
	June 30, 2020		December 31, 2019
Residential Real Estate Loans	$	84,864,381	$	86,404,304
Consumer Loans	58,235,306		56,331,013
Commercial Business Loans	24,003,787		22,234,189
Commercial Real Estate Loans	311,975,450		303,550,905
Paycheck Protection Program Loans	72,672,428		—
Total Loans Held For Investment	551,751,352		468,520,411
Loans Held For Sale	6,155,830		3,990,606
Total Loans Receivable, Gross	$	557,907,182	$	472,511,017
Less:
Allowance For Loan Losses	10,676,271		9,225,574
Loans in Process	9,755,038		9,957,140
Deferred Loan Fees	3,029,378		469,568
	23,460,687		19,652,282
Total Loans Receivable, Net	$	534,446,495	$	452,858,735

The Company uses a risk based approach based on the following credit quality measures when analyzing the loan portfolio: pass, caution, special mention, and substandard. These indicators are used to rate the credit quality of loans for the purposes of determining the Company’s allowance for loan losses. Pass loans are loans that are performing and are deemed adequately protected by the net worth of the borrower or the underlying collateral value. These loans are considered to have the least amount of risk in terms of determining the allowance for loan losses. Loans that are graded as substandard are considered to have the most risk. These loans typically have an identified weakness or weaknesses and are inadequately protected by the net worth of the borrower or collateral value. All loans 90 days or more past due are automatically classified in this category. The caution and special mention categories fall in between the pass and substandard grades and consist of loans that do not currently expose the Company to sufficient risk to warrant adverse classification but possess weaknesses.



June 30, 2020	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	74,090,846	$	5,558,599	$	1,073,323	$	4,141,613	$	84,864,381
Consumer	44,897,990		10,759,361		937,761		1,640,194		58,235,306
Commercial Business	17,787,879		4,935,589		468,875		811,444		24,003,787
Commercial Real Estate	236,153,488		56,777,380		15,486,771		3,557,811		311,975,450
PPP	72,672,428		—		—		—		72,672,428
Total	$	445,602,631	$	78,030,929	$	17,966,730	$	10,151,062	$	551,751,352



December 31, 2019	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	76,674,539	$	4,612,182	$	1,155,802	$	3,961,781	$	86,404,304
Consumer	44,294,400		9,617,301		624,248		1,795,064		56,331,013
Commercial Business	16,140,592		5,486,393		301,462		305,742		22,234,189
Commercial Real Estate	230,810,756		56,025,352		14,285,015		2,429,782		303,550,905
Total	$	367,920,287	$	75,741,228	$	16,366,527	$	8,492,369	$	468,520,411


	June 30, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	107,237	$	1,233,577	$	1,340,814	$	83,523,567	$	84,864,381
Consumer	312,743		8,504		95,369		416,616		57,818,690		58,235,306
Commercial Business	79,696		26,902		932		107,530		23,896,257		24,003,787
Commercial Real Estate	2,019,784		364,649		754,100		3,138,533		308,836,917		311,975,450
PPP	—		—		—		—		72,672,428		72,672,428
Total	$	2,412,223	$	507,292	$	2,083,978	$	5,003,493	$	546,747,859	$	551,751,352


	December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	355,290	$	144,209	$	499,499	$	85,904,805	$	86,404,304
Consumer	422,443		217,542		81,736		721,721		55,609,292		56,331,013
Commercial Business	147,959		76,515		20,316		244,790		21,989,399		22,234,189
Commercial Real Estate	3,849,424		—		1,352,716		5,202,140		298,348,765		303,550,905
Total	$	4,419,826	$	649,347	$	1,598,977	$	6,668,150	$	461,852,261	$	468,520,411

At June 30, 2020 and December 31, 2019, the Company did not have any loans that were 90 days or more past due and still accruing interest. The Company's strategy is to work with its borrowers to reach acceptable payment plans while protecting its interests in the existing collateral. In the event an acceptable arrangement cannot be reached, the Company may have to acquire these properties through foreclosure or other means and subsequently sell, develop, or liquidate them.


	June 30, 2020						December 31, 2019					Increase (Decrease)
	Amount		Percent ⁽¹⁾		Amount		Percent ⁽¹⁾		$		%
Non-accrual Loans:
Residential Real Estate	$	2,393,501	0.4	%	$	1,520,485	0.3	%	$	873,016	57.4%
Consumer	402,084		0.1		319,280		0.1		82,804		25.9
Commercial Business	120,042		—		122,605		—		(2,563)		(2.1)
Commercial Real Estate	864,409		0.2		1,474,036		0.3		(609,627)		(41.4)
Total Non-accrual Loans	$	3,780,036	0.7	%	$	3,436,406	0.7	%	$	343,630	10.0%


	Three Months Ended June 30, 2020
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,470,338	$	1,328,285	$	612,718	$	6,460,497	$	9,871,838
Provision for Loan Losses	61,866		26,726		27,013		584,395		700,000
Charge-Offs	—		(55,886)		—		—		(55,886)
Recoveries	600		18,609		—		141,110		160,319
Ending Balance	$	1,532,804	$	1,317,734	$	639,731	$	7,186,002	$	10,676,271



	Six Months Ended June 30, 2020
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,390,594	$	1,210,849	$	544,764	$	6,079,367	$	9,225,574
Provision for Loan Losses	141,010		168,670		130,015		960,305		1,400,000
Charge-Offs	—		(102,993)		(35,048)		—		(138,041)
Recoveries	1,200		41,208		—		146,330		188,738
Ending Balance	$	1,532,804	$	1,317,734	$	639,731	$	7,186,002	$	10,676,271


	Three Months Ended June 30, 2019
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,147,670	$	1,121,205	$	991,982	$	5,537,698	$	8,798,555
Provision for Loan Losses	(23,308)		69,702		(95,635)		49,241		—
Charge-Offs	—		(135,286)		—		(28,079)		(163,365)
Recoveries	1,450		36,706		496		79,697		118,349
Ending Balance	$	1,125,812	$	1,092,327	$	896,843	$	5,638,557	$	8,753,539


	Six Months Ended June 30, 2019
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,191,443	$	1,203,593	$	923,600	$	5,853,081	$	9,171,717
Provision for Loan Losses	(35,958)		74,508		(40,189)		101,639		100,000
Charge-Offs	(34,599)		(265,480)		(1,132)		(428,164)		(729,375)
Recoveries	4,926		79,706		14,564		112,001		211,197
Ending Balance	$	1,125,812	$	1,092,327	$	896,843	$	5,638,557	$	8,753,539


	Allowance For Loan Losses
June 30, 2020	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,532,804	$	1,532,804
Consumer	—		1,317,734		1,317,734
Commercial Business	—		639,731		639,731
Commercial Real Estate	—		7,186,002		7,186,002
Total	$	—	$	10,676,271	$	10,676,271


	Allowance For Loan Losses
December 31, 2019	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,390,594	$	1,390,594
Consumer	—		1,210,849		1,210,849
Commercial Business	—		544,764		544,764
Commercial Real Estate	—		6,079,367		6,079,367
Total	$	—	$	9,225,574	$	9,225,574


	Loans Receivable
June 30, 2020	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	1,816,520	$	83,047,861	$	84,864,381
Consumer	176,522		58,058,784		58,235,306
Commercial Business	55,446		23,948,341		24,003,787
Commercial Real Estate	1,502,437		310,473,013		311,975,450
PPP	—		72,672,428		72,672,428
Total	$	3,550,925	$	548,200,427	$	551,751,352


	Loans Receivable
December 31, 2019	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	1,086,433	$	85,317,871	$	86,404,304
Consumer	184,402		56,146,611		56,331,013
Commercial Business	64,406		22,169,783		22,234,189
Commercial Real Estate	1,894,642		301,656,263		303,550,905
Total	$	3,229,883	$	465,290,528	$	468,520,411

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired management measures the impairment and records the loan at fair value. Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sell, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method. Typically, the Company reviews the most recent appraisal and, if it is over 24 months old, will request a new third party appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal and the value of the collateral relative to the recorded investment in the loan, management may order an independent appraisal immediately or, in some instances, may elect to perform an internal analysis. The average balance of impaired loans was $3.9 million for the three months ended June 30, 2020 compared to $4.9 million for the three months ended June 30, 2019.


	June 30, 2020										December 31, 2019
Impaired Loans	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With No Related Allowance Recorded:
Residential Real Estate	$	1,816,520	$	1,816,520	$	—	$	1,086,433	$	1,086,433	$	—
Consumer	176,522		184,822		—		184,402		192,702		—
Commercial Business	55,446		950,446		—		64,406		959,406		—
Commercial Real Estate	1,502,437		1,674,657		—		1,894,642		2,066,862		—










Total	$	3,550,925	$	4,626,445	$	—	$	3,229,883	$	4,305,403	$	—


	Three Months Ended June 30,
	2020						2019
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	1,826,881	$	11,835	$	1,157,380	$	—
Consumer	178,355		—		137,233		—
Commercial Business	61,366		—		73,606		—
Commercial Real Estate	1,836,782		18,232		2,481,028		14,085
With an Allowance Recorded:

Consumer	—		—		71,554		—

Commercial Real Estate	—		—		996,990		—
Total
Residential Real Estate	1,826,881		11,835		1,157,380		—
Consumer	178,355		—		208,787		—
Commercial Business	61,366		—		73,606		—
Commercial Real Estate	1,836,782		18,232		3,478,018		14,085
Total	$	3,903,384	$	30,067	$	4,917,791	$	14,085


	Six Months Ended June 30,
	2020						2019
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	1,837,270	$	13,030	$	1,347,984	$	—
Consumer	180,340		—		982,404		—
Commercial Business	62,669		—		75,149		—
Commercial Real Estate	1,856,463		33,792		2,866,245		28,332
With an Allowance Recorded:

Consumer	—		—		72,072		—

Commercial Real Estate	—		—		1,181,152		—
Total
Residential Real Estate	1,837,270		13,030		1,347,984		—
Consumer	180,340		—		1,054,476		—
Commercial Business	62,669		—		75,149		—
Commercial Real Estate	1,856,463		33,792		4,047,397		28,332
Total	$	3,936,742	$	46,822	$	6,525,006	$	28,332

In the course of resolving delinquent loans, the Company may choose to restructure the contractual terms of certain loans. A troubled debt restructuring ("TDR") is a restructuring in which the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider (Financial Accounting Standards Board ("FASB") ASC Topic 310-40). The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation. The Company grants such concessions to reassess the borrower’s financial status and develop a plan for repayment.

At the date of modification, TDRs are initially classified as nonaccrual TDRs. TDR loans are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower's financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).

TDRs included in impaired loans at June 30, 2020 and December 31, 2019 had a combined balance of $774,000 and $825,000, respectively, and the Company had no commitments at these dates to lend additional funds on these loans. There were no new TDRs modified during the six months ended June 30, 2020 or 2019 and there were no TDRs in default at those dates. The Bank considers any loan 30 days or more past due to be in default.

The Company's policy with respect to accrual of interest on loans restructured as a TDR follows relevant supervisory guidance. That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, continued accrual of interest at the restructured interest rate is probable. If a borrower was materially delinquent on payments prior to the restructuring but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward. Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status.

The Company closely monitors these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms. If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status. The Company's policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the modified loan terms before that loan can be placed back on accrual status. Further, the borrower must demonstrate the capacity to continue making payments on the loan prior to restoration of accrual status.

The Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act") signed into law on March 27, 2020, amended GAAP with respect to the modification of loans to borrowers affected by the COVID-19 pandemic. Among other criteria, this guidance provided that short-term loan modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. To qualify as an eligible loan under the CARES Act, a loan modification must be 1) related to COVID-19; 2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and 3) executed between March 1, 2020, and the earlier of A) 60 days after the date of termination of the national emergency by the President or B) December 31, 2020. On March 22, 2020, federal banking regulators issued an interagency statement that included similar guidance on their approach for the accounting of loan modifications in light of the economic impact of the COVID-19 pandemic that provides that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. See Footnote 11 – Accounting and Reporting Changes.

As of June 30, 2020 the Bank had approved 324 loan modifications related to the COVID-19 pandemic with an outstanding loan balance, net of deferred fees, totaling $110.6 million, which consisted of deferral of regularly scheduled principal and interest payments for three to six months. The majority of these modifications ($104.0 million) have been for commercial real estate loans. Loan modifications in accordance with the CARES Act and related banking agency regulatory guidance are still subject to an evaluation in regards to determining whether or not a loan is deemed to be impaired.