
	June 30, 2021		December 31, 2020
Residential Real Estate Loans	$	80,071,994	$	78,907,159
Consumer Loans	56,553,972		55,335,425
Commercial Business Loans	30,256,812		19,704,862
Commercial Real Estate Loans	309,876,227		299,299,647
Paycheck Protection Program ("PPP") Loans	58,858,887		47,105,618
Total Loans Held For Investment	535,617,892		500,352,711
Loans Held For Sale	4,778,107		5,693,400
Total Loans Receivable, Gross	540,395,999		506,046,111
Less:
Allowance For Loan Losses	11,423,760		12,842,896
Loans in Process	21,802,334		12,197,417
Deferred Loan Fees	3,883,254		1,838,426
	37,109,348		26,878,739
Total Loans Receivable, Net	$	503,286,651	$	479,167,372

During the year ended December 31, 2020, the Bank participated in the initial SBA Paycheck Protection Program (“PPP”), a guaranteed unsecured loan program enacted under the Coronavirus Aid, Relief and Economic Security Act of 2020 (“CARES Act”) signed into law on March 27, 2020 to provide near-term relief to help small businesses impacted by COVID-19 sustain operations. PPP loans are fully guaranteed by the SBA. Loan originations under the initial PPP ended in August 2020. The Consolidated Appropriations Act, 2021 (“CAA 2021”) enacted on December 27, 2020, renewed and extended the PPP until May 31, 2021. As a result, in January 2021, the Bank began accepting and processing loan applications under this second PPP.

As of June 30, 2021, the Bank had originated nearly 2,800 PPP loans to new and existing customers, totaling approximately $127.6 million. The Bank earns 1% interest on PPP loans as well as a fee from the SBA to cover processing costs, which is amortized over the life of the loan. The maturity date of a PPP loan is either two or five years from the date of loan origination. As of June 30, 2021, we have recognized $3.0 million in PPP loans fees, including $1.8 million recognized in the six months ended June 30, 2021. The balance of unamortized net deferred fees on PPP loans was $3.3 million at June 30, 2021 compared to $1.4 million at December 31, 2020. The Bank expects that the great majority of PPP borrowers will seek full or partial forgiveness of their loan obligations in accordance with the CARES Act. Because the SBA guarantees 100% of the PPP loans made to eligible borrowers, and the entire principal amount of these loans, including any accrued interest, is eligible to be forgiven and repaid by the SBA, PPP loans are excluded from our allowance for loan losses calculation. There were 1,515 PPP loans totaling $58.9 million in our loan portfolio at June 30, 2021.

The balance of unamortized net deferred fees on PPP loans was $3.3 million at June 30, 2021 compared to $1.4 million at December 31, 2020. The Bank expects that the great majority of PPP borrowers will seek full or partial forgiveness of their loan obligations in accordance with the CARES Act. Because the SBA guarantees 100% of the PPP loans made to eligible borrowers, and the entire principal amount of these loans, including any accrued interest, is eligible to be forgiven and repaid by the SBA, PPP loans are excluded from our allowance for loan losses calculation.

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, 2021	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	66,014,607	$	10,464,424	$	567,409	$	3,025,554	$	80,071,994
Consumer	43,733,684		11,013,908		969,614		836,766		56,553,972
Commercial Business	21,820,910		8,136,793		68,402		230,707		30,256,812
Commercial Real Estate	228,033,904		60,486,268		16,861,345		4,494,710		309,876,227
PPP	58,858,887		—		—		—		58,858,887
Total	$	418,461,992	$	90,101,393	$	18,466,770	$	8,587,737	$	535,617,892



December 31, 2020	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	65,437,564	$	9,675,300	$	799,446	$	2,994,849	$	78,907,159
Consumer	42,926,887		10,525,814		891,107		991,617		55,335,425
Commercial Business	15,315,677		3,851,517		309,100		228,568		19,704,862
Commercial Real Estate	221,696,863		56,642,660		16,349,302		4,610,822		299,299,647
PPP	47,105,618		—		—		—		47,105,618
Total	$	392,482,609	$	80,695,291	$	18,348,955	$	8,825,856	$	500,352,711


	June 30, 2021
	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	$	—	$	438,674	$	151,481	$	590,155	$	79,481,839	$	80,071,994
Consumer	182,207		5,150		73,991		261,348		56,292,624		56,553,972
Commercial Business	138,280		—		—		138,280		30,118,532		30,256,812
Commercial Real Estate	2,335,647		607,619		530,089		3,473,355		306,402,872		309,876,227
PPP	—		—		—		—		58,858,887		58,858,887
Total	$	2,656,134	$	1,051,443	$	755,561	$	4,463,138	$	531,154,754	$	535,617,892


	December 31, 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	$	—	$	152,634	$	160,152	$	312,786	$	78,594,373	$	78,907,159
Consumer	292,498		30,610		91,870		414,978		54,920,447		55,335,425
Commercial Business	49,554		—		7,152		56,706		19,648,156		19,704,862
Commercial Real Estate	735,456		346,850		550,409		1,632,715		297,666,932		299,299,647
PPP	—		—		—		—		47,105,618		47,105,618
Total	$	1,077,508	$	530,094	$	809,583	$	2,417,185	$	497,935,526	$	500,352,711

