10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File No. 001-38074

Community First Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Federal	82-1147778
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
3175 Highway 278 Covington, Georgia	30014
(Address of Principal Executive Offices)	(Zip Code)

(770) 786-7088

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.  YES ☒    NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES  ☒    NO  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.   See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a small reporting company)	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES  ☐    NO  ☒

As of August 2, 2018, 7,538,250 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding.

Community First Bancshares, Inc.

Form 10-Q

Table of Contents

		Page
PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Consolidated Balance Sheets at June 30, 2018 (unaudited) and September 30, 2017	2
	Consolidated Statements of Operations for the Three Months and Nine Months Ended June 30, 2018 and 2017 (unaudited)	3
	Consolidated Statements of Comprehensive (Loss) Income for the Three Months and Nine Months Ended June 30, 2018 and 2017 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2018 and 2017 (unaudited)	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
	SIGNATURES	33

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Balance Sheets

	June 30, 2018 (unaudited)			September 30, 2017 (audited)
	(In thousands)
Assets
Cash and due from banks, including reserve requirement of $1,808 and $1,483 at    June 30, 2018 and September 30, 2017, respectively	$	3,807			3,625
Interest-earning deposits in other depository institutions		22,516			32,318
Cash and cash equivalents		26,323			35,943
Investment securities held-to-maturity (estimated fair values of $990 and $1,001)		1,000			1,000
Investment securities available-for-sale		22,198			14,345
Federal Home Loan Bank stock		580			216
Loans held for sale		—			117
Loans, net		223,286			213,193
Other real estate owned		—			61
Premises and equipment, net		9,168			8,454
Bank owned life insurance		7,135			—
Accrued interest receivable and other assets		3,241			4,486
Total assets	$	292,931			277,815
Liabilities and Stockholders' Equity
Liabilities:
Passbook accounts	$	23,953			22,655
Interest-bearing checking		42,720			38,981
Market rate checking		23,646			22,556
Non-interest bearing checking		26,996			25,050
Certificate of deposits		86,131			85,371
Total deposits		203,446			194,613
Federal Home Loan Bank advances		7,570			—
Accrued interest payable and other liabilities		5,617			6,406
Total liabilities		216,633			201,019
Commitments
Stockholders' equity:
Common stock (par value $0.01 per share, 19,000,000 shares authorized,    7,538,250 outstanding at June 30, 2018 and September 30, 2017)		75			75
Preferred stock (1,000,000 shares authorized, no shares outstanding at    June 30, 2018 or September 30, 2017)		—			—
Additional paid in capital		33,070			33,055
Unearned ESOP shares		(2,748	)		(2,837	)
Retained earnings		46,436			46,446
Accumulated other comprehensive (loss) income		(535	)		57
Total stockholders' equity		76,298			76,796
Total liabilities and stockholders' equity	$	292,931			277,815

See accompanying notes to unaudited consolidated financial statements.

2

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Statements of Operations

(unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2018			2017			2018			2017
				(In thousands)
Interest income:
Loans, including fees	$	3,330			3,044		$	9,573			8,811
Investment securities, including dividends		150			71			428			141
Interest-earning deposits		90			138			263			242
Total interest income		3,570			3,253			10,264			9,194
Interest expense:
Deposits		365			291			997			780
Borrowings		37			—			98			—
Total interest expense		402			291			1,095			780
Net interest income before provision for loan losses		3,168			2,962			9,169			8,414
Provision for loan losses		300			-			300			—
Net interest income after provision for loan losses		2,868			2,962			8,869			8,414
Non-interest income:
Service charges on deposit accounts		175			178			520			539
Small Business Administration (SBA) loan fees		485			-			655			-
Other		134			101			354			377
Total non-interest income		794			279			1,529			916
Non-interest expenses:
Salaries and employee benefits		1,647			1,539			5,116			3,969
Deferred compensation		51			55			156			164
Occupancy		428			327			1,248			901
Advertising		55			49			128			163
Data processing		216			169			658			572
Other real estate owned		53			14			63			37
Net gain on sale of other real estate owned		(4	)		(17	)		(33	)		(24	)
Legal and accounting		223			145			706			357
Organizational dues and subscriptions		82			74			226			226
Director compensation		53			71			164			181
Federal deposit insurance premiums		16			17			49			72
Other		256			315			857			956
Total non-interest expenses		3,076			2,758			9,338			7,574
Income before income taxes		586			483			1,060			1,756
Income tax expense (benefit)		(32	)		129			1,070			609
Net (loss) income	$	618			354		$	(10	)		1,147
Basic and diluted earnings (loss) per share	$	0.08		$	0.03		$	(0.00	)	$	0.03

See accompanying notes to unaudited consolidated financial statements.

3

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Statements of Comprehensive (Loss) Income

(unaudited)

	Three Months Ended June 30,					Nine Months Ended June 30,
	2018			2017		2018			2017
				(In thousands)
Net (loss) income	$	618		$	354	$	(10	)	$	1,147
Other comprehensive (loss) income:
Net unrealized (loss) gain on available for sale securities,    net of taxes of $(1), $30, $(218) and $34 for the three months    and nine months ended June 30, 2018 and 2017		(2	)		57		(592	)		65
Total other comprehensive (loss) income		(2	)		57		(592	)		65
Total comprehensive (loss) income	$	616		$	411	$	(602	)	$	1,212

See accompanying notes to unaudited consolidated financial statements.

4

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended June 30,
	2018			2017
	(In thousands)
Cash flows from operating activities:
Net (loss) income	$	(10	)		1,147
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		671			327
Provision for loan losses		300			—
ESOP expense		104			64
Deferred income tax		1,171			(152	)
Net gain on sale of other real estate owned		(33	)		(11	)
Originations of loans held for sale		(843	)		(1,487	)
Increase in cash surrender value of life insurance		(135	)		—
Proceeds from sales of loans held for sale		960			1,960
Change in:
Accrued interest receivable and other assets		293			228
Accrued interest payable and other liabilities		(784	)		172
Net cash provided by operating activities		1,694			2,248
Cash flows from investing activities:
Purchases of investment securities available-for-sale		(10,319	)		(14,019	)
Net change in loans		(10,445	)		(19,785	)
Purchases of premises and equipment		(1,233	)		(3,798	)
Proceeds from paydowns of investment securities available-for-sale		1,502			340
Proceeds from maturity of investment securities held-to-maturity		—			5,000
Purchases of other investments		(364	)		(11	)
Purchase of bank owned life insurance		(7,000	)		—
Proceeds from sales of other real estate owned		142			381
Net cash used in investing activities		(27,717	)		(31,892	)
Cash flows from financing activities:
Net change in demand and savings deposits		8,833			13,294
Proceeds from stock offering		—			34,640
Funding of ESOP		—			(2,955	)
Stock offering expenses		—			(1,485	)
Proceeds from FHLB advances		7,570			—
Net cash provided by financing activities		16,403			43,494
Net change in cash and cash equivalents		(9,620	)		13,850
Cash and cash equivalents at beginning of period		35,943			25,693
Cash and cash equivalents at end of period		26,323			39,543
Supplemental disclosures of cash flow information:
Cash paid for interest		1,071			780
Supplemental disclosures of noncash investing activities:
Other real estate owned acquired through foreclosures		1,143			817

See accompanying notes to unaudited consolidated financial statements.

5

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

(1) Basis of Presentation

Community First Bancshares, Inc. (the “Company”) is a savings and loan holding company headquartered in Covington, Georgia. The Company has one operating subsidiary, Newton Federal Bank (the “Bank”), conducting banking activities primarily in Newton County, Georgia and surrounding counties. The main emphasis of the Bank is providing mortgage loans in its primary lending area.  It offers customary banking services such as consumer and commercial checking accounts, savings accounts, certificates of deposit, mortgage, commercial and consumer loans, money transfers and a variety of other banking services.

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the financial position of the Company as of June 30, 2018 and the results of its operations and its cash flows for the periods presented. The interim consolidated financial information should be read in conjunction with the annual financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2017.

The results of operations for the quarter and nine months ended June 30, 2018, are not necessarily indicative of the results to be expected for the full year or for any other period.

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, the valuation of other real estate acquired in connection with foreclosure or in satisfaction of loans and valuation allowances associated with the realization of deferred tax assets, which are based on future taxable income.

Summary of Significant Accounting Policies – The accounting and reporting policies of the Company conform to GAAP and general practices within the banking industry. There have been no material changes or developments in the application of principles or in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies as disclosed in the Company’s financial statements for the year ended September 30, 2017 included in the Company’s Form 10-K.

Net income per share is calculated for the period that the Company’s shares of common stock were outstanding, which includes the current quarter and a portion of the same quarter in the previous year.  The net income for the current period was $618,000 and the weighted average common shares outstanding were 7,538,250.  The net loss for the current year-to-date period was $10,000 and the weighted average common shares outstanding were 7,538,250.  The net income for the previous period that the Company’s shares of common stock were outstanding (April 27, 2017 through June 30, 2017) was $249,000 and the weighted average common shares outstanding were 7,538,250.

Recent Accounting Pronouncements

There have been no pronouncements issued during the quarter that would have a material impact on the Company's financial statements.

(2) Investment Securities

Investment Securities Held-to-Maturity

Investment securities held-to-maturity at June 30, 2018 and September 30, 2017 are as follows: (in thousands)

June 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government sponsored enterprises	$	1,000		—		(10	)		990
September 30, 2017
U.S. Government sponsored enterprises	$	1,000		1		—			1,001

6

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The U.S. government sponsored enterprise securities as of June 30, 2018were comprised of one debt financing security issued by a government agency that matures withintwo years.

There were no sales of securities held-to-maturity during the three and nine months ended June 30, 2018 or 2017.

Securities with a carrying value of approximately $1,000,000 were pledged to secure public deposits at both June 30, 2018 and September 30, 2017.

Investment Securities Available-for-Sale

Investment securities available-for-sale at June 30, 2018 and September 30, 2017 were as follows: (in thousands)

	Amortized		Gross Unrealized		Gross Unrealized			Estimated
June 30, 2018	Cost		Gains		Losses			Fair Value
Municipal securities - tax exempt	$	5,704		5		(122	)		5,587
Municipal securities - taxable		3,126		—		(138	)		2,988
Government agency securities		502		—		(12	)		490
Government agency mortgage-backed securities		13,589		—		(456	)		13,133
Total	$	22,921		5		(728	)		22,198
September 30, 2017
Municipal securities - tax exempt	$	5,756		119		(2	)		5,873
Government agency securities		502		—		—			502
Government agency mortgage-backed securities		8,000		6		(36	)		7,970
Total	$	14,258		125		(38	)		14,345

There were 34 and eight securities in an unrealized loss position less than 12 months as of June 30, 2018 and September 30, 2017, respectively.There were six and no securities in an unrealized loss position greater than 12 months as of June 30, 2018 and September 30, 2017, respectively.

7

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The amortized cost and estimated fair value of investment securities available-for-sale at June 30, 2018, by contractual maturity, are shown below. Maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties. Therefore, these securities are not included in the maturity categories. (in thousands)

	Amortized		Estimated
	Cost		Fair Value
Municipal securities - tax exempt
Within 1 year	$	—		—
1 to 5 years		491		491
5 to 10 years		5,213		5,096
Greater than 10 years		—		—
		5,704		5,587
Municipal securities - taxable
Within 1 year		—		—
1 to 5 years		—		—
5 to 10 years		1,127		1,094
Greater than 10 years		1,999		1,894
		3,126		2,988
Government agency securities
Within 1 year		—		—
1 to 5 years		502		490
5 to 10 years		—		—
Greater than 10 years		—		—
		502		490
Government agency mortgage-backed securities		13,589		13,133
Total	$	22,921		22,198

There were no sales of securities available-for-sale during the three and nine months ended June 30, 2018 or 2017.

Securities with a carrying value of approximately $490,000 and $502,000 were pledged to secure public deposits at June 30, 2018 and September 30, 2017, respectively.

(3) Loans and Allowance for Loan Losses

Major classifications of loans, by collateral code, at June 30, 2018 and September 30, 2017 are summarized as follows: (in thousands)

	June 30, 2018			September 30, 2017
Commercial (secured by real estate)	$	37,491			29,861
Commercial and industrial		27,613			21,060
Construction, land and acquisition & development		21,475			25,165
Residential mortgage 1-4 family		137,986			138,875
Consumer installment		2,730			2,783
Total		227,295			217,744
Less allowance for loan losses		(4,009	)		(4,551	)
Total loans, net	$	223,286			213,193

The Bank grants loans and extensions of credit to individuals and a variety of firms and corporations located primarily in Newton County and other surrounding Georgia counties. A substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market.

Qualifying loans in the amount of approximately $123,949,000 and $137,462,000 were pledged to secure the line of credit from Federal Home Loan Bank (the “FHLB”) at June 30, 2018 and September 30, 2017, respectively.

8

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the nine months ended June 30, 2018 and 2017: (in thousands)

June 30, 2018	Commercial (Secured by Real Estate)			Commercial and Industrial			Construction, Land and Acquisition & Development			Residential Mortgage			Consumer Installment			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,548			863			349			1,704			79			8			4,551
Provision		(412	)		1,807			(134	)		(970	)		15			(6	)		300
Charge-offs		—			(1,100	)		—			(44	)		(27	)		—			(1,171	)
Recoveries		102			22			—			205			—			—			329
Ending balance	$	1,238			1,592			215			895			67			2			4,009
Ending allowance attributable to loans:													.
Individually evaluated for impairment	$	3			—			—			8			—			—			11
Collectively evaluated for impairment		1,235			1,592			215			887			67			2			3,998
Total ending allowance	$	1,238			1,592			215			895			67			2			4,009
Loans:
Individually evaluated for impairment	$	1,994			277			—			5,835			2			—			8,108
Collectively evaluated for impairment		35,497			27,336			21,475			132,151			2,728			—			219,187
Total loans	$	37,491			27,613			21,475			137,986			2,730			—			227,295
June 30, 2017
Allowance for loan losses:
Beginning balance	$	1,595			643			143			1,882			36			10			4,309
Provision		(122	)		202			196			(278	)		9			(7	)		—
Charge-offs		—			(15	)		—			(41	)		(14	)		—			(70	)
Recoveries		52			—			—			253			9			—			314
Ending balance	$	1,525			830			339			1,816			40			3			4,553
Ending allowance attributable to loans:
Individually evaluated for impairment	$	2			—			—			3			—			—			5
Collectively evaluated for impairment		1,523			830			339			1,813			40			3			4,548
Total ending allowance	$	1,525			830			339			1,816			40			3			4,553
Loans:
Individually evaluated for impairment	$	1,922			37			—			5,698			4			—			7,661
Collectively evaluated for impairment		25,634			20,649			24,199			132,183			2,773			—			205,438
Total loans	$	27,556			20,686			24,199			137,881			2,777			—			213,099

The Bank individually evaluates all loans for impairment that are on nonaccrual status or are rated substandard (as described below).  Additionally, all troubled debt restructurings are evaluated for impairment.  A loan is considered impaired when, based on current events and circumstances, it is probable that all amounts due according to the contractual terms of the loan will not be collected.  Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Interest payments received on impaired loans are applied as a reduction of the outstanding principal balance.

9

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Impaired loans at June 30, 2018 and September 30, 2017 were as follows: (in thousands)

June 30, 2018	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	211		1,194		—		231		7
Commercial and industrial		277		1,383		—		853		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		4,955		6,760		—		4,712		148
Consumer installment		2		2		—		3		—
		5,445		9,339		—		5,799		155
With an allowance recorded:
Commercial (secured by real estate)		1,783		1,783		3		1,802		60
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		880		921		8		853		32
Consumer installment		—		—		—		—		—
		2,663		2,704		11		2,655		92
Total impaired loans	$	8,108		12,043		11		8,454		247
September 30, 2017
With no related allowance recorded:
Commercial (secured by real estate)	$	83	$	2,745		—		115		7
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		5,611		7,678		—		5,636		51
Consumer installment		3		3		—		4		—
		5,697		10,426		—		5,755		58
With an allowance recorded:
Commercial (secured by real estate)		1,810		1,810		10		1,834		28
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		685		685		4		696		10
Consumer installment		—		—		—		—		—
		2,495		2,495		14		2,530		38
Total impaired loans	$	8,192		12,921		14		8,285		96

10

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The following table presents the aging of the recorded investment in past due loans, as well as the recorded investment in nonaccrual loans, as of June 30, 2018 and September 30, 2017 by class of loans: (in thousands)

June 30, 2018	30 -59 Days Past Due		60- 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total		Nonaccrual
Commercial (secured by real estate)	$	—		212		39		251		37,240		37,491		252
Commercial and industrial		434		26		298		758		26,855		27,613		324
Construction, land and acquisition &    development		—		—		—		—		21,475		21,475		—
Residential mortgage		325		1,419		1,097		2,841		135,145		137,986		3,184
Consumer installment		33		2		25		60		2,670		2,730		25
Total	$	792		1,659		1,459		3,910		223,385		227,295		3,785
September 30, 2017
Commercial (secured by real estate)	$	—		—		45		45		29,816		29,861		129
Commercial and industrial		19		45		—		64		20,996		21,060		—
Construction, land and acquisition &    development		—		—		—		—		25,165		25,165		—
Residential mortgage		173		3,236		1,559		4,968		133,907		138,875		3,540
Consumer installment		24		7		—		31		2,752		2,783		—
Total	$	216		3,288		1,604		5,108		212,636		217,744		3,669

There were no loans past due over 90 days and still accruing interest as of June 30, 2018 and September 30, 2017.

The table below presents information on troubled debt restructurings including the number of loan contracts restructured and the pre- and post-modification recorded investment that occurred during the nine months ended June 30, 2017.  There were none for the nine months ended June 30, 2018. (in thousands)

			Pre- Modification Outstanding		Post- Modification Outstanding		Troubled Debt Restructurings that have Subsequently Defaulted
June 30, 2017	Number of Contracts		Recorded Investment		Recorded Investment		Number of Contracts		Recorded Investment
Residential mortgage		1	$	18	$	18		1		76

The Bank has allocated an allowance for loan losses of approximately $9,000 and $12,000 to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2018 and September 30, 2017, respectively.

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

Special Mention. Loans have potential weaknesses that may, if not corrected, weaken or inadequately protect the Bank's credit position at some future date.  Weaknesses are generally the result of deviation from prudent lending practices, such as over advances on collateral.  Credits in this category should, within a 12 month period, move to Pass if improved or drop to Substandard if poor trends continue.

Substandard. Inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any.  Loans have a well-defined weakness or weaknesses such as primary source of repayment is gone or severely impaired or cash flow is insufficient to reduce debt.  There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans have weaknesses of those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable.  The likelihood of a loss on an asset or portion of an asset classified Doubtful is high.

11

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Loss.  Loans considered uncollectible and of such little value that the continuance as a Bank asset is not warranted.  This does not mean that the loan has no recovery or salvage value, but rather the asset should be charged off even though partial recovery may be possible in the future.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.  As of June 30, 2018 and September 30, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans were as follows: (in thousands)

June 30, 2018	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	36,911		—		580		—		37,491
Commercial and industrial		27,289		—		324		—		27,613
Construction, land and acquisition & development		21,439		—		36		—		21,475
Residential mortgage		128,594		66		9,326		—		137,986
Consumer installment		2,687		—		43		—		2,730
Total	$	216,920		66		10,309		—		227,295

September 30, 2017	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	29,416		—		445		—		29,861
Commercial and industrial		21,015		—		45		—		21,060
Construction, land and acquisition & development		25,165		—		—		—		25,165
Residential mortgage		132,725		224		5,926		—		138,875
Consumer installment		2,783		—		—		—		2,783
Total	$	211,104		224		6,416		—		217,744

(4) Deposits

The aggregate amounts of certificates of deposit of $250,000 or more, the standard FDIC deposit insurance coverage limit per depositor, were approximately $11,253,000 at June 30, 2018 and $10,151,000 at September 30, 2017.  The aggregate amounts of certificates of deposit of $100,000 or more were approximately $40,239,000 at June 30, 2018 and $36,885,000 at September 30, 2017.

(5) Borrowings

The following Federal Home Loan Bank of Atlanta (“FHLB”) advances, which required monthly or quarterly interest payments, were outstanding at June 30, 2018:

Advance Date	Advance		Interest Rate	Maturity	Rate	Call Feature
10/25/2017	$	2,710,000	1.98%	10/26/2020	Fixed	None
10/25/2017	1,250,000		1.81%	10/25/2019	Fixed	None
11/13/2017	1,190,000		1.87%	11/13/2019	Fixed	None
11/13/2017	2,420,000		2.02%	11/13/2020	Fixed	None
	$	7,570,000

At September 30, 2017, the Company had no advances outstanding from the FHLB.

The FHLB advances were collateralized by certain loans which totaled approximately $123,949,000 at June 30, 2018, and by the Company’s investment in FHLB stock which totaled $580,400 at June 30, 2018.  

12

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

(6) Employee Stock Ownership Plan

The Company sponsors an employee stock ownership plan (“ESOP”) that covers all employees who meet certain service requirements. The Company makes annual contributions to the ESOP in amounts as defined by the plan document. These contributions are used to pay debt service and purchase additional shares. Certain ESOP shares are pledged as collateral for debt. As the debt is repaid, shares are released from collateral and allocated to active employees, based on the proportion of debt service paid in the year.

In April 2017, the ESOP borrowed $2,954,990 payable to the Company for the purpose of purchasing shares of the Company’s common stock. A total of 295,499 shares were purchased with the loan proceeds as part of the Company’s initial stock offering. Total ESOP expense for the three and nine months ended June 30, 2018 was approximately $33,000 and $104,000, respectively. There was $64,000 ESOP expense for the three and nine months ended June 30, 2017.  The balance of the note payable of the ESOP was $2,820,473 at June 30, 2018. Because the source of the loan payments are contributions received by the ESOP from the Company, the related notes receivable is shown as a reduction of stockholders’ equity. As of June 30, 2018, 11,820 shares have been released.

(7) Stockholders’ Equity

Prior to January 1, 1996, the Bank was permitted under the Internal Revenue Code (the “Code”) a special bad debt deduction related to additions to tax bad debt reserves established for the purpose of absorbing losses. The provisions of the Code permitted the Bank to deduct from taxable income an allowance for bad debts based on the greater of a percentage of taxable income before such deduction or actual loss experience.  Retained earnings at June 30, 2018 includes approximately $3,625,000 for which no deferred Federal income tax liability has been recognized. The amounts represent an allocation of income for bad debt deductions for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses would create income for tax purposes only, which would be subject to the then current corporate income tax rate.

On August 20, 1996, legislation was passed which eliminated the percentage of taxable income bad debt deduction for thrift institutions for tax years beginning after December 31, 1995. This legislation also requires a thrift to generally recapture the excess of its current tax reserves over its 1987 base year reserves whereas the base year reserves are frozen from taxation. No additional financial statement tax expense resulted from this legislation as the Bank had previously provided deferred taxes on this recaptured amount.  A write down of our deferred tax assets by approximately $1.0 million was made in the quarter ended December 31, 2017 as a result of the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the maximum federal corporate income tax rate to 21% from 35%.  The write-down is subject to adjustment in future periods.

On October 31, 2016, the Board of Directors of the Bank adopted a Plan of Reorganization from a Mutual Savings Association to a Mutual Holding Company and Stock Issuance Plan (the “Plan”).  The Plan was subject to the approval of the Board of Governors of the Federal Reserve System and the affirmative vote of at least a majority of the total votes eligible to be cast by the voting members of the Bank at a special meeting.  Pursuant to the Plan, on April 27, 2017 the Bank converted to a stock savings bank and is now organized in the mutual holding company structure.  The Bank issued all of its outstanding stock to the Company, which sold 3,467,595 shares of common stock to the public at $10.00 per share, representing 46% of its outstanding shares of common stock.  This amount included shares purchased by the Bank’s employee stock ownership plan (“ESOP”), which purchased 3.92% of the common stock of the new holding company outstanding upon the completion of the reorganization and stock issuance.  The Company is organized as a corporation under the laws of the United States.  Community First Bancshares, MHC has been organized as a mutual holding company under the laws of the United States and owns 54% of the outstanding common stock of the Company.          

(8) Fair Value Measurements and Disclosures

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.  From time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and other real estate owned. These nonrecurring fair value adjustments typically involve application of the lower of cost or market accounting or write-downs of individual assets. Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.

13

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Fair Value Hierarchy

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.  These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Cash and Cash Equivalents

The carrying value of cash and cash equivalents is a reasonable estimate of fair value.

Investment Securities Available-for-Sale

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

Investment Securities Held-to-Maturity

Held-to-maturity securities are recorded at cost, adjusted for the amortization or accretion of premiums and discounts.  Fair value measurement is based upon quoted prices, if available.  If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.  Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds.  Level 2 securities include mortgage-backed securities issued by government sponsored enterprises and state, county and municipal bonds.  Securities classified as Level 3 include asset-backed securities in less liquid markets.

FHLB Stock

The carrying value of FHLB Stock approximates fair value.

Loans and Loans Held for Sale

The Company does not record loans at fair value on a recurring basis.  However, from time to time, a loan is considered impaired and a specific reserve is established within the allowance for loan losses.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.  Once a loan is identified as individually impaired, management measures impairment in accordance with GAAP.  The fair value of impaired loans is estimated using one of three methods, including collateral value, market value of similar debt, and discounted cash flows.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.  In accordance with GAAP, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy.  When the fair value of the collateral is based on an observable market price, the Company records the impaired loan

14

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

as nonrecurring Level 2.  When an appraised value is used or an appraisal is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3. For disclosure purposes, the fair value of fixed rate loans which are not considered impaired is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For unimpaired variable rate loans, the carrying amount is a reasonable estimate of fair value for disclosure purposes.

The estimated fair value of loans held for sale, classified within Level 2, is approximated by the carrying value, given the short-term nature of the loans and similarly to what secondary markets are currently offering for portfolios of loans with similar characteristics.

Other Real Estate Owned

Other real estate properties are adjusted to fair value upon transfer of the loans to other real estate.  Subsequently, other real estate assets are carried at fair value less estimated selling costs.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral.  When the fair value of the collateral is based on an observable market price, the Bank records the other real estate as nonrecurring Level 2.  When an appraised value is used or an appraisal is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Bank records the other real estate asset as nonrecurring Level 3.

Bank Owned Life Insurance

For disclosure purposes, the carrying value of the cash surrender value of life insurance reasonably approximates fair value.

Deposits

The fair value of passbook accounts, interest bearing checking accounts, non-interest bearing checking accounts and market rate checking accounts is the amount payable on demand at the reporting date, while the fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using current rates at which comparable certificates would be issued.

Federal Home Loan Bank Advances

For disclosure purposes, the fair value of Federal Home Loan Bank fixed rate borrowings are estimated using discounted cash flows, based on the current incremental borrowing rates for similar types of borrowing arrangements.

Commitments to Extend Credit

Commitments to extend credit are short-term and, therefore, the carrying value and the fair value are considered immaterial for disclosure.

Assets Recorded at Fair Value on a Recurring Basis

The Company’s only assets recorded at fair value on a recurring basis are available-for-sale securities that had fair values of approximately $22,198,000 and $14,345,000 at June 30, 2018 and September 30, 2017, respectively.  They are classified as Level 2.  

15

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Assets Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP.  These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period.  Assets measured at fair value on a nonrecurring basis are included in the table below as of June 30, 2018 and September 30, 2017 (in thousands).

June 30, 2018	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		—		—
Impaired loans		—		—		8,097		8,097
Total assets at fair value	$	—		—		8,097		8,097
September 30, 2017	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		61		61
Impaired loans		—		—		8,178		8,178
Total assets at fair value	$	—		—		8,239		8,239

The carrying amounts and estimated fair values (in thousands) of the Company’s financial instruments at June 30, 2018 and September 30, 2017 are as follows:

	June 30, 2018				September 30, 2017
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	26,323		26,323		35,943		35,943
Investment securities
available-for-sale	$	22,198		22,198		14,345		14,345
held-to-maturity	$	1,000		990		1,000		1,001
FHLB Stock	$	580		580		216		216
Loans held for sale	$	—		—		117		117
Loans, net	$	223,286		191,305		213,193		198,637
Cash surrender value of life insurance	$	7,135		7,135		—		—
Financial liabilities:
Deposits	$	203,446		203,075		194,613		194,300
FHLB advances	$	7,570		7,703		—		—

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis of financial condition and results of operations at June 30, 2018 and September 30, 2017 and for the three months and nine months ended June 30, 2018 and 2017 is intended to assist in understanding the financial condition and results of operations of the Company.  The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this quarterly report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This quarterly report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “target” and words of similar meaning.  These forward-looking statements include, but are not limited to:

• statements of our goals, intentions and expectations;

• statements regarding our business plans, prospects, growth and operating strategies;

• statements regarding the quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.  In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.  Accordingly, you should not place undue reliance on such statements.  We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this quarterly report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

• general economic conditions, either nationally or in our market areas, that are worse than expected;

• changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

• our ability to access cost-effective funding;

• fluctuations in real estate values and both residential and commercial real estate market conditions;

• demand for loans and deposits in our market area;

• our ability to implement and change our business strategies;

• competition among depository and other financial institutions;

• inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

• adverse changes in the securities or secondary mortgage markets;

• changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, including as a result of Basel III;

• the impact of the Dodd-Frank Act and the implementing regulations;

• changes in tax laws;

• changes in the quality or composition of our loan or investment portfolios;

• technological changes that may be more difficult or expensive than expected;

• failure or breaches of IT security systems;

• the inability of third-party providers to perform as expected;

• our ability to manage market risk, credit risk and operational risk in the current economic environment;

17

• our ability to introduce new products and services, enter new markets successfully and capitalize on growth opportunities;

• our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;

• changes in consumer spending, borrowing and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

• our ability to retain key employees;

• our compensation expense associated with equity allocated or awarded to our employees; and

• changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Summary of Significant Accounting Policies

A summary of our accounting policies is described in Note 1 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2017.  The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with GAAP. The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be significant accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

The following represent our significant accounting policies:

Allowance for Loan Losses.  The allowance for loan losses is a reserve for estimated credit losses on individually evaluated loans determined to be impaired as well as estimated credit losses inherent in the loan portfolio. Actual credit losses, net of recoveries, are deducted from the allowance for loan losses. Loans are charged off when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance for loan losses. A provision for loan losses, which is a charge against earnings, is recorded to bring the allowance for loan losses to a level that, in management’s judgment, is adequate to absorb probable losses in the loan portfolio. Management’s evaluation process used to determine the appropriateness of the allowance for loan losses is subject to the use of estimates, assumptions, and judgment. The evaluation process involves gathering and interpreting many qualitative and quantitative factors which could affect probable credit losses. Because interpretation and analysis involves judgment, current economic or business conditions can change, and future events are inherently difficult to predict, the anticipated amount of estimated loan losses and therefore the appropriateness of the allowance for loan losses could change significantly.

The allocation methodology applied by the Bank is designed to assess the appropriateness of the allowance for loan losses and includes allocations for specifically identified impaired loans and loss factor allocations for all remaining loans, with a component primarily based on historical loss rates and a component primarily based on other qualitative factors. The methodology includes evaluation and consideration of several factors, such as, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions or

18

circumstances underlying the collectability of loans. Because each of the criteria used is subject to change, the allocation of the allowance for loan losses is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular loan category. The total allowance is available to absorb losses from any segment of the loan portfolio. Management believes the allowance for loan losses was appropriate atJune 30, 2018. The allowance analysis is reviewed by the board of directors on a quarterly basis in compliance with regulatory requirements. In addition, various regulatory agencies periodically review the allowance for loan losses. As a result of such reviews, we may have to adjust our allowance for loan losses.  However, regulatory agencies are not directly involved in the process of establishing the allowance for loan losses as the process is the responsibility of the Bank and any increase or decrease in the allowance is the responsibility of management.  

Income Taxes.  The assessment of income tax assets and liabilities involves the use of estimates, assumptions, interpretation, and judgment concerning certain accounting pronouncements and federal and state tax codes. There can be no assurance that future events, such as court decisions or positions of federal and state taxing authorities, will not differ from management’s current assessment, the impact of which could be significant to the results of operations and reported earnings.

The Company and the Bank file a federal and a state income tax return.  Amounts provided for income tax expense are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax law rates applicable to the periods in which the differences are expected to affect taxable income. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income tax expense. Valuation allowances are established when it is more likely than not that a portion of the full amount of the deferred tax asset will not be realized. In assessing the ability to realize deferred tax assets, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. The Company may also recognize a liability for unrecognized tax benefits from uncertain tax positions. Unrecognized tax benefits represent the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured in the financial statements. Penalties related to unrecognized tax benefits are classified as income tax expense. A write down of our deferred tax assets by approximately $1.0 million was made in the quarter ended December 31, 2017 as a result of the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the maximum federal corporate income tax rate to 21% from 35%.  The write-down is subject to adjustment in future periods.  

Comparison of Financial Condition at June 30, 2018 and September 30, 2017

Total assets increased $15.1 million, or 5.4%, to $292.9 million at June 30, 2018 from $277.8 million at September 30, 2017.  The increase was due primarily to increases in loans and investment securities available-for-sale, as well as the purchase of bank owned life insurance.  

Cash and cash equivalents decreased $9.6 million, or 26.8%, to $26.3 million at June 30, 2018 from $35.9 million at September 30, 2017. The decrease resulted from our using excess cash to purchase investment securities, bank owned life insurance and to fund continued loan growth, partially offset by cash provided from FHLB advances and increased deposits.  

We had no loans held for sale at June 30, 2018 compared to $117,000 at September 30, 2017.

Loans held for investment increased $9.6 million, or 4.4%, to $227.3 million at June 30, 2018 from $217.7 million at September 30, 2017.  Commercial real estate loans increased $7.6 million, or 25.6%, to $37.5 million at June 30, 2018 from $29.9 million at September 30, 2017.  In addition, commercial and industrial loans increased $6.6 million, or 31.1%, to $27.6 million at June 30, 2018 from $21.1 million at September 30, 2017.  These increases were largely due to increases in commercial construction loans and Small Business Administration loans.

Securities available-for-sale increased $7.9 million, or 54.7%, to $22.2 million at June 30, 2018, from $14.3 million at September 30, 2017. We purchased securities available-for-sale with a portion of the excess cash and cash equivalents we held during the nine-month period ended June 30, 2018.

Bank owned life insurance of $7.0 million was purchased during the nine months ended June 30, 2018, and had a cash surrender value of $7.1 million at June 30, 2018.

Total deposits increased $8.8 million, or 4.5%, to $203.4 million at June 30, 2018 from $194.6 million at September 30, 2017.  The increase was caused by increases in all deposit categories.  The largest increase was in interest-bearing checking accounts, which increased $3.7 million, or 9.6%.    

19

We had $7.6 million of borrowings at June 30, 2018and no outstanding borrowings at September 30, 2017.  We have recently begun borrowing from the Federal Home Loan Bank of Atlanta to fund loan growth and support operations.  

Stockholders’ equity decreased $498,000, or 0.6%, to $76.3 million at June 30, 2018 from $76.8 million at September 30, 2017. We had a net loss of $10,000 for the nine months ended June 30, 2018, mostly due to a write down of our deferred tax assets by approximately $1.0 million as a result of the enactment of the Tax Cuts and Jobs Act of 2017.   We also had $535,000, net of taxes, of unrecognized loss on securities available-for-sale as of June 30, 2018 as compared to an unrecognized gain of $57,000 on securities available-for-sale as of September 30, 2017.

Average Balance Sheets

The following tables set forth average balance sheets, annualized average yields and costs, and certain other information for the periods indicated.  No tax-equivalent yield adjustments have been made, as the effects would be immaterial.  All average balances are monthly average balances.  Non-accrual loans were included in the computation of average balances.   The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.  Loan balances exclude loans held for sale.

	For the Three Months Ended June 30,
	2018								2017
	Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	224,948		$	3,330		5.92	%	$	202,726		$	3,044		6.01	%
Securities		23,537			141		2.39	%		14,054			69		1.95	%
Interest-earning deposits		19,151			90		1.89	%		53,363			138		1.03	%
Federal Home Loan Bank of Atlanta stock		580			9		6.16	%		216			2		4.49	%
Total interest-earning assets		268,216			3,570		5.32	%		270,359			3,253		4.81	%
Non-interest-earning assets		23,777								15,957
Total assets	$	291,993							$	286,316
Interest-bearing liabilities:
Passbook savings accounts	$	24,169		$	5		0.08	%	$	22,830		$	3		0.05	%
Interest-bearing checking		42,812			67		0.62	%		38,159			48		0.50	%
Market rate checking accounts		23,034			33		0.56	%		22,055			14		0.26	%
Certificates of Deposit		85,798			260		1.22	%		87,544			226		1.04	%
Total interest-bearing deposits		175,813			365		0.83	%		170,588			291		0.68	%
Federal Home Loan Bank advances		7,570			37		1.97	%		134			—		—
Total interest-bearing liabilities		183,383			402		0.88	%		170,722			291		0.68	%
Non-interest-bearing liabilities		32,567								48,187
Total liabilities		215,950								218,910
Total stockholders' equity		76,043								67,406
Total liabilities and stockholders' equity	$	291,993							$	286,316
Net interest income				$	3,168							$	2,963
Net interest rate spread (1)							4.44	%							4.13	%
Net interest-earning assets (2)	$	84,833							$	99,637
Net interest margin (3)							4.72	%							4.38	%
Average interest-earning assets to interest-bearing    liabilities		146.26	%							158.36	%

(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets.

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	For the Nine Months Ended June 30,
	2018								2017
	Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	218,904		$	9,573		5.83	%	$	195,972		$	8,811		6.00	%
Securities		23,145			407		2.34	%		10,626			134		1.67	%
Interest-earning deposits		22,045			263		1.59	%		33,197			242		0.97	%
Federal Home Loan Bank of Atlanta stock		514			21		5.52	%		208			7		4.75	%
Total interest-earning assets		264,608			10,264		5.17	%		240,003			9,194		5.11	%
Non-interest-earning assets		22,335								18,547
Total assets	$	286,943							$	258,550
Interest-bearing liabilities:
Passbook savings accounts	$	23,953		$	9		0.05	%	$	22,554		$	7		0.04	%
Interest-bearing checking		41,665			186		0.59	%		34,307			110		0.43	%
Market rate checking accounts		22,830			63		0.37	%		22,283			43		0.26	%
Certificates of Deposit		85,229			739		1.16	%		85,887			620		0.96	%
Total interest-bearing deposits		173,677			997		0.77	%		165,031			780		0.63	%
Federal Home Loan Bank advances		6,668			98		1.96	%		45			—		—
Total interest-bearing liabilities		180,345			1,095		0.81	%		165,076			780		0.63	%
Non-interest-bearing liabilities		30,381								37,355
Total liabilities		210,726								202,431
Total stockholders' equity		76,217								56,119
Total liabilities and stockholders' equity	$	286,943							$	258,550
Net interest income				$	9,169							$	8,414
Net interest rate spread (1)							4.36	%							4.48	%
Net interest-earning assets (2)	$	84,263							$	74,927
Net interest margin (3)							4.62	%							4.67	%
Average interest-earning assets to interest-bearing    liabilities		146.72	%							145.39	%

(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated.  The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume).  The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate).  The total column represents the sum of the prior columns.  For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

	Three Months Ended June 30, 2018 vs. 2017									Nine Months Ended June 30, 2018 vs. 2017
	Increase (Decrease) Due to						Total			Increase (Decrease) Due to						Total
							Increase									Increase
	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	560		$	(274	)	$	286		$	1,139		$	(377	)	$	762
Securities		54			18			72			203			70			273
Interest-earning deposits and federal funds		(419	)		371			(48	)		(134	)		155			21
Federal Home Loan Bank of Atlanta stock		6			1			7			12			2			14
Total interest-earning assets		201			116			317			1,220			(150	)		1,070
Interest-bearing liabilities:
Passbook savings accounts		—			2			2			—			2			2
Interest-bearing checking		6			13			19			27			49			76
Market rate checking		1			18			19			1			19			20
Certificates of deposits		(29	)		63			34			(8	)		127			119
Total deposits		(22	)		96			74			20			197			217
Federal Home Loan Bank advances		33			4			37			97			1			98
Total interest-bearing liabilities		11			100			111			117			198			315
Change in net interest income	$	190		$	16		$	206		$	1,103		$	(348	)	$	755

Comparison of Operating Results for the Three Months Ended June 30, 2018 and 2017

General. Net income increased $264,000, or 74.6%, to $618,000 for the three months ended June 30, 2018, compared to $354,000 for the three months ended June 30, 2017.  The increase was due to increases in interest income, non-interest income, and an adjustment to our deferred tax asset, partially offset by increases in non-interest expense, the provision for loan losses and interest expense.  

Interest Income. Interest income increased $317,000, or 9.7%, to $3.6 million for the three months ended June 30, 2018 from $3.3 million for the three months ended June 30, 2017.  The increase was due primarily to increases in interest income on loans and securities.  Interest income on loans, which is our primary source of interest income, increased $286,000, or 9.4%, to $3.3 million for the three months ended June 30, 2018 from $3.0 million for the three months ended June 30, 2017.  Our average balance of loans increased $22.2 million, or 11.0%, to $224.9 million for the three months ended June 30, 2018 from $202.7 million for the three months ended June 30, 2017.  The increase in the average balance of loans resulted from our continued increased focus on commercial lending, including construction lending, and our construction lending has benefitted from the opening of our loan production office in Bogart, Georgia in January 2016, our loan production office in Braselton, Georgia in May 2017 and from continued growth of Small Business Administration loans.  Our average yield on loans decreased nine basis points to 5.92% for the three months ended June 30, 2018 from 6.01% for the three months ended June 30, 2017.

In addition to the increase in interest income on loans, interest income on securities increased $79,000 to $150,000 for the three months ended June 30, 2018 from $71,000 for the three months ended June 30, 2017.  Our average balance of securities increased $9.5 million, or 67.5%, to $23.5 million for the three months ended June 30, 2018 from $14.1 million for the three months ended June 30, 2017, as we have deployed excess cash and cash equivalents into higher yielding investments.

Interest income on interest-earning deposits decreased $48,000, or 34.8%, to $90,000 for the three months ended June 30, 2018 from $138,000 for the three months ended June 30, 2017.  Our average balance of interest-earning deposits decreased $34.2 million,

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or 64.1%, to $19.2 million for the three months ended June 30, 2018 from $53.4 million for the three months ended June 30, 2017, as we have deployed excess cash and cash equivalents into higher yielding investments.

Interest Expense. Interest expense increased $111,000, or 38.1%, to $402,000 for the three months ended June 30, 2018 compared to $291,000 for the three months ended June 30, 2017, due to an increase in interest expense on deposits and new borrowings entered into during the quarter ended December 31, 2017.  We experienced an increase in interest expense for all deposit categories.  Specifically, interest expense on certificates of deposit increased $34,000, or 15.0%, to $260,000 for the three months ended June 30, 2018 from $226,000 for the three months ended June 30, 2017.  This increase resulted from an increase in the average rate we paid on certificates of deposit.  The average rate we paid on certificates of deposit increased 18 basis points to 1.22% for the three months ended June 30, 2018 from 1.04% for the three months ended June 30, 2017, reflecting our increasing interest rates in response to changes in market interest rates.  The average balance of certificates of deposit decreased to $85.8 million for the three months ended June 30, 2018 compared to $87.5 million for the three months ended June 30, 2017.  Interest expense on interest-bearing checking accounts increased $19,000 to $67,000 for the three months ended June 30, 2018 compared to $48,000 for the three months ended June 30, 2017.  Both the average balance and average rate we paid on interest-bearing checking accounts increased, as we have increased the rate earned on our Kasasa reward based checking accounts and continue to see an increase in the number of Kasasa accounts opened.  

Interest expense on borrowings increased to $37,000 for the three months ended June 30, 2018 compared to no such expense for the three months ended June 30, 2017.  We have recently begun borrowing from the Federal Home Loan Bank of Atlanta to fund loan growth and support operations.  

Net Interest Income. Net interest income increased $206,000, or 6.9%, to $3.2 million for the three months ended June 30, 2018 from $3.0 million for the three months ended June 30, 2017, as a result of increases in net interest rate spread and net interest margin, which offset a decrease in net interest-earning assets. Our net interest rate spread increased by 31 basis points to 4.44% for the three months ended June 30, 2018 from 4.13% for the three months ended June 30, 2017, and our net interest margin increased by 34 basis points to 4.72% for the three months ended June 30, 2018 from 4.38% for the three months ended June 30, 2017, as we have been able to increase our yields on interest-earning assets faster than the rates we have paid on interest-bearing liabilities.  Our average net interest-earning assets decreased by $14.8 million, or 14.9%, to $84.8 million for the three months ended June 30, 2018 from $99.6 million for the three months ended June 30, 2017 due to increased deposits and borrowings while average earning assets were down slightly as the previous period included excess funds from over subscription of the capital offering before the excess was returned.  

Provision for Loan Losses.  Provisions for loan losses are charged to operations to establish an allowance for loan losses at a level necessary to absorb known and inherent losses in our loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. In evaluating the level of the allowance for loan losses, management analyzes several qualitative loan portfolio risk factors including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses. See “—Summary of Significant Accounting Policies” for additional information.

After an evaluation of these factors, we recorded a provision for loan losses of $300,000 for the three months ended June 30, 2018 and did not record a provision for loan losses for the three months ended June 30, 2017.  Our allowance for loan losses was $4.0 million at June 30, 2018 compared to $4.6 million at September 30, 2017 and $4.6 million at June 30, 2017.  The allowance for loan losses to total loans was 1.76% at June 30, 2018 compared to 1.81% at March 31, 2018 and 2.14% at June 30, 2017.  The allowance for loan losses to non-performing loans was 105.92% at June 30, 2018 compared to 65.13% at March 31, 2018 and 129.35% at June 30, 2017.  We had a charge-off of $700,000 during the three months ended June 30, 2018 as a result of one commercial loan relationship that resulted from overstated billings that were used as collateral to secure the loan.  Additionally we had recoveries of $242,000 during the three months ended June 30, 2018.  To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at June 30, 2018.  However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for loan losses. In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses.  However, regulatory agencies are not directly involved in the process of establishing the allowance for loan losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

Non-interest Income. Non-interest income increased $515,000 to $794,000 for the three months ended June 30, 2018 from $279,000 for the three months ended June 30, 2017.  The increase resulted primarily from an increase in Small Business Administration and United States Department of Agriculture loan fees and sale premium income of $485,000 for the three months ended June 30, 2018 compared to no such income for the three months ended June 30, 2017.

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Non-interest Expenses. Non-interest expenses information is as follows.

	Three Months Ended June 30,						Change
	2018			2017			Amount			Percent
	(Dollars in thousands)
Salaries and employee benefits	$	1,647		$	1,539		$	108			7.0	%
Deferred compensation		51			55			(4	)		(7.8	)%
Occupancy		428			327			101			30.9	%
Advertising		55			49			6			12.2	%
Data processing		216			169			47			27.8	%
Other real estate owned		53			14			39			278.6	%
Net gain on sale of other real estate owned		(4	)		(17	)		13			76.5	%
Legal and accounting		223			145			78			53.8	%
Organizational dues and subscriptions		82			74			8			10.9	%
Director compensation		53			71			(18	)		(25.4	)%
Federal deposit insurance premiums		16			17			(1	)		(5.9	)%
Other		256			315			(59	)		(18.8	)%
Total non-interest expenses	$	3,076		$	2,758		$	318			11.5	%

Salaries and employee benefits expense increased due to increased staff for growth and infrastructure.  Occupancy increased due to the completion of a new bank operations center.  Data processing expense increased due to new account growth.  Legal and accounting expense increased as a result of our being a public company.

Income Tax Expense. Income tax expense for the three months ended June 30, 2018 reflected our recording of a one-time benefit of $162,000 that resulted in income tax benefit of $32,000.  Income tax expense for the three months ended June 30, 2017 was $129,000.  Income tax expense for the quarter ended June 30, 2018 was reduced due to the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the maximum federal corporate income tax rate to 21% from 35%.  The one-time benefit of $162,000 resulted from the completion of a cost segregation study on a building placed in service during 2017.  The study enabled the reallocation of real property to personal property under the applicable provisions of the Internal Revenue Code, which resulted in substantially shorter depreciable tax lives and accelerated depreciation methods.  Our deferred tax asset remains subject to adjustment in future periods.

Comparison of Operating Results for the Nine Months Ended June 30, 2018 and 2017

General. Net income decreased $1.2 million to a net loss of $10,000 for the nine months ended June 30, 2018, compared to net income of $1.1 million for the nine months ended June 30, 2017.  The net loss was due to our write down of our deferred tax assets by approximately $1 million as a result of the enactment of the Tax Cuts and Jobs Act of 2017 and an increase in non-interest expenses and provision for loan losses, partially offset by an increase in net interest income.    

Interest Income. Interest income increased $1.1 million, or 11.6%, to $10.3 million for the nine months ended June 30, 2018 from $9.2 million for the nine months ended June 30, 2017.  The increase was primarily due to increases in interest income on loans and securities.

Interest income on loans increased $762,000, or 8.6%, to $9.6 million for the nine months ended June 30, 2018 from $8.8 million for the nine months ended June 30, 2017.  Our average balance of loans increased $22.9 million, or 11.7%, to $218.9 million for the nine months ended June 30, 2018 from $196.0 million for the nine months ended June 30, 2017.  The increase in the average balance of loans resulted from our continued increased focus on commercial lending, including construction lending, and our construction lending has benefitted from the opening of our loan production office in Bogart, Georgia in January 2016, our loan production office in Braselton, Georgia in May 2017 and from continued growth of Small Business Administration loans.  Our average yield on loans decreased 17 basis points to 5.83% for the nine months ended June 30, 2018 from 6.00% for the nine months ended June 30, 2017,  

In addition to the increase in interest income on loans, interest income on securities increased $287,000 to $428,000 for the nine months ended June 30, 2018 from $141,000 for the nine months ended June 30, 2017.  Our average balance of securities increased $12.5 million, or 117.8%, to $23.1 million for the nine months ended June 30, 2018 from $10.6 million for the nine months ended June 30, 2017, as we have deployed excess cash and cash equivalents into higher yielding investments.  

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Interest income on interest-earning deposits increased $21,000, or 8.7%, to $263,000 for the nine months ended June 30, 2018 from $242,000 for the nine months ended June 30, 2017.  The increase was due to a 62 basis point increase in yield, as our average balance of interest-earning deposits decreased $11.2 million, or 33.6%, to $22.0 million for the nine months ended June 30, 2018 from $33.2 million for the nine months ended June 30, 2017, as we have deployed excess cash and cash equivalents into higher yielding investments.

Interest Expense. Interest expense increased $315,000, or 40.4%, to $1.1 million for the nine months ended June 30, 2018 compared to $780,000 for the nine months ended June 30, 2017, due to an increase in interest expense on deposits and new borrowings entered into during the quarter ended December 31, 2017.  We experienced an increase in interest expense for all deposit categories.  Specifically, interest expense on certificates of deposit increased $119,000, or 19.2%, to $739,000 for the nine months ended June 30, 2018 from $620,000 for the nine months ended June 30, 2017.  This increase resulted from an increase in the average rate we paid on certificates of deposit.  The average rate we paid on certificates of deposit increased 20 basis points to 1.16% for the nine months ended June 30, 2018 from 0.96% for the nine months ended June 30, 2017, reflecting our increasing interest rates in response to changes in market interest rates.  The average balance of certificates of deposit remained relatively unchanged, at $85.2 million for the nine months ended June 30, 2018 compared to $85.9 million for the nine months ended June 30, 2017.  Interest expense on interest-bearing checking accounts increased $76,000 to $186,000 for the nine months ended June 30, 2018 compared to $110,000 for the nine months ended June 30, 2017.  Both the average balance and average rate we paid on interest-bearing checking accounts increased, as we have increased the rate paid on our Kasasa reward based checking accounts and continue to see an increase in the number of Kasasa accounts opened.  

Interest expense on borrowings increased to $98,000 for the nine months ended June 30, 2018 compared to no such expense for the nine months ended June 30, 2017.  We have recently begun borrowing from the Federal Home Loan Bank of Atlanta to fund loan growth and support operations.  

Net Interest Income. Net interest income increased $755,000, or 9.0%, to $9.2 million for the nine months ended June 30, 2018 from $8.4 million for the nine months ended June 30, 2017, as a result of a higher balance of net interest-earning assets, which offset decreases in net interest rate spread and net interest margin. Our average net interest-earning assets increased by $9.3 million, or 12.5%, to $84.3 million for the nine months ended June 30, 2018 from $74.9 million for the nine months ended June 30, 2017.  Our net interest rate spread decreased by 12 basis points to 4.36% for the nine months ended June 30, 2018 from 4.48% for the nine months ended June 30, 2017, and our net interest margin decreased by five basis points to 4.62% for the nine months ended June 30, 2018 from 4.67% for the nine months ended June 30, 2017, reflecting primarily our cost of funds increasing faster than our average yield on our interest-earning assets.

Provision for Loan Losses.  Provisions for loan losses are charged to operations to establish an allowance for loan losses at a level necessary to absorb known and inherent losses in our loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. In evaluating the level of the allowance for loan losses, management analyzes several qualitative loan portfolio risk factors including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses. See “—Summary of Significant Accounting Policies” for additional information.

After an evaluation of these factors, we recorded a provision for loan losses of $300,000 for the nine months ended June 30, 2018 and did not record a provision for loan losses for the nine months ended June 30, 2017.  Our allowance for loan losses was $4.0 million at June 30, 2018 compared to $4.6 million at September 30, 2017 and $4.6 million at June 30, 2017.  The allowance for loan losses to total loans was 1.76% at June 30, 2018 compared to 2.09% at September 30, 2017 and 2.14% at June 30, 2017.  The allowance for loan losses to non-performing loans was 105.92% at June 30, 2018 compared to 124.04% at September 30, 2017 and 129.35% at June 30, 2017.  Of the $1.2 million charge off during the nine months ended June 30, 2018, $1.1 million was from one commercial loan relationship as a result of overstated billings that were used as collateral to secure the loan.  Additionally we had recoveries of $329,000 during the nine months ended June 30, 2018.  To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at June 30, 2018.  However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for loan losses. In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses.  However, regulatory agencies are not directly involved in the process of establishing the allowance for loan losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

Non-interest Income. Non-interest income increased $613,000 to $1.5 million for the nine months ended June 30, 2018 from $916,000 for the nine months ended June 30, 2017.  The increase resulted primarily from an increase in Small Business

25

Administration and United States Department of Agriculture loan fees and sale premium income of $655,000 for the nine months ended June 30, 2018, compared to no such income for the nine months ended June 30, 2017.

Non-interest Expenses. Non-interest expenses information is as follows.

	Nine Months Ended June 30,						Change
	2018			2017			Amount			Percent
	(Dollars in thousands)
Salaries and employee benefits	$	5,116		$	3,969		$	1,147			28.9	%
Deferred compensation		156			164			(8	)		(4.9	)%
Occupancy		1,248			901			347			38.5	%
Advertising		128			163			(35	)		(21.5	)%
Data processing		658			572			86			15.0	%
Other real estate owned		63			37			26			70.3	%
Net gain on sale of other real estate owned		(33	)		(24	)		(9	)		37.5	%
Legal and accounting		706			357			349			97.8	%
Organizational dues and subscriptions		226			226			—			—
Director compensation		164			181			(17	)		(9.4	)%
Federal deposit insurance premiums		49			72			(23	)		(31.9	)%
Other		857			956			(99	)		(10.4	)%
Total non-interest expenses	$	9,338		$	7,574		$	1,764			23.3	%

Salaries and employee benefits expense increased due to increased staff for growth and infrastructure.  Occupancy increased due to the completion of a new bank operations center.  Data processing expense increased due to new account growth.  Legal and accounting expense increased as a result of our being a public company.

Income Tax Expense. Income tax expense for the nine months ended June 30, 2018 reflected our recording of a one-time deferred tax adjustment of $1.0 million and a one-time benefit of $162,000 that resulted in income tax expense of $1.1 million.  Income tax expense for the nine months ended June 30, 2017 was $609,000.  Income tax expense for the nine months ended June 30, 2018 was reduced due to the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the maximum federal corporate income tax rate to 21% from 35%.  The one-time deferred tax adjustment was due to the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the maximum federal corporate income tax rate to 21% from 35%.  The one-time benefit of $162,000 resulted from the completion of a cost segregation study on a building placed in service during 2017.  The study enabled the reallocation of real property to personal property under the applicable provisions of the Internal Revenue Code, which resulted in substantially shorter depreciable tax lives and accelerated depreciation methods.  Our deferred tax asset remains subject to adjustment in future periods.

Management of Market Risk

General.  Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates.  Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates.  Our Asset/Liability Management Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors.  We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates.  We have implemented the following strategies to manage our interest rate risk:

• limiting our reliance on non-core/wholesale funding sources;

• growing our volume of transaction deposit accounts;

• increasing our investment securities portfolio, with an average maturity of less than 15 years;

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• diversifying our loan portfolio by adding more commercial-related loans, which typically have shorter maturities and/or balloon payments; and

• continuing to price our one- to four-family residential real estate loan products in a way that encourages borrowers to select our balloon loans as opposed to longer-term, fixed-rate loans.

By following these strategies, we believe that we are better positioned to react to increases in market interest rates.  In addition, beginning in calendar year 2018, we intend to introduce adjustable-rate, one- to four-family residential real estate loans (in addition to our existing home equity loans and lines of credit, which are originated with adjustable interest rates).

We do not engage in hedging activities, such as engaging in futures, options or swap transactions, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage backed securities.

Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model.  Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings.  We estimate what our net interest income would be for a 12-month period.  We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 200 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.  A basis point equals one-hundredth of one percent, and 100 basis points equals one percent.  An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.

The table below sets forth, as of June 30, 2018, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve.

Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Level
	(Dollars in thousands)
+400	$	12,645		5.16	%
+200		12,341		2.63	%
Level		12,025	—
-200		11,037		(8.21	)%
-400		10,276		(14.55	)%

(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at June 30, 2018, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 2.63% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience an 8.21% decrease in net interest income.  At June 30, 2017, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 0.65% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 7.34% decrease in net interest income.

Net Economic Value. We also compute amounts by which the net present value of our assets and liabilities (net economic value or “NEV”) would change in the event of a range of assumed changes in market interest rates.  This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value.  The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 200 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

27

The table below sets forth, as of June 30, 2018, the calculation of the estimated changes in our NEV that would result from the designated immediate changes in the United States Treasury yield curve.

Change in Interest			Estimated Increase (Decrease) in NEV						NEV as a Percentage of Present Value of Assets (3)
Rates (basis points) (1)	Estimated NEV (2)		Amount			Percent			NEV Ratio (4)			Increase (Decrease) (basis points)
(Dollars in thousands)
+400	$	53,897	$	(13,228	)		(19.71	)%		20.75	%		(239	)
+200		59,822		(7,303	)		(10.88	)%		21.85	%		(129	)
—		67,125	—			—				23.14	%	—
-200		70,408		3,283			4.89	%		23.03	%		(11	)
-400		68,610		1,485			2.21	%		22.24	%		(90	)

(1) Assumes an immediate uniform change in interest rates at all maturities.

(2) NEV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) NEV Ratio represents NEV divided by the present value of assets.

The table above indicates that at June 30, 2018, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 10.88% decrease in net economic value, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 4.89% increase in net economic value.  At June 30, 2017, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 9.66% decrease in net economic value, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 0.52% increase in net economic value.

GAP Analysis. In addition, we analyze our interest rate sensitivity by monitoring our interest rate sensitivity “gap.” Our interest rate sensitivity gap is the difference between the amount of our interest-earning assets maturing or repricing within a specific time period and the amount of our interest-bearing liabilities maturing or repricing within that same time period.  A gap is considered positive when the amount of interest rate sensitive assets maturing or repricing during a period exceeds the amount of interest rate sensitive liabilities maturing or repricing during the same period, and a gap is considered negative when the amount of interest rate sensitive liabilities maturing or repricing during a period exceeds the amount of interest rate sensitive assets maturing or repricing during the same period.

28

The following table sets forth our interest-earning assets and our interest-bearing liabilities at June 30, 2018, which are anticipated to reprice or mature in each of the future time periods shown based upon certain assumptions. The amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability.  The table sets forth an approximation of the projected repricing of assets and liabilities at June 30, 2018, on the basis of contractual maturities, anticipated prepayments and scheduled rate adjustments. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and as a result of contractual rate adjustments on adjustable-rate loans.  Amounts are based on a preliminary balance sheet as of June 30, 2018, and may not equal amounts included in our unaudited consolidated financial statements for the quarter ended June 30, 2018.  However, we believe that there would be no material changes in the results of the gap analysis if the unaudited financial results included in Part 1, Item 1 of this quarterly report had been utilized.

	Time to Repricing
	Zero to 90 Days			Zero to 180 Days			Zero Days to One Year			Zero Days to Two Years			Zero Days to Five Years			Total
				(Dollars in thousands)
Assets:
Cash and due from banks	$	21,914			21,914			21,914			21,914			21,914		$	26,085
Investments		1,467			1,965			2,972			5,939			11,021			24,137
Net loans		35,899			50,218			65,844			92,412			158,623			227,361
Other assets		—			—			—			—			—			17,962
Total	$	59,280			74,097			90,730			120,265			191,558		$	295,545
Liabilities:
Non-maturity deposits	$	50,027			53,888			61,612			77,058			108,716		$	130,269
Certificates of deposit		6,236			10,459			22,529			36,115			68,539			86,131
Borrowings		—			—			—			2,440			7,570			10,390
Other liabilities		—			—			—			—			—			9,066
Equity capital		—			—			—			—			—			59,689
Total (1)	$	56,263			64,347			84,141			115,613			184,825		$	295,545
Asset/liability gap	$	3,017			9,750			6,589			4,652			6,733
Gap/assets ratio (2)		1.02	%		3.30	%		2.23	%		1.57	%		2.28	%

(1) Amounts do not foot due to rounding.

(2) Gap/assets ratio equals the asset/liability gap for the period divided by total assets ($292.6 million).

At June 30, 2018, our asset/liability gap from zero days to one year was $6.6 million, resulting in a gap/assets ratio of 2.23%.  At June 30, 2017, our asset/liability gap from zero days to one year was $1.5 million, resulting in a gap/assets ratio of 0.55%.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net interest income and NEV tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on net interest income and NEV and will differ from actual results.  Furthermore, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates.  Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset. In the event of changes in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the gap table.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

29

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business.  Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures.  Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from maturities of securities.  We also have the ability to borrow from the Federal Home Loan Bank of Atlanta.  At June 30, 2018, we had a $71.8 million line of credit with the Federal Home Loan Bank of Atlanta, and had $7.6 million in borrowings outstanding.  In addition, at June 30, 2018, we had a $5.0 million unsecured federal funds line of credit and a $7.5 million unsecured federal funds line of credit.  No amount was outstanding on these lines of credit at June 30, 2018.  

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities.  Net cash provided by operating activities was $1.7 million and $2.2 million for the nine months ended June 30, 2018 and 2017, respectively. Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, was $27.7 million and $31.9 million for the nine months ended June 30, 2018 and 2017, respectively. Net cash provided by financing activities, consisting of activity in deposit accounts and proceeds from FHLB advances, was $16.4 million and $43.5 million for the nine months ended June 30, 2018 and 2017, respectively.

We are committed to maintaining a strong liquidity position.  We monitor our liquidity position on a daily basis.  We anticipate that we will have sufficient funds to meet our current funding commitments.  Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

At June 30, 2018, we exceeded all of our regulatory capital requirements, and we were categorized as “well capitalized” at June 30, 2018.  Management is not aware of any conditions or events since the most recent notification that would change our category.  The Bank’s actual capital amounts and ratios for June 30, 2018 and September 30, 2017 are presented in the table below (in thousands).

						For Capital					To Be Well Capitalized
						Adequacy					Under Prompt Corrective
	Actual					Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of June 30, 2018:
Common Equity Tier 1
(to Risk Weighted Assets)	$	60,126		30	%	$	8,970		4.50	%	$	12,957		6.50	%
Total Capital
(to Risk Weighted Assets)	$	62,636		31	%	$	15,947		8	%	$	19,934		10	%
Tier I Capital
(to Risk Weighted Assets)	$	60,126		30	%	$	11,960		6	%	$	15,947		8	%
Tier I Capital
(to Average Assets)	$	60,126		20	%	$	11,736		4	%	$	14,670		5	%
As of September 30, 2017:
Common Equity Tier 1
(to Risk Weighted Assets)	$	59,919		33	%	$	8,069		4.50	%	$	11,655		6.50	%
Total Capital
(to Risk Weighted Assets)	$	62,189		35	%	$	14,344		8	%	$	17,930		10	%
Tier I Capital
(to Risk Weighted Assets)	$	59,919		33	%	$	10,758		6	%	$	14,344		8	%
Tier I Capital
(to Average Assets)	$	59,919		22	%	$	11,122		4	%	$	13,902		5	%

30

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion.  A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes.  The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%.  A financial institution can elect to be subject to this new definition.

The net proceeds from the stock offering significantly increased our liquidity and capital resources. Over time, our level of liquidity may be reduced as the net proceeds from the stock offering are used for general corporate purposes, including the funding of loans. Our financial condition and results of operations are expected to be enhanced and result in increases in net interest-earning assets and net interest income. However, due to the increase in equity from the stock offering proceeds, our return on equity will be lower until we can utilize the proceeds raised in the stock offering.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit.  While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon.  Such commitments are subject to the same credit policies and approval process accorded to loans we make.  At June 30, 2018, we had outstanding commitments to originate loans of $28.0 million.  We anticipate that we will have sufficient funds available to meet our current lending commitments.  Time deposits that are scheduled to mature in less than one year from June 30, 2018 totaled $24.0 million.  Management expects that a substantial portion of the maturing time deposits will be renewed.  However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations.  Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is included in Part 1, Item 2 of this quarterly report under “Management of Market Risk.”

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2018. Based on that evaluation, the Company’s Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended June 30, 2018, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

31

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not involved in any pending legal proceedings as a defendant other than routine legal proceedings occurring in the ordinary course of business.  At June 30, 2018, we were not involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit
Number	Description
3.1	Charter of Community First Bancshares, Inc. (1)
3.2	Bylaws of Community First Bancshares, Inc. (2)
3.3	Amendment to Bylaws of Community First Bancshares, Inc. (3)
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Written Statement of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.0	The following materials for the quarter ended June 30, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Comprehensive (Loss) Income, (iv) Statements of Cash Flows, and (v) Notes to Financial Statements

(1) Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-215041).

(2) Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-215041).

(3) Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 31, 2017 (Commission File No. 001-38074).

32

SIGNATURES

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

		COMMUNITY FIRST BANCSHARES, INC.
Date:	August 9, 2018	/s/ Johnny S. Smith
		Johnny S. Smith
		President and Chief Executive Officer
Date:	August 9, 2018	/s/ Tessa M. Nolan
		Tessa M. Nolan
		Senior Vice President and Chief Financial Officer

33

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Johnny S. Smith, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Community First Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   August 9, 2018	/s/ Johnny S. Smith
	Johnny S. Smith
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Tessa M. Nolan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Community First Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 9, 2018	/s/ Tessa M. Nolan
	Tessa M. Nolan
	Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Johnny S. Smith, President and Chief Executive Officer of Community First Bancshares, Inc. (the “Company”), and Tessa M. Nolan, Senior Vice President and Chief Financial Officer of the Company, each certify in his or her capacity as an executive officer of the Company that he or she has reviewed the quarterly report on Form 10-Q for the quarter ended June 30, 2018 (the “Report”) and that to the best of his or her knowledge:

1. the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 9, 2018	/s/ Johnny S. Smith
	Johnny S. Smith
	President and Chief Executive Officer
Date:  August 9, 2018	/s/ Tessa M. Nolan
	Tessa M. Nolan
	Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2018	Aug. 02, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	CFBI
Entity Registrant Name	Community First Bancshares, Inc.
Entity Central Index Key	0001691507
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,538,250

XML

Consolidated Balance Sheets (unaudited) - USD ($)	Jun. 30, 2018	Sep. 30, 2017
Assets
Cash and due from banks, including reserve requirement of $1,808 and $1,483 at June 30, 2018 and September 30, 2017, respectively	$ 3,807,000	$ 3,625,000
Interest-earning deposits in other depository institutions	22,516,000	32,318,000
Cash and cash equivalents	26,323,000	35,943,000
Investment securities held-to-maturity (estimated fair values of $990 and $1,001)	1,000,000	1,000,000
Investment securities available-for-sale	22,198,000	14,345,000
Federal Home Loan Bank stock	580,400	216,000
Loans held for sale		117,000
Loans, net	223,286,000	213,193,000
Other real estate owned		61,000
Premises and equipment, net	9,168,000	8,454,000
Bank owned life insurance	7,135,000
Accrued interest receivable and other assets	3,241,000	4,486,000
Total assets	292,931,000	277,815,000
Liabilities:
Passbook accounts	23,953,000	22,655,000
Interest-bearing checking	42,720,000	38,981,000
Market rate checking	23,646,000	22,556,000
Non-interest bearing checking	26,996,000	25,050,000
Certificate of deposits	86,131,000	85,371,000
Total deposits	203,446,000	194,613,000
Federal Home Loan Bank advances	7,570,000	0
Accrued interest payable and other liabilities	5,617,000	6,406,000
Total liabilities	216,633,000	201,019,000
Commitments
Stockholders' equity:
Common stock (par value $0.01 per share, 19,000,000 shares authorized, 7,538,250 outstanding at June 30, 2018 and September 30, 2017)	75,000	75,000
Preferred stock (1,000,000 shares authorized, no shares outstanding at June 30, 2018 or September 30, 2017)
Additional paid in capital	33,070,000	33,055,000
Unearned ESOP shares	(2,748,000)	(2,837,000)
Retained earnings	46,436,000	46,446,000
Accumulated other comprehensive (loss) income	(535,000)	57,000
Total stockholders' equity	76,298,000	76,796,000
Total liabilities and stockholders' equity	$ 292,931,000	$ 277,815,000

XML

Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Statement Of Financial Position [Abstract]
Cash and due from banks, reserve requirement	$ 1,808	$ 1,483
Investment securities held-to-maturity, estimated fair value	$ 990	$ 1,001
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	19,000,000	19,000,000
Common stock, shares outstanding	7,538,250	7,538,250
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0

XML

Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest income:
Loans, including fees	$ 3,330	$ 3,044	$ 9,573	$ 8,811
Investment securities, including dividends	150	71	428	141
Interest-earning deposits	90	138	263	242
Total interest income	3,570	3,253	10,264	9,194
Interest expense:
Deposits	365	291	997	780
Borrowings	37		98
Total interest expense	402	291	1,095	780
Net interest income before provision for loan losses	3,168	2,962	9,169	8,414
Provision for loan losses	300		300
Net interest income after provision for loan losses	2,868	2,962	8,869	8,414
Non-interest income:
Small Business Administration (SBA) loan fees	485		655
Other	134	101	354	377
Total non-interest income	794	279	1,529	916
Non-interest expenses:
Salaries and employee benefits	1,647	1,539	5,116	3,969
Deferred compensation	51	55	156	164
Occupancy	428	327	1,248	901
Advertising	55	49	128	163
Data processing	216	169	658	572
Other real estate owned	53	14	63	37
Net gain on sale of other real estate owned	(4)	(17)	(33)	(24)
Legal and accounting	223	145	706	357
Organizational dues and subscriptions	82	74	226	226
Director compensation	53	71	164	181
Federal deposit insurance premiums	16	17	49	72
Other	256	315	857	956
Total non-interest expenses	3,076	2,758	9,338	7,574
Income before income taxes	586	483	1,060	1,756
Income tax expense (benefit)	(32)	129	1,070	609
Net (loss) income	$ 618	$ 354	$ (10)	$ 1,147
Basic and diluted earnings (loss) per share	$ 0.08	$ 0.03	$ 0.00	$ 0.03
Service Charges
Non-interest income:
Service charges on deposit accounts	$ 175	$ 178	$ 520	$ 539

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Consolidated Statements of Comprehensive (Loss) Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net (loss) income	$ 618	$ 354	$ (10)	$ 1,147
Other comprehensive (loss) income:
Net unrealized (loss) gain on available for sale securities, net of taxes of $(1), $30, $(218) and $34 for the three months and nine months ended June 30, 2018 and 2017	(2)	57	(592)	65
Total other comprehensive (loss) income	(2)	57	(592)	65
Total comprehensive (loss) income	$ 616	$ 411	$ (602)	$ 1,212

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Consolidated Statements of Comprehensive (Loss) Income (unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net unrealized (loss) gain on available for sale securities, tax	$ (1)	$ 30	$ (218)	$ 34

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Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net (loss) income	$ (10)	$ 1,147
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	671	327
Provision for loan losses	300	0
ESOP expense	104	64
Deferred income tax	1,171	(152)
Net gain on sale of other real estate owned	(33)	(11)
Originations of loans held for sale	(843)	(1,487)
Increase in cash surrender value of life insurance	(135)	0
Proceeds from sales of loans held for sale	960	1,960
Change in:
Accrued interest receivable and other assets	293	228
Accrued interest payable and other liabilities	(784)	172
Net cash provided by operating activities	1,694	2,248
Cash flows from investing activities:
Purchases of investment securities available-for-sale	(10,319)	(14,019)
Net change in loans	(10,445)	(19,785)
Purchases of premises and equipment	(1,233)	(3,798)
Proceeds from paydowns of investment securities available-for-sale	1,502	340
Proceeds from maturity of investment securities held-to-maturity	0	5,000
Purchases of other investments	(364)	(11)
Purchase of bank owned life insurance	(7,000)	0
Proceeds from sales of other real estate owned	142	381
Net cash used in investing activities	(27,717)	(31,892)
Cash flows from financing activities:
Net change in demand and savings deposits	8,833	13,294
Proceeds from stock offering	0	34,640
Funding of ESOP	0	(2,955)
Stock offering expenses	0	(1,485)
Proceeds from FHLB advances	7,570	0
Net cash provided by financing activities	16,403	43,494
Net change in cash and cash equivalents	(9,620)	13,850
Cash and cash equivalents at beginning of period	35,943	25,693
Cash and cash equivalents at end of period	26,323	39,543
Supplemental disclosures of cash flow information:
Cash paid for interest	1,071	780
Supplemental disclosures of noncash investing activities:
Other real estate owned acquired through foreclosures	$ 1,143	$ 817

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Basis of Presentation

9 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

(1) Basis of Presentation

Community First Bancshares, Inc. (the “Company”) is a savings and loan holding company headquartered in Covington, Georgia. The Company has one operating subsidiary, Newton Federal Bank (the “Bank”), conducting banking activities primarily in Newton County, Georgia and surrounding counties. The main emphasis of the Bank is providing mortgage loans in its primary lending area.  It offers customary banking services such as consumer and commercial checking accounts, savings accounts, certificates of deposit, mortgage, commercial and consumer loans, money transfers and a variety of other banking services.

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the financial position of the Company as of June 30, 2018 and the results of its operations and its cash flows for the periods presented. The interim consolidated financial information should be read in conjunction with the annual financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2017.

The results of operations for the quarter and nine months ended June 30, 2018, are not necessarily indicative of the results to be expected for the full year or for any other period.

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, the valuation of other real estate acquired in connection with foreclosure or in satisfaction of loans and valuation allowances associated with the realization of deferred tax assets, which are based on future taxable income.

Summary of Significant Accounting Policies – The accounting and reporting policies of the Company conform to GAAP and general practices within the banking industry. There have been no material changes or developments in the application of principles or in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies as disclosed in the Company’s financial statements for the year ended September 30, 2017 included in the Company’s Form 10-K.

Net income per share is calculated for the period that the Company’s shares of common stock were outstanding, which includes the current quarter and a portion of the same quarter in the previous year.  The net income for the current period was $618,000 and the weighted average common shares outstanding were 7,538,250.  The net loss for the current year-to-date period was $10,000 and the weighted average common shares outstanding were 7,538,250.  The net income for the previous period that the Company’s shares of common stock were outstanding (April 27, 2017 through June 30, 2017) was $249,000 and the weighted average common shares outstanding were 7,538,250.

Recent Accounting Pronouncements

There have been no pronouncements issued during the quarter that would have a material impact on the Company's financial statements.

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Investment Securities

9 Months Ended

Jun. 30, 2018

Investments Debt And Equity Securities [Abstract]

Investment Securities

(2) Investment Securities

Investment Securities Held-to-Maturity

Investment securities held-to-maturity at June 30, 2018 and September 30, 2017 are as follows: (in thousands)

June 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government sponsored enterprises	$	1,000		—		(10	)		990
September 30, 2017
U.S. Government sponsored enterprises	$	1,000		1		—			1,001

The U.S. government sponsored enterprise securities as of June 30, 2018 were comprised of one debt financing security issued by a government agency that matures withintwo years.

There were no sales of securities held-to-maturity during the three and nine months ended June 30, 2018 or 2017.

Securities with a carrying value of approximately $1,000,000 were pledged to secure public deposits at both June 30, 2018 and September 30, 2017.

Investment Securities Available-for-Sale

Investment securities available-for-sale at June 30, 2018 and September 30, 2017 were as follows: (in thousands)

	Amortized		Gross Unrealized		Gross Unrealized			Estimated
June 30, 2018	Cost		Gains		Losses			Fair Value
Municipal securities - tax exempt	$	5,704		5		(122	)		5,587
Municipal securities - taxable		3,126		—		(138	)		2,988
Government agency securities		502		—		(12	)		490
Government agency mortgage-backed securities		13,589		—		(456	)		13,133
Total	$	22,921		5		(728	)		22,198
September 30, 2017
Municipal securities - tax exempt	$	5,756		119		(2	)		5,873
Government agency securities		502		—		—			502
Government agency mortgage-backed securities		8,000		6		(36	)		7,970
Total	$	14,258		125		(38	)		14,345

There were 34 and eight securities in an unrealized loss position less than 12 months as of June 30, 2018 and September 30, 2017, respectively.There were six and no securities in an unrealized loss position greater than 12 months as of June 30, 2018 and September 30, 2017, respectively.

The amortized cost and estimated fair value of investment securities available-for-sale at June 30, 2018, by contractual maturity, are shown below. Maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties. Therefore, these securities are not included in the maturity categories. (in thousands)

	Amortized		Estimated
	Cost		Fair Value
Municipal securities - tax exempt
Within 1 year	$	—		—
1 to 5 years		491		491
5 to 10 years		5,213		5,096
Greater than 10 years		—		—
		5,704		5,587
Municipal securities - taxable
Within 1 year		—		—
1 to 5 years		—		—
5 to 10 years		1,127		1,094
Greater than 10 years		1,999		1,894
		3,126		2,988
Government agency securities
Within 1 year		—		—
1 to 5 years		502		490
5 to 10 years		—		—
Greater than 10 years		—		—
		502		490
Government agency mortgage-backed securities		13,589		13,133
Total	$	22,921		22,198

There were no sales of securities available-for-sale during the three and nine months ended June 30, 2018 or 2017.

Securities with a carrying value of approximately $490,000 and $502,000 were pledged to secure public deposits at June 30, 2018 and September 30, 2017, respectively.

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Loans and Allowance for Loan Losses

9 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Loans and Allowance for Loan Losses

(3) Loans and Allowance for Loan Losses

Major classifications of loans, by collateral code, at June 30, 2018 and September 30, 2017 are summarized as follows: (in thousands)

	June 30, 2018			September 30, 2017
Commercial (secured by real estate)	$	37,491			29,861
Commercial and industrial		27,613			21,060
Construction, land and acquisition & development		21,475			25,165
Residential mortgage 1-4 family		137,986			138,875
Consumer installment		2,730			2,783
Total		227,295			217,744
Less allowance for loan losses		(4,009	)		(4,551	)
Total loans, net	$	223,286			213,193

The Bank grants loans and extensions of credit to individuals and a variety of firms and corporations located primarily in Newton County and other surrounding Georgia counties. A substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market.

Qualifying loans in the amount of approximately $123,949,000 and $137,462,000 were pledged to secure the line of credit from Federal Home Loan Bank (the “FHLB”) at June 30, 2018 and September 30, 2017, respectively.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the nine months ended June 30, 2018 and 2017: (in thousands)

June 30, 2018	Commercial (Secured by Real Estate)			Commercial and Industrial			Construction, Land and Acquisition & Development			Residential Mortgage			Consumer Installment			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,548			863			349			1,704			79			8			4,551
Provision		(412	)		1,807			(134	)		(970	)		15			(6	)		300
Charge-offs		—			(1,100	)		—			(44	)		(27	)		—			(1,171	)
Recoveries		102			22			—			205			—			—			329
Ending balance	$	1,238			1,592			215			895			67			2			4,009
Ending allowance attributable to loans:													.
Individually evaluated for impairment	$	3			—			—			8			—			—			11
Collectively evaluated for impairment		1,235			1,592			215			887			67			2			3,998
Total ending allowance	$	1,238			1,592			215			895			67			2			4,009
Loans:
Individually evaluated for impairment	$	1,994			277			—			5,835			2			—			8,108
Collectively evaluated for impairment		35,497			27,336			21,475			132,151			2,728			—			219,187
Total loans	$	37,491			27,613			21,475			137,986			2,730			—			227,295
June 30, 2017
Allowance for loan losses:
Beginning balance	$	1,595			643			143			1,882			36			10			4,309
Provision		(122	)		202			196			(278	)		9			(7	)		—
Charge-offs		—			(15	)		—			(41	)		(14	)		—			(70	)
Recoveries		52			—			—			253			9			—			314
Ending balance	$	1,525			830			339			1,816			40			3			4,553
Ending allowance attributable to loans:
Individually evaluated for impairment	$	2			—			—			3			—			—			5
Collectively evaluated for impairment		1,523			830			339			1,813			40			3			4,548
Total ending allowance	$	1,525			830			339			1,816			40			3			4,553
Loans:
Individually evaluated for impairment	$	1,922			37			—			5,698			4			—			7,661
Collectively evaluated for impairment		25,634			20,649			24,199			132,183			2,773			—			205,438
Total loans	$	27,556			20,686			24,199			137,881			2,777			—			213,099

The Bank individually evaluates all loans for impairment that are on nonaccrual status or are rated substandard (as described below).  Additionally, all troubled debt restructurings are evaluated for impairment.  A loan is considered impaired when, based on current events and circumstances, it is probable that all amounts due according to the contractual terms of the loan will not be collected.  Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.  Interest payments received on impaired loans are applied as a reduction of the outstanding principal balance.

Impaired loans at June 30, 2018 and September 30, 2017 were as follows: (in thousands)

June 30, 2018	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	211		1,194		—		231		7
Commercial and industrial		277		1,383		—		853		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		4,955		6,760		—		4,712		148
Consumer installment		2		2		—		3		—
		5,445		9,339		—		5,799		155
With an allowance recorded:
Commercial (secured by real estate)		1,783		1,783		3		1,802		60
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		880		921		8		853		32
Consumer installment		—		—		—		—		—
		2,663		2,704		11		2,655		92
Total impaired loans	$	8,108		12,043		11		8,454		247
September 30, 2017
With no related allowance recorded:
Commercial (secured by real estate)	$	83	$	2,745		—		115		7
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		5,611		7,678		—		5,636		51
Consumer installment		3		3		—		4		—
		5,697		10,426		—		5,755		58
With an allowance recorded:
Commercial (secured by real estate)		1,810		1,810		10		1,834		28
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		685		685		4		696		10
Consumer installment		—		—		—		—		—
		2,495		2,495		14		2,530		38
Total impaired loans	$	8,192		12,921		14		8,285		96

The following table presents the aging of the recorded investment in past due loans, as well as the recorded investment in nonaccrual loans, as of June 30, 2018 and September 30, 2017 by class of loans: (in thousands)

June 30, 2018	30 -59 Days Past Due		60- 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total		Nonaccrual
Commercial (secured by real estate)	$	—		212		39		251		37,240		37,491		252
Commercial and industrial		434		26		298		758		26,855		27,613		324
Construction, land and acquisition &    development		—		—		—		—		21,475		21,475		—
Residential mortgage		325		1,419		1,097		2,841		135,145		137,986		3,184
Consumer installment		33		2		25		60		2,670		2,730		25
Total	$	792		1,659		1,459		3,910		223,385		227,295		3,785
September 30, 2017
Commercial (secured by real estate)	$	—		—		45		45		29,816		29,861		129
Commercial and industrial		19		45		—		64		20,996		21,060		—
Construction, land and acquisition &    development		—		—		—		—		25,165		25,165		—
Residential mortgage		173		3,236		1,559		4,968		133,907		138,875		3,540
Consumer installment		24		7		—		31		2,752		2,783		—
Total	$	216		3,288		1,604		5,108		212,636		217,744		3,669

There were no loans past due over 90 days and still accruing interest as of June 30, 2018 and September 30, 2017.

