OLD FINANCIAL POINT: Management report and analysis of the financial situation and operating results (Form 10-K)

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The following discussion is intended to assist readers in understanding and
evaluating the financial condition, changes in financial condition and the
results of operations of the Company, consisting of the parent company (the
Parent) and its wholly-owned subsidiaries, the Bank and Trust. This discussion
should be read in conjunction with the Consolidated Financial Statements and
other financial information contained elsewhere in this report.  In addition to
current and historical information, the following discussion and analysis
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to future business,
financial condition or results of operations. For a description of certain
factors that may have a significant impact on the Company's future business,
financial condition or results of operations, see "Cautionary Statement
Regarding Forward-Looking Statements" prior to Item 1. "Business."

Executive Overview
Headquartered in Hampton, Virginia, the Company is the parent company of Trust
and the Bank. Trust is a wealth management services provider. The Bank offers a
complete line of consumer, mortgage and business banking services, including
loan, deposit, and cash management services to individual and commercial
customers. The Bank is an independent community bank and has 16 branches
throughout the Hampton Roads localities of Chesapeake, Hampton, Isle of Wight
County, Newport News, Norfolk, Virginia Beach, Williamsburg/James City County
and York County.  The Bank also has a loan production office in Richmond and a
mortgage loan origination office in Charlotte, NC.

Net income for 2020 was $5.4 million ($1.03 per diluted share) compared to $7.9
million ($1.51 per diluted share) in 2019. Net income for 2020 was affected by
one-time pre-tax expenses of $1.1 million associated with three strategic
initiatives: prepayment of FHLB advances during the fourth quarter of 2020, a
voluntary Early Retirement Incentive Plan (ERIP) offered in the fourth quarter
of 2020, and a loss on sale of a loan pool effectively removing non- or
under-performing credit relationships from the balance sheet. The impact of
excluding these one-time strategic initiative expenses would be an increase of
$900 thousand to net income and an increase of $0.18 to earnings per diluted
common share.

Assets as of December 31, 2020 were $1.2 billion, an increase of $171.7 million
or 16.3% compared to assets as of December 31, 2019. During 2020, the Company
experienced significant balance sheet growth. Net loans held for investment
increased $88.6 million, or 12.0% from December 31, 2019 to $826.8 million at
December 31, 2020 and was primarily attributable to PPP loans. Securities
available for sale, at fair value, increased $40.7 million from December 31,
2019 to $186.4 million at December 31, 2020, utilizing additional liquidity
provided by growth in deposit accounts.

Critical Accounting Policies and Estimates
The accounting and reporting policies of the Company are in accordance with U.S.
generally accepted accounting principles (GAAP) and conform to general practices
within the banking industry. The Company's financial position and results of
operations are affected by management's application of accounting policies,
including estimates, assumptions and judgments made to arrive at the carrying
value of assets and liabilities and amounts reported for revenues, expenses and
related disclosures. Different assumptions in the application of these policies
could result in material changes in the Company's consolidated financial
position and/or results of operations. The accounting policy that required
management's most difficult, subjective or complex judgments is the Company's
allowance for loan losses, which is described below.

Allowance for Loan Losses
The allowance for loan losses is an estimate of probable and estimable losses
inherent in the loan portfolio. The allowance is based on three basic principles
of accounting which require: (i) that losses be accrued when they are probable
of occurring and estimable, (ii) that losses be accrued based on the differences
between the loan balances and the value of collateral, present value of expected
future cash flows (discounted at the loan's effective interest rate) or values
that are observable in the secondary market and (iii) that adequate
documentation exist to support the allowance for loan losses estimate.

The Company's allowance for loan losses is the accumulation of various
components that are calculated based on independent methodologies. Management's
estimate is based on certain observable, historical data and other factors that
management believes are most reflective of the underlying credit losses being
estimated. This evaluation includes credit quality trends; collateral values;
discounted cash flow analysis; loan volumes; geographic, borrower and industry
concentrations; the findings of internal credit quality assessments; and results
from external bank regulatory examinations. These factors, as well as identified
impaired loans, historical losses and current economic and business conditions,
are used in developing estimated loss factors used in the calculations.

Authoritative accounting literature requires that the impairment of loans that
have been separately identified for evaluation be measured based on the present
value of expected future cash flows (discounted at the loan's effective interest
rate) or, alternatively, the observable market price of the loans or the fair
value of the collateral. However, for those loans that are collateral dependent
(that is, if repayment of those loans is expected to be provided solely by the
underlying collateral) and for which management has determined foreclosure is
probable, the measure of impairment is to be based on the net realizable value
of the collateral. Authoritative accounting literature, as amended, also
requires certain disclosures about investments in impaired loans and the
allowance for loan losses and interest income recognized on loans.

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For loans not individually evaluated for impairment, the loan portfolio is
segmented into pools, based on the loan classifications as defined by Schedule
RC-C of the Federal Financial Institutions Examination Council Consolidated
Reports of Condition and Income Form 041 (Call Report) and collectively
evaluated for impairment. Consumer loans not secured by real estate and made to
individuals for household, family and other personal expenditures are segmented
into pools based on whether the loan's payments are current (including loans
1-29 days past due), 30 - 59 days past due, 60 - 89 days past due, or 90 days or
more past due. All other loans, including loans to consumers that are secured by
real estate, are segmented by the Company's internally assigned risk grades:
substandard, other assets especially mentioned (rated just above substandard),
and pass (all other loans). The Company may also assign loans to the risk grades
of doubtful or loss, but as of December 31, 2020 and December 31, 2019, the
Company had no loans in these categories.

Specific reserves are determined on a loan-by-loan basis based on management's
evaluation of the Company's exposure for each credit, given the current payment
status of the loan and the net market value of any underlying collateral.

While management uses the best information available to establish the allowance
for loan losses, future adjustment to the allowance may be necessary if economic
conditions differ substantially from the assumptions used in making the
valuations or if required by regulators, based upon information available to
them at the time of their examinations. Such adjustments to original estimates,
as necessary, are made in the period in which these factors and other relevant
considerations indicate that loss levels may vary from previous estimates.

Results of Operations
Net income for 2020 was $5.4 million compared to $7.9 million in 2019. The
decrease was primarily attributable to higher net interest income and
non-interest income offset by increased provision for loan loss and non-interest
expense.  As of December 31, 2020 return on average assets was 0.45% compared to
0.76% in 2019 and the return on average equity was 4.68% at December 31, 2020
compared to 7.33% in 2019.

In 2020, the Company recognized one-time pre-tax expenses of $1.1 million
associated with three strategic initiatives: prepayment of FHLB advances, the
ERIP, and a loss on sale of a non- or under-performing credit relationships. The
impact of excluding these one-time strategic initiative expenses would be an
increase of $900 thousand to net income and an increase of 8 basis points and 79
basis points to return on average assets and return on average equity,
respectively.

During 2020, the Company experienced significant balance sheet growth. Assets as
of December 31, 2020 were $1.2 billion, an increase of $171.7 million or 16.28%
compared to assets as of December 31, 2019. Net loans held for investment
increased $88.6 million, or 12.0% from December 31, 2019 to $826.8 million at
December 31, 2020. The increase was primarily attributable to PPP loans.
Securities available for sale, at fair value, increased $40.7 million from
December 31, 2019 to $186.4 million at December 31, 2020, utilizing additional
liquidity provided by growth in deposit accounts.

Net Interest Income
The principal source of earnings for the Company is net interest income. Net
interest income is the difference between interest and fees generated by earning
assets and interest expense paid to fund them. Changes in the volume and mix of
interest-earning assets and interest-bearing liabilities, as well as their
respective yields and rates, have a significant impact on the level of net
interest income. The net interest margin is calculated by dividing
tax-equivalent net interest income by average earning assets.

Net interest income was $34.7 million in 2020, an increase of $898 thousand from
2019. The net interest margin was 3.18% in 2020 as compared to 3.58% in 2019.
Net interest income, on a fully tax-equivalent basis, was $34.9 million in 2020,
an increase of $832 thousand from 2019. The net interest margin was 3.19% in
2020 as compared to 3.61% in 2019. The movements year-over-year were due to
significant growth in average earning asset balances at lower average earning
yields offset by higher average interest bearing liabilities balances at lower
interest bearing costs. The low interest rate environment, high levels of
liquidity invested at lower yielding short-term levels, and PPP participation
continue to impact and challenge the net interest margin.  While accretive to
net interest income, PPP loans, which have a fixed interest rate of 1%,
compressed the net interest margin. Related loan fees and costs are deferred at
time of loan origination and amortized into interest income over the remaining
lives of the loans, which for the majority of PPP loans was 24 months at
origination. Recognition of these deferred fees and costs will be accelerated
upon forgiveness or repayment of the PPP loans. For more information about these
FTE financial measures, please see "Non-GAAP- Financial Measures" and
"Reconciliation of Certain Non-GAAP Financial Measures".

When comparing 2020 to 2019, the following changes occurred. Tax equivalent
interest income decreased $298 thousand, or 0.74%. Average earning assets
increased $148.9 million, or 15.78%. The average tax-equivalent yield decreased
61 basis points to 3.68%. Total average loans increased $76.6 million, or
10.11%, and average investment securities increased $16.9 million, or 11.58%.
The increase in average loans was primarily attributable to PPP loan
originations.  Interest bearing due from banks increased $56.6 million as a
result of increased deposits liabilities but saw their yield decline by 170
basis points due to action by the Federal Reserve Board related to the decrease
of the federal funds target rate to a range of 0 to 25 basis points.

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Average interest-bearing liabilities increased $59.8 million, or 8.77%.
Increases in average interest-bearing deposits of $59.6 million and average FRB
borrowings of $11.5 million were partially offset by an $11.5 million reduction
in average FHLB advances and average repurchase agreements. Total interest
expense decreased $1.1 million, or 17.60%, when comparing 2020 to 2019. The
decrease was driven by decreased deposit and borrowing costs. The average rate
on interest-bearing liabilities in 2020 was 0.71%, a decrease of 23 basis points
from 2019.

The following table presents an analysis of average earning assets, interest-bearing liabilities, and rates and returns. Non-criminal loans are included in loans receivable.

             AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND RATES

                                                                                                     For the years ended December 31,
                                                                 2020                                              2019                                              2018
                                                               Interest                                          Interest                                          Interest
                                               Average         Income/           Yield/          Average         Income/           Yield/          Average         Income/           Yield/
(dollars in thousands)                         Balance         Expense            Rate           Balance         Expense            Rate           Balance         Expense            Rate
ASSETS
Loans*                                       $   834,247     $     36,061             4.32 %   $   757,677     $     35,771             4.72 %   $   768,960     $     34,504             4.49 %
Investment securities:
Taxable                                          145,029            3,068             2.12 %       116,930            2,827             2.42 %        95,752            2,080             2.17 %
Tax-exempt*                                       18,270              654             3.58 %        29,425              955             3.25 %        50,426            1,547             3.07 %
Total investment securities                      163,299            3,722             2.28 %       146,355            3,782             2.58 %       146,178            3,627             2.48 %
Interest-bearing due from banks                   91,160              267             0.29 %        34,592              689             1.99 %         9,358              198             2.12 %
Federal funds sold                                   841               12             1.45 %         1,546               31             2.01 %         1,150               21             1.83 %
Other investments                                  3,020              134             4.43 %         3,484              221             6.36 %         4,083              253             6.20 %
Total earning assets                           1,092,567     $     40,196             3.68 %       943,654     $     40,494             4.29 %       929,729     $     38,603             4.15 %
Allowance for loan losses                         (9,723 )                                         (10,562 )                                         (10,254 )
Other nonearning assets                          104,414                                           105,422                                           101,100
Total assets                                 $ 1,187,258                                       $ 1,038,514                                       $ 1,020,575

LIABILITIES AND STOCKHOLDERS' EQUITY
Time and savings deposits:
Interest-bearing transaction accounts        $    55,667     $         12             0.02 %   $    32,603     $         11             0.03 %   $    28,246     $         10             0.04 %
Money market deposit accounts                    307,190            1,012             0.33 %       257,884            1,037             0.40 %       242,025              542             0.22 %
Savings accounts                                  96,149               56             0.06 %        86,787               88             0.10 %        87,534               76             0.09 %
Time deposits                                    209,727            3,337             1.59 %       231,774            3,845             1.66 %       228,800            2,916             1.27 %
Total time and savings deposits                  668,733            4,417             0.66 %       609,048            4,981             0.82 %       586,605            3,544             0.60 %
Federal funds purchased, repurchase
agreements and other borrowings                   33,846              150             0.44 %        22,302              132             0.59 %        28,427              131             0.46 %
Federal Home Loan Bank advances                   38,942              725             1.86 %        50,397            1,309             2.60 %        66,151            1,294             1.96 %
Total interest-bearing liabilities               741,521            5,292             0.71 %       681,747            6,422             0.94 %       681,183            4,969             0.73 %
Demand deposits                                  325,596                                           245,518                                           236,249
Other liabilities                                  5,055                                             3,947                                             3,378
Stockholders' equity                             115,086                                           107,302                                            

99 765

Total liabilities and stockholders' equity   $ 1,187,258                                       $ 1,038,514                                       $ 1,020,575
Net interest margin                                          $     34,904             3.19 %                   $     34,072             3.61 %                   $     33,634             3.62 %

* Calculated on a fully equivalent tax basis using a rate of 21%, adjusting the interest income of 187 thousand dollars, $ 253 thousand, and 384 thousand dollars, respectively.

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The following table summarizes changes in net interest income attributable to
changes in the volume of interest-bearing assets and liabilities and changes in
interest rates.

                                    TABLE II
                           VOLUME AND RATE ANALYSIS*
                                                    2020 vs. 2019                             2019 vs. 2018
                                                 Increase (Decrease)                       Increase (Decrease)
                                                 Due to Changes in:                         Due to Changes in:
(dollars in thousands)                   Volume         Rate          Total         Volume         Rate          Total
EARNING ASSETS
Loans                                   $   3,723     $  (3,433 )   $     290     $     (520 )   $   1,787     $   1,267
Investment securities:
Taxable                                       689          (448 )         241            457           290           747
Tax-exempt                                   (360 )          59          (301 )         (645 )          53          (592 )
Total investment securities                   329          (389 )         (60 )         (188 )         343           155

Federal funds sold                            (14 )          (5 )         (19 )            7             3            10
Other investments                           1,345        (1,854 )        (509 )          827          (368 )         459
Total earning assets                        5,383        (5,681 )        (298 )          126         1,765         1,891

INTEREST-BEARING LIABILITIES
Interest-bearing transaction accounts           8            (7 )           1              2            (1 )           1
Money market deposit accounts                 202          (227 )         (25 )           35           460           495
Savings accounts                               10           (42 )         (32 )           (1 )          13            12
Time deposits                                (356 )        (152 )        (508 )           37           892           929
Total time and savings deposits              (136 )        (428 )        (564 )           73         1,364         1,437
Federal funds purchased, repurchase
agreements and other borrowings                68           (50 )          18            (28 )          29             1
Federal Home Loan Bank advances              (298 )        (286 )        (584 )         (309 )         324            15
Total interest-bearing liabilities           (366 )        (764 )      

(1,130) (264) 1,717 1,453

Change in net interest income           $   5,749     $  (4,917 )   $     

832 $ 390 $ 48 $ 438

* Calculated on a fully equivalent tax basis using a rate of 21%.

The Company believes the net interest margin may be affected in future periods
by several factors that are difficult to predict, including: (1) changes in
interest rates, which may depend on the severity of adverse economic conditions,
the timing and extent of any economic recovery, and the extent of government
stimulus measures, which are inherently uncertain, (2) possible changes in the
composition of earning assets which may result from decreased loan demand as a
result of the current economic environment (3) the repricing of higher-rate time
deposits at maturity to lower rates, which may occur at a slower rate than the
repricing of interest earning assets and (4) the recognition of net deferred
fees on PPP loans, which is subject to the timing of repayment or forgiveness.

Analysis of net interest income for the year ended December 31, 2018 has been omitted as this discussion was provided in Part II, point 7. “Management Report”, under the heading “Net Interest Income” in the Company’s Form 10-K 2019.

Provision for Loan Losses
The provision for loan losses is a charge against earnings necessary to maintain
the allowance for loan losses at a level consistent with management's evaluation
of the portfolio. This expense is based on management's estimate of probable
credit losses inherent in the loan portfolio. Management's evaluation included
credit quality trends, collateral values, discounted cash flow analysis, loan
volumes, geographic, borrower and industry concentrations, the findings of
internal credit quality assessments and results from external regulatory
examinations. These factors, as well as identified impaired loans, historical
losses and current economic and business conditions including uncertainties
associated with the COVID-19 pandemic, were used in developing estimated loss
factors for determining the loan loss provision. Based on its analysis of the
adequacy of the allowance for loan losses, management concluded that the
provision was appropriate.

The provision for loan losses was $1.0 million for the year ended December 31,
2020 as compared to $318 thousand for 2019. While historical loss rates, levels
of non-performing assets, and credit quality continued to improve in 2020,
increased qualitative reserves primarily related to uncertainties associated
with potential asset quality deterioration which may arise as a result of the
COVID-19 pandemic and related economic disruption. The level of provision for
loan losses in 2019 was largely due to a $695 thousand recapture driven by the
prior year decrease in loans, the upgrade of one large classified asset to a
pass rating, and declines in past due loans as well as adversely, classified
non-performing loans offset somewhat by an increase in specific reserves
required on impaired loans.  Charged-off loans totaled $2.0 million in 2020,
compared to $1.4 million in 2019. Recoveries amounted to $886 thousand in 2020
and $629 thousand in 2019. The Company's net loans charged off to average loans
were 0.13% in 2020 as compared to 0.10% in 2019.

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The state of the local economy can have a significant impact on the level of
loan charge-offs. If the economy begins to contract, nonperforming assets could
increase as a result of declines in real estate values and home sales or
increases in unemployment rates and financial stress on borrowers. Increased
nonperforming assets would increase charge-offs and reduce earnings due to
larger contributions to the loan loss provision.

Noninterest Income
Unless otherwise noted, all comparisons in this section are between the twelve
months ended December 31, 2020 and the twelve months ended December 31, 2019.

Noninterest income increased $621 thousand or 4.41% for the year ended December
31, 2020 as compared to the year ended December 31, 2019. In 2020, increases in
other service charges, commissions and fees ($103 thousand or 2.62%), mortgage
banking income ($897 thousand or 101.47%) and nonrecurring gains on sale of real
estate ($818 thousand) partially offset by decreases in service charges on
deposit accounts ($1.21 million or 29.69%) were the primary drivers of
noninterest income growth.

Other service charges, commissions and fees increased primarily due to growth in
merchant processing income and debit card fee income, while the increase in
mortgage banking income is primarily due to the expansion of the mortgage
lending team in early 2020 and increased mortgage lending activity in the
current low interest rate environment.  The decrease in service charges on
deposit accounts is primarily attributable to lower nonsufficient fund, or NSF,
and overdraft charges.

The company continues to focus on diversifying non-interest income by striving to expand its trust, insurance and mortgage business, and by continuing to focus on business audit and other business services.

Discussion of non-interest income for the year ended December 31, 2018 has been omitted as this discussion was provided in Part II, point 7. “Management report”, under the heading “Non-interest income” in the company’s 2019 Form 10-K.

Noninterest Expense
Unless otherwise noted, all comparisons in this section are between the twelve
months ended December 31, 2020 and the twelve months ended December 31, 2019.

The Company's noninterest expense increased $3.9 million or 10.01%.
Year-over-year increases were primarily related to salaries and employee
benefits, data processing, ATM and other losses, loss on FHLB prepayment, and
other operating expenses partially offset by decreases in occupancy and
equipment, customer development, professional services, and employee
professional development. In 2020, salaries and benefit costs increased $1.5
million or 6.20% which were primarily attributable to (i) the full-year effect
of the addition of highly skilled bankers in lending, credit management and
executive management to the team in 2019; (ii) increased commission expense
related to higher mortgage loan originations during 2020; (iii) ERIP severance
costs; and (iv) increased overtime and incentive pay related to the COVID-19
pandemic, which were partially offset by the deferral of costs related to PPP
loan origination. The costs related to PPP loan originations were deferred at
time of origination and are being amortized to interest income over the
remaining lives of the loans, which for the majority of PPP loans was 24 months
at origination. These costs are amortized against the related loan fees received
for the origination of the PPP loans. Recognition of the deferred costs and
related fees will be accelerated upon forgiveness or repayment of the PPP loans.

Data processing expenses increased $1.7 million thousand, or 93.44%, driven by
implementation of Bank-wide technology and efficiency initiatives which when
combined with a pivot from in-house to outsourced environments, also shifted
costs previously included in occupancy and equipment expense. In 2020, the
Company effectively completed outsourcing of the Bank's core application,
outsourcing of item processing, migration of our digital platform to a new
vendor, and implementation of an automated solution for PPP. Implementation of
Bank-wide technology and efficiency initiatives is expected to flow through 2021
with the full roll-out of a new loan origination system, upgrades to critical
infrastructure software related to imaging, and implementations of a new data
analytics solution, deposit origination platform, and teller systems. Leveraging
our digital and technological strategies to gain efficiencies continues to be a
focus as well as noninterest expense control.

Among other categories of non-interest expense, the most significant changes comparing 2020 to 2019 were in:

• ATM and other losses, which have increased 580 thousand dollars mainly due to depreciation

certain equity investments in low-rental housing.

• Loss on extinguishment of loans, which is linked to the FHLB advance

prepayments of $ 38.5 millionand should reduce future interest charges

about 560 thousand dollars.

• Other operating expenses (increased $ 716 thousand or 26.99%) due to a single

loss event 85 thousand dollars in the first quarter of 2020, $ 94 thousand increase

in FDIC insurance costs, as valuation credits from small banks were used to offset

charge for part of 2019, attendance fees (138 thousand dollars) and other loan

  expenses primarily due to costs associated with higher mortgage volumes.



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The provision for income taxes is based upon the results of operations, adjusted
for the effect of certain tax-exempt income, non-deductible expenses, and tax
credits. In addition, certain items of income and expense are reported in
different periods for financial reporting and tax return purposes. The tax
effects of these temporary differences are recognized currently in the deferred
income tax provision or benefit. Deferred tax assets or liabilities are computed
based on the difference between the financial statement and income tax bases of
assets and liabilities using the applicable enacted marginal tax rate.

The effective tax rates for the years ended December 31, 2020 and 2019 were 8.8% and 12.1% respectively.

Discussion of noninterest expense and income taxes for the year ended December
31, 2018 has been omitted as such discussion was provided in Part II, Item 7.
"Management's Discussion and Analysis," under the heading "Noninterest Expense"
in the Company's 2019 Form 10-K.

Balance Sheet Review
At December 31, 2020, the Company had total assets of $1.23 billion, an increase
of $171.7 million or 16.28% compared to assets as of December 31, 2019.

Net loans held for investment increased $88.6 million or 12.00%, from $738.2
million at December 31, 2019 to $826.8 million at December 31, 2020. Net loan
growth of $86.0 million was attributed to PPP loans with the remaining $2.6
million in the real estate secured portfolio segments partially offset by
pay-downs in the indirect automobile segment. Cash and cash equivalents
increased $30.6 million or 34.02% from December 31, 2019 to December 31, 2020,
and securities available for sale increased $40.7 million or 27.93% over the
same period utilizing additional liquidity provided by growth in deposit
accounts.

Total deposits as of December 31, 2020 increased $177.7 million, or 20.0%, to
$1.1 billion from December 31, 2019. Noninterest-bearing deposits increased
$98.0 million, or 37.3%, savings deposits increased $113.9 million, or 28.6%,
and time deposits decreased $34.2 million, or 15.0%. The impact of government
stimulus, PPP loan related deposits, and higher levels of consumer savings were
primary drivers of the increase on total deposits.  Deposit growth continued to
shift year-over-year resulting from strategies for expanding low cost deposits
and re-pricing to reduce interest expense.

The Company used the PPPLF initiated by the Federal Reserve Bank to partially finance the initiation of PPP loans, borrowings $ 28.6 million from December 31, 2020. The company also uses the FHLB advances as a source of liquidity when needed. In December 2020, FHLB is progressing $ 38.5 million were prepaid.

Portfolio of securities When comparing December 31, 2020 at December 31, 2019, the titles available for sale increased $ 40.7 million, or 27.93%. Most of the change was due to the deployment of excess liquidity levels.

The Company's strategy for the securities portfolio is primarily intended to
manage the portfolio's susceptibility to interest rate risk and to provide
liquidity to fund loan growth. The securities portfolio is also adjusted to
achieve other asset/liability objectives, including pledging requirements, and
to manage tax exposure when necessary.

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The following table presents a summary of the securities portfolio:

                                   TABLE III
                              SECURITIES PORTFOLIO

                                                            As of December 31,
(Dollars in thousands)                               2020          2019          2018
U.S. Treasury securities                           $   7,043     $   7,003     $  12,328
Obligations of U.S. Government agencies               36,696        33,604  

10 714

State and political subdivision obligations 45,995 24,742

      48,837
Mortgage-backed securities                            73,501        71,908        71,191
Money market investments                               4,743         3,825         1,897
Corporate bonds and other securities                  18,431         4,633  

3,280

                                                     186,409       145,715  

148,247

Restricted securities:
Federal Home Loan Bank stock                       $     943         2,502  

3429

Federal Reserve Bank stock                               382           382  

382

Community Bankers' Bank stock                             42            42            42
                                                       1,367         2,926         3,853
Total Securities                                   $ 187,776     $ 148,641     $ 152,100


The following table summarizes the contractual maturity of the securities portfolio and their average yields weighted at December 31, 2020:

                                                   1 year or less
(Dollars in thousands)                                  2020            1-5 years       5-10 years       Over 10 years        Total
U.S. Treasury securities                           $         7,043     $         -     $          -     $             -     $   7,043
Weighted average yield                                        2.50 %          0.00 %              -                   -          2.50 %

Obligations of U.S. Government agencies            $             -     $    

1,400 $ 4,164 $ 31,132 $ 36,696
Weighted average return

                                        0.00 %          0.36 %           1.37 %              1.02 %        1.03 %

Obligations of state and policitcal subdivisions   $             -     $     2,474     $      2,635     $        40,886     $  45,995
Weighted average yield                                        0.00 %          3.54 %           3.27 %              2.87 %        2.93 %

Mortgage-backed securities                         $             -     $         -     $     23,280     $        50,221     $  73,501
Weighted average yield                                           -            0.00 %           1.94 %              1.75 %        1.81 %

Money market investments                           $         4,743     $         -     $          -     $             -     $   4,743
Weighted average yield                                        0.36 %             -                -                   -          0.36 %

Corporate bonds and other securities               $           102     $       743     $     17,586     $             -     $  18,431
Weighted average yield                                        3.15 %          3.06 %           5.16 %                 -          5.06 %

Federal Home Loan Bank stock                       $             -     $         -     $          -     $           943     $     943
Weighted average yield                                           -               -                -                3.90 %        3.90 %

Federal Reserve Bank stock                         $             -     $         -     $          -     $           382     $     382
Weighted average yield                                           -               -                -                6.00 %        6.00 %

Community Bankers' Bank stock                      $             -     $         -     $          -     $            42     $      42
Weighted average yield                                           -               -                -                0.00 %        0.00 %
Total Securities                                   $        11,888     $     4,617     $     47,665     $       123,606     $ 187,776
Weighted average yield                                        1.65 %          2.10 %           3.15 %              1.95 %        2.24 %



The table above is based on maturity. Therefore, it does not reflect cash flow
from principal payments or prepayments prior to maturity. The weighted average
life of the $73.5 million in mortgage-backed securities as of December 31, 2020
was 5.97 years. Yields are calculated on a fully tax-equivalent basis using a
21% rate.

                                       31

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  Index



Loan Portfolio
The following table shows a breakdown of total loans by segment at December 31
for years 2016 through 2020:

                                    TABLE IV
                                 LOAN PORTFOLIO

                                                   As of December 31,
(Dollars in thousands)        2020          2019          2018          2017          2016
Commercial and industrial   $ 141,746     $  75,383     $  63,398     $  60,398     $  54,434
Real estate-construction       43,732        40,716        32,383        27,489        23,116
Real estate-mortgage (1)      207,536       210,653       213,909       175,549       162,979
Real estate-commercial        316,851       277,541       286,532       289,682       285,429
Consumer                      118,368       137,007       169,138       174,225        58,907
Other                           8,067         6,565         8,649        11,197        19,017
Ending Balance              $ 836,300     $ 747,865     $ 774,009     $ 738,540     $ 603,882

(1) The real estate-mortgage segment consisted of residential 1-4, multi-family, senior mortgages and equity lines of credit.

Based on the North American Industry Classification System code, there are no
categories of loans that exceed 10% of total loans other than the categories
disclosed in the preceding table.

As of December 31, 2020, the total loan portfolio increased by $88.6 million or
12.00% from December 31, 2019, primarily due to increases in commercial and
industrial and real estate-commercial which were partially offset by reductions
in indirect automobile dealer lending. The growth in commercial and industrial
is attributed to PPP loans, which were $86.0 million at December 31, 2020.

The maturity distribution and the interest rate sensitivity of certain categories of the loan portfolio of the December 31, 2020 is shown below:

                                    TABLE V
                      MATURITY SCHEDULE OF SELECTED LOANS

                                                          As of December 31, 2020
(Dollars in thousands)               Within 1 year       1 to 5 years       After 5 years        Total
Commercial and industrial           $         8,563     $      111,317     $        21,866     $ 141,746
Real estate-construction                     25,125              9,972               8,635        43,732
Total                               $        33,688     $      121,289     

$ 30,501 $ 185,478

Loans due after 1 year with:
Fixed interest rate                                     $      111,087     $        17,032     $ 128,119
Variable interest rate                                          10,202              13,469        23,671
Total                                                   $      121,289     $        30,501     $ 151,790



Nonperforming Assets
Nonperforming assets consist of nonaccrual loans, loans past due 90 days or more
and accruing interest, nonperforming restructured loans, and other real estate
owned (OREO). Restructured loans are loans with terms that were modified in a
troubled debt restructuring (TDR) for borrowers experiencing financial
difficulties. Refer to Note 4 of the Notes to Consolidated Financial Statements
included in Item 8, "Financial Statements and Supplementary Data" of this report
Form 10-K for more information.

Nonperforming assets decreased by $5.2 million or 72.53%, from $7.1 million at
December 31, 2019 to $2.0 million at December 31, 2020. The 2020 total consisted
of $744 thousand in loans still accruing interest but past due 90 days or more
and $1.2 million in nonaccrual loans. All of the nonaccrual loans at December
31, 2020 was secured by real estate. All of the nonaccrual loans are classified
as impaired. Impaired loans are a component of the allowance for loan losses.
When a loan changes from "90 days past due but still accruing interest" to
"nonaccrual" status, the loan is normally reviewed for impairment. If impairment
is identified, then the Company records a charge-off based on the value of the
collateral or the present value of the loan's expected future cash flows,
discounted at the loan's effective interest rate. If the Company is waiting on
an appraisal to determine the collateral's value, management allocates funds to
cover the deficiency to the allowance for loan losses based on information
available to management at the time.

The recorded investment in impaired loans decreased to $2.1 million as of
December 31, 2020 from $8.4 million as of December 31, 2019 as detailed in Note
4 of the Notes to Consolidated Financial Statements included in Item 8,
"Financial Statements and Supplementary Data" of this report on Form 10-K. The
majority of these loans were collateralized.

                                       32

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Index



The following table presents information concerning the aggregate amount of
nonperforming assets, which includes nonaccrual loans, past due loans, TDRs and
OREO:

                                    TABLE VI
                              NONPERFORMING ASSETS

                                                                                         As of December 31,
(dollars in thousands)                                          2020            2019            2018            2017            2016
Nonaccrual loans
Commercial and industrial                                    $         -     $       257     $       298     $       836     $       231
Real estate-construction                                               -               -             417             721               -
Real estate-mortgage (1)                                             311           5,780           1,772           1,857             814
Real estate-commercial                                               903               -           9,654           9,468           6,033
Consumer loans                                                         -               -               -               -              81
Total nonaccrual loans                                       $     1,214     $     6,037     $    12,141     $    12,882     $     7,159

Loans 90 days or more past due and accrued interest Commercial and industrial

                                    $         -    

$ – $ – $ 471 $ – Real estate-construction

                                               -               -             205               -               -
Real estate-mortgage (1)                                               -               -             315             306             276
Consumer loans (2)                                                   744           1,091           1,965           2,401           2,603
Other                                                                  -               -              12               4               5

Total loans 90 days or more past due and accrued interest $ 744

 $     1,091     $     2,497     $     3,182     $     2,884

Restructured loans
Commercial and industrial                                    $         -     $       257     $       217     $        98     $       144
Real estate-construction                                              83              88              92              92              96
Real estate-mortgage (1)                                             492           6,754           1,956           2,458           2,731
Real estate-commercial                                             1,352               -          10,142          12,323           8,885
Consumer loans                                                         -               -               -               -               -
Total restructured loans                                     $     1,927   

$ 7,099 $ 12,407 $ 14,971 $ 11,856
Less restructured loans not at fault (included above)

                1,120           4,693           8,454           8,561           2,838
Less restructured loans currently in compliance (3)                  807           2,406           3,953           6,410           9,018
Net nonperforming, accruing restructured loans               $         -     $         -     $         -     $         -     $         -
Nonperforming loans                                          $     1,958     $     7,128     $    14,638     $    16,064     $    10,043

Other real estate owned
Construction, land development, and other land               $         -     $         -     $        83     $         -     $       940
Former branch site                                                     -               -               -               -             127
Total other real estate owned                                $         -     $         -     $        83     $         -     $     1,067

Total nonperforming assets                                   $     1,958     $     7,128     $    14,721     $    16,064     $    11,110

Interest income that would have been recognized under the original loan terms on the above non -crual loans

                $        45    

$ 283 $ 533 $ 474 $ 318

Interest income recorded for the period on nonaccrual
loans included above                                         $        34     $       115     $       336     $       281     $       269



(1) The real estate-mortgage segment includes residential 1 - 4 family, second
mortgages and equity lines of credit.
(2) Amounts listed include student loans and small business loans with principal
and interest amounts that are 97 - 100% guaranteed by the federal government.
The past due principal portion of these guaranteed loans totaled $547 thousand
at December 31, 2020 and $885 thousand at December 31, 2019. For additional
information, refer to Note 4 of the Notes to Consolidated Financial Statements
included in Item 8, "Financial Statements and Supplementary Data" of this report
on Form 10-K.
(3) Amounts listed represent restructured loans that are in compliance with
their modified terms as of the date presented.

As shown in the table above, as of December 31, 2020 compared to December 31,
2019, the nonaccrual loan category decreased by $4.8 million or 79.89% and the
90-days past due and still accruing interest category decreased by $347 thousand
or 31.81%.

                                       33

————————————————– ——————————

Index



The majority of the balance of nonaccrual loans at December 31, 2020 was related
to one large credit relationship. Of the $1.2 million of nonaccrual loans at
December 31, 2020, $903 thousand, or approximately 74.35%, was comprised of one
credit relationship. All loans in these relationships have been analyzed to
determine whether the cash flow of the borrower and the collateral pledged to
secure the loans is sufficient to cover outstanding principal balances. The
Company has set aside specific allocations for those loans without sufficient
cash flow or collateral and charged off any balance that management does not
expect to collect.

The majority of the loans past due 90 days or more and still accruing interest
at December 31, 2020 ($547 thousand) were student loans. The federal government
has provided guarantees of repayment of these student loans in an amount ranging
from 97% to 98% of the total principal and interest of the loans; as such,
management does not expect even a significant increase in past due student loans
to have a material effect on the Company.

Management believes the Company has excellent credit quality review processes in
place to identify problem loans quickly. For a detailed discussion of the
Company's nonperforming assets, refer to Note 4 and Note 5 of the Notes to
Consolidated Financial Statements included in Item 8, "Financial Statements and
Supplementary Data" of this report on Form 10-K.

The Allowance for Loan Losses
The allowance for loan losses is based on several components. In evaluating the
adequacy of the allowance, each segment of the loan portfolio is divided into
several pools of loans:

1. Specific identification (regardless of the risk rating)

2. Poor quality pool

3. Pool-other specially mentioned assets (OAEM) (rated just above the lower grade)

4. Passport loans (all other rated loans)



The first component of the allowance for loan losses is determined based on
specifically identified loans that may become impaired. These loans are
individually analyzed for impairment and include nonperforming loans and both
performing and nonperforming TDRs. This component may also include loans
considered impaired for other reasons, such as outdated financial information on
the borrower or guarantors or financial problems of the borrower, including
operating losses, marginal working capital, inadequate cash flow, or business
interruptions. Changes in TDRs and nonperforming loans affect the dollar amount
of the allowance. Increases in the impairment allowance for TDRs and
nonperforming loans are reflected as an increase in the allowance for loan
losses except in situations where the TDR or nonperforming loan does not require
a specific allocation (i.e., the discounted present value of expected future
cash flows or the collateral value is considered sufficient).

The majority of the Company's TDRs and nonperforming loans are collateralized by
real estate. When reviewing loans for impairment, the Company obtains current
appraisals when applicable. If the Company has not yet received a current
appraisal on loans being reviewed for impairment, any loan balance that is in
excess of the estimated appraised value is allocated in the allowance. As of
December 31, 2020 and December 31, 2019, the impaired loan component of the
allowance for loan losses amounted to $11 thousand and $481 thousand,
respectively. The decrease in the impaired loan component is due to resolution
of several non- or under-performing credit relationships. The impaired loan
component of the allowance for loan losses is reflected as a valuation allowance
related to impaired loans in Note 4 of the Notes to Consolidated Financial
Statements included in Item 8, "Financial Statements and Supplementary Data" of
this report on Form 10-K.

The second component of the allowance consists of qualitative factors and
includes items such as economic conditions, growth trends, loan concentrations,
changes in certain loans, changes in underwriting, changes in management and
legal and regulatory changes.

Historical loss is the final component of the allowance for loan losses. The
calculation of the historical loss component is conducted on loans evaluated
collectively for impairment and uses migration analysis with eight migration
periods covering twelve quarters each on pooled segments. These segments are
based on the loan classifications set by the Federal Financial Institutions
Examination Council in the instructions for the Call Report applicable to the
Bank.

Consumer loans not secured by real estate and made to individuals for household,
family and other personal expenditures are segmented into pools based on whether
the loan's payments are current (including loans 1 - 29 days past due), 30 - 59
days past due, 60 - 89 days past due, or 90 days or more past due. All other
loans, including loans to consumers that are secured by real estate, are
segmented by the Company's internally assigned risk grades: substandard, other
assets especially mentioned (rated just above substandard), and pass (all other
loans). The Company may also assign loans to the risk grades of doubtful or
loss, but as of December 31, 2020 and December 31, 2019, the Company had no
loans in these categories.

The overall historical loss rate from December 31, 2019 to December 31, 2020,
improved 20 basis points as a percentage of loans evaluated collectively for
impairment as a result of overall improving asset quality combined with
continued improvement in non-performing assets. For the same period, the
qualitative factor components increased 20 basis points as a percentage of loans
evaluated collectively for impairment overall. This increase was primarily due
to segment adjustments for economic conditions and uncertainty related to the
COVID-19 pandemic and change in volume. As the economic impact of the COVID-19
pandemic and the related federal relief programs continue to evolve, elevated
levels of risk within the loan portfolio may require additional increases in the
allowance for loan losses.

                                       34

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Index



On a combined basis, the historical loss and qualitative factor components
amounted to $9.4 million as of December 31, 2020 and $9.2 million at December
31, 2019. Management is monitoring portfolio activity, such as levels of
deferral and/or modification requests, deferral and/or modification
concentration levels by collateral, as well as industry concentration levels to
identify areas within the loan portfolio which may create elevated levels of
risk should the economic environment created by the COVID-19 pandemic or limited
positive impact from federal government relief programs present indications of
economic instability that is other than temporary in nature.

Acquired loans are recorded at their fair value at acquisition date without
carryover of the acquiree's previously established ALLL, as credit discounts are
included in the determination of fair value. The fair value of the loans is
determined using market participant assumptions in estimating the amount and
timing of both principal and interest cash flows expected to be collected on the
loans and then applying a market-based discount rate to those cash flows. During
evaluation upon acquisition, acquired loans are also classified as either
purchased credit impaired or purchased performing.

Acquired impaired loans reflect credit quality deterioration since origination,
as it is probable at acquisition that the Company will not be able to collect
all contractually required payments. These acquired impaired loans are accounted
for under ASC 310-30, Receivables - Loans and Debt Securities Acquired with
Deteriorated Credit Quality. The acquired impaired loans are segregated into
pools based on loan type and credit risk. Loan type is determined based on
collateral type, purpose, and lien position. Credit risk characteristics include
risk rating groups, nonaccrual status, and past due status. For valuation
purposes, these pools are further disaggregated by maturity, pricing
characteristics, and re-payment structure. Acquired impaired loans are written
down at acquisition to fair value using an estimate of cash flows deemed to be
collectible. Accordingly, such loans are no longer classified as nonaccrual even
though they may be contractually past due because the Company expects to fully
collect the new carrying values of such loans, which is the new cost basis
arising from purchase accounting.

Acquired performing loans are accounted for under ASC 310-20, Receivables -
Nonrefundable Fees and Other Costs. The difference between the fair value and
unpaid principal balance of the loan at acquisition date (premium or discount)
is amortized or accreted into interest income over the life of the loans. If the
acquired performing loan has revolving privileges, it is accounted for using the
straight-line method? otherwise the effective interest method is used.

Overall Change in Allowance
As a result of management's analysis, the Company added, through the provision,
$1.0 million to the ALLL for the year ended December 31, 2020. The ALLL, as a
percentage of year-end loans held for investment, was 1.14% in 2020 and 1.29% in
2019. The decrease in the ALLL as a percentage of loans held for investment at
December 31, 2020 compared to the prior year was directly attributable to PPP
loan originations, creating a 0.13% compression. Excluding PPP loans, the ALLL
as a percentage of loans held for investment was 1.27% at December 31, 2020.
Management believes that the allowance has been appropriately funded for losses
on existing loans, based on currently available information. Nonperforming asset
levels and year-over-year quantitative historical loss rates continue to
demonstrate improvement but are balanced by increased qualitative factors
related to economic uncertainty stemming primarily from the COVID-19 pandemic.
The Company will continue to monitor the loan portfolio, levels of nonperforming
assets, and the sustainability of improving asset quality trends experienced in
2020 closely and make changes to the allowance for loan losses when necessary.
As the economic impact of the COVID-19 pandemic continues to evolve, elevated
levels of risk within the loan portfolio may require additional increases in the
ALLL. For more information about these financial measures, which are not
calculated in accordance with GAAP, please see "Non-GAAP Financial Measures" and
"Reconciliation of Certain Non-GAAP Financial Measures".

                                       35

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Index

The following table presents an analysis of the allowance for loan losses:

                                   TABLE VII
           ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
                                                                          As of December 31,
(Dollars in thousands)                               2020          2019          2018          2017          2016
Balance, beginning                                 $   9,660     $  10,111     $   9,448     $   8,245     $   7,738
Charge-offs:
Commercial and industrial                                 25             -            81           807           915
Real estate-construction                                   -             -             -             -             -
Real estate-mortgage (1)                                 149           170           325           273           473
Real estate-commercial                                   654            27         1,300         1,661            31
Consumer                                                 822           776           769           279           204
Other                                                    355           425           367           267           147
Total charge-offs                                      2,005         1,398         2,842         3,287         1,770

Recoveries:
Commercial and industrial                                 47            10           140            37            79
Real estate-construction                                  10             -             -           104             3
Real estate-mortgage (1)                                  69           113           111            44           196
Real estate-commercial                                   317            87            47             1             1
Consumer                                                 377           351           262            56            28
Other                                                     66            68            84            88            40
Total recoveries                                         886           629           644           330           347

Net charge-offs                                        1,119           769         2,198         2,957         1,423
Provision for loan                                     1,000           318         2,861         4,160         1,930
Ending Balance                                     $   9,541     $   9,660     $  10,111     $   9,448     $   8,245

Selected loan loss statistics
Loans (net of unearned income):
End of period balance                              $ 836,300     $ 747,865     $ 774,009     $ 738,540     $ 603,882
Average balance                                    $ 834,247     $ 757,677     $ 768,960     $ 673,015     $ 585,206

Net charge-offs to average total loans                  0.13 %        0.10 %        0.29 %        0.44 %        0.24 %
Provision for loan losses to average total loans        0.12 %        0.04 %        0.37 %        0.62 %        0.33 %
Provision for loan losses to net charge-offs           89.37 %       41.35 %      130.16 %      140.68 %      135.63 %
Allowance for loan losses to period end loans           1.14 %        1.29 %        1.31 %        1.28 %        1.37 %
Earnings to loan loss coverage (2)                      6.18         12.04  

3.67 1.36 4.14 Allowance for loan losses on non-performing loans 487.28% 135.52% 69.07% 58.81% 82.10%

(1) The real estate-mortgage segment includes residential 1-4 mortgages, second mortgage loans and equity lines of credit. (2) Profit before taxes plus allowance for loan losses, divided by net write-offs.

                                       36

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Index



The following table shows the amount of the allowance for loan losses allocated
to each category at December 31 of the years presented. Although the allowance
for loan losses is allocated into these categories, the entire allowance for
loan losses is available to cover loan losses in any category.

                                   TABLE VIII
                  ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

                                                                                         As of December 31,
                                      2020                         2019                         2018                          2017                         2016
                                         Percent of                   Percent of                    Percent of                   Percent of                   Percent of
                                          Loans to                     Loans to                      Loans to                     Loans to                     Loans to
                                           Total                        Total                         Total                        Total                        Total
(Dollars in thousands)      Amount         Loans         Amount         Loans          Amount         Loans         Amount         Loans         Amount         Loans
Commercial and industrial   $   650            16.95 %   $ 1,244            10.08 %   $  2,340             8.19 %   $ 1,889             8.18 %   $ 1,493             9.16 %
Real estate-construction        339             5.23 %       258             5.44 %        156             4.18 %       541             3.72 %       846             3.83 %
Real estate-mortgage (1)      2,560            24.82 %     2,505            28.17 %      2,497            27.64 %     2,779            23.77 %     2,656            26.98 %
Real estate-commercial        4,434            37.89 %     3,663            37.11 %      3,459            37.02 %     2,438            39.22 %     2,611            47.27 %
Consumer                      1,302            14.15 %     1,694            18.32 %      1,354            21.85 %     1,644            23.59 %       455             9.61 %
Other                           123             0.96 %       296             0.88 %        305             1.12 %       157             1.52 %       184             3.15 %
Unallocated                     133             0.00 %         -                -            -                -           -                -           -                -
Ending Balance              $ 9,541           100.00 %   $ 9,660           100.00 %   $ 10,111           100.00 %   $ 9,448           100.00 %   $ 8,245           100.00 %

(1) The real estate-mortgage segment includes residential 1-4, multi-family, second-ranking mortgages and equity lines of credit.

For the year ended December 31, 2020 as compared to the year ended December 31,
2019, there was a decrease in the allowance for loan losses due to improving
asset quality trends and historical loss rates as well as resolution of
non-performing loans. The change in the allowance was distributed among the loan
segments based on the composition of loans in each segment.

Deposits

The following table shows the average balances and the average rates paid on deposits for the periods presented.

                                    TABLE IX
                                    DEPOSITS

                                                          Years ended December 31,
                                        2020                        2019                        2018
                                Average       Average       Average       Average       Average       Average
(Dollars in thousands)          Balance        Rate         Balance        Rate         Balance        Rate
Interest-bearing transaction   $  55,667          0.02 %   $  32,603          0.03 %   $  28,246          0.04 %
Money market                     307,190          0.33 %     257,884          0.40 %     242,025          0.22 %
Savings                           96,149          0.06 %      86,787          0.10 %      87,534          0.09 %
Time deposits                    209,727          1.59 %     231,774          1.66 %     228,800          1.27 %
Total interest bearing           668,733          0.66 %     609,048          0.82 %     586,605          0.60 %
Demand                           325,596                     245,518                     236,249
Total deposits                 $ 994,329                   $ 854,566                   $ 822,854



The Company's average total deposits were $994.3 million for the year ended
December 31, 2020, an increase of $139.8 million or 16.35% from average total
deposits for the year ended December 31, 2019. Demand deposit and money market
account categories had the largest increases, totaling $80.1 million and $49.3
million, respectively. Average time deposits, which is the Company's most
expensive deposit category, decreased by a total of $22.0 million as seen in the
table above. The average rate paid on interest-bearing deposits by the Company
in 2020 was 0.66% compared to 0.82% in 2019.

The impact of government stimulus, PPP loan related deposits, and higher levels
of consumer savings were primary drivers of the increase in total deposits. The
Company remains focused on increasing lower-cost deposits by actively targeting
new noninterest-bearing deposits and savings deposits.

The following table presents term deposits in amounts of 100 thousand dollars or more by the time remaining until the expiry date on the dates presented.

                                    TABLE XI
                       TIME DEPOSITS OF $100,000 OR MORE
                           As of December 31,
(dollars in thousands)     2020          2019
Maturing in:
Within 3 months          $  26,494     $  19,121
4 through 6 months          12,391         8,699
7 through 12 months         20,751        25,820
Greater than 12 months      46,672        75,689
                         $ 106,308     $ 129,329



                                       37

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  Index



Capital Resources
Total stockholders' equity as of December 31, 2020 was $117.1 million, up 6.70%
from $109.8 million on December 31, 2019 as the result of increased retained
earnings and the reversal of the net unrealized loss on available-for-sale
securities, a component of accumulated other comprehensive income (loss) on the
consolidated balance sheets. The improvement in the unrealized gain/loss
position was driven by changes in market rates and shift in portfolio
composition.

The Bank's capital position remains strong as evidenced by the regulatory
capital measurements. Under the banking regulations, Total Capital is composed
of core capital (Tier 1) and supplemental capital (Tier 2). Tier 1 capital
consists of common stockholders' equity less goodwill. Tier 2 capital consists
of certain qualifying debt and a qualifying portion of the allowance for loan
losses.

In June 2013, the federal bank regulatory agencies adopted the Basel III Capital
Rules (i) to implement the Basel III capital framework and (ii) for calculating
risk-weighted assets. These rules became effective January 1, 2015, subject to
limited phase-in periods. The EGRRCPA, enacted in May 2018, required action by
the FRB to expand the applicability of its small bank holding company policy
statement, which, among other things, exempts certain bank holding companies
from reporting consolidated regulatory capital ratios and from minimum
regulatory capital requirements that apply to other bank holding companies. In
August 2018, the FRB issued an interim final rule provisionally expanding the
applicability of the small bank holding company policy statement to bank holding
companies with consolidated total assets of less than $3 billion.  The statement
previously applied only to bank holding companies with consolidated total assets
of less than $1 billion. As a result of the interim final rule, which was
effective upon its issuance, the Company expects that it will be treated as a
small bank holding company and will no longer be subject to regulatory capital
requirements.  For an overview of the Basel III Capital Rules and the EGRRCPA,
refer to "Regulation and Supervision" included in Item 1, "Business" of this
report on Form 10-K.

At September 17, 2019 the FDIC finalized a rule that introduces an optional simplified capital adequacy measure for eligible community banking organizations (i.e. the Community Bank Leverage Ratio (CBLR) framework), as required by the EGRRCPA. The CBLR framework is designed to reduce the burden by removing the requirements for calculating and reporting risk-based capital ratios for eligible community banking organizations that opt ​​for the framework.

In order to qualify for the CBLR framework, a community banking organization
must have a Tier 1 leverage ratio of greater than 9%, less than $10 billion in
total consolidated assets, and limited amounts of off-balance-sheet exposures
and trading assets and liabilities. A qualifying community banking organization
that opts into the CBLR framework and meets all requirements under the framework
will be considered to have met the well-capitalized ratio requirements under the
Prompt Corrective Action regulations and will not be required to report or
calculate risk-based capital. The CBLR framework was available for banks to
begin using in their March 31, 2020, Call Report. The Bank did not opt into the
CBLR framework.

The following is a summary of the Bank's capital ratios for the past two years.
As shown below, these ratios were all well above the recommended regulatory
minimum levels.

                                                           2020                                     2019
                                                        Regulatory                               Regulatory
                                                         Minimums       

December 31, 2020 Minimums December 31, 2019
Ordinary Tier 1 capital relative to risk-weighted assets 4.500%

                 11.69 %          4.500 %                 11.73 %
Tier 1 Capital to Risk-Weighted Assets                        6.000 %                 11.69 %          6.000 %                 11.73 %
Tier 1 Leverage to Average Assets                             4.000 %                  8.56 %          4.000 %                  9.73 %
Total Capital to Risk-Weighted Assets                         8.000 %                 12.77 %          8.000 %                 12.86 %
Capital Conservation Buffer                                   2.500 %                  4.77 %          2.500 %                  4.86 %
Risk-Weighted Assets (in thousands)                                     $           890,091                      $           863,905



Year-end book value per share was $22.53 in 2020 and $21.11 in 2019. The common
stock of the Company has not been extensively traded. The stock is quoted on the
NASDAQ Capital Market under the symbol "OPOF." There were 1,611 stockholders of
record of the Company as of March 15, 2021. This stockholder count does not
include stockholders who hold their stock in a nominee registration.

Liquidity

Liquidity is the ability of the company to meet its present and future financial obligations through the sale or maturity of existing assets or through the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, sold federal funds, securities investments, and loans maturing within one year.

The Company's major source of liquidity is its large, stable deposit base. In
addition, secondary liquidity sources are available through the use of borrowed
funds if the need should arise, including secured advances from the FHLB and
FRB. As of December 31, 2020, the Company had $374.7 million in FHLB borrowing
availability. The Company believes that the availability at the FHLB is
sufficient to meet future cash-flow needs. As of year-end 2020 and 2019, the
Company had $100.0 million and $55.0 million available in federal funds lines of
credit to address any short-term borrowing needs, respectively.

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As a result of the Company's management of liquid assets, the availability of
borrowed funds and the ability to generate liquidity through liability funding,
management believes that the Company maintains overall liquidity sufficient to
satisfy its depositors' requirements and to meet its customers' future borrowing
needs.

Notwithstanding the foregoing, the Company's ability to maintain sufficient
liquidity may be affected by numerous factors, including economic conditions
nationally and in the Company's markets. Depending on its liquidity levels, its
capital position, conditions in the capital markets and other factors, the
Company may from time to time consider the issuance of debt, equity, other
securities or other possible capital markets transactions, the proceeds of which
could provide additional liquidity for the Company's operations.

The following table sets forth information relating to the Company's sources of
liquidity and the outstanding commitments for use of liquidity at December 31,
2020 and December 31, 2019. Dividing the total short-term sources of liquidity
by the outstanding commitments for use of liquidity derives the liquidity
coverage ratio.

                                                    December 31,
                                   2020                                        2019
(dollars in
thousands)         Total         In Use        Available        Total        In Use       Available
Sources:
Federal funds
lines of
credit           $ 100,000     $         -     $  100,000     $  55,000     $       -     $   55,000
Federal Home
Loan Bank
advances           374,743               -        374,743       313,275        37,000        276,275
Federal funds
sold &
balances at
the Federal
Reserve                                            93,727                                     50,665
Securities,
available for
sale and
unpledged at
fair value                                        112,229                                     71,712
Total
short-term
funding
sources                                        $  680,699                                 $  453,652

Uses: (1)
Unfunded loan
commitments
and available
lending lines
of credit                                          71,742                                     66,986
Letters of
credit                                              1,452                                      2,317
Total
potential
short-term
funding uses                                       73,194                                     69,303
Liquidity
coverage ratio                                      930.0 %                                    654.6 %

(1) Represents partial withdrawal levels based on loan segment.

The fair value of unsecured AFS securities increased from
December 31, 2019 at December 31, 2020 mainly due to an increase in the securities portfolio.

Management is not aware of any market or institutional trends, events or
uncertainties, other than potential impacts from the COVID-19 pandemic, that are
expected to have a material effect on the liquidity, capital resources or
operations of the Company. Nor is management aware of any current
recommendations by regulatory authorities that would have a material effect on
liquidity or operations. The Company's internal sources of liquidity are
deposits, loan and investment repayments and securities available-for-sale. The
Company's primary external source of liquidity is advances from the FHLB.

The Company's operating activities used $8.6 million of cash during the year
ended December 31, 2020, compared to $12.3 million provided during 2019. The
Company's investing activities used $122.2 million of cash during 2020, compared
to $29.2 million provided during 2019. The Company's financing activities
provided $161.4 million of cash during 2020 compared to $6.1 million of cash
provided during 2019.

Effects of Inflation
Management believes changes in interest rates affect the financial condition of
the Company, and other financial institutions, to a far greater degree than
changes in the inflation rate. While interest rates are greatly influenced by
changes in the inflation rate, they do not necessarily change at the same rate
or in the same magnitude as the inflation rate. Interest rates are highly
sensitive to many factors that are beyond the control of the Company, including
changes in the expected rate of inflation, the influence of general and local
economic conditions and the monetary and fiscal policies of the U.S. government,
its agencies and various other governmental regulatory authorities.

Management believes that the key to achieving satisfactory performance in an
inflationary environment is the Company's ability to maintain or improve its net
interest margin and to generate additional fee income. The Company's policy of
investing in and funding with interest-sensitive assets and liabilities is
intended to reduce the risks inherent in a volatile inflationary economy.

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Off-Balance Sheet Lending Related Commitments
The Company had $151.6 million in consumer and commercial commitments at
December 31, 2020. As of the same date, the Company also had $4.8 million in
letters of credit that the Company will fund if certain future events occur. It
is expected that only a portion of these commitments will ever actually be
funded.

Management believes that the Company has the liquidity and capital resources to
handle these commitments in the normal course of business. See Note 15 of the
Notes to Consolidated Financial Statements included in Item 8, "Financial
Statements and Supplementary Data" of this report on Form 10-K.

Contractual Obligations
In the normal course of business, there are various outstanding contractual
obligations of the Company that will require future cash outflows. In addition,
there are commitments and contingent liabilities, such as commitments to extend
credit, which may or may not require future cash outflows. The following table
provides the Company's contractual obligations as of December 31, 2020:

                                                Payments due by period
                                                                          Less                                   More
                                                                         Than 1         1-3          3-5        Than 5
(dollars in thousands)                                     Total          Year         Years        Years        Years
Contractual Obligations
Short-Term Debt Obligations                             $     6,619     $   6,619     $      -     $      -     $     -
Long-Term Debt Obligations                                   29,900           600       29,150          150           -
Operating Lease Obligations                                   1,488           352          587          549           -
Total contractual cash obligations excluding deposits        38,007         7,571       29,737          699           -
Deposits                                                  1,067,236       985,095       65,393       16,748           -
Total                                                   $ 1,105,243     $ 992,666     $ 95,130     $ 17,447     $     -



Short-term debt obligations include federal funds purchased, overnight
repurchase agreements and Federal Home Loan Bank advances maturing within a year
of origination. Long-term debt obligations consist of FRB borrowings under PPPLF
with original maturities greater than one year.

Non-GAAP Financial Measures
In reporting the results of the year ended December 31, 2020, the Company has
provided supplemental financial measures on a tax-equivalent or an adjusted
basis. These non-GAAP financial measures are a supplement to GAAP, which is used
to prepare the Company's financial statements, and should not be considered in
isolation or as a substitute for comparable measures calculated in accordance
with GAAP. In addition, the Company's non-GAAP financial measures may not be
comparable to non-GAAP financial measures of other companies. The Company uses
the non-GAAP financial measures discussed herein in its analysis of the
Company's performance. The Company's management believes that these non-GAAP
financial measures provide additional understanding of ongoing operations and
enhance comparability of results of operations with prior periods presented
without the impact of items or events that may obscure trends in the Company's
underlying performance.  A reconciliation of the non-GAAP financial measures
used by the Company to evaluate and measure the Company's performance to the
most directly comparable GAAP financial measures is presented below.

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  Index



                                                                                  Years Ended December 31,
(dollar in thousands, except per share data)                                        2020              2019
Fully Taxable Equivalent Net Interest Income
Net interest income (GAAP)                                                     $       34,717      $    33,819
FTE adjustment                                                                            187              253
Net interest income (FTE) (non-GAAP)                                           $       34,904      $    34,072
Noninterest income (GAAP)                                                              14,698           14,077
Total revenue (FTE) (non-GAAP)                                                 $       49,602      $    48,149
Noninterest expense (GAAP)                                                             42,505           38,638

Average earning assets                                                         $    1,092,567      $   943,654
Net interest margin                                                                      3.18 %           3.58 %
Net interest margin (FTE)                                                                3.19 %           3.61 %

Efficiency ratio                                                                        86.02 %          80.67 %
Efficiency ratio (FTE)                                                                  85.69 %          80.25 %

ALLL as a Percentage of Loans Held for Investment
Loans held for investment  (net of deferred fees and costs) (GAAP)             $      836,300      $   871,890
Less PPP originations                                                                  85,983          102,489
Loans held for investment, (net of deferred fees and costs), excluding PPP
(non-GAAP)                                                                     $      750,317      $   769,401

ALLL                                                                           $        9,541      $     9,920

ALLL as a Percentage of Loans Held for Investment                                        1.14 %           1.14 %

ALLL as a percentage of loans held for investment, net of PPP initiations

              1.27 %           1.29 %

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