At June 30, 2021 and December 31, 2020, 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, 2021				December 31, 2020				(Decrease) Increase
	Amount		Percent (1)		Amount		Percent (1)		$		%
Non-accrual Loans:
Residential Real Estate	$	1,361,321	0.3	%	$	1,682,240	0.4	%	$	(320,919)	(19.1)%
Consumer	300,020		0.1		402,878		0.1		(102,858)		(25.5)
Commercial Business	89,250		—		100,408		—		(11,158)		(11.1)
Commercial Real Estate	1,307,600		0.3		939,946		0.2		367,654		39.1
Total Non-accrual Loans	$	3,058,191	0.7	%	$	3,125,472	0.7	%	$	(67,281)	(2.2)%


	Three Months Ended June 30, 2021
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,228,610	$	1,201,154	$	1,131,285	$	8,385,824	$	11,946,873
Provision for Loan Losses	(154,894)		(75,763)		427,288		(931,631)		(735,000)
Charge-Offs	—		(19,415)		—		—		(19,415)
Recoveries	24,276		59,381		708		146,937		231,302
Ending Balance	$	1,097,992	$	1,165,357	$	1,559,281	$	7,601,130	$	11,423,760



	Six Months Ended June 30, 2021
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,528,948	$	1,298,655	$	1,165,033	$	8,850,260	$	12,842,896
Provision for Loan Losses	(455,302)		(144,282)		399,291		(1,404,707)		(1,605,000)
Charge-Offs	—		(57,692)		(6,699)		—		(64,391)
Recoveries	24,346		68,676		1,656		155,577		250,255
Ending Balance	$	1,097,992	$	1,165,357	$	1,559,281	$	7,601,130	$	11,423,760



	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


	Allowance For Loan Losses
June 30, 2021	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,097,992	$	1,097,992
Consumer	—		1,165,357		1,165,357
Commercial Business	—		1,559,281		1,559,281
Commercial Real Estate	—		7,601,130		7,601,130
Total	$	—	$	11,423,760	$	11,423,760


	Allowance For Loan Losses
December 31, 2020	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,528,948	$	1,528,948
Consumer	—		1,298,655		1,298,655
Commercial Business	—		1,165,033		1,165,033
Commercial Real Estate	—		8,850,260		8,850,260
Total	$	—	$	12,842,896	$	12,842,896


	Loans Receivable
June 30, 2021	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	1,122,369	$	78,949,625	$	80,071,994
Consumer	154,465		56,399,507		56,553,972
Commercial Business	53,046		30,203,766		30,256,812
Commercial Real Estate	1,105,495		308,770,732		309,876,227
PPP	—		58,858,887		58,858,887
Total	$	2,435,375	$	533,182,517	$	535,617,892


	Loans Receivable
December 31, 2020	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	1,284,303	$	77,622,856	$	78,907,159
Consumer	161,869		55,173,556		55,335,425
Commercial Business	53,047		19,651,815		19,704,862
Commercial Real Estate	720,111		298,579,536		299,299,647
PPP	—		47,105,618		47,105,618
Total	$	2,219,330	$	498,133,381	$	500,352,711

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. Non-accrual commercial loans under $200,000 and non-accrual consumer loans under $100,000 are considered immaterial and are excluded from the impairment review. 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 $2.6 million for the three months ended June 30, 2021 compared to $3.9 million for the three months ended June 30, 2020.

The following tables present information related to impaired loans by loan category at June 30, 2021 and December 31, 2020 and for the six months ended June 30, 2021 and 2020. There was no allowance recorded related to any impaired loans at June 30, 2021 and December 31, 2020.


	June 30, 2021						December 31, 2020
Impaired Loans	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance

Residential Real Estate	$	1,122,369	$	1,122,369	$	—	$	1,284,303	$	1,284,303	$	—
Consumer	154,465		162,765		—		161,869		170,169		—
Commercial Business	53,046		948,046		—		53,047		948,046		—
Commercial Real Estate	1,105,495		1,250,916		—		720,111		865,531		—










Total	$	2,435,375	$	3,484,096	$	—	$	2,219,330	$	3,268,049	$	—


	Three Months Ended June 30,
	2021				2020
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	1,217,428	$	—	$	1,826,881	$	11,835
Consumer	155,905		—		178,355		—
Commercial Business	53,046		—		61,366		—
Commercial Real Estate	1,129,983		3,171		1,836,782		18,232










Total	$	2,556,362	$	3,171	$	3,903,384	$	30,067



	Six Months Ended June 30,
	2021				2020
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:










Residential Real Estate	1,242,528		—		1,837,270		13,030
Consumer	157,694		—		180,340		—
Commercial Business	53,046		—		62,669		—
Commercial Real Estate	1,132,767		5,027		1,856,463		33,792
Total	$	2,586,035	$	5,027	$	3,936,742	$	46,822

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") Accounting Standards Codification (“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, 2021 and December 31, 2020 had a combined balance of $714,000 and $315,000, respectively, and the Company had no commitments at these dates to lend additional funds on these loans. There was one new TDR modified during the six months ended June 30, 2021 and no TDRs in default at that date. The Bank considers any loan 30 days or more past due to be in default.

Our 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.

We will continue to closely monitor 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 CARES Act 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. The CAA, 2021 provides additional COVID-19 emergency response and relief, including extending relief offered under the CARES Act related to TDRs as a result of COVID-19 through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier.