10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

☑ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2019

☐ 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: 000-33411

NEW PEOPLES BANKSHARES, INC.

(Amendment No. 1) 

(Exact name of registrant as specified in its charter)

Virginia (State or other jurisdiction of incorporation or organization)	31-1804543 (I.R.S. Employer Identification No.)
67 Commerce Drive Honaker, Virginia (Address of principal executive offices)	24260 (Zip Code)

(Registrant’s telephone number, including area code) (276) 873-7000

n/a

(Former name, former address and former fiscal year, if changed since last report)

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 preceding 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 every Interactive Data File required to be submitted 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 such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 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  ☐	Smaller reporting company  ☑
	Emerging growth company  ☐

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 ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class	Outstanding at August 13, 2019
Common Stock, $2.00 par value	23,922,086

1

 Explanatory Note

The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 of NEW PEOPLES BANKSHARES, INC. (the “Company”) filed with the Securities and Exchange Commission on August 13, 2019 (the “Form 10-Q”) is to include Exhibit 101 to the Form 10-Q, which contains the XBRL (eXtensible Business Reporting Language) Interactive Data File for the financial statements and notes.

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NEW PEOPLES BANKSHARES, INC. (Registrant)
By:	/s/ C. TODD ASBURY
	C. Todd Asbury
	President and Chief Executive Officer
Date:	August 15, 2019
By:	/s/ JOHN J. BOCZAR
	John J. Boczar
	Executive Vice President and Chief Financial Officer
Date:	August 15, 2019

3

Index of Exhibits

No.	Description
2.1	Agreement and Plan of Share Exchange dated August 15, 2011 (incorporated by reference to Exhibit 2 to Form 8-K filed December 17, 2011).
3.1	Amended Articles of Incorporation of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarterly period ended June 30, 2008 filed on August 11, 2008).
3.2	Bylaws of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed on April 15, 2004).
4.1	Specimen Common Stock Certificate of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarterly period ended June 30, 2012 filed on August 14, 2012).
4.2	Form of Warrant to Purchase Shares of Common Stock (incorporated by reference to Exhibit 4.2 to Form 10-Q for the quarterly period ended June 30, 2012 filed on August 14, 2012).
4.3	Form of Rights Certificate (incorporated by reference to Exhibit 4.3 to Form 10-Q for the quarterly period ended June 30, 2012 filed on August 14, 2012).
10.1*	New Peoples Bank, Inc. 2001 Stock Option Plan (incorporated by reference to Exhibit 10.1 to Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001).
10.2*	Form of Non-Employee Director Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed November 30, 2004).
10.3*	Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.3 to Form 8-K filed November 30, 2004).
10.4*	Salary Continuation Agreement dated December 18, 2002 between New Peoples Bank, Inc. and Frank Sexton, Jr. (incorporated by reference to Exhibit 10.6 to Annual Report on Form 10-K for the fiscal year ended December 31, 2004).
10.5*	First Amendment dated June 30, 2003 to Salary Continuation Agreement between New Peoples Bank, Inc. and Frank Sexton, Jr. (incorporated by reference to Exhibit 10.7 to Annual Report on Form 10-K for the fiscal year ended December 31, 2004).
10.6*	Letter Agreement, dated as of June 29, 2009, between the Company and Kenneth D. Hart (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2009).
10.7	Written Agreement, effective August 4, 2010, by and among New Peoples Bankshares, Inc., New Peoples Bank, Inc., the Federal Reserve Bank of Richmond and the State Corporation Commission Bureau of Financial Institutions (incorporated by reference to Exhibit 10.1 to Form 8-K filed August 6, 2010).
10.8	Engagement Letters of Scott & Stringfellow, LLC (incorporated by reference to Exhibit 10.8 to Form 10-Q for the quarterly period ended June 30, 2012 filed on August 14, 2012).
10.9	Convertible Note Payable, B. Scott White, dated June 27, 2012 (incorporated by reference to Exhibit 10.1 to Form 8-K filed June 29, 2012).
10.10	Convertible Note Payable, Harold Lynn Keene, dated June 27, 2012 (incorporated by reference to Exhibit 10.2 to Form 8-K filed June 29, 2012).
10.11*	Employment Agreement dated December 1, 2017 between New Peoples Bankshares, Inc., New Peoples Bank, Inc., and C. Todd Asbury (incorporated by reference to Exhibit 10.1 to Form 8-K filed December 2, 2017).
31.1	Certification by Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
31.2	Certification by Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
32	Certification by Chief Executive Officer and Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials for the Company’s 10-Q Report for the quarterly period ended March 31, 2019, formatted in XBRL:  (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements, tagged as blocks of text.

___________________

* Denotes management contract.

4

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, C. Todd Asbury, certify that:

1.    I have reviewed this quarterly report on Form 10-Q/A for the quarter ended June 30, 2019 of New Peoples Bankshares, Inc.;

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 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 Act Rules 13a-15(f) and 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 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 the 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.

Date: August 15, 2019	/s/ C. TODD ASBURY
	C. Todd Asbury
	President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, John J. Boczar, certify that:

1.    I have reviewed this quarterly report on Form 10-Q/A for the quarter ended June 30, 2019 of New Peoples Bankshares, Inc.;

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 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 Act Rules 13a-15(f) and 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 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 the 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.

Date: August 15, 2019	/s/ JOHN J. BOCZAR
	John J. Boczar
	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF 

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, as the Chief Executive Officer and Chief Financial Officer, respectively, of New Peoples Bankshares, Inc., certify that, to the best of their knowledge and belief, the Quarterly Report on Form 10-Q/A for the period ended June 30, 2019 which accompanies this certification fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of New Peoples Bankshares, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaim any obligation to update the foregoing certification except as required by law.

Date: August 15, 2019	/s/ C. TODD ASBURY
	C. Todd Asbury
	President & Chief Executive Officer
Date: August 15, 2019	/s/ JOHN J. BOCZAR
	John J. Boczar
	Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 13, 2019
Document And Entity Information
Entity Registrant Name	NEW PEOPLES BANKSHARES INC
Entity Central Index Key	0001163389
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	VA
Entity File Number	000-33411
Entity Reporting Status Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		23,922,086
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
INTEREST AND DIVIDEND INCOME
Loans including fees	$ 7,130	$ 6,462	$ 14,072	$ 12,920
Federal funds sold	2	1	3	1
Interest-earning deposits with banks	231	95	474	160
Investments	365	397	733	805
Dividends on equity securities (restricted)	42	38	80	73
Total Interest and Dividend Income	7,770	6,993	15,362	13,959
INTEREST EXPENSE
Deposits	1,260	769	2,520	1,465
Borrowed funds	228	245	464	437
Total Interest Expense	1,488	1,014	2,984	1,902
NET INTEREST INCOME	6,282	5,979	12,378	12,057
PROVISION FOR LOAN LOSSES	135	63	270	126
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	6,147	5,916	12,108	11,931
NONINTEREST INCOME
Service charges and fees	872	919	1,713	1,786
Card processing and interchange	797	734	1,476	1,389
Insurance and investment fees	161	179	323	253
Other noninterest income	139	39	233	193
Total Noninterest Income	1,969	1,871	3,745	3,621
NONINTEREST EXPENSES
Salaries and employee benefits	3,830	3,670	7,476	7,314
Occupancy and equipment expense	1,130	1,299	2,279	2,591
Data processing and telecommunications	643	736	1,298	1,340
Other operating expenses	2,081	2,190	3,859	4,289
Total Noninterest Expenses	7,684	7,895	14,912	15,534
INCOME BEFORE INCOME TAXES	432	(108)	941	18
INCOME TAX EXPENSE (BENEFIT)	87	(59)	190	(13)
NET INCOME	$ 345	$ (49)	$ 751	$ 31
Income Per Share
Basic (in dollars per share)	$ 0.01	$ 0.00	$ 0.03	$ 0.00
Fully Diluted (in dollars per share)	$ 0.01	$ 0.00	$ 0.03	$ 0.00
Weighted Average Shares of Common Stock
Basic (in shares)	23,922,086	23,922,086	23,922,086	23,922,086
Diluted (in shares)	23,922,086	23,922,086	23,922,086	23,922,086

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
NET INCOME (LOSS)	$ 345	$ (49)	$ 751	$ 31
Investment Securities Activity
Unrealized gains (losses) arising during the period	1,023	(207)	1,490	(1,248)
Tax related to unrealized (gains) losses	(215)	43	(312)	263
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	808	(164)	1,178	(985)
TOTAL COMPREHENSIVE INCOME (LOSS)	$ 1,153	$ (213)	$ 1,929	$ (954)

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
ASSETS
Cash and due from banks	$ 15,656	$ 12,245
Interest-bearing deposits with banks	29,696	15,664
Federal funds sold	228	264
Total Cash and Cash Equivalents	45,580	28,173
Investment securities available-for-sale	56,398	59,407
Loans held for sale	4,487
Loans receivable	551,131	547,096
Allowance for loan losses	(5,188)	(5,336)
Net Loans	545,943	541,760
Bank premises and equipment, net	23,496	24,195
Other real estate owned	4,024	5,937
Accrued interest receivable	2,142	1,934
Deferred taxes, net	4,973	5,476
Right-of-use assets - operating leases	4,783	4,942
Other assets	10,126	10,318
Total Assets	701,952	682,142
Deposits:
Noninterest bearing	173,715	164,298
Interest-bearing	445,598	431,694
Total Deposits	619,313	595,992
Borrowed funds	21,496	27,126
Lease liabilities - operating leases	4,783	4,942
Accrued interest payable	675	587
Accrued expenses and other liabilities	2,506	2,245
Total Liabilities	648,773	630,892
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock - $2.00 par value; 50,000,000 shares authorized; 23,922,086 shares issued and outstanding at June 30, 2019 and December 31, 2018	47,844	47,844
Additional paid-in-capital	14,570	14,570
Retained deficit	(9,177)	(9,928)
Accumulated other comprehensive loss	(58)	(1,236)
Total Stockholders' Equity	53,179	51,250
Total Liabilities and Stockholders' Equity	$ 701,952	$ 682,142

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 2.00	$ 2.00
Common stock, authorized	50,000,000	50,000,000
Common stock, issued	23,922,086	23,922,086
Common stock, outstanding	23,922,086	23,922,086

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at beginning at Dec. 31, 2017	$ 47,844	$ 14,570	$ (10,847)	$ (594)	$ 50,973
Balance at beginning (in shares) at Dec. 31, 2017	23,922
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			80		80
Other comprehensive income (loss), net of tax				(821)	(821)
Balance at end at Mar. 31, 2018	$ 47,844	14,570	(10,767)	(1,415)	50,232
Balance at end (in shares) at Mar. 31, 2018	23,922
Balance at beginning at Dec. 31, 2017	$ 47,844	14,570	(10,847)	(594)	50,973
Balance at beginning (in shares) at Dec. 31, 2017	23,922
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)					31
Other comprehensive income (loss), net of tax					(985)
Balance at end at Jun. 30, 2018	$ 47,844	14,570	(10,816)	(1,579)	50,019
Balance at end (in shares) at Jun. 30, 2018	23,922
Balance at beginning at Mar. 31, 2018	$ 47,844	14,570	(10,767)	(1,415)	50,232
Balance at beginning (in shares) at Mar. 31, 2018	23,922
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			(49)		(49)
Other comprehensive income (loss), net of tax				(164)	(164)
Balance at end at Jun. 30, 2018	$ 47,844	14,570	(10,816)	(1,579)	50,019
Balance at end (in shares) at Jun. 30, 2018	23,922
Balance at beginning at Dec. 31, 2018	$ 47,844	14,570	(9,928)	(1,236)	$ 51,250
Balance at beginning (in shares) at Dec. 31, 2018	23,922				23,922,086
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			406		$ 406
Other comprehensive income (loss), net of tax				370	370
Balance at end at Mar. 31, 2019	$ 47,844	14,570	(9,522)	(866)	52,076
Balance at end (in shares) at Mar. 31, 2019	23,922
Balance at beginning at Dec. 31, 2018	$ 47,844	14,570	(9,928)	(1,236)	$ 51,250
Balance at beginning (in shares) at Dec. 31, 2018	23,922				23,922,086
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)					$ 751
Other comprehensive income (loss), net of tax					1,178
Balance at end at Jun. 30, 2019	$ 47,844	14,570	(9,177)	(58)	$ 53,179
Balance at end (in shares) at Jun. 30, 2019	23,922				23,922,086
Balance at beginning at Mar. 31, 2019	$ 47,844	14,570	(9,522)	(866)	$ 52,076
Balance at beginning (in shares) at Mar. 31, 2019	23,922
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			345		345
Other comprehensive income (loss), net of tax				808	808
Balance at end at Jun. 30, 2019	$ 47,844	$ 14,570	$ (9,177)	$ (58)	$ 53,179
Balance at end (in shares) at Jun. 30, 2019	23,922				23,922,086

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 751	$ 31
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of bond premiums/discounts	273	330
Provision for loan losses	270	126
Depreciation	1,189	1,295
Income on life insurance	(29)	(28)
Gain on sale of mortgage loans	(26)
Loss on sale of premises and equipment	4	82
Loss on sale of foreclosed assets	39	111
Adjustment of carrying value of foreclosed real estate	214	198
Deferred tax cost (benefit)	191	(12)
Net change in:
Interest receivable	(208)	135
Other assets	235	66
Accrued interest payable	88	85
Accrued expenses and other liabilities	261	(1,003)
Net Cash Provided by Operating Activities	3,252	1,416
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans receivable	(8,210)	(16,694)
Net increase in loans available for sale	(102)
Purchase of securities available-for-sale	(790)
Proceeds from sales, maturities, and principal paydowns of securities available-for-sale	5,016	5,515
Net purchase of equity securities (restricted)	(14)	(489)
Proceeds from sale of premises and equipment	1	777
Payments for the purchase of premises and equipment	(495)	(1,471)
Proceeds from insurance claims on other real estate owned	19
Proceeds from sales of other real estate owned	1,039	1,265
Net Cash Used In Investing Activities	(3,536)	(11,097)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowed funds	(5,630)	11,442
Net change in non-interest bearing deposits	9,417	12,909
Net change in interest bearing deposits	13,904	(3,902)
Net Cash Provided by Financing Activities	17,691	20,449
Net increase in cash and cash equivalents	17,407	10,768
Cash and Cash Equivalents, Beginning of Period	28,173	32,705
Cash and Cash Equivalents, End of Period	45,580	43,473
Supplemental Disclosure of Cash Paid During the Period for:
Interest	2,896	1,817
Taxes		320
Supplemental Disclosure of Non Cash Transactions:
Transfer of loans to Loans held for Sale	4,359
Other real estate acquired in settlement of foreclosed loans	45	1,289
Loans made to finance sale of foreclosed real estate	647	467
Change in unrealized gains (losses) on securities available-for-sale	$ 1,490	$ (1,248)

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NATURE OF OPERATIONS

6 Months Ended

Jun. 30, 2019

Nature Of Operations

NATURE OF OPERATIONS

NOTE 1 NATURE OF OPERATIONS:

New Peoples Bankshares, Inc. (the “Company”) is a financial holding company whose principal activity is the ownership and management of a community bank, New Peoples Bank, Inc. (the “Bank”). The Bank was organized and incorporated under the laws of the Commonwealth of Virginia. As a state-chartered member bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions, the Federal Deposit Insurance Corporation and the Federal Reserve Bank. The Bank provides general banking services to individuals, small and medium size businesses and the professional community of southwestern Virginia, southern West Virginia, and eastern Tennessee. Services include commercial and consumer loans along with traditional deposit products such as checking and savings accounts.

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ACCOUNTING PRINCIPLES

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

ACCOUNTING PRINCIPLES

NOTE 2 ACCOUNTING PRINCIPLES:

These consolidated financial statements conform to U. S. generally accepted accounting principles and to general industry practices. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position at June 30, 2019 and December 31, 2018, and the results of operations for the three and six-month periods ended June 30, 2019 and 2018. The notes included herein should be read in conjunction with the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any future period.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The determination of the adequacy of the allowance for loan losses and the determination of the deferred tax asset and related valuation allowance are based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2019

Income Per Share

EARNINGS PER SHARE

NOTE 3 EARNINGS PER SHARE:

Basic earnings per share computations are based on the weighted average number of shares outstanding during each period. Dilutive earnings per share reflect the additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued related to outstanding common stock warrants are determined by the Treasury method. There were no dilutive potential common shares for the three and six months ended June 30, 2019. Basic and diluted net income per common share calculations follow:

(Amounts in Thousands, Except		For the three months				For the six months
Share and Per Share Data)		ended June 30,				ended June 30,
		2019		2018		2019		2018
Net income (loss)	$	345	$	(49)	$	751	$	31
Weighted average shares outstanding		23,922,086		23,922,086		23,922,086		23,922,086
Dilutive shares		-		-		-		-
Weighted average dilutive shares outstanding		23,922,086		23,922,086		23,922,086		23,922,086
Basic income (loss) per share	$	0.01	$	(0.00)	$	0.03	$	0.00
Diluted income (loss) per share	$	0.01	$	(0.00)	$	0.03	$	0.00

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CAPITAL

6 Months Ended

Jun. 30, 2019

Capital [Abstract]

CAPITAL

NOTE 4 CAPITAL:

Capital Requirements and Ratios

The Bank is subject to various capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum ratios of Tier 1 and total capital as a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 1250%. Tier 1 capital consists of common stockholders’ equity, excluding the unrealized gain or loss on securities available-for-sale, minus certain intangible assets. Tier 2 capital consists of the allowance for loan losses subject to certain limitations. Total capital for purposes of computing the capital ratios consists of the sum of Tier 1 and Tier 2 capital. The Bank is also required to maintain capital at a minimum level based on quarterly average assets, which is known as the leverage ratio.

The Company meets eligibility criteria of a small bank holding company in accordance with the Federal Reserve Board’s Small Bank Holding Company Policy Statement issued in February 2015, and is no longer obligated to report consolidated regulatory capital. The Bank’s actual capital amounts and ratios are presented in the following table as of June 30, 2019 and December 31, 2018, respectively. These ratios comply with Federal Reserve rules to align with the Basel III Capital requirements effective January 1, 2015.

							Minimum to Be Well
							Capitalized Under
							Prompt Corrective
		Actual		Minimum Capital Requirement			Action Provisions
(Dollars are in thousands)		Amount	Ratio	Amount		Ratio	Amount		Ratio
June 30, 2019:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	70,635	14.70%	$	38,453	8.0%	$	48,066	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		65,447	13.62%		28,840	6.0%		38,453	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		65,447	9.25%		28,312	4.0%		35,390	5.0%
Common Equity Tier 1 Capital
to Risk Weighted Assets:
New Peoples Bank, Inc.		65,447	13.62%		21,630	4.5%		31,243	6.5%
December 31, 2018:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	70,002	14.39%	$	38,912	8.0%	$	48,640	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		64,666	13.29%		29,184	6.0%		38,912	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		64,666	9.59%		26,960	4.0%		33,700	5.0%
Common Equity Tier 1 Capital
to Risk Weighted Assets:
New Peoples Bank, Inc.		64,666	13.29%		21,888	4.5%		31,616	6.5%

As of June 30, 2019, the Bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage, and Common Equity Tier 1 ratios as set forth in the above tables. There were no subsequent conditions or events that management believes have changed the Bank’s category.

Under Basel III Capital requirements, a capital conservation buffer of 0.625% became effective beginning on January 1, 2016. The capital conservation buffer was gradually increased through January 1, 2019 to 2.50%. Banks are now required to maintain levels that meet the required minimum plus the capital conservation buffer in order to make distributions, such as dividends, or discretionary bonus payments. The Bank’s capital conservation buffer is 6.70% as of June 30, 2019.

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INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2019

Investment Securities

INVESTMENT SECURITIES

NOTE 5 INVESTMENT SECURITIES:

The amortized cost and estimated fair value of securities (all available-for-sale (“AFS”)) are as follows:

				Gross		Gross		Approximate
		Amortized		Unrealized		Unrealized		Fair
(Dollars are in thousands)		Cost		Gains		Losses		Value
June 30, 2019
U.S. Government Agencies	$	17,738	$	87	$	(108)	$	17,717
Taxable municipals		4,409		52		-		4,461
Corporate bonds		5,415		104		-		5,519
Mortgage backed securities		28,911		67		(277)		28,701
Total Securities AFS	$	56,473	$	310	$	(385)	$	56,398
December 31, 2018
U.S. Government Agencies	$	19,755	$	26	$	(392)	$	19,389
Taxable municipals		4,428		-		(115)		4,313
Corporate bonds		5,422		47		(149)		5,320
Mortgage backed securities		31,366		11		(992)		30,385
Total Securities AFS	$	60,971	$	84	$	(1,648)	$	59,407

The following table details unrealized losses and related fair values in the available-for-sale portfolio. This information is aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2019 and December 31, 2018.

		Less than 12 Months				12 Months or More					Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars are in thousands)		Value		Losses		Value		Losses		Value		Losses
June 30, 2019
U.S. Government Agencies	$	1,267	$	(1)	$	9,508	$	(107)	$	10,775	$	(108)
Taxable municipals		-		-		518		-		518		-
Corporate bonds		-		-		-		-		-		-
Mtg. backed securities		2		-		24,429		(277)		24,431		(277)
Total Securities AFS	$	1,269	$	(1)	$	34,455	$	(384)	$	35,724	$	(385)
December 31, 2018
U.S. Government Agencies	$	5,013	$	(68)	$	11,585	$	(324)	$	16,599	$	(392)
Taxable municipals		-		-		4,049		(115)		4,049		(115)
Corporate bonds		1,713		(43)		1,423		(106)		3,136		(149)
Mtg. backed securities		165		(2)		29,245		(990)		29,410		(992)
Total Securities AFS	$	6,891	$	(113)	$	46,302	$	(1,535)	$	53,194	$	(1,648)

At June 30, 2019, there were 119 securities in a loss position, of which 114 have been in a loss position for twelve months or more. Management believes that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and not as a result of credit deterioration. Management does not intend to sell, and it is not likely that the Bank will be required to sell any of the securities referenced in the table above before recovery of their amortized cost.

Investment securities with a carrying value of $7.6 million and $8.0 million at June 30, 2019 and December 31, 2018, respectively, were pledged as collateral to secure public deposits and for other purposes required by law.

There were no sales of investment securities during the six months ended June 30, 2019 or June 30, 2018.

The amortized cost and fair value of investment securities at June 30, 2019, by contractual maturity, are shown in the following schedule. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

						Weighted
(Dollars are in thousands)		Amortized		Fair		Average
Securities Available-for-Sale		Cost		Value		Yield
Due in one year or less	$	2	$	2	-		%
Due after one year through five years		5,643		5,685	2.60%
Due after five years through ten years		14,326		14,402	3.39%
Due after ten years		36,502		36,309		2.45%
Total	$	56,473	$	56,398	2.70%

The Bank, as a member of the Federal Reserve Bank and the Federal Home Loan Bank, is required to hold stock in each. The Bank also owns stock in CBB Financial Corp., which is a correspondent of the Bank. These equity securities are restricted from trading and are recorded at a cost of $2.6 million and $2.5 million as of June 30, 2019 and December 31, 2018, respectively.

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LOANS

6 Months Ended

Jun. 30, 2019

Loans

LOANS

NOTE 6 LOANS:

Loans held for sale includes $128 thousand of loans related to our secondary mortgage program, which are now being

originated in the Bank’s name. Previously, these loans were originated and funded in the name of the purchaser and were not included in loans receivable. The additional $4.4 million in loans held for sale is the fair value of classified and underperforming loans that were under a sales agreement and classified as loans held for sale at June 30, 2019. This loan sale settled July 3, 2019.

Loans receivable outstanding are summarized as follows:
(Dollars are in thousands)		June 30, 2019		December 31, 2018
Real estate secured:
Commercial	$	159,156	$	140,862
Construction and land development		29,285		35,119
Residential 1-4 family		244,433		249,946
Multifamily		13,110		13,496
Farmland		21,392		22,114
Total real estate loans		467,376		461,537
Commercial		54,902		55,157
Agriculture		5,185		5,266
Consumer installment loans		23,106		24,538
All other loans		562		598
Total loans	$	551,131	$	547,096

Loans receivable on nonaccrual status are summarized as follows:

(Dollars are in thousands)		June 30, 2019		December 31, 2018
Real estate secured:
Commercial	$	609	$	784
Construction and land development		167		157
Residential 1-4 family		2,333		3,626
Multifamily		-		76
Farmland		813		1,637
Total real estate loans		3,922		6,300
Commercial		1,601		61
Agriculture		-		1
Consumer installment loans		19		7
Total loans receivable on nonaccrual status	$	5,542	$	6,369

Total interest income not recognized on nonaccrual loans for the six months ended June 30, 2019 and 2018 was $379 thousand and $390 thousand, respectively.

The following table presents information concerning the Company’s investment in loans considered impaired as of June 30, 2019 and December 31, 2018:

				Unpaid
As of June 30, 2019		Recorded		Principal		Related
(Dollars are in thousands)		Investment		Balance		Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	1,783	$	1,837	$	-
Construction and land development		89		362		-
Residential 1-4 family		1,221		1,292		-
Multifamily		-		-		-
Farmland		819		1,011		-
Commercial		-		-		-
Agriculture		-		-		-
Consumer installment loans		6		6		-
All other loans		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		376		384		7
Construction and land development		-		-		-
Residential 1-4 family		623		641		116
Multifamily		-		-		-
Farmland		221		232		3
Commercial		1,610		1,633		681
Agriculture		-		-		-
Consumer installment loans		-		-		-
All other loans		-		-		-
Total	$	6,748	$	7,398	$	807

				Unpaid
As of December 31, 2018		Recorded		Principal		Related
(Dollars are in thousands)		Investment		Balance		Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	1,887	$	1,941	$	-
Construction and land development		114		379		-
Residential 1-4 family		2,880		3,168		-
Multifamily		75		117		-
Farmland		1,693		1,880		-
Commercial		-		-		-
Agriculture		-		-		-
Consumer installment loans		-		-		-
All other loans		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		435		539		40
Construction and land development		-		-		-
Residential 1-4 family		431		454		132
Multifamily		-		-		-
Farmland		345		358		132
Commercial		109		109		13
Agriculture		-		-		-
Consumer installment loans		7		7		1
All other loans		-		-		-
Total	$	7,976	$	8,952	$	318

The following table presents information concerning the Company’s average impaired loans and interest recognized on those impaired loans, for the periods indicated:

				Six Months Ended
		June 30, 2019				June 30, 2018
		Average		Interest		Average		Interest
		Recorded		Income		Recorded		Income
(Dollars are in thousands)		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Real estate secured:
Commercial	$	1,833	$	42	$	2,746	$	54
Construction and land
development		102		-		246		-
Residential 1-4 family		2,316		39		3,291		87
Multifamily		49		1		191		4
Farmland		1,394		13		1,430		42
Commercial		891		11		216		-
Agriculture		-		-		5		-
Consumer installment loans		2		-		3		-
All other loans		-		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		539		1		1,698		16
Construction and land		-				-
development				-				-
Residential 1-4 family		466		10		378		7
Multifamily		-		-		-		-
Farmland		297		6		371		-
Commercial		596		5		354		2
Agriculture		-		-		-		-
Consumer installment loans		4				5		1
All other loans		-		-		-		-
Total	$	8,489	$	128	$	10,934	$	213

				Three Months Ended
		June 30, 2019				June 30, 2018
		Average		Interest		Average		Interest
		Recorded		Income		Recorded		Income
(Dollars are in thousands)		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Real estate secured:
Commercial	$	1,806	$	20	$	2,796	$	26
Construction and land
development		96		-		158		-
Residential 1-4 family		2,034		-		3,144		45
Multifamily		36		-		147		-
Farmland		1,245		6		1,514		30
Commercial		1,336		-		10		-
Agriculture		-		-		2		-
Consumer installment loans		3		-		-		-
All other loans		-		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		591		1		1,296		-
Construction and land
development		-		-		-		-
Residential 1-4 family		484		10		357		3
Multifamily		-		-		-		-
Farmland		273		6		368		-
Commercial		840		5		286		2
Agriculture		-		-		-		-
Consumer installment loans		3		-		8		1
All other loans		-		-		-		-
Total	$	8,747	$	48	$	10,086	$	107

An age analysis of past due loans receivable is below. At June 30, 2019 and December 31, 2018, there were no loans over 90 days past due that were accruing.

						Loans
		Loans		Loans		90 or
		30-59		60-89		More		Total
		Days		Days		Days		Past
As of June 30, 2019		Past		Past		Past		Due		Current		Total
(Dollars are in thousands)		Due		Due		Due		Loans		Loans		Loans
Real estate secured:
Commercial	$	991	$	317	$	87	$	1,395	$	157,761	$	159,156
Construction and land												29,285
development		46		-		27		73		29,212
Residential 1-4 family		1,959		1,027		672		3,658		240,775		244,433
Multifamily		123		-		-		123		12,987		13,110
Farmland		289		-		-		289		21,103		21,392
Total real estate loans		3,408		1,344		786		5,538		461,838		467,376
Commercial		2,342		435		1,202		3,979		50,923		54,902
Agriculture		92		-		-		92		5,093		5,185
Consumer installment												23,106
loans		51		-		-		51		23,055
All other loans		-		2		18		20		542		562
Total loans	$	5,893	$	1,781	$	2,006	$	9,680	$	541,451	$	551,131

						Loans
		Loans		Loans		90 or
		30-59		60-89		More		Total
		Days		Days		Days		Past
As of December 31, 2018		Past		Past		Past		Due		Current		Total
(Dollars are in thousands)		Due		Due		Due		Loans		Loans		Loans
Real estate secured:
Commercial	$	80	$	31	$	137	$	248	$	140,614	$	140,862
Construction and land
development		70		-		27		97		35,022		35,119
Residential 1-4 family		3,468		564		525		4,557		245,389		249,946
Multifamily		-		273		-		273		13,223		13,496
Farmland		316		-		1090		1406		20,708		22,114
Total real estate loans		3,934		868		1,779		6,581		454,956		461,537
Commercial		68		-		61		129		55,028		55,157
Agriculture		22		-		-		22		5,244		5,266
Consumer installment
loans		74		15		-		89		24,449		24,538
All other loans		-		-		-		-		598		598
Total loans	$	4,098	$	883	$	1,840	$	6,821	$	540,275	$	547,096

The Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans receivable as to credit risk. The Company uses the following definitions for risk ratings:

Pass - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors.

Special Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances. Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified doubtful have all the weaknesses inherent in loans classified as substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

Based on the most recent analysis performed, the risk categories of loans receivable was as follows:

As of June 30, 2019				Special
(Dollars are in thousands)		Pass		Mention		Substandard		Doubtful		Total
Real estate secured:
Commercial	$	156,246	$	2,301	$	609	$	-	$	159,156
Construction and land development		28,802		316		167		-		29,285
Residential 1-4 family		241,071		1,126		2,236		-		244,433
Multifamily		13,110		-		-		-		13,110
Farmland		18,705		1,874		813		-		21,392
Total real estate loans		457,934		5,617		3,825		-		467,376
Commercial		51,010		2,296		75		1,521		54,902
Agriculture		5,172		13		-		-		5,185
Consumer installment loans		23,084		3		19		-		23,106
All other loans		562		-		-		-		562
Total	$	537,762	$	7,929	$	3,919	$	1,521	$	551,131

As of December 31, 2018				Special
(Dollars are in thousands)		Pass		Mention		Substandard		Doubtful			Total
Real estate secured:
Commercial	$	137,146	$	2,890	$	826	$		-	$	140,862
Construction and land development		34,231		718		170			-		35,119
Residential 1-4 family		243,950		1,523		4,473			-		249,946
Multifamily		13,357		63		76			-		13,496
Farmland		18,126		2,331		1,657			-		22,114
Total real estate loans		446,810		7,525		7,202			-		461,537
Commercial		52,156		2,940		61			-		55,157
Agriculture		5,255		10		1			-		5,266
Consumer installment loans		24,493		35		10			-		24,538
All other loans		598		-		-			-		598
Total	$	529,312	$	10,510	$	7,274	$		-	$	547,096

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ALLOWANCE FOR LOAN LOSSES

6 Months Ended

Jun. 30, 2019

Allowance For Loan Losses

ALLOWANCE FOR LOAN LOSSES

NOTE 7 ALLOWANCE FOR LOAN LOSSES:

The following table details activity in the allowance for loan losses by portfolio segment for the period ended June 30, 2019. Included in the charge-off and recovery activity is $113 thousand of charge-offs and $57 thousand of recoveries related to the sale of $4.4 million of classified and underperforming loans secured by real estate, which closed on July 3, 2019. The negative provision expense for loans secured by real estate is related to the sale of those loans. The large commercial charge-off amount is due to one customer who is liquidating their business. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

As of June 30, 2019		Beginning		Charge						Ending
(Dollars are in thousands)		Balance		Offs		Recoveries		Provisions		Balance
Real estate secured:
Commercial	$	1,386	$	-	$	2	$	(163)	$	1,225
Construction and land development		202		-		34		(90)		146
Residential 1-4 family		2,437		(129)		157		(498)		1,967
Multifamily		89		-		30		(32)		87
Farmland		287		(33)		8		(144)		118
Total real estate loans		4,401		(162)		231		(927)		3,543
Commercial		448		(537)		45		1,427		1,383
Agriculture		37		-		1		(3)		35
Consumer installment loans		172		(43)		47		(17)		159
All other loans		3		-		-		-		3
Unallocated		275		-		-		(210)		65
Total	$	5,336	$	(742)	$	324	$	270	$	5,188

		Allowance for Loan Losses						Recorded Investment in Loans
		Individually		Collectively				Individually		Collectively
		Evaluated		Evaluated				Evaluated		Evaluated
As of June 30, 2019		for		for				for		for
(Dollars are in thousands)		Impairment		Impairment		Total		Impairment		Impairment		Total
Real estate secured:
Commercial	$	7	$	1,218	$	1,225	$	2,159	$	156,997	$	159,156
Construction and land						146						29,285
development		-		146				89		29,196
Residential 1-4 family		116		1,851		1,967		1,844		242,590		244,433
Multifamily		-		87		87		-		13,110		13,110
Farmland		3		115		118		1,040		20,352		21,392
Total real estate loans		126		3,417		3,543		5,131		462,245		467,376
Commercial		682		701		1,383		1,610		53,292		54,902
Agriculture		-		35		35		-		5,185		5,185
Consumer installment loans		-		159		159		6		23,100		23,106
All other loans		-		3		3		-		562		562
Unallocated		-		65		65		-		-		-
Total	$	808	$	4,380	$	5,188	$	6,748	$	544,384	$	551,131

The following table details activity in the allowance for loan losses by portfolio segment for the period ended December 31, 2018. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

As of December 31, 2018		Beginning		Charge						Ending
(Dollars are in thousands)		Balance		Offs		Recoveries		Provisions		Balance
Real estate secured:
Commercial	$	1,989	$	(334)	$	73	$	(342)	$	1,386
Construction and land development		191		(96)		11		96		202
Residential 1-4 family		2,400		(290)		73		254		2,437
Multifamily		106		-		-		(17)		89
Farmland		415		(58)		72		(142)		287
Total real estate loans		5,101		(778)		229		(151)		4,401
Commercial		660		(617)		84		321		448
Agriculture		20		-		1		16		37
Consumer installment loans		156		(75)		44		47		172
All other loans		3		-		-		-		3
Unallocated		256		-		-		19		275
Total	$	6,196	$	(1,470)	$	358	$	252	$	5,336

		Allowance for Loan Losses						Recorded Investment in Loans
		Individually		Collectively				Individually		Collectively
		Evaluated		Evaluated				Evaluated		Evaluated
As of December 31, 2018		for		for				for		for
(Dollars are in thousands)		Impairment		Impairment		Total		Impairment		Impairment		Total
Real estate secured:
Commercial	$	40	$	1,346	$	1,386	$	2,322	$	138,540	$	140,862
Construction and land						202
development		-		202				114		35,005		35,119
Residential 1-4 family		132		2,205		2,437		3,311		246,635		249,946
Multifamily		-		89		89		75		13,421		13,496
Farmland		132		155		287		2,038		20,076		22,114
Total real estate loans		304		4,097		4,401		7,860		453,677		461,537
Commercial		13		435		448		109		55,048		55,157
Agriculture		-		37		37		-		5,266		5,266
Consumer installment loans		1		171		172		7		24,531		24,538
All other loans		-		3		3		-		598		598
Unallocated		-		275		275		-		-		-
Total	$	318	$	5,018	$	5,336	$	7,976	$	539,120	$	547,096

In determining the amount of our allowance, we rely on an analysis of our loan portfolio, our experience and our evaluation of general economic conditions, as well as any regulatory input. If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future loan losses and we may experience significant increases to our provision.

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TROUBLED DEBT RESTRUCTURINGS

6 Months Ended

Jun. 30, 2019

Troubled Debt Restructurings

TROUBLED DEBT RESTRUCTURINGS

NOTE 8 TROUBLED DEBT RESTRUCTURINGS:

At June 30, 2019 there were $4.1 million in loans that are classified as troubled debt restructurings compared to $5.4 million at December 31, 2018. All loans considered to be troubled debt restructurings are individually evaluated for impairment as part of the allowance for loan losses calculation. The following table presents information related to loans modified as troubled debt restructurings during the six and three months ended June 30, 2019 and 2018.

		For the six months ended							For the six months ended
			June 30, 2019							June 30, 2018
			Pre-Mod.							Pre-Mod.		Post-Mod.
Troubled Debt	# of		Recorded		Post-Mod.		# of			Recorded		Recorded
Restructurings	Loans		Investment				Loans			Investment		Investment
					Recorded
(Dollars are in thousands)					Investment
Real estate secured:
Commercial	-	$	-	$	-	-		$	-		$	-
Construction and land
Development	-		-		-	-			-			-
Residential 1-4 family	-		-		-	-			-			-
Multifamily	-		-		-	-			-			-
Farmland	1		281		281		-			-		-
Total real estate loans	-		-		-	-			-			-
Commercial						-			-			-
Agriculture	-		-		-	-			-			-
Consumer installment loans	-		-		-	-			-			-
All other loans	-		-		-		-			-		-
Total	1	$	281	$	281		-	$		-	$	-

		For the three months ended							For the three months ended
				June 30, 2019						June 30, 2018
Troubled Debt				Pre-Mod.		Post-Mod.				Pre-Mod.		Post-Mod.
Restructurings	# of			Recorded				# of		Recorded		Recorded
						Recorded
(Dollars are in thousands)	Loans			Investment				Loans		Investment		Investment
						Investment
Real estate secured:
Commercial	-	$		-	$	-	-		$	-	$	-
Construction and land
Development	-			-		-	-			-		-
Residential 1-4 family	-			-		-	-			-		-
Multifamily	-			-		-	-			-		-
Farmland	1			281		281		-		-		-
Total real estate loans	-			-		-	-			-		-
Commercial							-			-		-
Agriculture	-			-		-	-			-		-
Consumer installment loans	-			-		-	-			-		-
All other loans	-			-		-		-		-		-
Total	1		$	281	$	281		-	$	-	$	-

During the three months ended June 30, 2019, the Company modified one loan for which the modification was considered to be a troubled debt restructuring. This loan is secured by farmland and the modification is related to a court-ordered payment plan. No modified loans were considered to be troubled debt restructurings during the first three months of 2019.

During the six and three months ended June 30, 2018, the Company modified no loans for which the modification was considered to be a troubled debt restructuring.

No loans modified as a troubled debt restructurings defaulted during the three or six months ended June 30, 2019 or 2018. Generally, a troubled debt restructuring is considered to be in default once it becomes 90 days or more past due following a modification.

In determination of the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings in its estimate. The Company evaluates all troubled debt restructurings for possible further impairment. As a result, the allowance may be increased, adjustments may be made in the allocation of the allowance, or charge-offs may be taken to further write down the carrying value of the loan.

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OTHER REAL ESTATE OWNED

6 Months Ended

Jun. 30, 2019

Other Real Estate Owned Abstract

OTHER REAL ESTATE OWNED

NOTE 9 OTHER REAL ESTATE OWNED:

The following table summarizes the activity in other real estate owned for the six months ended June 30, 2019 and the year ended December 31, 2018:

		June 30,		December 31,
(Dollars are in thousands)		2019		2018
Balance, beginning of period	$	5,937	$	6,859
Additions		45		1,719
Proceeds from sales		(1,039)		(1,405)
Proceeds from insurance claims		(19)		-
Loans made to finance sales		(647)		(569)
Adjustment of carrying value		(214)		(542)
Deferred gain from sales		-		10
Losses from sales		(39)		(135)
Balance, end of period	$	4,024	$	5,937

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FAIR VALUES

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUES

NOTE 10 FAIR VALUES:

The financial reporting standard, “Fair Value Measurements and Disclosures” provides a framework for measuring fair value under generally accepted accounting principles and requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for example, available-for-sale investment securities) or on a nonrecurring basis (for example, impaired loans and other real estate acquired through foreclosure).

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an 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. Fair Value Measurements and Disclosures also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an exchange market, as well as U. S. Treasury, other U. S. Government and agency mortgage-backed debt securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2: 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 for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain derivative contracts and impaired loans.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. For example, this category generally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highly structured or long-term derivative contracts.

Investment Securities Available-for-Sale – Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices if available. If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange such as the New York Stock Exchange, or by dealers or brokers in active over-the counter markets. Level 2 securities include mortgage backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Assets measured at fair value on a recurring basis are as follows. There were no liabilities measured at fair value on a recurring basis.

(Dollars are in thousands)		Quoted market				Significant
		price in active		Significant other		unobservable
		markets		observable inputs		inputs
		(Level 1)		(Level 2)		(Level 3)
June 30, 2019
Available-for-sale investments
U.S. Government Agencies	$	-	$	17,717	$	-
Taxable municipals		-		4,461		-
Corporate bonds		-		5,519		-
Mortgage backed securities		-		28,701		-
Total	$	-	$	56,398	$	-
December 31, 2018
Available-for-sale investments
U.S. Government Agencies	$	-	$	19,389	$	-
Taxable municipals		-		4,313		-
Corporate bonds		-		5,320		-
Mortgage backed securities		-		30,385		-
Total	$	-	$	59,407	$	-

Loans - The Company does not record loans at fair value on a recurring basis. Real estate serves as collateral on a substantial majority of the Company’s loans. When a loan is considered impaired a specific reserve may be established. Loans which are deemed to be impaired and require a reserve are primarily valued on a non-recurring basis at the fair values of the underlying real estate collateral. Such fair values are obtained using independent appraisals, which management evaluates and determines whether or not the fair value of the collateral is further impaired below the appraised value and there is no observable market price, or whether or not an appraised value does not include estimated costs of disposition. The Company records impaired loans as nonrecurring Level 3 assets.

Other Real Estate Owned – Other real estate owned (“OREO”) is adjusted to fair value upon transfer of the loans to OREO. OREO is carried at the lower of the carrying value or fair value. Fair value is based upon independent observable market prices or appraised values of the collateral with a third party less an estimate of disposition costs, which the Company considers to be level 2 inputs. When the appraised value is not available or management determines the fair value of the collateral to be further impaired below the appraised value and there is no observable market price, the Company records OREO as nonrecurring Level 3.

Assets measured at fair value on a non-recurring basis are as follows (for purpose of this table the impaired loans are shown net of the related allowance). There were no liabilities measured at fair value on a non-recurring basis.

(Dollars are in thousands)			Quoted market						Significant
			price in active			Significant other			unobservable
			markets			observable inputs			inputs
			(Level 1)			(Level 2)			(Level 3)
June 30, 2019
Other real estate owned	$	-		$	-		$	4,024
Impaired loans			-			-			5,941
Total	$	-		$	-		$	9,965
December 31, 2018
Other real estate owned	$	-		$	-		$	5,937
Impaired loans			-			-			7,658
Total	$	-		$	-		$	13,595

For Level 3 assets measured at fair value on a recurring or non-recurring basis as of June 30, 2019, the significant unobservable inputs used in the fair value measurements were as follows:

						General
						Range of
		Fair Value			Significant	Significant
(Dollars in		at June 30,		Valuation	Unobservable	Unobservable
thousands)		2019		Technique	Inputs	Input Values
Impaired Loans	$	5,941	$	Appraised	Discounts to reflect	0–18%
				Value/Discounted	current market
				Cash	conditions, ultimate
				Flows/Market	collectability, and
				Value of Note	estimated costs to
					sell
Other Real Estate	$	4,024	$	Appraised	Discounts to reflect	0–18%
Owned				Value/Comparable	current market
				Sales/Other	conditions and
				Estimates from	estimated costs to
				Independent	sell
				Sources

Fair Value of Financial Instruments

Fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate the value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence of ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or deliver cash for another financial instrument.

The following summary presents the methodologies and assumptions used to estimate the fair value of the Company’s financial instruments presented below. The information used to determine fair value is highly subjective and judgmental in nature and, therefore, the results may not be precise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and interest rates, all of which are subject to change. Since the fair value is estimated as of the balance sheet date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different.

The carrying amount and fair value of the Company’s financial instruments that are not required to be measured or reported at fair value on a recurring basis are as follows:

								Fair Value Measurements
						Quoted
						market			Significant
						price in			other		Significant
						active			observable		unobservable
(Dollars are in thousands)		Carrying		Fair		markets			inputs		inputs
		Amount		Value		(Level 1)			(Level 2)		(Level 3)
June 30, 2019
Financial Instruments – Assets
Net Loans	$	545,943	$	538,134	$		-	$	532,195	$	5,939
Financial Instruments –
Liabilities
Time Deposits		255,714		259,495			-		259,495		-
FHLB Advances		5,000		5,079			-		5,079		-
Trust Preferred Securities		16,496		13,756			-		13,756		-
December 31, 2018
Financial Instruments – Assets
Net Loans	$	541,760	$	534,425	$		-	$	526,767	$	7,658
Financial Instruments– Liabilities
Time Deposits		258,850		258,671			-		258,671		-
FHLB Advances		7,000		7,215			-		7,215		-
Trust Preferred Securities		16,496		14,425			-		14,425		-

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, 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 can significantly affect the estimates.

Estimated fair values have been determined by the Company using historical data, as generally provided in the Company’s regulatory reports, and an estimation methodology suitable for each category of financial instruments. The Company’s fair value estimates, methods and assumptions are set forth below for the Company’s other financial instruments.

The carrying value of cash and due from banks, federal funds sold, interest-bearing deposits, deposits with no stated maturities, and accrued interest approximates fair value and are excluded from the table above.

In accordance with our adoption of ASU 2016-01 in 2018, the methods utilized to measure the fair value of financial instruments at June 30, 2019 and December 31, 2018 represent an approximation of exit price; however, an actual exit price may differ.

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SALE AND LEASEBACK TRANSACTIONS

6 Months Ended

Jun. 30, 2019

Sale And Leaseback Transactions

SALE AND LEASEBACK TRANSACTIONS

NOTE 11 SALE AND LEASEBACK TRANSACTIONS:

In anticipation of certain sale and leaseback transactions, the Company adopted ASU No. 2016-02 Leases (Topic 842) in 2017. This ASU revised certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. As a result of this transaction the Company recognized initial right-to-use assets – operating leases of approximately $5.3 million, along with corresponding lease liabilities of approximately $5.3 million. The $5.3 million was determined by calculating the present value of the annual cash lease payments using a discount rate of 3.25%. The 3.25% discount rate was determined to be the 15-year incremental borrowing rate as of May 31, 2017.

The Company’s other operating leases were evaluated and determined to be immaterial to the financial statements. At June 30, 2019, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):

2019	$	221
2020		440
2021		416
2022		436
2023		450
Thereafter		3,965
Total lease payments		5,928
Less imputed interest		1,145
Total	$	4,783

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REVENUE FROM CONTRACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 2019

Revenue From Contracts With Customers

REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 12 REVENUE FROM CONTRACTS WITH CUSTOMERS

All our revenue from contracts with customers as defined in ASC 606 is recognized within Non-interest income. The following table presents Non-interest income by revenue stream for the three and six months ended June 30, 2019 and 2018.

		For the three months ended					For the six months ended
			June 30,				June 30,
(Dollars in thousands)		2019			2018		2019		2018
Service charges and fees	$	872		$	919	$	1,713	$	1,786
Card Processing and interchange		797			734		1,476		1,389
income
Insurance and investment fees		161			179		323		253
Other noninterest income		139			39		233		193
Total Noninterest Income	$	1,969		$	1,871	$	3,745	$	3,621

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NONINTEREST EXPENSES

6 Months Ended

Jun. 30, 2019

Noninterest Expenses

NONINTEREST EXPENSES

NOTE 13 NONINTEREST EXPENSES:

Other operating expenses, included as part of noninterest expenses, consisted of the following for the periods presented:

		For the three months ended June 30,				For the six months ended June 30,
(Dollars are in thousands)		2019		2018		2019		2018
Advertising	$	86	$	114	$	152	$	261
ATM network expense		458		450		901		842
Legal and professional fees		420		406		702		773
Loan related expenses		170		130		291		330
Printing and supplies		39		66		78		202
FDIC insurance premiums		106		84		213		181
Other real estate owned, net		234		113		427		360
Other		568		827		1,095		1,340
Total other operating expenses
	$	2,081	$	2,190	$	3,859	$	4,289

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14 SUBSEQUENT EVENTS:

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

A group of classified and underperforming loans, with outstanding contractual balances of $5.1 million, were under agreement to be sold in June 2019 with settlement effective July 3, 2019. These loans are shown in Loans held for sale on the face of the balance sheet as of June 30, 2019, at a fair value of $4.4 million. Included in these loans were nonaccrual loans totaling $2.8 million.

On July 30, 2019 the bank entered into an agreement, with an unrelated third party, to sell the land and building housing the branch site in Lebanon Virginia. This transaction is expected to close prior to August 31, 2019 with the bank providing financing to the purchaser. At closing the bank will execute a 15 year lease agreement to maintain its current operations at this site. This transaction is expected to result in a gain of approximately $790 thousand. In addition, the lease transaction will result in the recognition of a right-to-use asset and a lease obligation liability of approximately $1.2 million, each.

Management has reviewed events occurring through the date the financial statements were available to be issued and no other subsequent events occurred requiring accrual or disclosure.

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RECENT ACCOUNTING DEVELOPMENTS

6 Months Ended

Jun. 30, 2019

Recent Accounting Developments

RECENT ACCOUNTING DEVELOPMENTS

NOTE 15 RECENT ACCOUNTING DEVELOPMENTS:

The following is a summary of recent authoritative announcements:

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance became effective January 1, 2018. The amendment does not apply to revenue associated with financial instruments, such as loans and investment securities available for sale, and therefore had no material effect on our consolidated financial statements. Information related to revenue from comments with customers is summarized at Note 12.

In January 2016, per Accounting Standards Update (“ASU”) 2016-01, the FASB amended the Financial Instruments topic of the Accounting Standards Codification (“ASC”), to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments became effective on January 1, 2018 and did not have a material effect on the financial statements. As discussed in Note 10, the Company measured the fair value of its loan portfolio using an exit price notion as of June 30, 2019.

In February 2016, the FASB amended the Leases topic of the ASC to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments became effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As discussed in Note 11, the Company early adopted ASU No. 2016-02 Leases (Topic 842).

In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the ASC to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The guidance became effective January 1, 2018. The Company completed an assessment of revenue streams and a review of related contracts potentially affected by the ASU and, based on this assessment, the Company concluded that the ASU did not materially change the method in which the Company currently recognizes revenue for these revenue streams. As such, a cumulative effect adjustment to opening retained earnings was not deemed necessary.

In June 2016, per ASU No. 2016-13 ‘Financial Instruments – Credit Losses (Topic 326),’ the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for all organizations for periods beginning after December 15, 2018. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows. On July 17, 2019, the FASB voted to issue a proposal which would extend the effective date for implementation of ASU No. 2016-13 ‘Financial Instruments – Credit Losses (Topic 326)’ for small public lenders, among other entities, which would extend the effective date for the Company by three years to fiscal years beginning after December 15, 2022. Although this proposal has not yet been issued and also must undergo a comment period before finalization, it is widely expected that this extension will be granted. Should this proposal be adopted management expects to take advantage of the extension in order to better assess the impact of the implementation by others.

In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The amendment became effective on January 1, 2018 and did not have a material effect on the financial statements.

In January 2017, the FASB updated the Accounting Changes and Error Corrections and the Investments—Equity Method and Joint Ventures Topics of the ASC. The ASU incorporates into the ASC recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards. The ASU was effective upon issuance. The Company has assessed the impact on additional disclosure requirements for each of the standards and determined them to not have a material effect on its financial position, results of operations or cash flows.

In February 2017, the FASB amended the Other Income Topic of the ASC to clarify the scope of the guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. The amendments conform the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. The amendment became effective on January 1, 2018 and did not have a material effect on the financial statements.

In September 2017, the FASB updated the Revenue from Contracts with Customers and the Leases Topics of the ASC. The amendments incorporate into the ASC recent SEC guidance about certain public business entities (PBEs) electing to use the non-PBE effective dates solely to adopt the FASB’s new standards on revenue and leases. The amendments were effective upon issuance. The Company has assessed the impact of adoption of this guidance, and determined it does not have a material effect on its financial statements.

In November 2017, the FASB updated the Income Statement and Revenue from Contracts with Customers Topics of the ASC. The amendments incorporate into the ASC recent SEC guidance related to revenue recognition. The amendments were effective upon issuance and did not have a material effect on the financial statements.

In February 2018, the FASB Issued (ASU 2018-02), Income Statement (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which requires Companies to reclassify the stranded effects in other comprehensive income to retained earnings as a result of the change in the tax rates under the Tax Cuts and Jobs Act. The Company early adopted this pronouncement by retrospective application to each period (or periods) in which the effect of the change in the tax rate under the Tax Cuts and Jobs Act is recognized. The impact of the reclassification from other comprehensive income to retained earnings was $98 thousand as of December 31, 2018.

In February 2018, the FASB amended the Financial Instruments Topic of the ASC. The amendments clarify certain aspects of the guidance issued in ASU 2016-01. The amendments were effective for the third quarter of 2018 subsequent to adopting the amendments in ASU 2016-01. All entities were able to early adopt these amendments for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, as long as they had adopted ASU 2016-01. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2018, the FASB updated the Debt Securities and the Regulated Operations Topics of the ASC. The amendments incorporate into the ASC recent SEC guidance which was issued in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The amendments were effective upon issuance. These amendments did not have a material effect on the Company’s financial statements.

In March 2018, the FASB updated the Income Taxes Topic of the ASC. The amendments incorporate into the ASC recent SEC guidance related to the income tax accounting implications of the Tax Cuts and Jobs Act. The amendments were effective upon issuance. These amendments did not have a material effect on the Company’s financial statements.

In May 2018, the FASB amended the Financial Services—Depository and Lending Topic of the ASC to remove outdated guidance related to Circular 202. The amendments were effective upon issuance and did not have a material effect on the Company’s financial statements.

In July 2018, the FASB amended the Leases Topic of the Accounting Standards Codification to make narrow amendments to clarify how to apply certain aspects of the new standard. The amendments are effective for reporting periods beginning after December 15, 2018. These amendments did not have a material effect on the Company’s financial statements. As discussed in Note 17, the Company early adopted ASU No. 2016-02 Leases (Topic 842).

In August 2018, the FASB amended the Fair Value Measurement Topic of the Accounting Standards Codification. The amendments remove, modify, and add certain fair value disclosure requirements based on the concepts in the FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date. The Company does not expect these amendments to have a material effect on its financial statements.

In August 2018, the FASB amended the Intangibles—Goodwill and Other Topic of the Accounting Standards Codification to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amendments will be effective for the Company for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In October 2018, the FASB amended the Derivatives and Hedging Topic of the Accounting Standards Codification to expand the list of U.S. benchmark interest rates permitted in the application of hedge accounting. The amendments were effective for the Company for fiscal years beginning after December 15, 2018. Early adoption was permitted. These amendments did not have a material effect on the Company’s financial statements.

In October 2018, the FASB amended the Consolidation topic of the Accounting Standards Codification for determining whether a decision-making fee is a variable interest. The amendments require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety. The amendments will be effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company will apply a full retrospective approach in which financial statements for each individual prior period presented and the opening balances of the earliest period presented are adjusted to reflect the period-specific effects of applying the amendments. The Company does not expect these amendments to have a material effect on its financial statements.

In November 2018, the FASB amended the Collaborative Arrangements Topic of the Accounting Standards Codification to clarify the interaction between the guidance for certain collaborative arrangements and the new revenue recognition financial accounting and reporting standard. The amendments will be effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In November 2018, the FASB issued guidance to amend the Financial Instruments—Credit Losses topic of the Accounting Standards Codification. The guidance aligns the implementation date of the topic for annual financial statements of nonpublic companies with the implementation date for their interim financial statements. The guidance also clarifies that

receivables arising from operating leases are not within the scope of the topic, but rather, should be accounted for in accordance with the leases topic. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for all organizations for periods beginning after December 15, 2018. The Company is currently in the process of evaluating the impact of adoption of this guidance on its financial statements.

In December 2018, the FASB issued guidance providing narrow-scope improvements for lessors, that provides relief in the accounting for sales, use and similar taxes, the accounting for other costs paid by a lessee that may benefit a lessor, and variable payments when contracts have lease and non-lease components. The amendments were effective for the Company for reporting periods beginning after December 15, 2018. Early adoption was permitted. These amendments did not have a material effect on the Company’s financial statements.

In March 2019, as part of the FASB’s ongoing annual improvements project, it amended the Leases Topic of the ASC to clarify the Codification more generally and/or to correct unintended application of guidance. The amendments relate to determining the fair value of the underlying asset by lessors that are not manufacturers or dealers, presentation on the statement of cash flows – sales-type and direct financing leases, and transition disclosures related to the Accounting Changes and Error Corrections Topic. The amendments will be effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In April 2019, as part of the FASB’s ongoing annual improvements project, it amended various Topics of the ASC related to financial instruments to clarify the Codification more generally and/or to correct unintended application of guidance. The amendments relate to Recognition and Measurement of Financial Assets and Financial Liabilities, Measurement of Credit Losses on Financial Instruments, and Targeted Improvements to Accounting for Hedging Activities. The amendments will be effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In May 2019, the FASB issued targeted transition relief for entities which irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the amendments to the transition guidance for ASU No. 2016-13 will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. The amendments will be effective for the Company for fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of adoption of this guidance on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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ACCOUNTING PRINCIPLES (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

ACCOUNTING PRINCIPLES

These consolidated financial statements conform to U. S. generally accepted accounting principles and to general industry practices. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position at June 30, 2019 and December 31, 2018, and the results of operations for the three and six-month periods ended June 30, 2019 and 2018. The notes included herein should be read in conjunction with the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any future period.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The determination of the adequacy of the allowance for loan losses and the determination of the deferred tax asset and related valuation allowance are based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions.

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EARNINGS PER SHARE (Table)

6 Months Ended

Jun. 30, 2019

Earnings Per Share

Schedule of anti-dilutive income per common share

Basic and diluted net income per common share calculations follow:

(Amounts in Thousands, Except		For the three months				For the six months
Share and Per Share Data)		ended June 30,				ended June 30,
		2019		2018		2019		2018
Net income (loss)	$	345	$	(49)	$	751	$	31
Weighted average shares outstanding		23,922,086		23,922,086		23,922,086		23,922,086
Dilutive shares		-		-		-		-
Weighted average dilutive shares outstanding		23,922,086		23,922,086		23,922,086		23,922,086
Basic income (loss) per share	$	0.01	$	(0.00)	$	0.03	$	0.00
Diluted income (loss) per share	$	0.01	$	(0.00)	$	0.03	$	0.00

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CAPITAL (Table)

6 Months Ended

Jun. 30, 2019

Capital

Schedule of capital requirements

These ratios comply with Federal Reserve rules to align with the Basel III Capital requirements effective January 1, 2015.

							Minimum to Be Well
							Capitalized Under
							Prompt Corrective
		Actual		Minimum Capital Requirement			Action Provisions
(Dollars are in thousands)		Amount	Ratio	Amount		Ratio	Amount		Ratio
June 30, 2019:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	70,635	14.70%	$	38,453	8.0%	$	48,066	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		65,447	13.62%		28,840	6.0%		38,453	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		65,447	9.25%		28,312	4.0%		35,390	5.0%
Common Equity Tier 1 Capital
to Risk Weighted Assets:
New Peoples Bank, Inc.		65,447	13.62%		21,630	4.5%		31,243	6.5%
December 31, 2018:
Total Capital to Risk Weighted Assets:
New Peoples Bank, Inc.	$	70,002	14.39%	$	38,912	8.0%	$	48,640	10.0%
Tier 1 Capital to Risk Weighted Assets:
New Peoples Bank, Inc.		64,666	13.29%		29,184	6.0%		38,912	8.0%
Tier 1 Capital to Average Assets:
New Peoples Bank, Inc.		64,666	9.59%		26,960	4.0%		33,700	5.0%
Common Equity Tier 1 Capital
to Risk Weighted Assets:
New Peoples Bank, Inc.		64,666	13.29%		21,888	4.5%		31,616	6.5%

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INVESTMENT SECURITIES (Table)

6 Months Ended

Jun. 30, 2019

Investment Securities Table Abstract

Schedule of securities' amortized cost and estimated fair value

The amortized cost and estimated fair value of securities (all available-for-sale (“AFS”)) are as follows:

				Gross		Gross		Approximate
		Amortized		Unrealized		Unrealized		Fair
(Dollars are in thousands)		Cost		Gains		Losses		Value
June 30, 2019
U.S. Government Agencies	$	17,738	$	87	$	(108)	$	17,717
Taxable municipals		4,409		52		-		4,461
Corporate bonds		5,415		104		-		5,519
Mortgage backed securities		28,911		67		(277)		28,701
Total Securities AFS	$	56,473	$	310	$	(385)	$	56,398
December 31, 2018
U.S. Government Agencies	$	19,755	$	26	$	(392)	$	19,389
Taxable municipals		4,428		-		(115)		4,313
Corporate bonds		5,422		47		(149)		5,320
Mortgage backed securities		31,366		11		(992)		30,385
Total Securities AFS	$	60,971	$	84	$	(1,648)	$	59,407

Schedule of fair value and gross unrealized losses on investment securities in a continuous unrealized loss position

This information is aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2019 and December 31, 2018.

		Less than 12 Months				12 Months or More					Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars are in thousands)		Value		Losses		Value		Losses		Value		Losses
June 30, 2019
U.S. Government Agencies	$	1,267	$	(1)	$	9,508	$	(107)	$	10,775	$	(108)
Taxable municipals		-		-		518		-		518		-
Corporate bonds		-		-		-		-		-		-
Mtg. backed securities		2		-		24,429		(277)		24,431		(277)
Total Securities AFS	$	1,269	$	(1)	$	34,455	$	(384)	$	35,724	$	(385)
December 31, 2018
U.S. Government Agencies	$	5,013	$	(68)	$	11,585	$	(324)	$	16,599	$	(392)
Taxable municipals		-		-		4,049		(115)		4,049		(115)
Corporate bonds		1,713		(43)		1,423		(106)		3,136		(149)
Mtg. backed securities		165		(2)		29,245		(990)		29,410		(992)
Total Securities AFS	$	6,891	$	(113)	$	46,302	$	(1,535)	$	53,194	$	(1,648)

Schedule of amortized cost and fair value of investment securities' contractual maturity

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

						Weighted
(Dollars are in thousands)		Amortized		Fair		Average
Securities Available-for-Sale		Cost		Value		Yield
Due in one year or less	$	2	$	2	-		%
Due after one year through five years		5,643		5,685	2.60%
Due after five years through ten years		14,326		14,402	3.39%
Due after ten years		36,502		36,309		2.45%
Total	$	56,473	$	56,398	2.70%

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LOANS (Table)

6 Months Ended

Jun. 30, 2019

Loans Table Abstract

Summary of loans receivable outstandin

This loan sale settled July 3, 2019.

Loans receivable outstanding are summarized as follows:
(Dollars are in thousands)		June 30, 2019		December 31, 2018
Real estate secured:
Commercial	$	159,156	$	140,862
Construction and land development		29,285		35,119
Residential 1-4 family		244,433		249,946
Multifamily		13,110		13,496
Farmland		21,392		22,114
Total real estate loans		467,376		461,537
Commercial		54,902		55,157
Agriculture		5,185		5,266
Consumer installment loans		23,106		24,538
All other loans		562		598
Total loans	$	551,131	$	547,096

Summary of loans receivable on nonaccrual status

Loans receivable on nonaccrual status are summarized as follows:

(Dollars are in thousands)		June 30, 2019		December 31, 2018
Real estate secured:
Commercial	$	609	$	784
Construction and land development		167		157
Residential 1-4 family		2,333		3,626
Multifamily		-		76
Farmland		813		1,637
Total real estate loans		3,922		6,300
Commercial		1,601		61
Agriculture		-		1
Consumer installment loans		19		7
Total loans receivable on nonaccrual status	$	5,542	$	6,369

Summary of impaired loans

The following table presents information concerning the Company’s investment in loans considered impaired as of June 30, 2019 and December 31, 2018:

				Unpaid
As of June 30, 2019		Recorded		Principal		Related
(Dollars are in thousands)		Investment		Balance		Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	1,783	$	1,837	$	-
Construction and land development		89		362		-
Residential 1-4 family		1,221		1,292		-
Multifamily		-		-		-
Farmland		819		1,011		-
Commercial		-		-		-
Agriculture		-		-		-
Consumer installment loans		6		6		-
All other loans		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		376		384		7
Construction and land development		-		-		-
Residential 1-4 family		623		641		116
Multifamily		-		-		-
Farmland		221		232		3
Commercial		1,610		1,633		681
Agriculture		-		-		-
Consumer installment loans		-		-		-
All other loans		-		-		-
Total	$	6,748	$	7,398	$	807

				Unpaid
As of December 31, 2018		Recorded		Principal		Related
(Dollars are in thousands)		Investment		Balance		Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	1,887	$	1,941	$	-
Construction and land development		114		379		-
Residential 1-4 family		2,880		3,168		-
Multifamily		75		117		-
Farmland		1,693		1,880		-
Commercial		-		-		-
Agriculture		-		-		-
Consumer installment loans		-		-		-
All other loans		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		435		539		40
Construction and land development		-		-		-
Residential 1-4 family		431		454		132
Multifamily		-		-		-
Farmland		345		358		132
Commercial		109		109		13
Agriculture		-		-		-
Consumer installment loans		7		7		1
All other loans		-		-		-
Total	$	7,976	$	8,952	$	318

Summary of average impaired loans

The following table presents information concerning the Company’s average impaired loans and interest recognized on those impaired loans, for the periods indicated:

				Six Months Ended
		June 30, 2019				June 30, 2018
		Average		Interest		Average		Interest
		Recorded		Income		Recorded		Income
(Dollars are in thousands)		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Real estate secured:
Commercial	$	1,833	$	42	$	2,746	$	54
Construction and land
development		102		-		246		-
Residential 1-4 family		2,316		39		3,291		87
Multifamily		49		1		191		4
Farmland		1,394		13		1,430		42
Commercial		891		11		216		-
Agriculture		-		-		5		-
Consumer installment loans		2		-		3		-
All other loans		-		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		539		1		1,698		16
Construction and land		-				-
development				-				-
Residential 1-4 family		466		10		378		7
Multifamily		-		-		-		-
Farmland		297		6		371		-
Commercial		596		5		354		2
Agriculture		-		-		-		-
Consumer installment loans		4				5		1
All other loans		-		-		-		-
Total	$	8,489	$	128	$	10,934	$	213

				Three Months Ended
		June 30, 2019				June 30, 2018
		Average		Interest		Average		Interest
		Recorded		Income		Recorded		Income
(Dollars are in thousands)		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Real estate secured:
Commercial	$	1,806	$	20	$	2,796	$	26
Construction and land
development		96		-		158		-
Residential 1-4 family		2,034		-		3,144		45
Multifamily		36		-		147		-
Farmland		1,245		6		1,514		30
Commercial		1,336		-		10		-
Agriculture		-		-		2		-
Consumer installment loans		3		-		-		-
All other loans		-		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		591		1		1,296		-
Construction and land
development		-		-		-		-
Residential 1-4 family		484		10		357		3
Multifamily		-		-		-		-
Farmland		273		6		368		-
Commercial		840		5		286		2
Agriculture		-		-		-		-
Consumer installment loans		3		-		8		1
All other loans		-		-		-		-
Total	$	8,747	$	48	$	10,086	$	107

Summary of age analysis of past due loans receivable

An age analysis of past due loans receivable is below. At June 30, 2019 and December 31, 2018, there were no loans over 90 days past due that were accruing.

						Loans
		Loans		Loans		90 or
		30-59		60-89		More		Total
		Days		Days		Days		Past
As of June 30, 2019		Past		Past		Past		Due		Current		Total
(Dollars are in thousands)		Due		Due		Due		Loans		Loans		Loans
Real estate secured:
Commercial	$	991	$	317	$	87	$	1,395	$	157,761	$	159,156
Construction and land												29,285
development		46		-		27		73		29,212
Residential 1-4 family		1,959		1,027		672		3,658		240,775		244,433
Multifamily		123		-		-		123		12,987		13,110
Farmland		289		-		-		289		21,103		21,392
Total real estate loans		3,408		1,344		786		5,538		461,838		467,376
Commercial		2,342		435		1,202		3,979		50,923		54,902
Agriculture		92		-		-		92		5,093		5,185
Consumer installment												23,106
loans		51		-		-		51		23,055
All other loans		-		2		18		20		542		562
Total loans	$	5,893	$	1,781	$	2,006	$	9,680	$	541,451	$	551,131

						Loans
		Loans		Loans		90 or
		30-59		60-89		More		Total
		Days		Days		Days		Past
As of December 31, 2018		Past		Past		Past		Due		Current		Total
(Dollars are in thousands)		Due		Due		Due		Loans		Loans		Loans
Real estate secured:
Commercial	$	80	$	31	$	137	$	248	$	140,614	$	140,862
Construction and land
development		70		-		27		97		35,022		35,119
Residential 1-4 family		3,468		564		525		4,557		245,389		249,946
Multifamily		-		273		-		273		13,223		13,496
Farmland		316		-		1090		1406		20,708		22,114
Total real estate loans		3,934		868		1,779		6,581		454,956		461,537
Commercial		68		-		61		129		55,028		55,157
Agriculture		22		-		-		22		5,244		5,266
Consumer installment
loans		74		15		-		89		24,449		24,538
All other loans		-		-		-		-		598		598
Total loans	$	4,098	$	883	$	1,840	$	6,821	$	540,275	$	547,096

Summary of risk category of loans receivable

Based on the most recent analysis performed, the risk categories of loans receivable was as follows:

As of June 30, 2019				Special
(Dollars are in thousands)		Pass		Mention		Substandard		Doubtful		Total
Real estate secured:
Commercial	$	156,246	$	2,301	$	609	$	-	$	159,156
Construction and land development		28,802		316		167		-		29,285
Residential 1-4 family		241,071		1,126		2,236		-		244,433
Multifamily		13,110		-		-		-		13,110
Farmland		18,705		1,874		813		-		21,392
Total real estate loans		457,934		5,617		3,825		-		467,376
Commercial		51,010		2,296		75		1,521		54,902
Agriculture		5,172		13		-		-		5,185
Consumer installment loans		23,084		3		19		-		23,106
All other loans		562		-		-		-		562
Total	$	537,762	$	7,929	$	3,919	$	1,521	$	551,131

As of December 31, 2018				Special
(Dollars are in thousands)		Pass		Mention		Substandard		Doubtful			Total
Real estate secured:
Commercial	$	137,146	$	2,890	$	826	$		-	$	140,862
Construction and land development		34,231		718		170			-		35,119
Residential 1-4 family		243,950		1,523		4,473			-		249,946
Multifamily		13,357		63		76			-		13,496
Farmland		18,126		2,331		1,657			-		22,114
Total real estate loans		446,810		7,525		7,202			-		461,537
Commercial		52,156		2,940		61			-		55,157
Agriculture		5,255		10		1			-		5,266
Consumer installment loans		24,493		35		10			-		24,538
All other loans		598		-		-			-		598
Total	$	529,312	$	10,510	$	7,274	$		-	$	547,096

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ALLOWANCE FOR LOAN LOSSES (Table)

6 Months Ended

Jun. 30, 2019

Allowance For Loan Losses Table Abstract

Summary of activity in the allowance for loan losses by portfolio segment

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

As of June 30, 2019		Beginning		Charge						Ending
(Dollars are in thousands)		Balance		Offs		Recoveries		Provisions		Balance
Real estate secured:
Commercial	$	1,386	$	-	$	2	$	(163)	$	1,225
Construction and land development		202		-		34		(90)		146
Residential 1-4 family		2,437		(129)		157		(498)		1,967
Multifamily		89		-		30		(32)		87
Farmland		287		(33)		8		(144)		118
Total real estate loans		4,401		(162)		231		(927)		3,543
Commercial		448		(537)		45		1,427		1,383
Agriculture		37		-		1		(3)		35
Consumer installment loans		172		(43)		47		(17)		159
All other loans		3		-		-		-		3
Unallocated		275		-		-		(210)		65
Total	$	5,336	$	(742)	$	324	$	270	$	5,188

		Allowance for Loan Losses						Recorded Investment in Loans
		Individually		Collectively				Individually		Collectively
		Evaluated		Evaluated				Evaluated		Evaluated
As of June 30, 2019		for		for				for		for
(Dollars are in thousands)		Impairment		Impairment		Total		Impairment		Impairment		Total
Real estate secured:
Commercial	$	7	$	1,218	$	1,225	$	2,159	$	156,997	$	159,156
Construction and land						146						29,285
development		-		146				89		29,196
Residential 1-4 family		116		1,851		1,967		1,844		242,590		244,433
Multifamily		-		87		87		-		13,110		13,110
Farmland		3		115		118		1,040		20,352		21,392
Total real estate loans		126		3,417		3,543		5,131		462,245		467,376
Commercial		682		701		1,383		1,610		53,292		54,902
Agriculture		-		35		35		-		5,185		5,185
Consumer installment loans		-		159		159		6		23,100		23,106
All other loans		-		3		3		-		562		562
Unallocated		-		65		65		-		-		-
Total	$	808	$	4,380	$	5,188	$	6,748	$	544,384	$	551,131

Schedule of allocation of portion of allowance

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

As of December 31, 2018		Beginning		Charge						Ending
(Dollars are in thousands)		Balance		Offs		Recoveries		Provisions		Balance
Real estate secured:
Commercial	$	1,989	$	(334)	$	73	$	(342)	$	1,386
Construction and land development		191		(96)		11		96		202
Residential 1-4 family		2,400		(290)		73		254		2,437
Multifamily		106		-		-		(17)		89
Farmland		415		(58)		72		(142)		287
Total real estate loans		5,101		(778)		229		(151)		4,401
Commercial		660		(617)		84		321		448
Agriculture		20		-		1		16		37
Consumer installment loans		156		(75)		44		47		172
All other loans		3		-		-		-		3
Unallocated		256		-		-		19		275
Total	$	6,196	$	(1,470)	$	358	$	252	$	5,336

		Allowance for Loan Losses						Recorded Investment in Loans
		Individually		Collectively				Individually		Collectively
		Evaluated		Evaluated				Evaluated		Evaluated
As of December 31, 2018		for		for				for		for
(Dollars are in thousands)		Impairment		Impairment		Total		Impairment		Impairment		Total
Real estate secured:
Commercial	$	40	$	1,346	$	1,386	$	2,322	$	138,540	$	140,862
Construction and land						202
development		-		202				114		35,005		35,119
Residential 1-4 family		132		2,205		2,437		3,311		246,635		249,946
Multifamily		-		89		89		75		13,421		13,496
Farmland		132		155		287		2,038		20,076		22,114
Total real estate loans		304		4,097		4,401		7,860		453,677		461,537
Commercial		13		435		448		109		55,048		55,157
Agriculture		-		37		37		-		5,266		5,266
Consumer installment loans		1		171		172		7		24,531		24,538
All other loans		-		3		3		-		598		598
Unallocated		-		275		275		-		-		-
Total	$	318	$	5,018	$	5,336	$	7,976	$	539,120	$	547,096

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TROUBLED DEBT RESTRUCTURINGS (Table)

6 Months Ended

Jun. 30, 2019

Troubled Debt Restructurings Table Abstract

Schedule of loans modified as troubled debt restructurings

The following table presents information related to loans modified as troubled debt restructurings during the six and three months ended June 30, 2019 and 2018.

		For the six months ended							For the six months ended
			June 30, 2019							June 30, 2018
			Pre-Mod.							Pre-Mod.		Post-Mod.
Troubled Debt	# of		Recorded		Post-Mod.		# of			Recorded		Recorded
Restructurings	Loans		Investment				Loans			Investment		Investment
					Recorded
(Dollars are in thousands)					Investment
Real estate secured:
Commercial	-	$	-	$	-	-		$	-		$	-
Construction and land
Development	-		-		-	-			-			-
Residential 1-4 family	-		-		-	-			-			-
Multifamily	-		-		-	-			-			-
Farmland	1		281		281		-			-		-
Total real estate loans	-		-		-	-			-			-
Commercial						-			-			-
Agriculture	-		-		-	-			-			-
Consumer installment loans	-		-		-	-			-			-
All other loans	-		-		-		-			-		-
Total	1	$	281	$	281		-	$		-	$	-

		For the three months ended							For the three months ended
				June 30, 2019						June 30, 2018
Troubled Debt				Pre-Mod.		Post-Mod.				Pre-Mod.		Post-Mod.
Restructurings	# of			Recorded				# of		Recorded		Recorded
						Recorded
(Dollars are in thousands)	Loans			Investment				Loans		Investment		Investment
						Investment
Real estate secured:
Commercial	-	$		-	$	-	-		$	-	$	-
Construction and land
Development	-			-		-	-			-		-
Residential 1-4 family	-			-		-	-			-		-
Multifamily	-			-		-	-			-		-
Farmland	1			281		281		-		-		-
Total real estate loans	-			-		-	-			-		-
Commercial							-			-		-
Agriculture	-			-		-	-			-		-
Consumer installment loans	-			-		-	-			-		-
All other loans	-			-		-		-		-		-
Total	1		$	281	$	281		-	$	-	$	-

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OTHER REAL ESTATE OWNED (Table)

6 Months Ended

Jun. 30, 2019

Other Real Estate Owned Table Abstract

Schedule of other real estate

The following table summarizes the activity in other real estate owned for the six months ended June 30, 2019 and the year ended December 31, 2018:

		June 30,		December 31,
(Dollars are in thousands)		2019		2018
Balance, beginning of period	$	5,937	$	6,859
Additions		45		1,719
Proceeds from sales		(1,039)		(1,405)
Proceeds from insurance claims		(19)		-
Loans made to finance sales		(647)		(569)
Adjustment of carrying value		(214)		(542)
Deferred gain from sales		-		10
Losses from sales		(39)		(135)
Balance, end of period	$	4,024	$	5,937

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FAIR VALUES (Table)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Summary of assets and liabilities measured at fair value

Assets measured at fair value on a recurring basis are as follows. There were no liabilities measured at fair value on a recurring basis.

(Dollars are in thousands)		Quoted market				Significant
		price in active		Significant other		unobservable
		markets		observable inputs		inputs
		(Level 1)		(Level 2)		(Level 3)
June 30, 2019
Available-for-sale investments
U.S. Government Agencies	$	-	$	17,717	$	-
Taxable municipals		-		4,461		-
Corporate bonds		-		5,519		-
Mortgage backed securities		-		28,701		-
Total	$	-	$	56,398	$	-
December 31, 2018
Available-for-sale investments
U.S. Government Agencies	$	-	$	19,389	$	-
Taxable municipals		-		4,313		-
Corporate bonds		-		5,320		-
Mortgage backed securities		-		30,385		-
Total	$	-	$	59,407	$	-

There were no liabilities measured at fair value on a non-recurring basis.

(Dollars are in thousands)			Quoted market						Significant
			price in active			Significant other			unobservable
			markets			observable inputs			inputs
			(Level 1)			(Level 2)			(Level 3)
June 30, 2019
Other real estate owned	$	-		$	-		$	4,024
Impaired loans			-			-			5,941
Total	$	-		$	-		$	9,965
December 31, 2018
Other real estate owned	$	-		$	-		$	5,937
Impaired loans			-			-			7,658
Total	$	-		$	-		$	13,595

Schedule of significant unobservable inputs in level 3 assets

For Level 3 assets measured at fair value on a recurring or non-recurring basis as of June 30, 2019, the significant unobservable inputs used in the fair value measurements were as follows:

						General
						Range of
		Fair Value			Significant	Significant
(Dollars in		at June 30,		Valuation	Unobservable	Unobservable
thousands)		2019		Technique	Inputs	Input Values
Impaired Loans	$	5,941	$	Appraised	Discounts to reflect	0–18%
				Value/Discounted	current market
				Cash	conditions, ultimate
				Flows/Market	collectability, and
				Value of Note	estimated costs to
					sell
Other Real Estate	$	4,024	$	Appraised	Discounts to reflect	0–18%
Owned				Value/Comparable	current market
				Sales/Other	conditions and
				Estimates from	estimated costs to
				Independent	sell
				Sources

Estimated fair value of financial instruments

The carrying amount and fair value of the Company’s financial instruments that are not required to be measured or reported at fair value on a recurring basis are as follows:

								Fair Value Measurements
						Quoted
						market			Significant
						price in			other		Significant
						active			observable		unobservable
(Dollars are in thousands)		Carrying		Fair		markets			inputs		inputs
		Amount		Value		(Level 1)			(Level 2)		(Level 3)
June 30, 2019
Financial Instruments – Assets
Net Loans	$	545,943	$	538,134	$		-	$	532,195	$	5,939
Financial Instruments –
Liabilities
Time Deposits		255,714		259,495			-		259,495		-
FHLB Advances		5,000		5,079			-		5,079		-
Trust Preferred Securities		16,496		13,756			-		13,756		-
December 31, 2018
Financial Instruments – Assets
Net Loans	$	541,760	$	534,425	$		-	$	526,767	$	7,658
Financial Instruments– Liabilities
Time Deposits		258,850		258,671			-		258,671		-
FHLB Advances		7,000		7,215			-		7,215		-
Trust Preferred Securities		16,496		14,425			-		14,425		-

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SALE AND LEASEBACK TRANSACTIONS (Table)

6 Months Ended

Jun. 30, 2019

Sale And Leaseback Transactions Table Abstract

Schedule of future minimum rental commitments under the non-cancellable operating leases

At June 30, 2019, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):

2019	$	221
2020		440
2021		416
2022		436
2023		450
Thereafter		3,965
Total lease payments		5,928
Less imputed interest		1,145
Total	$	4,783

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Table)

6 Months Ended

Jun. 30, 2019

Revenue From Contracts With Customers Table Abstract

Schedule of revenue from contracts with customers

The following table presents Non-interest income by revenue stream for the three and six months ended June 30, 2019 and 2018.

		For the three months ended					For the six months ended
			June 30,				June 30,
(Dollars in thousands)		2019			2018		2019		2018
Service charges and fees	$	872		$	919	$	1,713	$	1,786
Card Processing and interchange		797			734		1,476		1,389
income
Insurance and investment fees		161			179		323		253
Other noninterest income		139			39		233		193
Total Noninterest Income	$	1,969		$	1,871	$	3,745	$	3,621

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NONINTEREST EXPENSES (Table)

6 Months Ended

Jun. 30, 2019

Noninterest Expenses

Schedule of operating expenses

Other operating expenses, included as part of noninterest expenses, consisted of the following for the periods presented:

		For the three months ended June 30,				For the six months ended June 30,
(Dollars are in thousands)		2019		2018		2019		2018
Advertising	$	86	$	114	$	152	$	261
ATM network expense		458		450		901		842
Legal and professional fees		420		406		702		773
Loan related expenses		170		130		291		330
Printing and supplies		39		66		78		202
FDIC insurance premiums		106		84		213		181
Other real estate owned, net		234		113		427		360
Other		568		827		1,095		1,340
Total other operating expenses
	$	2,081	$	2,190	$	3,859	$	4,289

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Per Share
Net income	$ 345	$ 406	$ (49)	$ 80	$ 751	$ 31
Weighted average shares outstanding Dilutive shares	23,922,086		23,922,086		23,922,086	23,922,086
Weighted average dilutive shares outstanding	23,922,086		23,922,086		23,922,086	23,922,086
Dilutive shares	23,922,086		23,922,086		23,922,086	23,922,086
Basic and diluted income per share	$ 0.01		$ 0.00		$ 0.03	$ 0.00
Diluted income (loss) per share	$ 0.01		$ 0.00		$ 0.03	$ 0.00

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CAPITAL (Details) - Bank - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Total Capital to Risk Weighted Assets, Actual, Amount	$ 70,635	$ 70,002
Total Capital to Risk Weighted Assets, Actual, Ratio	14.70%	14.39%
Total Capital to Risk Weighted Assets, Minimum Capital Requirement, Amount	$ 38,453	$ 38,912
Total Capital to Risk Weighted Assets, Minimum Capital Requirement, Ratio	8.00%	8.00%
Total Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 48,066	$ 48,640
Total Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	10.00%	10.00%
Tier 1 Capital Risk Weighted Assets, Actual, Amount	$ 65,447	$ 64,666
Tier 1 Capital Risk Weighted Assets, Actual, Ratio	13.62%	13.29%
Tier 1 Capital Risk Weighted Assets, Minimum Capital Requirement, Amount	$ 28,840	$ 29,184
Tier 1 Capital Risk Weighted Assets, Minimum Capital Requirement, Ratio	6.00%	6.00%
Tier 1 Capital Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 38,453	$ 38,912
Tier 1 Capital Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	8.00%	8.00%
Tier 1 Capital to Average Assets, Actual, Amount	$ 65,447	$ 64,666
Tier 1 Capital to Average Assets, Actual, Ratio	9.25%	9.59%
Tier 1 Capital to Average Assets, Minimum Capital Requirement, Amount	$ 28,312	$ 26,960
Tier 1 Capital to Average Assets, Minimum Capital Requirement, Ratio	4.00%	4.00%
Tier 1 Capital to Average Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 35,390	$ 33,700
Tier 1 Capital to Average Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%	5.00%
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual, Amount	$ 65,447	$ 64,666
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual, Ratio	13.62%	13.29%
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum Capital Requirement, Amount	$ 21,630	$ 21,888
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum Capital Requirement, Ratio	4.50%	4.50%
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 31,243	$ 31,616
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50%	6.50%

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INVESTMENT SECURITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Amortized Cost	$ 56,473	$ 60,971
Gross Unrealized Gains	310	84
Gross Unrealized Losses	(385)	(1,648)
Approximate Fair Value	56,398	59,407
U.S. Government Agencies [Member]
Amortized Cost	17,738	19,755
Gross Unrealized Gains	87	26
Gross Unrealized Losses	(108)	(392)
Approximate Fair Value	17,717	19,389
Taxable Municipals [Member]
Amortized Cost	4,409	4,428
Gross Unrealized Gains	52
Gross Unrealized Losses		(115)
Approximate Fair Value	4,461	4,313
Corporate Bonds [Member]
Amortized Cost	5,415	5,422
Gross Unrealized Gains	104	47
Gross Unrealized Losses		(149)
Approximate Fair Value	5,519	5,320
Mortgage Backed Securities [Member]
Amortized Cost	28,911	31,366
Gross Unrealized Gains	67	11
Gross Unrealized Losses	(277)	(992)
Approximate Fair Value	$ 28,701	$ 30,385

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INVESTMENT SECURITIES (Details 1) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Less than 12 Months	$ 1,269	$ 6,891
Unrealized Losses, Less than 12 Months	(1)	(113)
Fair Value, 12 Months or More	34,455	46,302
Unrealized Losses, 12 Months or More	(384)	(1,535)
Fair Value, Total	35,724	53,194
Unrealized Losses, Total	(385)	(1,648)
U.S. Government Agencies [Member]
Fair Value, Less than 12 Months	1,267	5,013
Unrealized Losses, Less than 12 Months	(1)	(68)
Fair Value, 12 Months or More	9,508	11,585
Unrealized Losses, 12 Months or More	(107)	(324)
Fair Value, Total	10,775	16,599
Unrealized Losses, Total	(108)	(392)
Taxable Municipals [Member]
Fair Value, Less than 12 Months
Unrealized Losses, Less than 12 Months
Fair Value, 12 Months or More	518	4,049
Unrealized Losses, 12 Months or More		(115)
Fair Value, Total	3,329	4,049
Unrealized Losses, Total		(115)
Corporate Bonds [Member]
Fair Value, Less than 12 Months		1,713
Unrealized Losses, Less than 12 Months		(43)
Fair Value, 12 Months or More		1,423
Unrealized Losses, 12 Months or More		(106)
Fair Value, Total		3,136
Unrealized Losses, Total		(149)
Mortgage Backed Securities [Member]
Fair Value, Less than 12 Months	2	165
Unrealized Losses, Less than 12 Months		(2)
Fair Value, 12 Months or More	24,429	29,245
Unrealized Losses, 12 Months or More	(277)	(990)
Fair Value, Total	24,431	29,410
Unrealized Losses, Total	$ (277)	$ (992)

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INVESTMENT SECURITIES (Details 2) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Investment Securities Activity
Due in one year or less, Amortized Cost	$ 2
Due after one year through five years, Amortized Cost	5,643
Due after five years through ten years, Amortized Cost	14,326
Due after ten years, Amortized Cost	36,502
Amortized Cost, Total	56,473	$ 60,971
Due in one year or less, Fair Value	2
Due after one year through five years, Fair Value	5,685
Due after five years through ten years, Fair Value	14,402
Due after ten years, Fair Value	36,309
Approximate Fair Value	$ 56,398	$ 59,407
Due in one year or less, Weighted Average Yield	0.00%
Due after one year through five years, Weighted Average Yield	2.60%
Due after five years through ten years, Weighted Average Yield	3.39%
Due after ten years, Weighted Average Yield	2.45%
Weighted Average Yield, Total	2.70%

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LOANS (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Total loans and leases	$ 551,131	$ 547,096
Real Estate [Member]
Total loans and leases	467,376	461,537
Unallocated
Total loans and leases
Other Loans [Member]
Total loans and leases	562	598
Commercial [Member]
Total loans and leases	55,157	55,157
Commercial [Member] | Real Estate [Member]
Total loans and leases	159,156	140,862
Construction and Land Development [Member] | Real Estate [Member]
Total loans and leases	29,285	35,119
Residential 1-4 Family [Member] | Real Estate [Member]
Total loans and leases	244,433	249,946
Multifamily [Member] | Real Estate [Member]
Total loans and leases	13,110	13,496
Farmland [Member] | Real Estate [Member]
Total loans and leases	21,392	22,114
Commercial Real Estate [Member]
Total loans and leases	54,902	55,157
Agriculture [Member]
Total loans and leases	5,185	5,266
Consumer Installment Loans [Member]
Total loans and leases	$ 23,106	$ 24,538

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LOANS (Details 1) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Total loans receivable on nonaccrual status	$ 5,542	$ 6,369
Real Estate [Member]
Total loans receivable on nonaccrual status	3,922	6,300
Consumer Installment Loans [Member]
Total loans receivable on nonaccrual status	19	7
Commercial [Member]
Total loans receivable on nonaccrual status	1,601	61
Commercial [Member] | Real Estate [Member]
Total loans receivable on nonaccrual status	609	784
Construction and Land Development [Member] | Real Estate [Member]
Total loans receivable on nonaccrual status	167	157
Residential 1-4 Family [Member] | Real Estate [Member]
Total loans receivable on nonaccrual status	2,333	3,626
Multifamily [Member] | Real Estate [Member]
Total loans receivable on nonaccrual status		76
Farmland [Member] | Real Estate [Member]
Total loans receivable on nonaccrual status	813	1,637
Agriculture [Member]
Total loans receivable on nonaccrual status		$ 1

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LOANS (Details 2) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Average Recorded Investment	$ 8,489		$ 10,934
Interest Income Recognized	128		213
Recorded Investment	6,748	$ 7,976
Unpaid Principal Balance	7,398	8,952
Related Allowance	807	318
Consumer Installment Loans [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment	7		5
Interest Income Recognized			1
Recorded Investment	6	7
Unpaid Principal Balance	6	7
Related Allowance		1
Consumer Installment Loans [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment	2		3
Interest Income Recognized
Recorded Investment	6
Unpaid Principal Balance	6
Related Allowance
Commercial Real Estate [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment	596		354
Interest Income Recognized	5		2
Recorded Investment	1,610	109
Unpaid Principal Balance	1,633	109
Related Allowance	681	13
Commercial Real Estate [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment	891		216
Interest Income Recognized	11
Recorded Investment
Unpaid Principal Balance
Related Allowance
Agriculture [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment
Interest Income Recognized
Recorded Investment
Unpaid Principal Balance
Related Allowance
Agriculture [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment			5
Interest Income Recognized
Recorded Investment
Unpaid Principal Balance
Related Allowance
Commercial Real Estate [Member] | Real Estate [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment	539		1,698
Interest Income Recognized	1		16
Recorded Investment	376	435
Unpaid Principal Balance	384	539
Related Allowance	7	40
Commercial Real Estate [Member] | Real Estate [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment	1,833		2,746
Interest Income Recognized	42		54
Recorded Investment	1,783	1,887
Unpaid Principal Balance	1,837	1,941
Related Allowance
Construction and Land Development [Member] | Real Estate [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment
Interest Income Recognized
Recorded Investment
Unpaid Principal Balance
Related Allowance
Construction and Land Development [Member] | Real Estate [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment	96		246
Interest Income Recognized
Recorded Investment	89	114
Unpaid Principal Balance	362	379
Related Allowance
Residential 1-4 Family [Member] | Real Estate [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment	466		378
Interest Income Recognized	10		7
Recorded Investment	623	431
Unpaid Principal Balance	641	454
Related Allowance	116	132
Residential 1-4 Family [Member] | Real Estate [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment	2,316		3,291
Interest Income Recognized	39		87
Recorded Investment	1,221	2,880
Unpaid Principal Balance	1,292	3,168
Related Allowance
Multifamily [Member] | Real Estate [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment
Interest Income Recognized
Recorded Investment
Unpaid Principal Balance
Related Allowance
Multifamily [Member] | Real Estate [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment	49		191
Interest Income Recognized	1		4
Recorded Investment		75
Unpaid Principal Balance		117
Related Allowance
Farmland [Member] | Real Estate [Member] | Impaired Financing Receivables With Related Allowance [Member]
Average Recorded Investment	297		371
Interest Income Recognized	6
Recorded Investment	221	345
Unpaid Principal Balance	232	358
Related Allowance	3	132
Farmland [Member] | Real Estate [Member] | Impaired Financing Receivables With No Related Allowance [Member]
Average Recorded Investment	1,394		1,430
Interest Income Recognized	13		$ 42
Recorded Investment	819	1,693
Unpaid Principal Balance	1,011	$ 1,880
Related Allowance

XML

LOANS (Details 3) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Loans 30-59 Days Past Due	$ 4,098	$ 4,098
Loans 60-89 Days Past Due	883	883
Loans 90 or More Days Past Due	1,840	1,840
Total Past Due Loans	6,821	6,821
Current Loans	540,275	540,275
Total loans and leases	551,131	547,096
Real Estate [Member]
Loans 30-59 Days Past Due	3,934	3,934
Loans 60-89 Days Past Due	868	868
Loans 90 or More Days Past Due	1,779	1,779
Total Past Due Loans	6,581	6,581
Current Loans	454,956	454,956
Total loans and leases	467,376	461,537
Unallocated
Total loans and leases
Commercial [Member]
Loans 30-59 Days Past Due	68	68
Loans 60-89 Days Past Due
Loans 90 or More Days Past Due	61	61
Total Past Due Loans	129	129
Current Loans	55,028	55,028
Total loans and leases	55,157	55,157
Commercial [Member] | Real Estate [Member]
Loans 30-59 Days Past Due	80	80
Loans 60-89 Days Past Due	31	31
Loans 90 or More Days Past Due	137	137
Total Past Due Loans	248	248
Current Loans	140,614	140,614
Total loans and leases	159,156	140,862
Construction and Land Development [Member] | Real Estate [Member]
Loans 30-59 Days Past Due	70	70
Loans 60-89 Days Past Due
Loans 90 or More Days Past Due	27	27
Total Past Due Loans	97	97
Current Loans	35,022	35,022
Total loans and leases	29,285	35,119
Residential 1-4 Family [Member] | Real Estate [Member]
Loans 30-59 Days Past Due	80	3,468
Loans 60-89 Days Past Due	31	564
Loans 90 or More Days Past Due	137	525
Total Past Due Loans	248	4,557
Current Loans	140,614	245,389
Total loans and leases	244,433	249,946
Multifamily [Member] | Real Estate [Member]
Loans 30-59 Days Past Due
Loans 60-89 Days Past Due	273	273
Loans 90 or More Days Past Due
Total Past Due Loans	273	273
Current Loans	13,223	13,223
Total loans and leases	13,110	13,496
Farmland [Member] | Real Estate [Member]
Loans 30-59 Days Past Due	316	316
Loans 60-89 Days Past Due
Loans 90 or More Days Past Due	1,090	1,090
Total Past Due Loans	1,406	1,406
Current Loans	20,708	20,708
Total loans and leases	21,392	22,114
Agriculture [Member]
Loans 30-59 Days Past Due	22	22
Loans 60-89 Days Past Due
Loans 90 or More Days Past Due
Total Past Due Loans	22	22
Current Loans	5,244	5,244
Total loans and leases	5,185	5,266
Consumer Installment Loans [Member]
Loans 30-59 Days Past Due	74	74
Loans 60-89 Days Past Due	15	15
Loans 90 or More Days Past Due
Total Past Due Loans	89	89
Current Loans	24,449	24,449
Total loans and leases	23,106	24,538
Other Loans [Member]
Loans 30-59 Days Past Due
Loans 60-89 Days Past Due
Loans 90 or More Days Past Due
Total Past Due Loans
Current Loans	598	598
Total loans and leases	562	598
Commercial Real Estate [Member]
Total loans and leases	$ 54,902	$ 55,157

XML

LOANS (Details 4) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Total loans and leases	$ 551,131	$ 547,096
Real Estate [Member]
Total loans and leases	467,376	461,537
Substandard [Member]
Total loans and leases	3,919	7,274
Special Mention [Member]
Total loans and leases	7,929	10,510
Pass [Member]
Total loans and leases	537,762	529,312
Doubtful [Member]
Total loans and leases	1,521
Real Estate [Member] | Substandard [Member]
Total loans and leases	3,825	7,202
Real Estate [Member] | Special Mention [Member]
Total loans and leases	5,617	7,525
Real Estate [Member] | Pass [Member]
Total loans and leases	457,934	446,810
Commercial Portfolio Segment [Member] | Substandard [Member]
Total loans and leases	75	61
Commercial Portfolio Segment [Member] | Special Mention [Member]
Total loans and leases	2,296	2,940
Commercial Portfolio Segment [Member] | Pass [Member]
Total loans and leases	51,010	52,156
Commercial Portfolio Segment [Member] | Doubtful [Member]
Total loans and leases	1,521
Commercial Portfolio Segment [Member] | Real Estate [Member] | Substandard [Member]
Total loans and leases	609	826
Commercial Portfolio Segment [Member] | Real Estate [Member] | Special Mention [Member]
Total loans and leases	2,301	2,890
Commercial Portfolio Segment [Member] | Real Estate [Member] | Pass [Member]
Total loans and leases	156,246	137,146
Commercial [Member]
Total loans and leases	55,157	55,157
Commercial [Member] | Real Estate [Member]
Total loans and leases	159,156	140,862
Construction and Land Development [Member] | Real Estate [Member]
Total loans and leases	29,285	35,119
Construction and Land Development [Member] | Real Estate [Member] | Substandard [Member]
Total loans and leases	167	170
Construction and Land Development [Member] | Real Estate [Member] | Special Mention [Member]
Total loans and leases	316	718
Construction and Land Development [Member] | Real Estate [Member] | Pass [Member]
Total loans and leases	28,802	34,231
Residential 1-4 Family [Member] | Real Estate [Member]
Total loans and leases	244,433	249,946
Residential 1-4 Family [Member] | Real Estate [Member] | Substandard [Member]
Total loans and leases	2,236	4,473
Residential 1-4 Family [Member] | Real Estate [Member] | Special Mention [Member]
Total loans and leases	1,126	1,523
Residential 1-4 Family [Member] | Real Estate [Member] | Pass [Member]
Total loans and leases	241,071	243,950
Multifamily [Member] | Real Estate [Member]
Total loans and leases	13,110	13,496
Multifamily [Member] | Real Estate [Member] | Substandard [Member]
Total loans and leases		76
Multifamily [Member] | Real Estate [Member] | Special Mention [Member]
Total loans and leases		63
Multifamily [Member] | Real Estate [Member] | Pass [Member]
Total loans and leases	13,110	13,357
Farmland [Member] | Real Estate [Member]
Total loans and leases	21,392	22,114
Farmland [Member] | Real Estate [Member] | Substandard [Member]
Total loans and leases	813	1,657
Farmland [Member] | Real Estate [Member] | Special Mention [Member]
Total loans and leases	1,874	2,331
Farmland [Member] | Real Estate [Member] | Pass [Member]
Total loans and leases	18,705	18,126
Commercial Real Estate [Member]
Total loans and leases	54,902	55,157
Agriculture [Member]
Total loans and leases	5,185	5,266
Agriculture [Member] | Substandard [Member]
Total loans and leases		1
Agriculture [Member] | Special Mention [Member]
Total loans and leases	13	10
Agriculture [Member] | Pass [Member]
Total loans and leases	5,172	5,255
Consumer Installment Loans [Member]
Total loans and leases	23,106	24,538
Consumer Installment Loans [Member] | Substandard [Member]
Total loans and leases	19	10
Consumer Installment Loans [Member] | Special Mention [Member]
Total loans and leases	3	35
Consumer Installment Loans [Member] | Pass [Member]
Total loans and leases	23,084	24,493
Other Loans [Member]
Total loans and leases	562	598
Other Loans [Member] | Substandard [Member]
Total loans and leases
Other Loans [Member] | Special Mention [Member]
Total loans and leases
Other Loans [Member] | Pass [Member]
Total loans and leases	562	598
Unallocated
Total loans and leases

