2,029,501	1,759,075
Commitments and contingencies (Note 7)
Shareholders’ equity:
Preferred stock, no par value; 10,000,000 shares authorized, none issued and outstanding	0	0
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 12,329,089 at June 30, 2021 and 12,509,848 at December 31, 2020	75,265	79,416
Retained earnings	162,910	150,749
Accumulated other comprehensive income, net of tax	12,874	14,856
Total shareholders’ equity	251,049	245,021
Total liabilities and shareholders’ equity	$ 2,280,550	$ 2,004,096

XML

CONSOLIDATED BALANCE SHEETS (Unaudited)  CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for credit losses on loans	$ 10,439	$ 12,915
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, authorized (in shares)	80,000,000	80,000,000
Common stock, issued (in shares)	12,524,609	12,509,848
Common stock, outstanding (in shares)	12,329,089	12,509,848
Common stock, par value (in dollars per share)	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
INTEREST INCOME:
Interest and fees on loans	$ 13,556	$ 12,600	$ 27,321	$ 25,498
Interest on deposits in other banks	29	13	61	196
Interest and dividends on investment securities:
Taxable	3,361	2,959	6,094	6,225
Exempt from Federal income taxes	1,409	412	2,726	571
Total interest income	18,355	15,984	36,202	32,490
INTEREST EXPENSE:
Interest on deposits	252	374	520	806
Interest on junior subordinated deferrable interest debentures	22	36	46	81
Total interest expense	274	410	566	887
Net interest income before provision for credit losses	18,081	15,574	35,636	31,603
(REVERSAL OF) PROVISION FOR CREDIT LOSSES	(1,500)	3,000	(3,300)	4,375
Net interest income after provision for credit losses	19,581	12,574	38,936	27,228
NON-INTEREST INCOME:
Service charges	467	447	899	1,093
Appreciation in cash surrender value of bank-owned life insurance	176	176	349	358
Interchange fees	471	307	841	640
Net realized gains (losses) on sales of investment securities	(79)	(58)	(79)	4,140
Federal Home Loan Bank dividends	83	75	153	182
Loan placement fees	510	561	1,167	860
Other income	449	537	746	1,315
Total non-interest income	2,077	2,045	4,076	8,588
NON-INTEREST EXPENSES:
Salaries and employee benefits	6,979	6,812	13,917	14,324
Occupancy and equipment	1,201	1,139	2,314	2,283
Professional services	475	522	831	980
Data processing	625	554	1,242	890
Regulatory assessments	172	146	333	193
ATM/Debit card expenses	191	187	416	481
Information technology	611	602	1,170	1,210
Directors’ expenses	113	136	154	328
Advertising	128	167	257	340
Internet banking expense	84	182	208	378
Amortization of core deposit intangibles	173	173	347	347
Other	878	878	1,829	1,823
Total non-interest expenses	11,630	11,498	23,018	23,577
Income before provision for income taxes	10,028	3,121	19,994	12,239
Provision for income taxes	2,465	820	4,952	3,315
Net income	$ 7,563	$ 2,301	$ 15,042	$ 8,924
Earnings per common share:
Basic earnings per common share (in dollars per share)	$ 0.61	$ 0.18	$ 1.20	$ 0.71
Weighted average common shares used in basic computation (in shares)	12,498,809	12,449,283	12,497,217	12,592,126
Diluted earnings per common share (in dollars per share)	$ 0.60	$ 0.18	$ 1.20	$ 0.71
Weighted average common shares used in diluted computation (in shares)	12,548,044	12,486,681	12,548,101	12,646,403
Cash dividends per common share (in dollars per share)	$ 0.12	$ 0.11	$ 0.23	$ 0.22

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 7,563	$ 2,301	$ 15,042	$ 8,924
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	10,729	12,366	(2,892)	10,679
Reclassification of net (gains) losses included in net income	(79)	(58)	(79)	4,140
Other comprehensive income, before tax	10,808	12,424	(2,813)	6,539
Tax effect	(3,196)	(3,673)	831	(1,933)
Total other comprehensive loss	7,612	8,751	(1,982)	4,606
Comprehensive income	$ 15,175	$ 11,052	$ 13,060	$ 13,530

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss) (Net of Taxes)
Balance at Dec. 31, 2019	$ 228,128	$ 89,379	$ 135,932	$ 2,817
Balance (in shares) at Dec. 31, 2019		13,052,407
Net income	8,924		8,924
Other comprehensive income	4,606			4,606
Cash dividend	(2,780)		(2,780)
Stock-based compensation expense	248	$ 248
Restricted stock granted, net of forfeitures, and related tax benefit (in shares)		14,090
Stock issued under employee stock purchase plan (in shares)		7,981
Stock issued under employee stock purchase plan	115	$ 115
Stock Issued During Period, Shares, Employee Stock Ownership Plan		6,548
Stock Issued During Period, Value, Employee Stock Ownership Plan	141	$ 141
Stock options exercised and related tax benefit (in shares)		34,950
Stock options exercised and related tax benefit	228	$ 228
Repurchase and retirement of common stock (in shares)		(621,379)
Repurchase and retirement of common stock	(11,052)	$ (11,052)
Balance at Jun. 30, 2020	228,558	$ 79,059	142,076	7,423
Balance (in shares) at Jun. 30, 2020		12,494,597
Balance at Mar. 31, 2020	218,673	$ 78,854	141,147	(1,328)
Balance (in shares) at Mar. 31, 2020		12,472,939
Net income	2,301		2,301
Restricted stock granted, net of forfeitures, and related tax benefit	0
Other comprehensive income	8,751			8,751
Cash dividend	(1,372)		(1,372)
Stock-based compensation expense	128	$ 128
Restricted stock granted, net of forfeitures, and related tax benefit (in shares)		14,090
Stock issued under employee stock purchase plan (in shares)		4,348
Stock issued under employee stock purchase plan	58	$ 58
Stock options exercised and related tax benefit (in shares)		3,220
Stock options exercised and related tax benefit	19	$ 19
Balance at Jun. 30, 2020	228,558	$ 79,059	142,076	7,423
Balance (in shares) at Jun. 30, 2020		12,494,597
Balance at Dec. 31, 2020	245,021	$ 79,416	150,749	14,856
Balance (in shares) at Dec. 31, 2020		12,509,848
Net income	15,042		15,042
Other comprehensive income	(1,982)			(1,982)
Cash dividend	(2,881)		(2,881)
Stock-based compensation expense	210	$ 210
Restricted stock granted, net of forfeitures, and related tax benefit (in shares)		20,720
Stock issued under employee stock purchase plan (in shares)		7,671
Stock issued under employee stock purchase plan	110	$ 110
Stock Issued During Period, Shares, Employee Stock Ownership Plan		10,529
Stock Issued During Period, Value, Employee Stock Ownership Plan	$ 158	$ 158
Stock options exercised and related tax benefit (in shares)	20,000	20,000
Stock options exercised and related tax benefit	$ 213	$ 213
Repurchase and retirement of common stock (in shares)		(239,679)
Repurchase and retirement of common stock	(4,842)	$ (4,842)
Balance at Jun. 30, 2021	251,049	$ 75,265	162,910	12,874
Balance (in shares) at Jun. 30, 2021		12,329,089
Balance at Mar. 31, 2021	241,845	$ 79,732	156,851	5,262
Balance (in shares) at Mar. 31, 2021		12,524,609
Net income	7,563		7,563
Other comprehensive income	7,612			7,612
Cash dividend	(1,504)		(1,504)
Stock-based compensation expense	109	$ 109
Restricted stock granted, net of forfeitures, and related tax benefit (in shares)		20,967
Stock issued under employee stock purchase plan (in shares)		3,292
Stock issued under employee stock purchase plan	54	$ 54
Stock options exercised and related tax benefit (in shares)		19,900
Stock options exercised and related tax benefit	212	$ 212
Repurchase and retirement of common stock (in shares)		(239,679)
Repurchase and retirement of common stock	(4,842)	$ (4,842)
Balance at Jun. 30, 2021	$ 251,049	$ 75,265	$ 162,910	$ 12,874
Balance (in shares) at Jun. 30, 2021		12,329,089

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Stockholders' Equity [Abstract]
Cash dividends per common share (in dollars per share)	$ 0.12	$ 0.11	$ 0.23	$ 0.22

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 15,042	$ 8,924
Adjustments to reconcile net income to net cash provided by operating activities:
Net (increase) decrease in deferred loan fees	1,222	(5,975)
Depreciation	467	462
Accretion	(693)	(666)
Amortization	3,578	2,128
Stock-based compensation	210	248
(Reversal of) provision for credit losses	(3,300)	4,375
Net realized losses (gains) on sales and calls of available-for-sale investment securities	79	(4,140)
Net gain on disposal of premises and equipment	(8)	(6)
Net change in equity securities	112	(183)
Increase in bank-owned life insurance, net of expenses	(349)	(198)
Gain (Loss) on Bank Owned Life Insurance	0	462
Net increase in accrued interest receivable and other assets	(3,767)	(1,418)
Net increase in accrued interest payable and other liabilities	14,199	417
Benefit (provision) for deferred income taxes	983	(1,735)
Net cash provided by operating activities	27,775	1,771
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investment securities	(271,930)	(202,390)
Proceeds from sales or calls of available-for-sale investment securities	590	122,151
Proceeds from maturity and principal repayments of available-for-sale investment securities	23,660	16,103
Net decrease (increase) in loans	32,004	(176,105)
Purchases of premises and equipment	(704)	(101)
Purchases of bank-owned life insurance	10,000	250
FHLB stock redeemed	0	(467)
Proceeds from bank-owned life insurance	0	1,550
Proceeds from sale of premises and equipment	9	6
Net cash used in investing activities	(226,371)	(238,569)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, interest bearing and savings deposits	256,426	319,263
Net decrease in time deposits	(42)	(2,993)
Purchase and retirement of common stock	4,842	11,052
Proceeds from stock issued under employee stock purchase plan	110	115
Proceeds from exercise of stock options	213	228
Cash dividend payments on common stock	(2,881)	(2,780)
Net cash provided by financing activities	248,984	302,781
Increase in cash and cash equivalents	50,388	65,983
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	70,278	52,574
CASH AND CASH EQUIVALENTS AT END OF PERIOD	120,666	118,557
Cash paid during the period for:
Interest	576	937
Income taxes	6,105	2,810
Operating cash flows from operating leases	$ 1,124	$ 1,120

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Basis of Presentation

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation.  Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2020 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at June 30, 2021, and the results of its operations and its cash flows for the six-month interim periods ended June 30, 2021 and 2020 have been included. The results of operations for interim periods are not necessarily indicative of results for the full year.

     The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

     Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment, and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank.

Impact of New Financial Accounting Standards:

FASB Accounting Standards Update (ASU) 2016-13 - Measurement of Credit Losses on Financial Instruments (Subtopic 326): Financial Instruments - Credit Losses, commonly referred to as “CECL,” was issued June 2016. The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the contractual term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity (“HTM”) debt securities. Under the provisions of the update, credit losses recognized on available for sale (“AFS”) debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL, reserves will be established for purchased loans at the time of acquisition, the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL require organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. The FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. On August 15, 2019, the FASB issued a proposed Accounting Standards Update (ASU), “Financial Instruments -Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” that would provide private entities and certain small public companies additional time to implement the standards on CECL, leases, and hedging. The final ASU extends the effective date for SEC filers, such as the Company, that are classified as smaller reporting companies to January 1, 2023.

    The Company has formed an internal task force that is responsible for oversight of the Company’s implementation strategy for compliance with provisions of the new standard. The Company has also established a project management governance process to manage the implementation across affected disciplines. An external provider specializing in community bank loss driver and CECL reserving model design as well as other related consulting services has been retained, and we have begun to evaluate potential CECL modeling alternatives. As part of this process, the Company has determined potential loan pool segmentation and sub-segmentation under CECL, as well as begun to evaluate the key economic loss drivers for each segment. Further, the Company has begun developing internal controls around the CECL process, data, calculations and implementation. The Company presently plans to generate and evaluate model scenarios under CECL in tandem with its current reserving processes for interim and annual reporting periods during 2022 due to the fact the Company elected to delay

implementation of the CECL process as allowed by FASB. While the Company is currently unable to reasonably estimate the impact of adopting this new guidance, management expects the impact of adoption will be significantly influenced by the composition and quality of the Company’s loans as well as the economic conditions as of the date of adoption. The Company also anticipates changes to the processes and procedures for calculating the reserve for credit losses and continues to evaluate the potential impact on our consolidated financial statements.

    FASB Accounting Standards Update (ASU) 2020-04 - Reference Rate Reform (Subtopic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, was issued March 2020. This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements. The Company believes the adoption of this guidance on activities subsequent to June 30, 2021 through December 31, 2022 will not have a material impact on the consolidated financial statements.

    In April 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, (“the agencies”) issued a revised interagency statement encouraging financial institutions to work with customers affected by COVID-19 and providing additional information regarding loan modifications. The revised interagency statement clarifies the interaction between the interagency statement issued on March 22, 2020 and the temporary relief provided by Section 4013 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Section 4013 allows financial institutions to suspend the requirements to classify certain loan modifications as troubled debt restructurings (“TDRs”). The revised statement also provides supervisory interpretations on past due and nonaccrual regulatory reporting of loan modification programs and regulatory capital. This interagency guidance is expected to reduce the number of TDRs that will be reported in future periods; however, the amount is indeterminable and will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair Value Hierarchy

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active markets that the entity has the ability to access as of the measurement date.

