
	September 30, 2021		December 31, 2020
Residential Real Estate Loans	$	77,416,918	$	78,907,159
Consumer Loans	55,594,757		55,335,425
Commercial Business Loans	28,060,855		19,704,862
Commercial Real Estate Loans	337,435,374		299,299,647
Paycheck Protection Program ("PPP") Loans	32,119,284		47,105,618
Total Loans Held For Investment	530,627,188		500,352,711
Loans Held For Sale	3,589,131		5,693,400
Total Loans Receivable, Gross	534,216,319		506,046,111
Less:
Allowance For Loan Losses	11,172,237		12,842,896
Loans in Process	20,013,219		12,197,417
Deferred Loan Fees	2,430,338		1,838,426
	33,615,794		26,878,739
Total Loans Receivable, Net	$	500,600,525	$	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 September 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 September 30, 2021, we have recognized $4.5 million in PPP loans fees, including $3.3 million recognized in the nine months ended September 30, 2021. The balance of unamortized net deferred fees on PPP loans was $1.8 million at September 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 696 PPP loans totaling $32.1 million in our loan portfolio at September 30, 2021.

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.



September 30, 2021	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	64,787,568	$	9,994,908	$	154,960	$	2,479,482	$	77,416,918
Consumer	43,080,359		10,938,180		855,278		720,940		55,594,757
Commercial Business	23,554,952		4,217,359		78,758		209,786		28,060,855
Commercial Real Estate	255,654,434		61,703,703		16,339,585		3,737,652		337,435,374
PPP	32,119,284		—		—		—		32,119,284
Total	$	419,196,597	$	86,854,150	$	17,428,581	$	7,147,860	$	530,627,188



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


	September 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	$	—	$	130,958	$	106,166	$	237,124	$	77,179,794	$	77,416,918
Consumer	320,412		88,653		58,917		467,982		55,126,775		55,594,757
Commercial Business	18,318		9,656		—		27,974		28,032,881		28,060,855
Commercial Real Estate	1,348,006		—		378,966		1,726,972		335,708,402		337,435,374
PPP	—		—		—		—		32,119,284		32,119,284
Total	$	1,686,736	$	229,267	$	544,049	$	2,460,052	$	528,167,136	$	530,627,188


	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 September 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.


	September 30, 2021				December 31, 2020				(Decrease) Increase
	Amount		Percent (1)		Amount		Percent (1)		$		%
Non-accrual Loans:
Residential Real Estate	$	1,506,923	0.3	%	$	1,682,240	0.4	%	$	(175,317)	(10.4)%
Consumer	210,833		0.1		402,878		0.1		(192,045)		(47.7)
Commercial Business	70,031		—		100,408		—		(30,377)		(30.3)
Commercial Real Estate	1,145,783		0.2		939,946		0.2		205,837		21.9
Total Non-accrual Loans	$	2,933,570	0.6	%	$	3,125,472	0.7	%	$	(191,902)	(6.1)%


	Three Months Ended September 30, 2021
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,097,992	$	1,165,357	$	1,559,281	$	7,601,130	$	11,423,760
Provision for Loan Losses	(74,147)		(16,176)		(419,263)		(155,414)		(665,000)
Charge-Offs	—		(45,962)		—		—		(45,962)
Recoveries	8,600		11,545		323		438,971		459,439
Ending Balance	$	1,032,445	$	1,114,764	$	1,140,341	$	7,884,687	$	11,172,237



	Nine Months Ended September 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	(529,449)		(160,458)		(19,972)		(1,560,121)		(2,270,000)
Charge-Offs	—		(103,654)		(6,699)		—		(110,353)
Recoveries	32,946		80,221		1,979		594,548		709,694
Ending Balance	$	1,032,445	$	1,114,764	$	1,140,341	$	7,884,687	$	11,172,237



	Three Months Ended September 30, 2020
	Residential Real Estate		Consumer		Commercial Business		Commercial Real Estate		Total
Beginning Balance	$	1,532,804	$	1,317,734	$	639,731	$	7,186,002	$	10,676,271
Provision for Loan Losses	55,487		(223)		442,730		1,702,006		2,200,000
Charge-Offs	—		(45,851)		—		(19,453)		(65,304)
Recoveries	600		13,430		—		20,665		34,695
Ending Balance	$	1,588,891	$	1,285,090	$	1,082,461	$	8,889,220	$	12,845,662



	Nine Months Ended September 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	196,497		168,447		572,745		2,662,311		3,600,000
Charge-Offs	—		(148,844)		(35,048)		(19,453)		(203,345)
Recoveries	1,800		54,638		—		166,995		223,433
Ending Balance	$	1,588,891	$	1,285,090	$	1,082,461	$	8,889,220	$	12,845,662


	Allowance For Loan Losses
September 30, 2021	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,032,445	$	1,032,445
Consumer	—		1,114,764		1,114,764
Commercial Business	—		1,140,341		1,140,341
Commercial Real Estate	—		7,884,687		7,884,687
Total	$	—	$	11,172,237	$	11,172,237


	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
September 30, 2021	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	1,210,901	$	76,206,017	$	77,416,918
Consumer	151,915		55,442,842		55,594,757
Commercial Business	35,446		28,025,409		28,060,855
Commercial Real Estate	1,085,504		336,349,870		337,435,374
PPP	—		32,119,284		32,119,284
Total	$	2,483,766	$	528,143,422	$	530,627,188


	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 $2.5 million and $2.6 million for the three and nine months ended September 30, 2021, respectively, compared to $3.3 million and $3.7 million for the three and nine months ended September 30, 2020, respectively.

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


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

Residential Real Estate	$	1,210,901	$	1,210,901	$	—	$	1,284,303	$	1,284,303	$	—
Consumer	151,915		160,215		—		161,869		170,169		—
Commercial Business	35,446		930,446		—		53,047		948,046		—
Commercial Real Estate	1,085,504		1,230,924		—		720,111		865,531		—










Total	$	2,483,766	$	3,532,486	$	—	$	2,219,330	$	3,268,049	$	—


	Three Months Ended September 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	$	1,224,991	$	496	$	1,792,912	$	—
Consumer	152,775		—		174,276		—
Commercial Business	46,246		—		54,846		—
Commercial Real Estate	1,096,077		6,887		1,294,957		7,788










Total	$	2,520,089	$	7,383	$	3,316,991	$	7,788



	Nine Months Ended September 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	1,317,557		3,149		1,817,715		13,030
Consumer	156,049		—		178,296		—
Commercial Business	50,326		—		60,262		—
Commercial Real Estate	1,119,634		11,914		1,656,438		41,580
Total	$	2,643,566	$	15,063	$	3,712,711	$	54,610

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 September 30, 2021 and December 31, 2020 had a combined balance of $707,000 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 nine months ended September 30, 2021 and no TDRs in default at that date. There were no new TDRs modified during the nine months ended September 30, 2020 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.