XML

ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Balance, beginning of year	$ 5,336
Charge Offs	(742)		$ (1,470)
Recoveries	324		358
Provision for loan losses	270	$ 126	252
Balance, End of period	5,188		5,336
Commercial Real Estate [Member]
Balance, beginning of year	448
Charge Offs	(537)		(617)
Recoveries	45		84
Provision for loan losses	1,427		321
Balance, End of period	1,383		448
Agriculture [Member]
Balance, beginning of year	37
Charge Offs
Recoveries	1		1
Provision for loan losses	(3)		16
Balance, End of period	35		37
Consumer Installment Loans [Member]
Balance, beginning of year	172
Charge Offs	(43)		(75)
Recoveries	47		44
Provision for loan losses	(17)		47
Balance, End of period	159		172
Other Loans [Member]
Balance, beginning of year	3
Charge Offs
Recoveries
Provision for loan losses
Balance, End of period	3		3
Unallocated
Balance, beginning of year	275
Charge Offs
Recoveries
Provision for loan losses	(210)		19
Balance, End of period	65		275
Real Estate [Member]
Balance, beginning of year	4,401	5,101	5,101
Charge Offs	(162)		(778)
Recoveries	231		229
Provision for loan losses	(927)		(151)
Balance, End of period	3,543		4,401
Real Estate [Member] | Commercial Real Estate [Member]
Balance, beginning of year	1,386	1,989	1,989
Charge Offs			(334)
Recoveries	2		73
Provision for loan losses	(163)		(342)
Balance, End of period	1,225		1,386
Real Estate [Member] | Construction and Land Development [Member]
Balance, beginning of year	202	191	191
Charge Offs			(96)
Recoveries	34		11
Provision for loan losses	(90)		96
Balance, End of period	146		202
Real Estate [Member] | Residential 1-4 Family [Member]
Balance, beginning of year	2,437	2,400	2,400
Charge Offs	(129)		(290)
Recoveries	157		73
Provision for loan losses	(498)		254
Balance, End of period	1,967		2,437
Real Estate [Member] | Multifamily [Member]
Balance, beginning of year	89	106	106
Charge Offs
Recoveries	30
Provision for loan losses	(32)		(17)
Balance, End of period	87		89
Real Estate [Member] | Farmland [Member]
Balance, beginning of year	287	$ 415	415
Charge Offs	(33)		(58)
Recoveries	8		72
Provision for loan losses	(144)		(142)
Balance, End of period	$ 118		$ 287

XML

ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Allowance for Loan Losses, Individually Evaluated for Impairment	$ 808	$ 318
Allowance for Loan Losses, Collectively Evaluated for Impairment	4,380	5,018
Allowance for Loan Losses, Total	5,188	5,336
Recorded Investment in Loans, Individually Evaluated for Impairment	6,748	7,976
Recorded Investment in Loans, Collectively Evaluated for Impairment	544,384	539,120
Recorded Investment in Loans, Total	551,131	547,096
Real Estate [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment	126	304
Allowance for Loan Losses, Collectively Evaluated for Impairment	3,417	4,097
Allowance for Loan Losses, Total	3,543	4,401
Recorded Investment in Loans, Individually Evaluated for Impairment	5,131	7,860
Recorded Investment in Loans, Collectively Evaluated for Impairment	462,245	453,677
Recorded Investment in Loans, Total	467,376	461,537
Commercial [Member]
Recorded Investment in Loans, Total	55,157	55,157
Commercial [Member] | Real Estate [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment	7	40
Allowance for Loan Losses, Collectively Evaluated for Impairment	1,218	1,346
Allowance for Loan Losses, Total	1,225	1,386
Recorded Investment in Loans, Individually Evaluated for Impairment	2,159	2,322
Recorded Investment in Loans, Collectively Evaluated for Impairment	156,997	138,540
Recorded Investment in Loans, Total	159,156	140,862
Construction and Land Development [Member] | Real Estate [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment
Allowance for Loan Losses, Collectively Evaluated for Impairment	146	202
Allowance for Loan Losses, Total	146	202
Recorded Investment in Loans, Individually Evaluated for Impairment	89	114
Recorded Investment in Loans, Collectively Evaluated for Impairment	29,196	35,005
Recorded Investment in Loans, Total	29,285	35,119
Residential 1-4 Family [Member] | Real Estate [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment	116	132
Allowance for Loan Losses, Collectively Evaluated for Impairment	1,851	2,205
Allowance for Loan Losses, Total	1,967	2,437
Recorded Investment in Loans, Individually Evaluated for Impairment	1,844	3,311
Recorded Investment in Loans, Collectively Evaluated for Impairment	242,590	246,635
Recorded Investment in Loans, Total	244,433	249,946
Multifamily [Member] | Real Estate [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment
Allowance for Loan Losses, Collectively Evaluated for Impairment	87	89
Allowance for Loan Losses, Total	87	89
Recorded Investment in Loans, Individually Evaluated for Impairment		75
Recorded Investment in Loans, Collectively Evaluated for Impairment	13,110	13,421
Recorded Investment in Loans, Total	13,110	13,496
Farmland [Member] | Real Estate [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment	3	132
Allowance for Loan Losses, Collectively Evaluated for Impairment	115	155
Allowance for Loan Losses, Total	118	287
Recorded Investment in Loans, Individually Evaluated for Impairment	1,040	2,038
Recorded Investment in Loans, Collectively Evaluated for Impairment	20,352	20,076
Recorded Investment in Loans, Total	21,392	22,114
Commercial Real Estate [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment	682	13
Allowance for Loan Losses, Collectively Evaluated for Impairment	701	435
Allowance for Loan Losses, Total	1,383	448
Recorded Investment in Loans, Individually Evaluated for Impairment	1,610	109
Recorded Investment in Loans, Collectively Evaluated for Impairment	53,292	55,048
Recorded Investment in Loans, Total	54,902	55,157
Agriculture [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment
Allowance for Loan Losses, Collectively Evaluated for Impairment	35	37
Allowance for Loan Losses, Total	35	37
Recorded Investment in Loans, Individually Evaluated for Impairment
Recorded Investment in Loans, Collectively Evaluated for Impairment	5,185	5,266
Recorded Investment in Loans, Total	5,185	5,266
Consumer Installment Loans [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment		1
Allowance for Loan Losses, Collectively Evaluated for Impairment	159	171
Allowance for Loan Losses, Total	159	172
Recorded Investment in Loans, Individually Evaluated for Impairment	6	7
Recorded Investment in Loans, Collectively Evaluated for Impairment	23,100	24,531
Recorded Investment in Loans, Total	23,106	24,538
Other Loans [Member]
Allowance for Loan Losses, Individually Evaluated for Impairment
Allowance for Loan Losses, Collectively Evaluated for Impairment	3	3
Allowance for Loan Losses, Total	3	3
Recorded Investment in Loans, Individually Evaluated for Impairment
Recorded Investment in Loans, Collectively Evaluated for Impairment	562	598
Recorded Investment in Loans, Total	562	598
Unallocated
Allowance for Loan Losses, Individually Evaluated for Impairment
Allowance for Loan Losses, Collectively Evaluated for Impairment	65	275
Allowance for Loan Losses, Total	65	275
Recorded Investment in Loans, Individually Evaluated for Impairment
Recorded Investment in Loans, Collectively Evaluated for Impairment
Recorded Investment in Loans, Total

XML

TROUBLED DEBT RESTRUCTURINGS (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($) Number	Jun. 30, 2019 USD ($) Number
# of Loans | Number	1	1
Pre-Mod. Recorded Investment	$ 281	$ 281
Post-Mod. Recorded Investment	$ 281	281
Real Estate [Member]
Pre-Mod. Recorded Investment
Post-Mod. Recorded Investment
Commercial Real Estate [Member] | Real Estate [Member]
Pre-Mod. Recorded Investment
Post-Mod. Recorded Investment
Construction and Land Development [Member] | Real Estate [Member]
Pre-Mod. Recorded Investment
Post-Mod. Recorded Investment
Residential 1-4 Family [Member] | Real Estate [Member]
Pre-Mod. Recorded Investment
Post-Mod. Recorded Investment
Farmland [Member] | Real Estate [Member]
# of Loans | Number	1	1
Pre-Mod. Recorded Investment	$ 281	$ 281
Post-Mod. Recorded Investment	$ 281	$ 281

XML

TROUBLED DEBT RESTRUCTURINGS (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Notes to Financial Statements
Total TDRs	$ 4,100	$ 5,400
Period loan is considered to be in default, days	90 days

XML

OTHER REAL ESTATE OWNED (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Real Estate [Abstract]
Balance, beginning of period	$ 5,937	$ 6,859
Additions	45	1,719
Proceeds from sales	(1,039)	(1,405)
Proceeds from insurance claims	(19)
Loans made to finance sales	(647)	(569)
Adjustment of carrying value	(214)	(542)
Deferred gain from sales		10
Losses from sales	(39)	(135)
Balance, end of period	$ 4,024	$ 5,937

XML

FAIR VALUES (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Inputs, Level 2 [Member]
Impaired Loans	$ 56,398	$ 59,407
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | US Government Agencies [Member]
Available for sale investments	17,717	19,389
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Taxable Municipals
Available for sale investments	4,461	4,313
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Corporate Bonds
Available for sale investments	5,519	5,320
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage Backed Securities [Member]
Available for sale investments	28,701	30,385
Fair Value, Inputs, Level 3 [Member]
Available for sale investments
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Agriculture [Member]
Impaired Loans
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial Real Estate [Member]
Impaired Loans
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial Real Estate [Member] | Real Estate [Member]
Available for sale investments
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Farmland [Member] | Real Estate [Member]
Impaired Loans
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Multifamily [Member] | Real Estate [Member]
Available for sale investments
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Residential 1-4 Family [Member] | Real Estate [Member]
Available for sale investments
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Construction and Land Development [Member] | Real Estate [Member]
Impaired Loans
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Consumer Installment Loans [Member]
Impaired Loans

XML

FAIR VALUES (Details 1) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Fair Value	$ 9,965
Impaired Loans
Fair Value	$ 5,941
Valuation Technique	Appraised Value/Discounted Cash Flows/Market Value of Note
Significant Unobservable Inputs	Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell
Impaired Loans | Minimum [Member]
General Range of Significant Unobservable Input Values	0.00%
Impaired Loans | Maximum [Member]
General Range of Significant Unobservable Input Values	18.00%
Other Real Estate Owned
Fair Value	$ 4,024
Valuation Technique	Appraised Value/Comparable Sales/Other Estimates from Independent Sources
Significant Unobservable Inputs	Discounts to reflect current market conditions and estimated costs to sell
Other Real Estate Owned | Minimum [Member]
General Range of Significant Unobservable Input Values	0.00%
Other Real Estate Owned | Maximum [Member]
General Range of Significant Unobservable Input Values	18.00%

XML

FAIR VALUES (Details 2) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Net Loans	$ 545,943	$ 541,760
Reported Value Measurement [Member]
Net Loans	545,943	541,760
Time deposits	255,714	258,850
FHLB advances	5,000	7,000
Estimate of Fair Value Measurement [Member]
Net Loans	538,134	534,425
Time deposits	259,495	258,671
FHLB advances	5,079	7,215
Fair Value, Inputs, Level 2 [Member]
Net Loans	532,195	526,767
Time deposits	259,495	258,671
FHLB advances	5,079	7,215
Fair Value, Inputs, Level 3 [Member]
Net Loans	$ 5,941	$ 7,658

XML

SALE AND LEASEBACK TRANSACTIONS (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Leasing Activities Details Abstract
2019	$ 221
2020	440
2021	416
2022	436
2023	450
Thereafter	3,965
Total lease payments	5,928
Less imputed interest	1,145
Total	$ 4,783

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue from Contract with Customer [Abstract]
Service charges and fees	$ 872	$ 919	$ 1,713	$ 1,786
Card Processing and interchange income	797	734	1,476	1,389
Insurance and investment fees	161	179	323	253
Other noninterest income	139	39	233	193
Total Noninterest Income	$ 1,969	$ 1,871	$ 3,745	$ 3,621

XML

NONINTEREST EXPENSES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Noninterest Expenses
Advertising	$ 86	$ 114	$ 152	$ 261
ATM network expense	458	450	901	842
Legal and professional fees	420	406	702	773
Loan related expenses	170	130	291	330
Printing and supplies	39	66	78	202
FDIC insurance premiums	106	84	213	181
Other real estate owned, net	234	113	427	360
Other	568	827	1,095	1,340
Total noninterest expenses	$ 2,081	$ 2,190	$ 3,859	$ 4,289