Level 2 —Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, we report the transfer at the beginning of the reporting period. The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):

	June 30, 2021
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	39,346	$	39,346	$	—	$	—	$	39,346
Interest-earning deposits in other banks	81,320		81,320		—		—		81,320
Available-for-sale debt securities	952,416		—		952,416		—		952,416
Equity securities	7,522		7,522		—		—		7,522
Loans, net	1,059,506		—		—		1,053,137		1,053,137
Federal Home Loan Bank stock	5,595		N/A		N/A		N/A		N/A
Accrued interest receivable	9,417		10		5,754		3,653		9,417
Financial liabilities:
Deposits	1,979,094		1,898,736		89,843		—		1,988,579
Junior subordinated deferrable interest debentures	5,155		—		—		4,234		4,234
Accrued interest payable	55		—		33		22		55

	December 31, 2020
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	34,175	$	34,175	$	—	$	—	$	34,175
Interest-earning deposits in other banks	36,103		36,103		—		—		36,103
Available-for-sale debt securities	710,092		—		710,092		—		710,092
Equity securities	7,634		7,634		—		—		7,634
Loans, net	1,089,432		—		—		1,087,124		1,087,124
Federal Home Loan Bank stock	5,595		N/A		N/A		N/A		N/A
Accrued interest receivable	8,834		9		3,617		5,208		8,834
Financial liabilities:
Deposits	1,722,710		1,691,647		90,008		—		1,781,655
Junior subordinated deferrable interest debentures	5,155		—		—		3,693		3,693
Accrued interest payable	65		—		41		24		65

These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments.  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 any of these estimates.

These estimates are made at a specific point in time based on relevant market data and information about the financial instruments.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors.  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 fair values presented.

    The methods and assumptions used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents — The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1.

(b) Investment Securities — Investment securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for investment securities classified in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

(c) Loans — Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Purchased credit

impaired (PCI) loans are measured at estimated fair value on the date of acquisition. Carrying value is calculated as the present value of expected cash flows and approximates fair value and included in Level 3. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are initially valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. The estimated fair values of financial instruments disclosed above follow the guidance in ASU 2016-01 which prescribes an “exit price” approach in estimating and disclosing fair value of financial instruments incorporating discounts for credit, liquidity, and marketability factors.

(d) FHLB Stock — It is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(e) Deposits — Fair value of demand deposit, savings, and money market accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification.

(f) Subordinated Debentures — The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(g) Accrued Interest Receivable/Payable — The fair value of accrued interest receivable and payable is based on the fair value hierarchy of the related asset or liability.

(h) Off-Balance Sheet Instruments — Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not considered significant for financial reporting purposes.

Assets Recorded at Fair Value

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2021:

Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis as of June 30, 2021 (in thousands). 

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Treasury securities	$	19,994	$	—	$	19,994	$	—
U.S. Government agencies	653		—		653		—
Obligations of states and political subdivisions	473,658		—		473,658		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	227,042		—		227,042		—
Private label mortgage and asset backed securities	180,781		—		180,781		—
Corporate debt securities	50,288		—		50,288		—
Equity securities	7,522		7,522		—		—
Total assets measured at fair value on a recurring basis	$	959,938	$	7,522	$	952,416	$	—

    Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets.  Fair values for available-for-sale debt securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

    Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the six months ended June 30, 2021, no transfers between levels occurred.

There were no Level 3 assets measured at fair value on a recurring basis at or during the six months ended June 30, 2021. Also there were no liabilities measured at fair value on a recurring basis at June 30, 2021.

Non-recurring Basis

    The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at

fair value which was below cost at June 30, 2021.

    At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow methods as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the six months ended June 30, 2021.

    Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics. As of June 30, 2021, there were no loans measured using the fair value of the collateral for the collateral dependent loans.

    There were no charge-offs related to loans carried at fair value during the six months ended June 30, 2021 and 2020. Activity related to changes in the allowance for loan losses related to impaired loans for the three months ended June 30, 2021 and 2020 was not considered significant for disclosure purposes. There were no liabilities measured at fair value on a non-recurring basis at June 30, 2021.

    The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2020:

Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2020 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Government agencies	$	680	$	—	$	680	$	—
Obligations of states and political subdivisions	379,565		—		379,565		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	216,298		—		216,298		—
Private label mortgage and asset backed securities	83,508		—		83,508		—
Corporate debt securities	30,041		—		30,041		—
Equity securities	7,634		7,634		—		—
Total assets measured at fair value on a recurring basis	$	717,726	$	7,634	$	710,092	$	—

    Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets.  Fair values for available-for-sale debt securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

     Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the year ended December 31, 2020, no transfers between levels occurred.

    There were no Level 3 assets measured at fair value on a recurring basis at or during the year ended December 31, 2020. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2020.

Non-recurring Basis

    The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis.  These include the following assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2020 (in thousands):

	Fair Value		Level 1		Level 2		Level 3
Impaired loans:
Real estate:
Real estate-construction and other land loans	$	1,260	$	—	$	—	$	1,260

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans

had a principal balance of $1,528,000 with a valuation allowance of $268,000 at December 31, 2020, and a resulting fair value

of $1,260,000. The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans.

There were no liabilities measured at fair value on a non-recurring basis at December 31, 2020.

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Investments

6 Months Ended

Jun. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

The investment portfolio consists primarily of U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities (PLMABS), corporate debt securities, and obligations of states and political subdivisions securities.  As of June 30, 2021, $191,882,000 of these securities were held as collateral for borrowing arrangements, public funds, and for other purposes.

     The fair value of the available-for-sale investment portfolio reflected a net unrealized gain of $18,278,000 at June 30, 2021 compared to an unrealized gain of $21,091,000 at December 31, 2020. The unrealized gain/(loss) recorded is net of $5,404,000,000 and $6,235,000 in tax liabilities (benefits) as accumulated other comprehensive income (loss) within shareholders’ equity at June 30, 2021 and December 31, 2020, respectively.

     The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands): 

	June 30, 2021
Available-for-Sale Securities	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Estimated  Fair Value
Debt securities:
U.S. Treasury securities	$	19,987	$	10	$	(3)	$	19,994
U.S. Government agencies	637		16		—		653
Obligations of states and political subdivisions	458,250		17,447		(2,039)		473,658
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	224,920		3,131		(1,009)		227,042
Private label mortgage and asset backed securities	180,844		1,293		(1,356)		180,781
Corporate debt securities	49,500		883		(95)		50,288
Total available-for-sale	$	934,138	$	22,780	$	(4,502)	$	952,416

	December 31, 2020
Available-for-Sale Securities	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Estimated Fair Value
Debt securities:
U.S. Government agencies	$	651	$	29	$	—	$	680
Obligations of states and political subdivisions	361,734		18,170		(339)		379,565
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	214,203		3,575		(1,480)		216,298
Private label mortgage and asset backed securities	82,413		1,337		(242)		83,508
Corporate debt securities	30,000		260		(219)		30,041
Total available-for-sale	$	689,001	$	23,371	$	(2,280)	$	710,092

    Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended June 30, 2021 and 2020 are shown below (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Available-for-Sale Securities	2021		2020		2021		2020
Proceeds from sales or calls	$	590	$	16,114	$	590	$	122,151
Gross realized gains from sales or calls	—		306		—		4,504
Gross realized losses from sales or calls	(79)		(364)		(79)		(364)

    As market interest rates or risks associated with a security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile is appropriate and beneficial to the Company.

    The provision for income taxes includes $1,224,000 income tax impact from the reclassification of unrealized net gains on securities to realized net gains on securities for the six months ended June 30, 2020.

    Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands): 

	June 30, 2021
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale Securities	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Treasury securities	$	9,997	$	(3)	$	—	$	—	$	9,997	$	(3)
Obligations of states and political subdivisions	79,759		(2,039)		—		—		79,759		(2,039)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	47,184		(573)		52,818		(436)		100,002		(1,009)
Private label mortgage and asset backed securities	91,811		(1,327)		4,203		(29)		96,014		(1,356)
Corporate debt securities	16,405		(95)		—		—		16,405		(95)
Total available-for-sale	$	245,156	$	(4,037)	$	57,021	$	(465)	$	302,177	$	(4,502)

	December 31, 2020
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale Securities	Value		Losses		Value		Losses		Value		Losses
Debt securities:
Obligations of states and political subdivisions	$	36,209	$	(339)	$	—	$	—	$	36,209	$	(339)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	30,755		(385)		77,337		(1,095)		108,092		(1,480)
Private label mortgage and asset backed securities	25,407		(242)		—		—		25,407		(242)
Corporate debt securities	12,881		(119)		3,900		(100)		16,781		(219)
Total available-for-sale	$	105,252	$	(1,085)	$	81,237	$	(1,195)	$	186,489	$	(2,280)

     The Company periodically evaluates each investment security for other-than-temporary impairment, relying primarily on industry analyst reports, observation of market conditions, and interest rate fluctuations.  The portion of the impairment that is attributable to a shortage in the present value of expected future cash flows relative to the amortized cost should be recorded as a current period charge to earnings.  The discount rate in this analysis is the original yield expected at time of purchase.

     As of June 30, 2021, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI). The Company evaluated all individual available-for-sale investment securities with an unrealized loss at June 30, 2021 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at June 30, 2021 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $75,000.  The Company also analyzed any securities that may have been downgraded by credit rating agencies. 

    For those investment securities that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those investment securities.  There were no OTTI losses recorded during the six months ended June 30, 2021.

U.S. Treasury Securities

At June 30, 2021, the Company held two U.S. Treasury securities of which one security was in a loss position for less than 12 months. The unrealized loss on the Company’s investment in direct obligations of U.S. Treasury securities is associated with the general fluctuation of market interest rates and are not an indication of any deterioration in the credit quality of the security issuer. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized costs of the investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

U.S. Government Agencies

    At June 30, 2021, the Company held one U.S. Government agency security which was in a gain position.

Obligations of States and Political Subdivisions

    At June 30, 2021, the Company held 122 obligations of states and political subdivision securities of which 16 were in a loss position for less than 12 months. The unrealized losses on the Company’s investments in obligations of states and political subdivision securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations

    At June 30, 2021, the Company held 115 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations of which eight were in a loss position for less than 12 months and 11 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed or supported by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

Private Label Mortgage and Asset Backed Securities

    At June 30, 2021, the Company had a total of 49 Private Label Mortgage and Asset Backed Securities (PLMABS). 18 of the PLMABS securities were in a loss position for less than 12 months and two have been in loss for more than 12 months at June 30, 2021. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021. The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary.

Corporate Debt Securities

    At June 30, 2021, the Company held 14 corporate debt securities of which five were in a loss position for less than 12 months. The unrealized loss on the Company’s investments in corporate debt security was caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2021.

    The amortized cost and estimated fair value of available-for-sale investment securities at June 30, 2021 by contractual maturity is shown below (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2021
Available-for-Sale Securities	Amortized Cost		Estimated Fair Value
Within one year	$	304	$	305
After one year through five years	3,317		3,627
After five years through ten years	84,162		86,564
After ten years	390,454		403,156
	478,237		493,652
Investment securities not due at a single maturity date:
U.S. Government agencies	637		653
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	224,920		227,042
Private label mortgage and asset backed securities	180,844		180,781
Corporate debt securities	49,500		50,288
Total available-for-sale	$	934,138	$	952,416

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Loans and Allowance for Credit Losses

3 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

Outstanding loans are summarized as follows:

Loan Type (Dollars in thousands)	June 30, 2021		% of Total Loans		December 31, 2020		% of Total Loans
Commercial:
Commercial and industrial	$	208,919	19.4	%	$	273,994	24.9	%
Agricultural production	32,918		3.1	%	21,971		2.0	%
Total commercial	241,837		22.5	%	295,965		26.9	%
Real estate:
Owner occupied	200,232		18.7	%	208,843		18.9	%
Real estate construction and other land loans	65,282		6.1	%	55,419		5.0	%
Commercial real estate	357,519		33.4	%	338,886		30.7	%
Agricultural real estate	88,110		8.2	%	84,258		7.6	%
Other real estate	29,750		2.8	%	28,718		2.6	%
Total real estate	740,893		69.2	%	716,124		64.8	%
Consumer:
Equity loans and lines of credit	51,364		4.8	%	55,634		5.0	%
Consumer and installment	37,241		3.5	%	37,236		3.3	%
Total consumer	88,605		8.3	%	92,870		8.3	%
Net deferred origination (fees) costs	(1,390)				(2,612)
Total gross loans	1,069,945		100.0	%	1,102,347		100.0	%
Allowance for credit losses	(10,439)				(12,915)
Total loans	$	1,059,506			$	1,089,432

    At June 30, 2021 and December 31, 2020, loans originated under Small Business Administration (SBA) programs totaling $23,685,000 and $24,220,000, respectively, were included in the real estate and commercial categories, of which, $18,029,000 or 76% and $18,180,000 or 75%, respectively, are secured by government guarantees. In addition, the Company participated in the SBA Paycheck Protection Program (PPP) to help provide loans to our business customers to provide them with additional working capital. At June 30, 2021, 630 PPP loans totaling $109,502,000 were outstanding and included in the commercial and industrial line item above. At December 31, 2020, 989 PPP loans totaling $192,916,000 were outstanding and included in the commercial and industrial line item above.

Allowance for Credit Losses

    The allowance for credit losses (the “Allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The Allowance is established through a provision for credit losses which is charged to expense. Additions to the Allowance are expected to maintain the adequacy of the total Allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the Allowance. Cash received on previously charged-off credits is recorded as a recovery to the Allowance. The overall Allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired.

    For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer data) over the most recent 50 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole.

    The following table shows the summary of activities for the Allowance as of and for the three months ended June 30, 2021 and 2020 by portfolio segment (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, April 1, 2021	$	2,483	$	8,352	$	888	$	333	$	12,056
(Reversal) provision charged to operations	(307)		(1,302)		91		18		(1,500)
Charge-offs	—		—		(171)		—		(171)
Recoveries	34		—		20		—		54
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Allowance for credit losses:
Beginning balance, April 1, 2020	$	1,657	$	7,555	$	1,236	$	98	$	10,546
Provision charged to operations	7		2,834		76		83		3,000
Charge-offs	—		—		(80)		—		(80)
Recoveries	423		—		48		—		471
Ending balance, June 30, 2020	$	2,087	$	10,389	$	1,280	$	181	$	13,937

The following table shows the summary of activities for the Allowance as of and for the six months ended June 30, 2021 and 2020 by portfolio segment (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, January 1, 2021	$	2,019	$	9,174	$	1,091	$	631	$	12,915
Reversal charged to operations	(439)		(2,443)		(138)		(280)		(3,300)
Charge-offs	(31)		—		(197)		—		(228)
Recoveries	661		319		72		—		1,052
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Allowance for credit losses:
Beginning balance, January 1, 2020	$	1,428	$	6,769	$	897	$	36	$	9,130
Provision charged to operations	233		3,620		377		145		4,375
Charge-offs	(29)		—		(94)		—		(123)
Recoveries	455		—		100		—		555
Ending balance, June 30, 2020	$	2,087	$	10,389	$	1,280	$	181	$	13,937

    The following is a summary of the Allowance by impairment methodology and portfolio segment as of June 30, 2021 and December 31, 2020 (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Ending balance: individually evaluated for impairment	$	865	$	10	$	5	$	—	$	880
Ending balance: collectively evaluated for impairment	$	1,345	$	7,040	$	823	$	351	$	9,559
Ending balance, December 31, 2020	$	2,019	$	9,174	$	1,091	$	631	$	12,915
Ending balance: individually evaluated for impairment	$	339	$	271	$	21	$	—	$	631
Ending balance: collectively evaluated for impairment	$	1,680	$	8,903	$	1,070	$	631	$	12,284

    The following table shows the ending balances of loans as of June 30, 2021 and December 31, 2020 by portfolio segment and by impairment methodology (in thousands):

	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, June 30, 2021	$	241,837	$	740,893	$	88,605	$	1,071,335
Ending balance: individually evaluated for impairment	$	6,503	$	971	$	1,065	$	8,539
Ending balance: collectively evaluated for impairment	$	235,334	$	739,922	$	87,540	$	1,062,796
Loans:
Ending balance, December 31, 2020	$	295,965	$	716,124	$	92,870	$	1,104,959
Ending balance: individually evaluated for impairment	$	7,402	$	2,616	$	1,168	$	11,186
Ending balance: collectively evaluated for impairment	$	288,563	$	713,508	$	91,702	$	1,093,773

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at June 30, 2021 (in thousands):

	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	196,108	$	745	$	12,066	$	—	$	208,919
Agricultural production	28,520		1,430		2,968		—		32,918
Real Estate:
Owner occupied	189,898		3,360		6,974		—		200,232
Real estate construction and other land loans	60,603		4,679		—		—		65,282
Commercial real estate	341,805		6,161		9,553		—		357,519
Agricultural real estate	84,870		2,087		1,153		—		88,110
Other real estate	29,589		—		161		—		29,750
Consumer:
Equity loans and lines of credit	51,116		248		—		—		51,364
Consumer and installment	37,178		—		63		—		37,241
Total	$	1,019,687	$	18,710	$	32,938	$	—	$	1,071,335

    The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2020 (in thousands):

	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	258,587	$	5,004	$	10,403	$	—	$	273,994
Agricultural production	18,289		377		3,305		—		21,971
Real Estate:
Owner occupied	197,721		3,870		7,252		—		208,843
Real estate construction and other land loans	50,560		1,622		3,237		—		55,419
Commercial real estate	314,710		14,537		9,639		—		338,886
Agricultural real estate	72,875		10,195		1,188		—		84,258
Other real estate	28,557		161		—		—		28,718
Consumer:
Equity loans and lines of credit	54,034		640		960		—		55,634
Consumer and installment	37,084		—		152		—		37,236
Total	$	1,032,417	$	36,406	$	36,136	$	—	$	1,104,959

The following table shows an aging analysis of the loan portfolio by class and the time past due at June 30, 2021 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than  90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non-accrual
Commercial:
Commercial and industrial	$	16	$	—	$	—	$	16	$	208,903	$	208,919	$	—	$	347
Agricultural production	—		—		—		—		32,918		32,918		—		1,205
Real estate:	—								—
Owner occupied	—		—		—		—		200,232		200,232		—		—
Real estate construction and other land loans	—		—		—		—		65,282		65,282		—		—
Commercial real estate	294		—		—		294		357,225		357,519		—		483
Agricultural real estate	—		—		—		—		88,110		88,110		—		—
Other real estate	—		—		—		—		29,750		29,750		—		—
Consumer:									—
Equity loans and lines of credit	—		—		—		—		51,364		51,364		—		—
Consumer and installment	81		—		—		81		37,160		37,241		—		—
Total	$	391	$	—	$	—	$	391	$	1,070,944	$	1,071,335	$	—	$	2,035

    The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2020 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than  90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non- accrual
Commercial:
Commercial and industrial	$	—	$	—	$	60	$	60	$	273,934	$	273,994	$	—	$	752
Agricultural production	—		—		—		—		21,971		21,971		—		—
Real estate:	—
Owner occupied	—		—		—		—		208,843		208,843		—		370
Real estate construction and other land loans	—		—		—		—		55,419		55,419		—		1,556
Commercial real estate	—		—		—		—		338,886		338,886		—		512
Agricultural real estate	—		—		—		—		84,258		84,258		—		—
Other real estate	—		—		—		—		28,718		28,718		—		—
Consumer:
Equity loans and lines of credit	—		24		—		24		55,610		55,634		—		—
Consumer and installment	5		—		—		5		37,231		37,236		—		88
Total	$	5	$	24	$	60	$	89	$	1,104,870	$	1,104,959	$	—	$	3,278

The following table shows information related to impaired loans by class at June 30, 2021 (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate:
Real estate construction and other land loans	$	316	$	316	$	—
Commercial real estate	483		544		—
Total real estate	799		860		—
Consumer:
Equity loans and lines of credit	140		176		—
Total with no related allowance recorded	939		1,036		—
With an allowance recorded:
Commercial:
Commercial and industrial	5,298		5,328		659
Agricultural production	1,205		1,248		206
Total commercial	6,503		6,576		865
Real estate:
Real estate construction and other land loans	—		—		—
Commercial real estate	142		143		3
Agricultural real estate	30		30		7
Total real estate	172		173		10
Consumer:
Equity loans and lines of credit	925		925		5
Total with an allowance recorded	7,600		7,674		880
Total	$	8,539	$	8,710	$	880

    The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

    The following table shows information related to impaired loans by class at December 31, 2020 (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	60	$	61	$	—
Real estate:
Owner occupied	370		409		—
Real estate construction and other land loans	28		28		—
Commercial real estate	512		561		—
Total real estate	910		998		—
Consumer:
Equity loans and lines of credit	144		180		—
Total with no related allowance recorded	1,114		1,239		—
With an allowance recorded:
Commercial:
Commercial and industrial	7,342		7,373		339
Real estate:
Real estate construction and other land loans	1,528		1,552		268
Commercial real estate	148		149		3
Agricultural real estate	30		29		—
Total real estate	1,706		1,730		271
Consumer:
Equity loans and lines of credit	936		936		9
Consumer and installment	88		93		12
Total consumer	1,024		1,029		21
Total with an allowance recorded	10,072		10,132		631
Total	$	11,186	$	11,371	$	631

    The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended June 30, 2021 and 2020 (in thousands).

	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	—	$	—	$	7	$	—
Agricultural production	—		—		212		—
Total commercial	—		—		219		—
Real estate:
Owner occupied	—		—		401		—
Real estate construction and other land loans	333		5		—		—
Commercial real estate	490		—		848		—
Agricultural real estate	—		—		199		—
Total real estate	823		5		1,448		—
Consumer:
Equity loans and lines of credit	142		3		232		3
Total with no related allowance recorded	965		8		1,899		3
With an allowance recorded:
Commercial:
Commercial and industrial	5,831		67		11,516		171
Agricultural production	1,328				619		12
Total commercial	7,159		67		12,135		183
Real estate:
Real estate construction and other land loans	746		—		95		—
Commercial real estate	144		2		331		2
Agricultural real estate	30		1		28		1
Total real estate	920		3		454		3
Consumer:
Equity loans and lines of credit	928		14		957		14
Consumer and installment	—		—		38		—
Total consumer	928		14		995		14
Total with an allowance recorded	9,007		84		13,584		200
Total	$	9,972	$	92	$	15,483	$	203

The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the six months ended June 30, 2021 and 2020 (in thousands).

	Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	9	$	—	$	71	$	—
Agricultural land and production	—		—		121		—
Total commercial	9		—		192		—
Real estate:
Owner occupied	103		—		407		—
Real estate construction and other land loans	201		11		—		—
Commercial real estate	498		—		959		—
Agricultural real estate	—		—		228		—
Total real estate	802		11		1,594		—
Consumer:
Equity loans and lines of credit	142		6		264		6
Total with no related allowance recorded	953		17		2,050		6
With an allowance recorded:
Commercial:
Commercial and industrial	6,475		153		6,589		344
Agricultural land and production	969		—		354		24
Total commercial	7,444		153		6,943		368
Real estate:
Real estate construction and other land loans	1,077		—		54		—
Commercial real estate	145		5		254		5
Agricultural real estate	30		1		26		1
Total real estate	1,252		6		334		6
Consumer:
Equity loans and lines of credit	931		27		1,052		28
Consumer and installment	25		—		24		—
Total consumer	956		27		1,076		28
Total with an allowance recorded	9,652		186		8,353		402
Total	$	10,605	$	203	$	10,403	$	408

Foregone interest on nonaccrual loans totaled $72,000 and $74,000 for the six month period ended June 30, 2021 and 2020, respectively. Foregone interest on nonaccrual loans totaled 34,000 and 55,000 for the three month period ended June 30, 2021 and 2020, respectively.

Troubled Debt Restructurings:

    As of June 30, 2021 and December 31, 2020, the Company has a recorded investment in troubled debt restructurings of $6,504,000 and $7,908,000, respectively. The Company has allocated $515,000 and $20,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2021 and December 31, 2020, respectively.

    During the six months ended June 30, 2021, one loan was modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses.

As discussed in Note 1 to these financial statements, Section 4013 of the CARES Act and the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)” provided banks an option to elect to not account for certain loan modifications related to COVID-19 as TDRs as long as the borrowers were not more than 30 days past due as of December 31, 2019 or at the time of modification program implementation, respectively, and the borrowers meet other applicable criteria. The remaining TDRs disclosed below were not related to COVID-19 modifications. The Company executed loan deferrals on outstanding balances of approximately $1.37 million resulting from the COVID-19 pandemic that were not classified as a TDRs at June 30, 2021.

    The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2021 (in thousands):

Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification (2)		Post Modification Outstanding Recorded Investment (3)		Outstanding Recorded Investment
Real Estate:
Real estate-construction and other land loans	1	$	333	$	—	$	333	$	317

(1)Amounts represent the recorded investment in loans before recognizing effects of the Troubled Debt Restructurings, if any.

(2)Principal modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.

(3)Balance outstanding after principal modification, if any borrower reduction to recorded investment.

    The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2020 (in thousands):

Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification (2)		Post Modification Outstanding Recorded Investment (3)		Outstanding Recorded Investment
Commercial:
Commercial and Industrial	1	$	12,925	$	—	$	12,925	$	9,725
Agricultural production	1	850		—		850		775
Total	2	$	13,775	$	—	$	13,775	$	10,500

During the quarters ended June 30, 2021 and 2020, no loans were modified as troubled debt restructurings.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the six months ended and three months ended June 30, 2021 or June 30, 2020.

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Goodwill

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

Business combinations involving the Company’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill.  Total goodwill at June 30, 2021, was $53,777,000 consisting of $8,934,000, $14,643,000, $6,340,000, $10,394,000, and $13,466,000 representing the excess of the cost of Bank of Madera County, Service 1st Bancorp, Visalia Community Bank, Sierra Vista Bank, and Folsom Lake Bank, respectively, over the net of the amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the acquisition method of accounting.  The value of goodwill is ultimately derived from the Company’s ability to generate net earnings after the acquisitions and is not deductible for tax purposes. A significant decline in net earnings, among other factors, could be indicative of a decline in the fair value of goodwill and result in impairment.  For that reason, goodwill is assessed at least annually for impairment. The Company’s annual goodwill test is completed as of September 30 each year.

Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the first six months of 2021.

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Borrowing Arrangements	6 Months Ended
	Jun. 30, 2021
Banking and Thrift, Other Disclosures [Abstract]
Borrowing Arrangements	Borrowing ArrangementsAs of June 30, 2021 and December 31, 2020, the Company had no Federal Home Loan Bank (“FHLB”) of San Francisco advances.    Approximately $447,170,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $245,311,000 as of June 30, 2021. FHLB advances are also secured by investment securities with amortized costs totaling $151,000 and $169,000 and market values totaling $159,000 and $178,000 at June 30, 2021 and December 31, 2020, respectively.  The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral. As of June 30, 2021, and December 31, 2020 the Company had no Federal funds purchased.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Financial Instruments With Off-Balance-Sheet Risk - In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract or notional amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for loans.

    Commitments to extend credit amounting to $316,702,000 and $326,179,000 were outstanding at June 30, 2021 and December 31, 2020, respectively. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract unless waived by the Bank. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

     Included in commitments to extend credit are undisbursed lines of credit totaling $306,144,000 and $314,774,000 at June 30, 2021 and December 31, 2020, respectively.  Undisbursed lines of credit include credits whereby customers can repay principal and request principal advances during the term of the loan at their discretion and most expire between one and 12 months.

     Included in undisbursed lines of credit are commitments for the undisbursed portions of construction loans totaling $52,007,000 and $79,669,000 as of June 30, 2021 and December 31, 2020, respectively. These commitments are agreements to lend to customers, subject to meeting certain construction progress requirements established in the contracts. The underlying construction loans have fixed expiration dates.

     Standby letters of credit and financial guarantees amounting to $10,558,000 and $11,405,000 were outstanding at June 30, 2021 and December 31, 2020, respectively. Standby letters of credit and financial guarantees are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private financial arrangements. Most standby letters of credit and guarantees carry a one year term or less. The fair value of the liability related to these standby letters of credit, which represents the fees received for their issuance, was not significant at June 30, 2021 or December 31, 2020.  The Company recognizes these fees as revenue over the term of the commitment or when the commitment is used.

    The Company generally requires collateral or other security to support financial instruments with credit risk. Management does not anticipate any material loss will result from the outstanding commitments to extend credit, standby letters of credit and financial guarantees. At June 30, 2021 and December 31, 2020, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $250,000. The contingent allocation for probable loan loss experience on unfunded obligations is calculated by management using an appropriate, systematic, and consistently applied process.  While related to credit losses, this allocation is not a part of the allowance for credit losses and is considered separately as a liability for accounting and regulatory reporting purposes, and is included in Other Liabilities on the Company’s balance sheet.

    In 2018, the Company sold its credit card portfolio to a third party vendor. Part of the sale of the portfolio was to provide a guarantee of certain accounts which as of June 30, 2021, the total guarantee was $2,475,000.

     The Company is subject to legal proceedings and claims which arise in the ordinary course of business.  In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or consolidated results of operations of the Company.

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Earnings Per Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share (EPS), which excludes dilution, is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options or restricted stock awards, result in the

issuance of common stock which shares in the earnings of the Company.  A reconciliation of the numerators and denominators of the basic and diluted EPS computations is as follows:

Basic Earnings Per Share	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except share and per share amounts)	2021		2020		2021		2020
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Weighted average shares outstanding	12,498,809		12,449,283		12,497,217		12,592,126
Basic earnings per share	$	0.61	$	0.18	$	1.20	$	0.71

Diluted Earnings Per Share	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except share and per share amounts)	2021		2020		2021		2020
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Weighted average shares outstanding	12,498,809		12,449,283		12,497,217		12,592,126
Effect of dilutive stock options	49,235		37,398		50,884		54,277
Weighted average shares of common stock and common stock equivalents	12,548,044		12,486,681		12,548,101		12,646,403
Diluted earnings per share	$	0.60	$	0.18	$	1.20	$	0.71

        No outstanding options or restricted stock awards were anti-dilutive for the six months ended June 30, 2021 and 2020.

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Share-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based Compensation

The Company has four share-based compensation plans as described below. Share-based compensation cost recognized for those plans was $210,000 and $248,000 for the six months ended June 30, 2021 and 2020, respectively. The recognized tax expense (benefits) for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $46,000 and $72,000, respectively, for the six months ended June 30, 2021 and 2020.

     The Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan) was adopted in May 2005 and expired March 16, 2015. While outstanding arrangements to issue shares under this plan, including options, continue in force until their expiration, no new options will be granted under this plan.

    The Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan) was adopted in May 2015. In October 2017, the Company assumed the Folsom Lake Bank 2007 Equity Incentive Plan (2007 Plan). The plans provide for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. Both plans allow for performance awards that may be in the form of cash or shares of the Company, including restricted stock. Outstanding arrangements to issue shares under this plan including options, will continue in force until expiration according to their respective terms.

    Effective June 2, 2017, the Company adopted an Employee Stock Purchase Plan (ESPP) whereby our employees may purchase Company common stock through payroll deductions of between one percent and 15 percent of pay in each pay period. Shares are purchased at the end of each of the three-month offering periods at a 10 percent discount from the lower of the closing market price on the Offering Date (first trading day of each offering period) or the Investment Date (last trading day of each offering period). The Company reserved 500,000 common shares to be set aside for the ESPP, and there were 450,257 shares available for future purchase under the plan as of June 30, 2021.

Stock Option Plan

    The Company bases the fair value of the options granted on the date of grant using a Black-Scholes Merton option pricing model that uses assumptions based on expected option life and the level of estimated forfeitures, expected stock volatility, risk free interest rate, and dividend yield.  The expected term and level of estimated forfeitures of the Company’s options are based on the Company’s own historical experience.  Stock volatility is based on the historical volatility of the Company’s stock.  The risk-free rate is based on the U. S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of grant.  The compensation cost for options granted is based on the weighted average grant date fair value per share.

     No options to purchase shares of the Company’s common stock were granted during the six months ended June 30, 2021 and 2020.

    A summary of the combined activity of the Company’s stock option compensation plans for the six months ended June 30, 2021 follows (in thousands, except per share amounts): 

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding at December 31, 2020	77,070	$	10.06
Options exercised	(20,000)	$	10.63
Options outstanding at June 30, 2021	57,070	$	9.86	1.06	$	587
Options vested or expected to vest at June 30, 2021	57,070	$	9.86	1.06	$	587
Options exercisable at June 30, 2021	57,070	$	9.86	1.06	$	587

Information related to the stock option plan is as follows (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Intrinsic value of options exercised	$	204	$	32	$	206	$	381
Cash received from options exercised	$	212	$	19	$	213	$	228
Excess tax benefit realized for option exercises	$	46	$	—	$	46	$	72

    As of June 30, 2021, there was no remaining unrecognized compensation cost related to stock options granted under all plans. 

Restricted and Performance Common Stock Awards

    The 2015 Plan provides for the issuance of restricted common stock to directors and officers. In addition, performance awards may be granted in the form of cash or shares. Restricted common stock grants typically vest over a one to five-year period. Restricted common stock (all of which are shares of our common stock) is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant.

    The following table summarizes restricted stock and performance award activity for the six months ended June 30, 2021 as follows: 

	Shares	Weighted Average Grant-Date Fair Value
Nonvested outstanding shares at December 31, 2020	30,013	$	15.60
Granted	31,496	$	18.83
Vested	(30,834)	$	15.18
Forfeited	(247)	$	20.26
Nonvested outstanding shares at June 30, 2021	30,428	$	19.33

    The shares awarded to employees and directors under the restricted stock agreements vest on applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated. Performance common stock awards vest immediately.

        As of June 30, 2021, there were 30,428 shares of restricted stock that are nonvested and expected to vest. As of June 30, 2021, there was $458,000 of total unrecognized compensation cost related to nonvested restricted common stock awards.  Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted-average remaining period of 1.72 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $2,880,000 at June 30, 2021.

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Accounting

The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation.  Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2020 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at June 30, 2021, and the results of its operations and its cash flows for the six-month interim periods ended June 30, 2021 and 2020 have been included. The results of operations for interim periods are not necessarily indicative of results for the full year.

     The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Segment Reporting

Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment, and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment.

Concentration of Credit Risk

No customer accounts for more than 10 percent of revenues for the Company or the Bank.

Impact of New Financial Accounting Standards

Impact of New Financial Accounting Standards:

FASB Accounting Standards Update (ASU) 2016-13 - Measurement of Credit Losses on Financial Instruments (Subtopic 326): Financial Instruments - Credit Losses, commonly referred to as “CECL,” was issued June 2016. The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the contractual term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity (“HTM”) debt securities. Under the provisions of the update, credit losses recognized on available for sale (“AFS”) debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL, reserves will be established for purchased loans at the time of acquisition, the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL require organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. The FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. On August 15, 2019, the FASB issued a proposed Accounting Standards Update (ASU), “Financial Instruments -Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” that would provide private entities and certain small public companies additional time to implement the standards on CECL, leases, and hedging. The final ASU extends the effective date for SEC filers, such as the Company, that are classified as smaller reporting companies to January 1, 2023.

    The Company has formed an internal task force that is responsible for oversight of the Company’s implementation strategy for compliance with provisions of the new standard. The Company has also established a project management governance process to manage the implementation across affected disciplines. An external provider specializing in community bank loss driver and CECL reserving model design as well as other related consulting services has been retained, and we have begun to evaluate potential CECL modeling alternatives. As part of this process, the Company has determined potential loan pool segmentation and sub-segmentation under CECL, as well as begun to evaluate the key economic loss drivers for each segment. Further, the Company has begun developing internal controls around the CECL process, data, calculations and implementation. The Company presently plans to generate and evaluate model scenarios under CECL in tandem with its current reserving processes for interim and annual reporting periods during 2022 due to the fact the Company elected to delay

implementation of the CECL process as allowed by FASB. While the Company is currently unable to reasonably estimate the impact of adopting this new guidance, management expects the impact of adoption will be significantly influenced by the composition and quality of the Company’s loans as well as the economic conditions as of the date of adoption. The Company also anticipates changes to the processes and procedures for calculating the reserve for credit losses and continues to evaluate the potential impact on our consolidated financial statements.

    FASB Accounting Standards Update (ASU) 2020-04 - Reference Rate Reform (Subtopic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, was issued March 2020. This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements. The Company believes the adoption of this guidance on activities subsequent to June 30, 2021 through December 31, 2022 will not have a material impact on the consolidated financial statements.

    In April 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, (“the agencies”) issued a revised interagency statement encouraging financial institutions to work with customers affected by COVID-19 and providing additional information regarding loan modifications. The revised interagency statement clarifies the interaction between the interagency statement issued on March 22, 2020 and the temporary relief provided by Section 4013 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Section 4013 allows financial institutions to suspend the requirements to classify certain loan modifications as troubled debt restructurings (“TDRs”). The revised statement also provides supervisory interpretations on past due and nonaccrual regulatory reporting of loan modification programs and regulatory capital. This interagency guidance is expected to reduce the number of TDRs that will be reported in future periods; however, the amount is indeterminable and will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Estimated Fair Value of Financial Instruments

The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):

	June 30, 2021
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	39,346	$	39,346	$	—	$	—	$	39,346
Interest-earning deposits in other banks	81,320		81,320		—		—		81,320
Available-for-sale debt securities	952,416		—		952,416		—		952,416
Equity securities	7,522		7,522		—		—		7,522
Loans, net	1,059,506		—		—		1,053,137		1,053,137
Federal Home Loan Bank stock	5,595		N/A		N/A		N/A		N/A
Accrued interest receivable	9,417		10		5,754		3,653		9,417
Financial liabilities:
Deposits	1,979,094		1,898,736		89,843		—		1,988,579
Junior subordinated deferrable interest debentures	5,155		—		—		4,234		4,234
Accrued interest payable	55		—		33		22		55

	December 31, 2020
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	34,175	$	34,175	$	—	$	—	$	34,175
Interest-earning deposits in other banks	36,103		36,103		—		—		36,103
Available-for-sale debt securities	710,092		—		710,092		—		710,092
Equity securities	7,634		7,634		—		—		7,634
Loans, net	1,089,432		—		—		1,087,124		1,087,124
Federal Home Loan Bank stock	5,595		N/A		N/A		N/A		N/A
Accrued interest receivable	8,834		9		3,617		5,208		8,834
Financial liabilities:
Deposits	1,722,710		1,691,647		90,008		—		1,781,655
Junior subordinated deferrable interest debentures	5,155		—		—		3,693		3,693
Accrued interest payable	65		—		41		24		65

Fair Value of Assets on a Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis as of June 30, 2021 (in thousands). 

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Treasury securities	$	19,994	$	—	$	19,994	$	—
U.S. Government agencies	653		—		653		—
Obligations of states and political subdivisions	473,658		—		473,658		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	227,042		—		227,042		—
Private label mortgage and asset backed securities	180,781		—		180,781		—
Corporate debt securities	50,288		—		50,288		—
Equity securities	7,522		7,522		—		—
Total assets measured at fair value on a recurring basis	$	959,938	$	7,522	$	952,416	$	—

The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2020 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Government agencies	$	680	$	—	$	680	$	—
Obligations of states and political subdivisions	379,565		—		379,565		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	216,298		—		216,298		—
Private label mortgage and asset backed securities	83,508		—		83,508		—
Corporate debt securities	30,041		—		30,041		—
Equity securities	7,634		7,634		—		—
Total assets measured at fair value on a recurring basis	$	717,726	$	7,634	$	710,092	$	—

Fair Value of Assets on a Non-recurring Basis

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis.  These include the following assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2020 (in thousands):

	Fair Value		Level 1		Level 2		Level 3
Impaired loans:
Real estate:
Real estate-construction and other land loans	$	1,260	$	—	$	—	$	1,260

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans

had a principal balance of $1,528,000 with a valuation allowance of $268,000 at December 31, 2020, and a resulting fair value

of $1,260,000. The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans.

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Investments (Tables)

6 Months Ended

Jun. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investments by contractual maturity

	June 30, 2021
Available-for-Sale Securities	Amortized Cost		Estimated Fair Value
Within one year	$	304	$	305
After one year through five years	3,317		3,627
After five years through ten years	84,162		86,564
After ten years	390,454		403,156
	478,237		493,652
Investment securities not due at a single maturity date:
U.S. Government agencies	637		653
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	224,920		227,042
Private label mortgage and asset backed securities	180,844		180,781
Corporate debt securities	49,500		50,288
Total available-for-sale	$	934,138	$	952,416

Available-for-sale securities reconciliation

The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands): 

	June 30, 2021
Available-for-Sale Securities	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Estimated  Fair Value
Debt securities:
U.S. Treasury securities	$	19,987	$	10	$	(3)	$	19,994
U.S. Government agencies	637		16		—		653
Obligations of states and political subdivisions	458,250		17,447		(2,039)		473,658
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	224,920		3,131		(1,009)		227,042
Private label mortgage and asset backed securities	180,844		1,293		(1,356)		180,781
Corporate debt securities	49,500		883		(95)		50,288
Total available-for-sale	$	934,138	$	22,780	$	(4,502)	$	952,416

	December 31, 2020
Available-for-Sale Securities	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Estimated Fair Value
Debt securities:
U.S. Government agencies	$	651	$	29	$	—	$	680
Obligations of states and political subdivisions	361,734		18,170		(339)		379,565
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	214,203		3,575		(1,480)		216,298
Private label mortgage and asset backed securities	82,413		1,337		(242)		83,508
Corporate debt securities	30,000		260		(219)		30,041
Total available-for-sale	$	689,001	$	23,371	$	(2,280)	$	710,092

Realized gains and losses

Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended June 30, 2021 and 2020 are shown below (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Available-for-Sale Securities	2021		2020		2021		2020
Proceeds from sales or calls	$	590	$	16,114	$	590	$	122,151
Gross realized gains from sales or calls	—		306		—		4,504
Gross realized losses from sales or calls	(79)		(364)		(79)		(364)

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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Outstanding loans

Outstanding loans are summarized as follows:

Loan Type (Dollars in thousands)	June 30, 2021		% of Total Loans		December 31, 2020		% of Total Loans
Commercial:
Commercial and industrial	$	208,919	19.4	%	$	273,994	24.9	%
Agricultural production	32,918		3.1	%	21,971		2.0	%
Total commercial	241,837		22.5	%	295,965		26.9	%
Real estate:
Owner occupied	200,232		18.7	%	208,843		18.9	%
Real estate construction and other land loans	65,282		6.1	%	55,419		5.0	%
Commercial real estate	357,519		33.4	%	338,886		30.7	%
Agricultural real estate	88,110		8.2	%	84,258		7.6	%
Other real estate	29,750		2.8	%	28,718		2.6	%
Total real estate	740,893		69.2	%	716,124		64.8	%
Consumer:
Equity loans and lines of credit	51,364		4.8	%	55,634		5.0	%
Consumer and installment	37,241		3.5	%	37,236		3.3	%
Total consumer	88,605		8.3	%	92,870		8.3	%
Net deferred origination (fees) costs	(1,390)				(2,612)
Total gross loans	1,069,945		100.0	%	1,102,347		100.0	%
Allowance for credit losses	(10,439)				(12,915)
Total loans	$	1,059,506			$	1,089,432

Impaired loans

The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended June 30, 2021 and 2020 (in thousands).

	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	—	$	—	$	7	$	—
Agricultural production	—		—		212		—
Total commercial	—		—		219		—
Real estate:
Owner occupied	—		—		401		—
Real estate construction and other land loans	333		5		—		—
Commercial real estate	490		—		848		—
Agricultural real estate	—		—		199		—
Total real estate	823		5		1,448		—
Consumer:
Equity loans and lines of credit	142		3		232		3
Total with no related allowance recorded	965		8		1,899		3
With an allowance recorded:
Commercial:
Commercial and industrial	5,831		67		11,516		171
Agricultural production	1,328				619		12
Total commercial	7,159		67		12,135		183
Real estate:
Real estate construction and other land loans	746		—		95		—
Commercial real estate	144		2		331		2
Agricultural real estate	30		1		28		1
Total real estate	920		3		454		3
Consumer:
Equity loans and lines of credit	928		14		957		14
Consumer and installment	—		—		38		—
Total consumer	928		14		995		14
Total with an allowance recorded	9,007		84		13,584		200
Total	$	9,972	$	92	$	15,483	$	203

The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the six months ended June 30, 2021 and 2020 (in thousands).

	Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	9	$	—	$	71	$	—
Agricultural land and production	—		—		121		—
Total commercial	9		—		192		—
Real estate:
Owner occupied	103		—		407		—
Real estate construction and other land loans	201		11		—		—
Commercial real estate	498		—		959		—
Agricultural real estate	—		—		228		—
Total real estate	802		11		1,594		—
Consumer:
Equity loans and lines of credit	142		6		264		6
Total with no related allowance recorded	953		17		2,050		6
With an allowance recorded:
Commercial:
Commercial and industrial	6,475		153		6,589		344
Agricultural land and production	969		—		354		24
Total commercial	7,444		153		6,943		368
Real estate:
Real estate construction and other land loans	1,077		—		54		—
Commercial real estate	145		5		254		5
Agricultural real estate	30		1		26		1
Total real estate	1,252		6		334		6
Consumer:
Equity loans and lines of credit	931		27		1,052		28
Consumer and installment	25		—		24		—
Total consumer	956		27		1,076		28
Total with an allowance recorded	9,652		186		8,353		402
Total	$	10,605	$	203	$	10,403	$	408

Foregone interest on nonaccrual loans totaled $72,000 and $74,000 for the six month period ended June 30, 2021 and 2020, respectively. Foregone interest on nonaccrual loans totaled 34,000 and 55,000 for the three month period ended June 30, 2021 and 2020, respectively.

Allowance for credit losses

The following table shows the summary of activities for the Allowance as of and for the three months ended June 30, 2021 and 2020 by portfolio segment (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, April 1, 2021	$	2,483	$	8,352	$	888	$	333	$	12,056
(Reversal) provision charged to operations	(307)		(1,302)		91		18		(1,500)
Charge-offs	—		—		(171)		—		(171)
Recoveries	34		—		20		—		54
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Allowance for credit losses:
Beginning balance, April 1, 2020	$	1,657	$	7,555	$	1,236	$	98	$	10,546
Provision charged to operations	7		2,834		76		83		3,000
Charge-offs	—		—		(80)		—		(80)
Recoveries	423		—		48		—		471
Ending balance, June 30, 2020	$	2,087	$	10,389	$	1,280	$	181	$	13,937

The following table shows the summary of activities for the Allowance as of and for the six months ended June 30, 2021 and 2020 by portfolio segment (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance, January 1, 2021	$	2,019	$	9,174	$	1,091	$	631	$	12,915
Reversal charged to operations	(439)		(2,443)		(138)		(280)		(3,300)
Charge-offs	(31)		—		(197)		—		(228)
Recoveries	661		319		72		—		1,052
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Allowance for credit losses:
Beginning balance, January 1, 2020	$	1,428	$	6,769	$	897	$	36	$	9,130
Provision charged to operations	233		3,620		377		145		4,375
Charge-offs	(29)		—		(94)		—		(123)
Recoveries	455		—		100		—		555
Ending balance, June 30, 2020	$	2,087	$	10,389	$	1,280	$	181	$	13,937

    The following is a summary of the Allowance by impairment methodology and portfolio segment as of June 30, 2021 and December 31, 2020 (in thousands):

	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Ending balance, June 30, 2021	$	2,210	$	7,050	$	828	$	351	$	10,439
Ending balance: individually evaluated for impairment	$	865	$	10	$	5	$	—	$	880
Ending balance: collectively evaluated for impairment	$	1,345	$	7,040	$	823	$	351	$	9,559
Ending balance, December 31, 2020	$	2,019	$	9,174	$	1,091	$	631	$	12,915
Ending balance: individually evaluated for impairment	$	339	$	271	$	21	$	—	$	631
Ending balance: collectively evaluated for impairment	$	1,680	$	8,903	$	1,070	$	631	$	12,284

Schedule of receivable by impairment methodology

	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, June 30, 2021	$	241,837	$	740,893	$	88,605	$	1,071,335
Ending balance: individually evaluated for impairment	$	6,503	$	971	$	1,065	$	8,539
Ending balance: collectively evaluated for impairment	$	235,334	$	739,922	$	87,540	$	1,062,796
Loans:
Ending balance, December 31, 2020	$	295,965	$	716,124	$	92,870	$	1,104,959
Ending balance: individually evaluated for impairment	$	7,402	$	2,616	$	1,168	$	11,186
Ending balance: collectively evaluated for impairment	$	288,563	$	713,508	$	91,702	$	1,093,773

Loan portfolio by internal risk rating

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at June 30, 2021 (in thousands):

	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	196,108	$	745	$	12,066	$	—	$	208,919
Agricultural production	28,520		1,430		2,968		—		32,918
Real Estate:
Owner occupied	189,898		3,360		6,974		—		200,232
Real estate construction and other land loans	60,603		4,679		—		—		65,282
Commercial real estate	341,805		6,161		9,553		—		357,519
Agricultural real estate	84,870		2,087		1,153		—		88,110
Other real estate	29,589		—		161		—		29,750
Consumer:
Equity loans and lines of credit	51,116		248		—		—		51,364
Consumer and installment	37,178		—		63		—		37,241
Total	$	1,019,687	$	18,710	$	32,938	$	—	$	1,071,335

    The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2020 (in thousands):

	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	258,587	$	5,004	$	10,403	$	—	$	273,994
Agricultural production	18,289		377		3,305		—		21,971
Real Estate:
Owner occupied	197,721		3,870		7,252		—		208,843
Real estate construction and other land loans	50,560		1,622		3,237		—		55,419
Commercial real estate	314,710		14,537		9,639		—		338,886
Agricultural real estate	72,875		10,195		1,188		—		84,258
Other real estate	28,557		161		—		—		28,718
Consumer:
Equity loans and lines of credit	54,034		640		960		—		55,634
Consumer and installment	37,084		—		152		—		37,236
Total	$	1,032,417	$	36,406	$	36,136	$	—	$	1,104,959

Loan portfolio by time past due

The following table shows an aging analysis of the loan portfolio by class and the time past due at June 30, 2021 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than  90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non-accrual
Commercial:
Commercial and industrial	$	16	$	—	$	—	$	16	$	208,903	$	208,919	$	—	$	347
Agricultural production	—		—		—		—		32,918		32,918		—		1,205
Real estate:	—								—
Owner occupied	—		—		—		—		200,232		200,232		—		—
Real estate construction and other land loans	—		—		—		—		65,282		65,282		—		—
Commercial real estate	294		—		—		294		357,225		357,519		—		483
Agricultural real estate	—		—		—		—		88,110		88,110		—		—
Other real estate	—		—		—		—		29,750		29,750		—		—
Consumer:									—
Equity loans and lines of credit	—		—		—		—		51,364		51,364		—		—
Consumer and installment	81		—		—		81		37,160		37,241		—		—
Total	$	391	$	—	$	—	$	391	$	1,070,944	$	1,071,335	$	—	$	2,035

    The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2020 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than  90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non- accrual
Commercial:
Commercial and industrial	$	—	$	—	$	60	$	60	$	273,934	$	273,994	$	—	$	752
Agricultural production	—		—		—		—		21,971		21,971		—		—
Real estate:	—
Owner occupied	—		—		—		—		208,843		208,843		—		370
Real estate construction and other land loans	—		—		—		—		55,419		55,419		—		1,556
Commercial real estate	—		—		—		—		338,886		338,886		—		512
Agricultural real estate	—		—		—		—		84,258		84,258		—		—
Other real estate	—		—		—		—		28,718		28,718		—		—
Consumer:
Equity loans and lines of credit	—		24		—		24		55,610		55,634		—		—
Consumer and installment	5		—		—		5		37,231		37,236		—		88
Total	$	5	$	24	$	60	$	89	$	1,104,870	$	1,104,959	$	—	$	3,278

Troubled debt restructurings

The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2021 (in thousands):

Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification (2)		Post Modification Outstanding Recorded Investment (3)		Outstanding Recorded Investment
Real Estate:
Real estate-construction and other land loans	1	$	333	$	—	$	333	$	317

(1)Amounts represent the recorded investment in loans before recognizing effects of the Troubled Debt Restructurings, if any.

(2)Principal modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.

(3)Balance outstanding after principal modification, if any borrower reduction to recorded investment.

    The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2020 (in thousands):

Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification (2)		Post Modification Outstanding Recorded Investment (3)		Outstanding Recorded Investment
Commercial:
Commercial and Industrial	1	$	12,925	$	—	$	12,925	$	9,725
Agricultural production	1	850		—		850		775
Total	2	$	13,775	$	—	$	13,775	$	10,500

During the quarters ended June 30, 2021 and 2020, no loans were modified as troubled debt restructurings.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

A reconciliation of the numerators and denominators of the basic and diluted EPS computations is as follows:

Basic Earnings Per Share	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except share and per share amounts)	2021		2020		2021		2020
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Weighted average shares outstanding	12,498,809		12,449,283		12,497,217		12,592,126
Basic earnings per share	$	0.61	$	0.18	$	1.20	$	0.71

Diluted Earnings Per Share	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except share and per share amounts)	2021		2020		2021		2020
Net income	$	7,563	$	2,301	$	15,042	$	8,924
Weighted average shares outstanding	12,498,809		12,449,283		12,497,217		12,592,126
Effect of dilutive stock options	49,235		37,398		50,884		54,277
Weighted average shares of common stock and common stock equivalents	12,548,044		12,486,681		12,548,101		12,646,403
Diluted earnings per share	$	0.60	$	0.18	$	1.20	$	0.71

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock option activity

A summary of the combined activity of the Company’s stock option compensation plans for the six months ended June 30, 2021 follows (in thousands, except per share amounts): 

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding at December 31, 2020	77,070	$	10.06
Options exercised	(20,000)	$	10.63
Options outstanding at June 30, 2021	57,070	$	9.86	1.06	$	587
Options vested or expected to vest at June 30, 2021	57,070	$	9.86	1.06	$	587
Options exercisable at June 30, 2021	57,070	$	9.86	1.06	$	587

Information related to the stock option plan is as follows (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Intrinsic value of options exercised	$	204	$	32	$	206	$	381
Cash received from options exercised	$	212	$	19	$	213	$	228
Excess tax benefit realized for option exercises	$	46	$	—	$	46	$	72

Restricted common stock activity

The following table summarizes restricted stock and performance award activity for the six months ended June 30, 2021 as follows: 

	Shares	Weighted Average Grant-Date Fair Value
Nonvested outstanding shares at December 31, 2020	30,013	$	15.60
Granted	31,496	$	18.83
Vested	(30,834)	$	15.18
Forfeited	(247)	$	20.26
Nonvested outstanding shares at June 30, 2021	30,428	$	19.33

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Fair Value Measurements - Fair Value by Balance Sheet Grouping (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financial assets:
Available-for-sale debt securities	$ 952,416	$ 710,092
Equity securities	7,522	7,634
Level 1
Financial assets:
Cash and due from banks	39,346	34,175
Interest-earning deposits in other banks	81,320	36,103
Available-for-sale debt securities	0	0
Loans, net	0	0
Accrued interest receivable	10	9
Financial liabilities:
Deposits	1,898,736	1,691,647
Junior subordinated deferrable interest debentures	0	0
Accrued interest payable	0	0
Level 2
Financial assets:
Cash and due from banks	0	0
Interest-earning deposits in other banks	0	0
Available-for-sale debt securities	952,416	710,092
Loans, net	0	0
Accrued interest receivable	5,754	3,617
Financial liabilities:
Deposits	89,843	90,008
Junior subordinated deferrable interest debentures	0	0
Accrued interest payable	33	41
Level 3
Financial assets:
Cash and due from banks	0	0
Interest-earning deposits in other banks	0	0
Available-for-sale debt securities	0	0
Loans, net	1,053,137	1,087,124
Accrued interest receivable	3,653	5,208
Financial liabilities:
Deposits	0	0
Junior subordinated deferrable interest debentures	4,234	3,693
Accrued interest payable	22	24
Carrying Amount
Financial assets:
Cash and due from banks	39,346	34,175
Interest-earning deposits in other banks	81,320	36,103
Available-for-sale debt securities	952,416	710,092
Equity securities	7,522	7,634
Loans, net	1,059,506	1,089,432
Federal Home Loan Bank stock	5,595	5,595
Accrued interest receivable	9,417	8,834
Financial liabilities:
Deposits	1,979,094	1,722,710
Junior subordinated deferrable interest debentures	5,155	5,155
Accrued interest payable	55	65
Fair Value
Financial assets:
Cash and due from banks	39,346	34,175
Interest-earning deposits in other banks	81,320	36,103
Available-for-sale debt securities	952,416	710,092
Equity securities	7,522	7,634
Loans, net	1,053,137	1,087,124
Accrued interest receivable	9,417	8,834
Financial liabilities:
Deposits	1,988,579	1,781,655
Junior subordinated deferrable interest debentures	4,234	3,693
Accrued interest payable	55	65
Recurring | Other equity securities | Level 1
Financial assets:
Equity securities	7,522	7,634
Recurring | Other equity securities | Level 2
Financial assets:
Equity securities	0	0
Recurring | Other equity securities | Level 3
Financial assets:
Equity securities	0	0
Recurring | Other equity securities | Fair Value
Financial assets:
Equity securities	$ 7,522	$ 7,634

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Fair Value Measurements - Recurring and Nonrecurring (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	$ 952,416,000			$ 710,092,000
Equity securities	7,522,000			7,634,000
Available-for-sale debt securities	952,416,000			710,092,000
Financing receivable, allowance for credit loss	10,439,000	$ 13,937,000	$ 12,056,000	12,915,000	$ 10,546,000	$ 9,130,000
Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	7,522,000			7,634,000
Available-for-sale debt securities	952,416,000			710,092,000
Total impaired loans	1,059,506,000			1,089,432,000
Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	7,522,000			7,634,000
Available-for-sale debt securities	952,416,000			710,092,000
Total impaired loans	1,053,137,000			1,087,124,000
Loans, charge-offs	0	$ 0
U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	19,994,000
U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	653,000			680,000
Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	473,658,000			379,565,000
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	227,042,000			216,298,000
Private label mortgage and asset backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	180,781,000			83,508,000
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	50,288,000			30,041,000
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0			0
Total impaired loans	0			0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	952,416,000			710,092,000
Total impaired loans	0			0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0			0
Total impaired loans	1,053,137,000			1,087,124,000
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	959,938,000			717,726,000
Recurring | U.S. Treasury securities | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	19,994,000
Recurring | U.S. Government agencies | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	653,000			680,000
Recurring | Obligations of states and political subdivisions | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	473,658,000			379,565,000
Recurring | U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	227,042,000			216,298,000
Recurring | Private label mortgage and asset backed securities | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	180,781,000			83,508,000
Recurring | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities				30,041,000
Recurring | Corporate debt securities | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	50,288,000
Recurring | Other equity securities | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	7,522,000			7,634,000
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	7,522,000			7,634,000
Recurring | Level 1 | U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0
Recurring | Level 1 | U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 1 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 1 | U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 1 | Private label mortgage and asset backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 1 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 1 | Other equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	7,522,000			7,634,000
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	952,416,000			710,092,000
Recurring | Level 2 | U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	19,994,000
Recurring | Level 2 | U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	653,000			680,000
Recurring | Level 2 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	473,658,000			379,565,000
Recurring | Level 2 | U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	227,042,000			216,298,000
Recurring | Level 2 | Private label mortgage and asset backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	180,781,000			83,508,000
Recurring | Level 2 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	50,288,000			30,041,000
Recurring | Level 2 | Other equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0			0
Recurring | Level 3 | U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0
Recurring | Level 3 | U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 3 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 3 | U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 3 | Private label mortgage and asset backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 3 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Recurring | Level 3 | Other equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0			0
Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities fair value disclosure	$ 0			0
Nonrecurring | Fair Value | Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans				1,260
Nonrecurring | Level 1 | Fair Value | Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans				0
Nonrecurring | Level 2 | Fair Value | Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans				0
Nonrecurring | Level 3 | Fair Value | Commercial real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans				$ 1,260

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Investments - Textual (Details)	6 Months Ended
	Jun. 30, 2021 USD ($) security Loans	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Schedule of Available-for-sale Securities
Available-for-sale Securities pledged as collateral	$ 191,882,000
Unrealized gain (loss) of available-for sale securities	18,278,000		$ 21,091,000
AOCI available-for-sale securities adjustment tax	$ 5,404,000,000		6,235,000
Income tax impact from the reclassification of unrealized net gains on available-for-sale securities to realized net gains on available-for-sale securities		$ 1,224,000
Threshold period of value decline in available-for-sale securities to be considered other than temporary impairment	12 months
Threshold percentage of value decline in available-for-sale securities to be considered other than temporary impairment	10.00%
Threshold amount of value decline in available-for-sale securities to be considered other than temporary impairment	$ 75,000
Other than temporary impairment losses on investment securities	0
Debt securities, amortized cost	$ 934,138,000
Available-for-sale Securities, Number of Securities, Loss Position | Loans	5
U.S. Government agencies
Schedule of Available-for-sale Securities
Available-for-sale securities, number of positions | security	1
Debt securities, amortized cost	$ 637,000		651,000
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities
Available-for-sale securities, number of positions | security	122
Debt securities, amortized cost	$ 458,250,000		361,734,000
Obligations of states and political subdivisions | Less than 12 months
Schedule of Available-for-sale Securities
Available-for-sale securities in unrealized loss positions, number of positions | security	16
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Schedule of Available-for-sale Securities
Available-for-sale securities, number of positions | security	115
Debt securities, amortized cost	$ 224,920,000		214,203,000
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | Less than 12 months
Schedule of Available-for-sale Securities
Available-for-sale securities in unrealized loss positions, number of positions | security	8
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | Greater than 12 months
Schedule of Available-for-sale Securities
Available-for-sale securities in unrealized loss positions, number of positions | security	11
Private label mortgage and asset backed securities
Schedule of Available-for-sale Securities
Available-for-sale securities, number of positions | security	49
Debt securities, amortized cost	$ 180,844,000		82,413,000
Private label mortgage and asset backed securities | Less than 12 months
Schedule of Available-for-sale Securities
Available-for-sale securities in unrealized loss positions, number of positions | security	18
Private label mortgage and asset backed securities | Greater than 12 months
Schedule of Available-for-sale Securities
Available-for-sale securities in unrealized loss positions, number of positions | security	2
Corporate debt securities
Schedule of Available-for-sale Securities
Available-for-sale securities, number of positions | security	14
Debt securities, amortized cost	$ 49,500,000		$ 30,000,000
U.S. Treasury securities
Schedule of Available-for-sale Securities
Available-for-sale securities, number of positions | security	2
Available-for-sale securities in unrealized loss positions, number of positions | security	1
Debt securities, amortized cost	$ 19,987,000

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Investments - Carrying value and estimated fair value (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities
Amortized Cost	$ 934,138
Available-for-sale debt securities	952,416	$ 710,092
Amortized Cost	934,138	689,001
Gross Unrealized Gains	22,780	23,371
Gross Unrealized Losses	(4,502)	(2,280)
Available-for-sale securities	952,416	710,092
U.S. Government agencies
Schedule of Available-for-sale Securities
Amortized Cost	637	651
Gross Unrealized Gains	16	29
Gross Unrealized Losses	0	0
Available-for-sale debt securities	653	680
U.S. Treasury securities
Schedule of Available-for-sale Securities
Amortized Cost	19,987
Gross Unrealized Gains	10
Gross Unrealized Losses	(3)
Available-for-sale debt securities	19,994
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities
Amortized Cost	458,250	361,734
Gross Unrealized Gains	17,447	18,170
Gross Unrealized Losses	(2,039)	(339)
Available-for-sale debt securities	473,658	379,565
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Schedule of Available-for-sale Securities
Amortized Cost	224,920	214,203
Gross Unrealized Gains	3,131	3,575
Gross Unrealized Losses	(1,009)	(1,480)
Available-for-sale debt securities	227,042	216,298
Private label mortgage and asset backed securities
Schedule of Available-for-sale Securities
Amortized Cost	180,844	82,413
Gross Unrealized Gains	1,293	1,337
Gross Unrealized Losses	(1,356)	(242)
Available-for-sale debt securities	180,781	83,508
Corporate debt securities
Schedule of Available-for-sale Securities
Amortized Cost	49,500	30,000
Gross Unrealized Gains	883	260
Gross Unrealized Losses	(95)	(219)
Available-for-sale debt securities	$ 50,288	$ 30,041

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Investments - Realized gains and losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Debt Securities, Available-for-sale [Abstract]
Proceeds from sales or calls	$ 590	$ 16,114	$ 590	$ 122,151
Gross realized gains from sales or calls	0	306	0	4,504
Gross realized losses from sales or calls	$ (79)	$ (364)	$ (79)	$ (364)

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Investments - Unrealized losses (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities
Less than 12 Months, Fair Value	$ 245,156	$ 105,252
Less than 12 Months, Unrealized Losses	(4,037)	(1,085)
12 Months or More, Fair Value	57,021	81,237
12 Months or More, Unrealized Losses	(465)	(1,195)
Total Fair Value	302,177	186,489
Total Unrealized Losses	(4,502)	(2,280)
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities
Less than 12 Months, Fair Value	79,759	36,209
Less than 12 Months, Unrealized Losses	(2,039)	(339)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total Fair Value	79,759	36,209
Total Unrealized Losses	(2,039)	(339)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Schedule of Available-for-sale Securities
Less than 12 Months, Fair Value	47,184	30,755
Less than 12 Months, Unrealized Losses	(573)	(385)
12 Months or More, Fair Value	52,818	77,337
12 Months or More, Unrealized Losses	(436)	(1,095)
Total Fair Value	100,002	108,092
Total Unrealized Losses	(1,009)	(1,480)
Private label mortgage and asset backed securities
Schedule of Available-for-sale Securities
Less than 12 Months, Fair Value	91,811	25,407
Less than 12 Months, Unrealized Losses	(1,327)	(242)
12 Months or More, Fair Value	4,203	0
12 Months or More, Unrealized Losses	(29)	0
Total Fair Value	96,014	25,407
Total Unrealized Losses	(1,356)	(242)
Corporate debt securities
Schedule of Available-for-sale Securities
Less than 12 Months, Fair Value	16,405
Less than 12 Months, Unrealized Losses	(95)
12 Months or More, Fair Value	0
12 Months or More, Unrealized Losses	0
Other equity securities
Schedule of Available-for-sale Securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	16,405	16,781
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	95	219
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		12,881
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		119
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		3,900
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		$ 100
U.S. Treasury securities
Schedule of Available-for-sale Securities
Less than 12 Months, Fair Value	9,997
Less than 12 Months, Unrealized Losses	(3)
12 Months or More, Fair Value	0
12 Months or More, Unrealized Losses	0
Total Fair Value	9,997
Total Unrealized Losses	$ (3)

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Investments - Investments by contractual maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities
Within one year, amortized cost	$ 304
Within one year, estimated fair value	305
After one year through five years, amortized cost	3,317
After one year through five years, estimated fair value	3,627
After five years through ten years, amortized cost	84,162
After five years through ten years, estimated fair value	86,564
After ten years, amortized cost	390,454
After ten years, estimated fair value	403,156
Total securities with single maturity date, amortized cost	478,237
Total securities with single maturity date, estimated fair value	493,652
Debt securities, amortized cost	934,138
Equity securities	952,416	$ 710,092
U.S. Government agencies
Schedule of Available-for-sale Securities
Investment securities not due at a single maturity date, amortized cost	637
Investment securities not due at a single maturity date, estimated fair value	653
Debt securities, amortized cost	637	651
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations
Schedule of Available-for-sale Securities
Investment securities not due at a single maturity date, amortized cost	224,920
Investment securities not due at a single maturity date, estimated fair value	227,042
Debt securities, amortized cost	224,920	214,203
Private label mortgage and asset backed securities
Schedule of Available-for-sale Securities
Investment securities not due at a single maturity date, amortized cost	180,844
Investment securities not due at a single maturity date, estimated fair value	180,781
Debt securities, amortized cost	180,844	82,413
Corporate debt securities
Schedule of Available-for-sale Securities
Investment securities not due at a single maturity date, amortized cost	49,500
Investment securities not due at a single maturity date, estimated fair value	50,288
Debt securities, amortized cost	$ 49,500	$ 30,000

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Loans and Allowance for Credit Losses - Summary of outstanding loans (Details) $ in Thousands	Jun. 30, 2021 USD ($) Loans	Dec. 31, 2020 USD ($) Loans
Loans
Loans	$ 1,071,335	$ 1,104,959
% of Total Loans	100.00%	100.00%
Deferred loan fees, net	$ (1,390)	$ (2,612)
Total gross loans	1,069,945	1,102,347
Allowance for credit losses	(10,439)	(12,915)
Total loans	1,059,506	1,089,432
Small Business Administration programs
Loans
Loans	23,685	24,220
Amount secured by government guarantees	$ 18,029	$ 18,180
Percent secured by government guarantees	76.00%	75.00%
Commercial
Loans
Loans	$ 241,837	$ 295,965
% of Total Loans	22.50%	26.90%
Commercial | Commercial and industrial
Loans
Loans	$ 208,919	$ 273,994
% of Total Loans	19.40%	24.90%
Commercial | Commercial and industrial | Paycheck Protection Program [Member]
Loans
Loans	$ 109,502	$ 192,916
Financing receivable number of contracts | Loans	630	989
Commercial | Agricultural production
Loans
Loans	$ 32,918	$ 21,971
% of Total Loans	3.10%	2.00%
Real Estate
Loans
Loans	$ 740,893	$ 716,124
% of Total Loans	69.20%	64.80%
Real Estate | Owner occupied
Loans
Loans	$ 200,232	$ 208,843
% of Total Loans	18.70%	18.90%
Real Estate | Real estate construction and other land loans
Loans
Loans	$ 65,282	$ 55,419
% of Total Loans	6.10%	5.00%
Real Estate | Commercial real estate
Loans
Loans	$ 357,519	$ 338,886
% of Total Loans	33.40%	30.70%
Real Estate | Agricultural real estate
Loans
Loans	$ 88,110	$ 84,258
% of Total Loans	8.20%	7.60%
Real Estate | Other real estate
Loans
Loans	$ 29,750	$ 28,718
% of Total Loans	2.80%	2.60%
Consumer
Loans
Loans	$ 88,605	$ 92,870
% of Total Loans	8.30%	8.30%
Consumer | Equity loans and lines of credit
Loans
Loans	$ 51,364	$ 55,634
% of Total Loans	4.80%	5.00%
Consumer | Consumer and installment
Loans
Loans	$ 37,241	$ 37,236
% of Total Loans	3.50%	3.30%

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Loans and Allowance for Credit Losses - Allowance for Credit Losses (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) component quarter	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) component quarter	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of primary components | component	2		2
Lookback period used in reserve analysis | quarter	50		50
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses, beginning balance	$ 12,056	$ 10,546	$ 12,915	$ 9,130
Provision charged to operations	(1,500)	(3,000)	(3,300)	4,375
Losses charged to allowance	(171)	(80)	(228)	(123)
Recoveries	54	471	1,052	555
Allowance for credit losses, ending balance	10,439	13,937	10,439	13,937
Ending balance: individually evaluated for impairment	880		880		$ 631
Ending balance: collectively evaluated for impairment	9,559		9,559		12,284
Commercial
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses, beginning balance	2,483	1,657	2,019	1,428
Provision charged to operations	(307)	(7)	439	(233)
Losses charged to allowance	0	0	(31)	(29)
Recoveries	34	423	661	455
Allowance for credit losses, ending balance	2,210	2,087	2,210	2,087
Ending balance: individually evaluated for impairment	865		865		339
Ending balance: collectively evaluated for impairment	1,345		1,345		1,680
Real Estate
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses, beginning balance	8,352	7,555	9,174	6,769
Provision charged to operations	(1,302)	(2,834)	2,443	(3,620)
Losses charged to allowance	0	0	0	0
Recoveries	0	0	319	0
Allowance for credit losses, ending balance	7,050	10,389	7,050	10,389
Ending balance: individually evaluated for impairment	10		10		271
Ending balance: collectively evaluated for impairment	7,040		7,040		8,903
Consumer
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses, beginning balance	888	1,236	1,091	897
Provision charged to operations	91	(76)	138	(377)
Losses charged to allowance	(171)	(80)	(197)	(94)
Recoveries	20	48	72	100
Allowance for credit losses, ending balance	828	1,280	828	1,280
Ending balance: individually evaluated for impairment	5		5		21
Ending balance: collectively evaluated for impairment	823		823		1,070
Unallocated
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit losses, beginning balance	333	98	631	36
Provision charged to operations	18	(83)	280	(145)
Losses charged to allowance	0	0	0	0
Recoveries	0	0	0	0
Allowance for credit losses, ending balance	351	$ 181	351	$ 181
Ending balance: individually evaluated for impairment	0		0		0
Ending balance: collectively evaluated for impairment	$ 351		$ 351		$ 631

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Loans and Allowance for Credit Losses - Loan Portfolio by Impairment Methodology (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 1,071,335	$ 1,104,959
Ending balance: individually evaluated for impairment	8,539	11,186
Ending balance: collectively evaluated for impairment	1,062,796	1,093,773
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	241,837	295,965
Ending balance: individually evaluated for impairment	6,503	7,402
Ending balance: collectively evaluated for impairment	235,334	288,563
Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	740,893	716,124
Ending balance: individually evaluated for impairment	971	2,616
Ending balance: collectively evaluated for impairment	739,922	713,508
Consumer
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	88,605	92,870
Ending balance: individually evaluated for impairment	1,065	1,168
Ending balance: collectively evaluated for impairment	$ 87,540	$ 91,702

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Loans and Allowance for Credit Losses - Loan Portfolio by Risk Rating (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Recorded Investment
Loans	$ 1,071,335	$ 1,104,959
Pass
Financing Receivable, Recorded Investment
Loans	1,019,687	1,032,417
Special Mention
Financing Receivable, Recorded Investment
Loans	18,710	36,406
Substandard
Financing Receivable, Recorded Investment
Loans	32,938	36,136
Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Commercial
Financing Receivable, Recorded Investment
Loans	241,837	295,965
Commercial | Commercial and industrial
Financing Receivable, Recorded Investment
Loans	208,919	273,994
Commercial | Commercial and industrial | Pass
Financing Receivable, Recorded Investment
Loans	196,108	258,587
Commercial | Commercial and industrial | Special Mention
Financing Receivable, Recorded Investment
Loans	745	5,004
Commercial | Commercial and industrial | Substandard
Financing Receivable, Recorded Investment
Loans	12,066	10,403
Commercial | Commercial and industrial | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Commercial | Agricultural production
Financing Receivable, Recorded Investment
Loans	32,918	21,971
Commercial | Agricultural production | Pass
Financing Receivable, Recorded Investment
Loans	28,520	18,289
Commercial | Agricultural production | Special Mention
Financing Receivable, Recorded Investment
Loans	1,430	377
Commercial | Agricultural production | Substandard
Financing Receivable, Recorded Investment
Loans	2,968	3,305
Commercial | Agricultural production | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Real Estate
Financing Receivable, Recorded Investment
Loans	740,893	716,124
Real Estate | Owner occupied
Financing Receivable, Recorded Investment
Loans	200,232	208,843
Real Estate | Owner occupied | Pass
Financing Receivable, Recorded Investment
Loans	189,898	197,721
Real Estate | Owner occupied | Special Mention
Financing Receivable, Recorded Investment
Loans	3,360	3,870
Real Estate | Owner occupied | Substandard
Financing Receivable, Recorded Investment
Loans	6,974	7,252
Real Estate | Owner occupied | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Real Estate | Real estate construction and other land loans
Financing Receivable, Recorded Investment
Loans	65,282	55,419
Real Estate | Real estate construction and other land loans | Pass
Financing Receivable, Recorded Investment
Loans	60,603	50,560
Real Estate | Real estate construction and other land loans | Special Mention
Financing Receivable, Recorded Investment
Loans	4,679	1,622
Real Estate | Real estate construction and other land loans | Substandard
Financing Receivable, Recorded Investment
Loans	0	3,237
Real Estate | Real estate construction and other land loans | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Real Estate | Commercial real estate
Financing Receivable, Recorded Investment
Loans	357,519	338,886
Real Estate | Commercial real estate | Pass
Financing Receivable, Recorded Investment
Loans	341,805	314,710
Real Estate | Commercial real estate | Special Mention
Financing Receivable, Recorded Investment
Loans	6,161	14,537
Real Estate | Commercial real estate | Substandard
Financing Receivable, Recorded Investment
Loans	9,553	9,639
Real Estate | Commercial real estate | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Real Estate | Agricultural real estate
Financing Receivable, Recorded Investment
Loans	88,110	84,258
Real Estate | Agricultural real estate | Pass
Financing Receivable, Recorded Investment
Loans	84,870	72,875
Real Estate | Agricultural real estate | Special Mention
Financing Receivable, Recorded Investment
Loans	2,087	10,195
Real Estate | Agricultural real estate | Substandard
Financing Receivable, Recorded Investment
Loans	1,153	1,188
Real Estate | Agricultural real estate | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Real Estate | Other real estate
Financing Receivable, Recorded Investment
Loans	29,750	28,718
Real Estate | Other real estate | Pass
Financing Receivable, Recorded Investment
Loans	29,589	28,557
Real Estate | Other real estate | Special Mention
Financing Receivable, Recorded Investment
Loans	0	161
Real Estate | Other real estate | Substandard
Financing Receivable, Recorded Investment
Loans	161	0
Real Estate | Other real estate | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Consumer
Financing Receivable, Recorded Investment
Loans	88,605	92,870
Consumer | Equity loans and lines of credit
Financing Receivable, Recorded Investment
Loans	51,364	55,634
Consumer | Equity loans and lines of credit | Pass
Financing Receivable, Recorded Investment
Loans	51,116	54,034
Consumer | Equity loans and lines of credit | Special Mention
Financing Receivable, Recorded Investment
Loans	248	640
Consumer | Equity loans and lines of credit | Substandard
Financing Receivable, Recorded Investment
Loans	0	960
Consumer | Equity loans and lines of credit | Doubtful
Financing Receivable, Recorded Investment
Loans	0	0
Consumer | Consumer and installment
Financing Receivable, Recorded Investment
Loans	37,241	37,236
Consumer | Consumer and installment | Pass
Financing Receivable, Recorded Investment
Loans	37,178	37,084
Consumer | Consumer and installment | Special Mention
Financing Receivable, Recorded Investment
Loans	0	0
Consumer | Consumer and installment | Substandard
Financing Receivable, Recorded Investment
Loans	63	152
Consumer | Consumer and installment | Doubtful
Financing Receivable, Recorded Investment
Loans	$ 0	$ 0

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Loans and Allowance for Credit Losses - Loan Portfolio Aging (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	$ 1,071,335	$ 1,104,959
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	2,035	3,278
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	241,837	295,965
Commercial | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	208,919	273,994
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	347	752
Commercial | Agricultural production
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	32,918	21,971
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	1,205	0
Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	740,893	716,124
Real Estate | Owner occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	200,232	208,843
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	0	370
Real Estate | Real estate construction and other land loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	65,282	55,419
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	0	1,556
Real Estate | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	357,519	338,886
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	483	512
Real Estate | Agricultural real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	88,110	84,258
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	0	0
Real Estate | Other real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	29,750	28,718
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	0	0
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	88,605	92,870
Consumer | Equity loans and lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	51,364	55,634
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	0	0
Consumer | Consumer and installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	37,241	37,236
Recorded Investment Greater Than 90 Days Accruing	0	0
Non-accrual	0	88
30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	391	5
30-59 Days Past Due | Commercial | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	16	0
30-59 Days Past Due | Commercial | Agricultural production
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
30-59 Days Past Due | Real Estate | Owner occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
30-59 Days Past Due | Real Estate | Real estate construction and other land loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
30-59 Days Past Due | Real Estate | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	294	0
30-59 Days Past Due | Real Estate | Agricultural real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
30-59 Days Past Due | Real Estate | Other real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
30-59 Days Past Due | Consumer | Equity loans and lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
30-59 Days Past Due | Consumer | Consumer and installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	81	5
60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	24
60-89 Days Past Due | Commercial | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
60-89 Days Past Due | Commercial | Agricultural production
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
60-89 Days Past Due | Real Estate | Owner occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
60-89 Days Past Due | Real Estate | Real estate construction and other land loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
60-89 Days Past Due | Real Estate | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
60-89 Days Past Due | Real Estate | Agricultural real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
60-89 Days Past Due | Real Estate | Other real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
60-89 Days Past Due | Consumer | Equity loans and lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	24
60-89 Days Past Due | Consumer | Consumer and installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	60
Greater Than 90 Days Past Due | Commercial | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	60
Greater Than 90 Days Past Due | Commercial | Agricultural production
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due | Real Estate | Owner occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due | Real Estate | Real estate construction and other land loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due | Real Estate | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due | Real Estate | Agricultural real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due | Real Estate | Other real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due | Consumer | Equity loans and lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Greater Than 90 Days Past Due | Consumer | Consumer and installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Financial Asset, Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	391	89
Financial Asset, Past Due | Commercial | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	16	60
Financial Asset, Past Due | Commercial | Agricultural production
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Financial Asset, Past Due | Real Estate | Owner occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Financial Asset, Past Due | Real Estate | Real estate construction and other land loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Financial Asset, Past Due | Real Estate | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	294	0
Financial Asset, Past Due | Real Estate | Agricultural real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Financial Asset, Past Due | Real Estate | Other real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	0
Financial Asset, Past Due | Consumer | Equity loans and lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	0	24
Financial Asset, Past Due | Consumer | Consumer and installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	81	5
Financial Asset, Not Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	1,070,944	1,104,870
Financial Asset, Not Past Due | Commercial | Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	208,903	273,934
Financial Asset, Not Past Due | Commercial | Agricultural production
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	32,918	21,971
Financial Asset, Not Past Due | Real Estate | Owner occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	200,232	208,843
Financial Asset, Not Past Due | Real Estate | Real estate construction and other land loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	65,282	55,419
Financial Asset, Not Past Due | Real Estate | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	357,225	338,886
Financial Asset, Not Past Due | Real Estate | Agricultural real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	88,110	84,258
Financial Asset, Not Past Due | Real Estate | Other real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	29,750	28,718
Financial Asset, Not Past Due | Consumer | Equity loans and lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	51,364	55,610
Financial Asset, Not Past Due | Consumer | Consumer and installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans	$ 37,160	$ 37,231

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Loans and Allowance for Credit Losses - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		9 Months Ended
	Jun. 30, 2021	Sep. 30, 2020	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020	Dec. 31, 2020	Jun. 30, 2017
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	$ 939			$ 939			$ 1,114
Unpaid Principal Balance, With no related allowance recorded	1,036			1,036			1,239
Cash flows expected to be collected at acquisition	7,600			7,600			10,072
Unpaid Principal Balance, With an allowance recorded	7,674			7,674			10,132
Related Allowance	880			880			631
Total Recorded Investment	8,539			8,539			11,186
Total Unpaid Principal Balance	8,710			8,710			11,371
Average Recorded Investment, With no related allowance recorded	965		$ 1,899	953	$ 2,050
Interest Income Recognized, With no related allowance recorded	8		3	17	6
Average Recorded Investment, With an allowance recorded	9,007		13,584	9,652	8,353
Interest Income Recognized, With an allowance recorded	84		200	186	402
Average Recorded Investment, Total	9,972		15,483	10,605	10,403
Interest Income Recognized, Total	92		203	203	408
Forgone interest on nonaccrual loans	34	$ 55		72		$ 74
Agricultural production
Financing Receivable, Impaired [Line Items]
Cash flows expected to be collected at acquisition								$ 1,205
Unpaid Principal Balance, With an allowance recorded								1,248
Related Allowance								206
Average Recorded Investment, With an allowance recorded	1,328		619	969	354
Interest Income Recognized, With an allowance recorded			12	0	24
Commercial
Financing Receivable, Impaired [Line Items]
Cash flows expected to be collected at acquisition								6,503
Unpaid Principal Balance, With an allowance recorded								6,576
Related Allowance								$ 865
Average Recorded Investment, With an allowance recorded	7,159		12,135	7,444	6,943
Interest Income Recognized, With an allowance recorded	67		183	153	368
Commercial
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, With no related allowance recorded	0		219	9	192
Interest Income Recognized, With no related allowance recorded	0		0	0	0
Commercial | Commercial and industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded							60
Unpaid Principal Balance, With no related allowance recorded							61
Cash flows expected to be collected at acquisition	5,298			5,298			7,342
Unpaid Principal Balance, With an allowance recorded	5,328			5,328			7,373
Related Allowance	659			659			339
Average Recorded Investment, With no related allowance recorded	0		7	9	71
Interest Income Recognized, With no related allowance recorded	0		0	0	0
Average Recorded Investment, With an allowance recorded	5,831		11,516	6,475	6,589
Interest Income Recognized, With an allowance recorded	67		171	153	344
Commercial | Agricultural production
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, With no related allowance recorded	0		212	0	121
Interest Income Recognized, With no related allowance recorded	0		0	0	0
Real Estate
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	799			799			910
Unpaid Principal Balance, With no related allowance recorded	860			860			998
Cash flows expected to be collected at acquisition	172			172			1,706
Unpaid Principal Balance, With an allowance recorded	173			173			1,730
Related Allowance	10			10			271
Average Recorded Investment, With no related allowance recorded	823		1,448	802	1,594
Interest Income Recognized, With no related allowance recorded	5		0	11	0
Average Recorded Investment, With an allowance recorded	920		454	1,252	334
Interest Income Recognized, With an allowance recorded	3		3	6	6
Real Estate | Owner occupied
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded							370
Unpaid Principal Balance, With no related allowance recorded							409
Average Recorded Investment, With no related allowance recorded	0		401	103	407
Interest Income Recognized, With no related allowance recorded	0		0	0	0
Real Estate | Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	483			483			512
Unpaid Principal Balance, With no related allowance recorded	544			544			561
Cash flows expected to be collected at acquisition	142			142			148
Unpaid Principal Balance, With an allowance recorded	143			143			149
Related Allowance	3			3			3
Average Recorded Investment, With no related allowance recorded	490		848	498	959
Interest Income Recognized, With no related allowance recorded	0		0	0	0
Average Recorded Investment, With an allowance recorded	144		331	145	254
Interest Income Recognized, With an allowance recorded	2		2	5	5
Real Estate | Real estate construction and other land loans
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	316			316			28
Unpaid Principal Balance, With no related allowance recorded	316			316			28
Cash flows expected to be collected at acquisition	0			0			1,528
Unpaid Principal Balance, With an allowance recorded	0			0			1,552
Related Allowance	0			0			268
Average Recorded Investment, With no related allowance recorded	333		0	201	0
Interest Income Recognized, With no related allowance recorded	5		0	11	0
Average Recorded Investment, With an allowance recorded	746		95	1,077	54
Interest Income Recognized, With an allowance recorded	0		0	0	0
Real Estate | Agricultural real estate
Financing Receivable, Impaired [Line Items]
Cash flows expected to be collected at acquisition	30			30			30
Unpaid Principal Balance, With an allowance recorded	30			30			29
Related Allowance	7			7			0
Average Recorded Investment, With no related allowance recorded	0		199	0	228
Interest Income Recognized, With no related allowance recorded	0		0	0	0
Average Recorded Investment, With an allowance recorded	30		28	30	26
Interest Income Recognized, With an allowance recorded	1		1	1	1
Consumer
Financing Receivable, Impaired [Line Items]
Cash flows expected to be collected at acquisition							1,024
Unpaid Principal Balance, With an allowance recorded							1,029
Related Allowance							21
Average Recorded Investment, With an allowance recorded	928		995	956	1,076
Interest Income Recognized, With an allowance recorded	14		14	27	28
Consumer | Equity loans and lines of credit
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	140			140			144
Unpaid Principal Balance, With no related allowance recorded	176			176			180
Cash flows expected to be collected at acquisition	925			925			936
Unpaid Principal Balance, With an allowance recorded	925			925			936
Related Allowance	5			5			9
Average Recorded Investment, With no related allowance recorded	142		232	142	264
Interest Income Recognized, With no related allowance recorded	3		3	6	6
Average Recorded Investment, With an allowance recorded	928		957	931	1,052
Interest Income Recognized, With an allowance recorded	14		14	27	28
Consumer | Consumer and installment
Financing Receivable, Impaired [Line Items]
Cash flows expected to be collected at acquisition							88
Unpaid Principal Balance, With an allowance recorded							93
Related Allowance							$ 12
Average Recorded Investment, With an allowance recorded	0		38	25	24
Interest Income Recognized, With an allowance recorded	$ 0		$ 0	$ 0	$ 0

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Loans and Allowance for Credit Losses - Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) Loans contract	Jun. 30, 2020 contract	Jun. 30, 2021 USD ($) contract	Jun. 30, 2020 contract	Dec. 31, 2020 USD ($)
Financing Receivable, Modifications [Line Items]
Outstanding Recorded Investment	$ 6,504		$ 6,504		$ 7,908
Reserves specific to modified loans	$ 515		$ 515		$ 20
Number of loans | Loans	1
Defaults on troubled debt restructurings | contract	0	0	0	0
COVID-19 [Member] | Payment Deferral [Member]
Financing Receivable, Modifications [Line Items]
Outstanding Recorded Investment	$ 1,370		$ 1,370
Commercial Real Estate | Commercial real estate
Financing Receivable, Modifications [Line Items]
Outstanding Recorded Investment	$ 317		317
Number of loans | Loans	1
Pre-Modification Outstanding Recorded Investment	$ 333
Principal Modification	0
Post Modification Outstanding Recorded Investment	333
Commercial Real Estate | Commercial and industrial
Financing Receivable, Modifications [Line Items]
Outstanding Recorded Investment	$ 9,725		9,725
Number of loans | Loans	1
Pre-Modification Outstanding Recorded Investment	$ 12,925
Principal Modification	0
Post Modification Outstanding Recorded Investment	12,925
Commercial Real Estate | Agricultural production
Financing Receivable, Modifications [Line Items]
Outstanding Recorded Investment	$ 775		775
Number of loans | Loans	1
Pre-Modification Outstanding Recorded Investment	$ 850
Principal Modification	0
Post Modification Outstanding Recorded Investment	850
Commercial and Real Estate
Financing Receivable, Modifications [Line Items]
Outstanding Recorded Investment	$ 10,500		$ 10,500
Number of loans | Loans	2
Pre-Modification Outstanding Recorded Investment	$ 13,775
Principal Modification	0
Post Modification Outstanding Recorded Investment	$ 13,775

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Goodwill (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Goodwill and Intangible Assets
Goodwill	$ 53,777	$ 53,777
Bank of Madera County
Goodwill and Intangible Assets
Goodwill	8,934
Service 1st Bank
Goodwill and Intangible Assets
Goodwill	14,643
Visalia Community Bank
Goodwill and Intangible Assets
Goodwill	6,340
Sierra Vista Bank
Goodwill and Intangible Assets
Goodwill	10,394
Folsom Lake Bank
Goodwill and Intangible Assets
Goodwill	$ 13,466

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Borrowing Arrangements (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Borrowing Arrangements
Investments securing FHLB advances, amortized cost	$ 934,138,000
Available-for-sale debt securities	952,416,000	$ 710,092,000
Federal funds purchased	0	0
Federal Home Loan Bank Advances
Borrowing Arrangements
Loans Pledged as Collateral	447,170,000
Remaining borrowing capacity	245,311,000
Federal Home Loan Bank Advances | Securities Pledged as Collateral
Borrowing Arrangements
Investments securing FHLB advances, amortized cost	151,000	169,000
Available-for-sale debt securities	159,000	$ 178,000
San Fransisco Branch
Borrowing Arrangements
Advances from FHLB	$ 0

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Guarantee commitment	$ 2,475
Probable loan loss experience on unfunded obligations [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Estimate of possible loss	250
Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	316,702	$ 326,179
Undisbursed lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	$ 306,144	314,774
Undisbursed lines of credit | Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit, term of agreement	1 month
Undisbursed lines of credit | Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit, term of agreement	12 months
Undisbursed portions of construction loans
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	$ 52,007	79,669
Standby letters of credit and financial guarantees
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	$ 10,558	$ 11,405
Standby letters of credit and financial guarantees | Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit, term of agreement	1 year

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Earnings Per Share - Basic (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Basic Earnings Per share
Net income	$ 7,563	$ 2,301	$ 15,042	$ 8,924
Weighted average shares outstanding (in shares)	12,498,809	12,449,283	12,497,217	12,592,126
Basic earnings per share (in dollars per share)	$ 0.61	$ 0.18	$ 1.20	$ 0.71

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Earnings Per Share - Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Diluted Earnings Per share
Net income available to common shareholders	$ 7,563	$ 2,301	$ 15,042	$ 8,924
Weighted average shares outstanding (in shares)	12,498,809	12,449,283	12,497,217	12,592,126
Effect of dilutive stock options (in shares)	49,235	37,398	50,884	54,277
Weighted average shares of common stock and common stock equivalents (in shares)	12,548,044	12,486,681	12,548,101	12,646,403
Diluted earnings per share (in dollars per share)	$ 0.60	$ 0.18	$ 1.20	$ 0.71
Anti-dilutive options and restricted stock awards (in shares)			0	0

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Share-Based Compensation - Textual (Details)		6 Months Ended
	Jun. 02, 2017 shares	Jun. 30, 2021 USD ($) plan $ / shares shares	Jun. 30, 2020 USD ($) shares	Dec. 31, 2020 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of plans | plan		4
Share-based compensation expense | $		$ 210,000	$ 248,000
Unrecognized compensation cost related to non-vested share-based compensation arrangements | $		$ 0
Granted (in shares) | shares		0	0
Employee Stock Purchase Plan (ESPP)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Offering period	3 months
Discount from market price	10.00%
Shares reserved for plan (in shares) | shares	500,000
Shares available for grant (in shares) | shares		450,257
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payroll deductions	1.00%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payroll deductions	15.00%
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tax benefit of stock option compensation expense | $		$ (46,000)	$ (72,000)
Restricted Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares) | shares		31,496
Unrecognized compensation cost related to non-vested share-based compensation arrangements | $		$ 458,000
Granted (in dollars per share) | $ / shares		$ 18.83
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | shares		30,428		30,013
Weighted average remaining period		1 year 8 months 19 days
Intrinsic value | $		$ 2,880,000
Restricted Common Stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		1 year
Restricted Common Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		5 years

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Share-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Stock option activity
Options outstanding (in shares)			77,070
Options exercised (in shares)			(20,000)
Options outstanding (in shares)	57,070		57,070
Options vested or expected to vest (in shares)	57,070		57,070
Options exercisable (in shares)	57,070		57,070
Stock option activity, weighted average exercise price
Options Outstanding, weighted average exercise price (in dollars per share)			$ 10.06
Options exercised, weighted average exercise price (in dollars per share)			10.63
Options Outstanding, weighted average exercise price (in dollars per share)	$ 9.86		9.86
Options vested or expected to vest, weighted average exercise price (in dollars per share)	9.86		9.86
Options exercisable, weighted average exercise price (in dollars per share)	$ 9.86		$ 9.86
Options outstanding, weighted average remaining contractual term			1 year 21 days
Options vested or expected to vest, weighted average remaining contractual term			1 year 21 days
Options exercisable, weighted average remaining contractual term			1 year 21 days
Options outstanding, aggregate intrinsic value	$ 587		$ 587
Options vested or expected to vest, aggregate intrinsic value	587		587
Options exercisable, aggregate intrinsic value	587		587
Intrinsic value of options exercised	204	$ 32	206	$ 381
Cash received from options exercised	212	19	213	228
Excess tax benefit realized for options exercises	$ 46	$ 0	$ 46	$ 72
Granted (in shares)			0	0

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Share-Based Compensation - Restricted Common Stock Awards (Details) - Restricted Common Stock	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Shares
Nonvested outstanding shares beginning balance (in shares) | shares	30,013
Granted (in shares) | shares	31,496
Vested (in shares) | shares	(30,834)
Forfeited (in shares) | shares	(247)
Nonvested outstanding shares ending balance (in shares) | shares	30,428
Weighted Average Grant-Date Fair Value
Nonvested outstanding shares beginning balance (in dollars per share) | $ / shares	$ 15.60
Granted (in dollars per share) | $ / shares	18.83
Vested (in dollars per share) | $ / shares	15.18
Forfeited (in dollars per share) | $ / shares	20.26
Nonvested outstanding shares ending balance (in dollars per share) | $ / shares	$ 19.33