The table below presents information on troubled debt restructurings including the number of loan contracts restructured and the pre- and post-modification recorded investment that occurred during the nine months ended June 30, 2017.  There were none for the nine months ended June 30, 2018. (in thousands)

			Pre- Modification Outstanding		Post- Modification Outstanding		Troubled Debt Restructurings that have Subsequently Defaulted
June 30, 2017	Number of Contracts		Recorded Investment		Recorded Investment		Number of Contracts		Recorded Investment
Residential mortgage		1	$	18	$	18		1		76

The Bank has allocated an allowance for loan losses of approximately $9,000 and $12,000 to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2018 and September 30, 2017, respectively.

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

Special Mention. Loans have potential weaknesses that may, if not corrected, weaken or inadequately protect the Bank's credit position at some future date.  Weaknesses are generally the result of deviation from prudent lending practices, such as over advances on collateral.  Credits in this category should, within a 12 month period, move to Pass if improved or drop to Substandard if poor trends continue.

Substandard. Inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any.  Loans have a well-defined weakness or weaknesses such as primary source of repayment is gone or severely impaired or cash flow is insufficient to reduce debt.  There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans have weaknesses of those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable.  The likelihood of a loss on an asset or portion of an asset classified Doubtful is high.

Loss.  Loans considered uncollectible and of such little value that the continuance as a Bank asset is not warranted.  This does not mean that the loan has no recovery or salvage value, but rather the asset should be charged off even though partial recovery may be possible in the future.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.  As of June 30, 2018 and September 30, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans were as follows: (in thousands)

June 30, 2018	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	36,911		—		580		—		37,491
Commercial and industrial		27,289		—		324		—		27,613
Construction, land and acquisition & development		21,439		—		36		—		21,475
Residential mortgage		128,594		66		9,326		—		137,986
Consumer installment		2,687		—		43		—		2,730
Total	$	216,920		66		10,309		—		227,295

September 30, 2017	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	29,416		—		445		—		29,861
Commercial and industrial		21,015		—		45		—		21,060
Construction, land and acquisition & development		25,165		—		—		—		25,165
Residential mortgage		132,725		224		5,926		—		138,875
Consumer installment		2,783		—		—		—		2,783
Total	$	211,104		224		6,416		—		217,744

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Deposits

9 Months Ended

Jun. 30, 2018

Deposits [Abstract]

Deposits

(4) Deposits

The aggregate amounts of certificates of deposit of $250,000 or more, the standard FDIC deposit insurance coverage limit per depositor, were approximately $11,253,000 at June 30, 2018 and $10,151,000 at September 30, 2017.  The aggregate amounts of certificates of deposit of $100,000 or more were approximately $40,239,000 at June 30, 2018 and $36,885,000 at September 30, 2017.

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Borrowings

9 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Borrowings

(5) Borrowings

The following Federal Home Loan Bank of Atlanta (“FHLB”) advances, which required monthly or quarterly interest payments, were outstanding at June 30, 2018:

Advance Date	Advance		Interest Rate	Maturity	Rate	Call Feature
10/25/2017	$	2,710,000	1.98%	10/26/2020	Fixed	None
10/25/2017	1,250,000		1.81%	10/25/2019	Fixed	None
11/13/2017	1,190,000		1.87%	11/13/2019	Fixed	None
11/13/2017	2,420,000		2.02%	11/13/2020	Fixed	None
	$	7,570,000

At September 30, 2017, the Company had no advances outstanding from the FHLB.

The FHLB advances were collateralized by certain loans which totaled approximately $123,949,000 at June 30, 2018, and by the Company’s investment in FHLB stock which totaled $580,400 at June 30, 2018.  

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Employee Stock Ownership Plan

9 Months Ended

Jun. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Employee Stock Ownership Plan

(6) Employee Stock Ownership Plan

The Company sponsors an employee stock ownership plan (“ESOP”) that covers all employees who meet certain service requirements. The Company makes annual contributions to the ESOP in amounts as defined by the plan document. These contributions are used to pay debt service and purchase additional shares. Certain ESOP shares are pledged as collateral for debt. As the debt is repaid, shares are released from collateral and allocated to active employees, based on the proportion of debt service paid in the year.

In April 2017, the ESOP borrowed $2,954,990 payable to the Company for the purpose of purchasing shares of the Company’s common stock. A total of 295,499 shares were purchased with the loan proceeds as part of the Company’s initial stock offering. Total ESOP expense for the three and nine months ended June 30, 2018 was approximately $33,000 and $104,000, respectively. There was $64,000 ESOP expense for the three and nine months ended June 30, 2017.  The balance of the note payable of the ESOP was $2,820,473 at June 30, 2018. Because the source of the loan payments are contributions received by the ESOP from the Company, the related notes receivable is shown as a reduction of stockholders’ equity. As of June 30, 2018, 11,820 shares have been released.

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Stockholders' Equity

9 Months Ended

Jun. 30, 2018

Stockholders Equity Note [Abstract]

Stockholders' Equity

(7) Stockholders’ Equity

Prior to January 1, 1996, the Bank was permitted under the Internal Revenue Code (the “Code”) a special bad debt deduction related to additions to tax bad debt reserves established for the purpose of absorbing losses. The provisions of the Code permitted the Bank to deduct from taxable income an allowance for bad debts based on the greater of a percentage of taxable income before such deduction or actual loss experience.  Retained earnings at June 30, 2018 includes approximately $3,625,000 for which no deferred Federal income tax liability has been recognized. The amounts represent an allocation of income for bad debt deductions for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses would create income for tax purposes only, which would be subject to the then current corporate income tax rate.

On August 20, 1996, legislation was passed which eliminated the percentage of taxable income bad debt deduction for thrift institutions for tax years beginning after December 31, 1995. This legislation also requires a thrift to generally recapture the excess of its current tax reserves over its 1987 base year reserves whereas the base year reserves are frozen from taxation. No additional financial statement tax expense resulted from this legislation as the Bank had previously provided deferred taxes on this recaptured amount.  A write down of our deferred tax assets by approximately $1.0 million was made in the quarter ended December 31, 2017 as a result of the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the maximum federal corporate income tax rate to 21% from 35%.  The write-down is subject to adjustment in future periods.

On October 31, 2016, the Board of Directors of the Bank adopted a Plan of Reorganization from a Mutual Savings Association to a Mutual Holding Company and Stock Issuance Plan (the “Plan”).  The Plan was subject to the approval of the Board of Governors of the Federal Reserve System and the affirmative vote of at least a majority of the total votes eligible to be cast by the voting members of the Bank at a special meeting.  Pursuant to the Plan, on April 27, 2017 the Bank converted to a stock savings bank and is now organized in the mutual holding company structure.  The Bank issued all of its outstanding stock to the Company, which sold 3,467,595 shares of common stock to the public at $10.00 per share, representing 46% of its outstanding shares of common stock.  This amount included shares purchased by the Bank’s employee stock ownership plan (“ESOP”), which purchased 3.92% of the common stock of the new holding company outstanding upon the completion of the reorganization and stock issuance.  The Company is organized as a corporation under the laws of the United States.  Community First Bancshares, MHC has been organized as a mutual holding company under the laws of the United States and owns 54% of the outstanding common stock of the Company.          

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Fair Value Measurements and Disclosures

9 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements and Disclosures

(8) Fair Value Measurements and Disclosures

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.  From time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and other real estate owned. These nonrecurring fair value adjustments typically involve application of the lower of cost or market accounting or write-downs of individual assets. Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.

Fair Value Hierarchy

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.  These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Cash and Cash Equivalents

The carrying value of cash and cash equivalents is a reasonable estimate of fair value.

Investment Securities Available-for-Sale

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

Investment Securities Held-to-Maturity

Held-to-maturity securities are recorded at cost, adjusted for the amortization or accretion of premiums and discounts.  Fair value measurement is based upon quoted prices, if available.  If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.  Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds.  Level 2 securities include mortgage-backed securities issued by government sponsored enterprises and state, county and municipal bonds.  Securities classified as Level 3 include asset-backed securities in less liquid markets.

FHLB Stock

The carrying value of FHLB Stock approximates fair value.

Loans and Loans Held for Sale

The Company does not record loans at fair value on a recurring basis.  However, from time to time, a loan is considered impaired and a specific reserve is established within the allowance for loan losses.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.  Once a loan is identified as individually impaired, management measures impairment in accordance with GAAP.  The fair value of impaired loans is estimated using one of three methods, including collateral value, market value of similar debt, and discounted cash flows.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.  In accordance with GAAP, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy.  When the fair value of the collateral is based on an observable market price, the Company records the impaired loan as nonrecurring Level 2.  When an appraised value is used or an appraisal is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3. For disclosure purposes, the fair value of fixed rate loans which are not considered impaired is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For unimpaired variable rate loans, the carrying amount is a reasonable estimate of fair value for disclosure purposes.

The estimated fair value of loans held for sale, classified within Level 2, is approximated by the carrying value, given the short-term nature of the loans and similarly to what secondary markets are currently offering for portfolios of loans with similar characteristics.

Other Real Estate Owned

Other real estate properties are adjusted to fair value upon transfer of the loans to other real estate.  Subsequently, other real estate assets are carried at fair value less estimated selling costs.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral.  When the fair value of the collateral is based on an observable market price, the Bank records the other real estate as nonrecurring Level 2.  When an appraised value is used or an appraisal is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Bank records the other real estate asset as nonrecurring Level 3.

Bank Owned Life Insurance

For disclosure purposes, the carrying value of the cash surrender value of life insurance reasonably approximates fair value.

Deposits

The fair value of passbook accounts, interest bearing checking accounts, non-interest bearing checking accounts and market rate checking accounts is the amount payable on demand at the reporting date, while the fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using current rates at which comparable certificates would be issued.

Federal Home Loan Bank Advances

For disclosure purposes, the fair value of Federal Home Loan Bank fixed rate borrowings are estimated using discounted cash flows, based on the current incremental borrowing rates for similar types of borrowing arrangements.

Commitments to Extend Credit

Commitments to extend credit are short-term and, therefore, the carrying value and the fair value are considered immaterial for disclosure.

Assets Recorded at Fair Value on a Recurring Basis

The Company’s only assets recorded at fair value on a recurring basis are available-for-sale securities that had fair values of approximately $22,198,000 and $14,345,000 at June 30, 2018 and September 30, 2017, respectively.  They are classified as Level 2.  

Assets Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP.  These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period.  Assets measured at fair value on a nonrecurring basis are included in the table below as of June 30, 2018 and September 30, 2017 (in thousands).

June 30, 2018	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		—		—
Impaired loans		—		—		8,097		8,097
Total assets at fair value	$	—		—		8,097		8,097
September 30, 2017	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		61		61
Impaired loans		—		—		8,178		8,178
Total assets at fair value	$	—		—		8,239		8,239

The carrying amounts and estimated fair values (in thousands) of the Company’s financial instruments at June 30, 2018 and September 30, 2017 are as follows:

	June 30, 2018				September 30, 2017
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	26,323		26,323		35,943		35,943
Investment securities
available-for-sale	$	22,198		22,198		14,345		14,345
held-to-maturity	$	1,000		990		1,000		1,001
FHLB Stock	$	580		580		216		216
Loans held for sale	$	—		—		117		117
Loans, net	$	223,286		191,305		213,193		198,637
Cash surrender value of life insurance	$	7,135		7,135		—		—
Financial liabilities:
Deposits	$	203,446		203,075		194,613		194,300
FHLB advances	$	7,570		7,703		—		—

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

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Basis of Presentation (Policies)

9 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

Community First Bancshares, Inc. (the “Company”) is a savings and loan holding company headquartered in Covington, Georgia. The Company has one operating subsidiary, Newton Federal Bank (the “Bank”), conducting banking activities primarily in Newton County, Georgia and surrounding counties. The main emphasis of the Bank is providing mortgage loans in its primary lending area.  It offers customary banking services such as consumer and commercial checking accounts, savings accounts, certificates of deposit, mortgage, commercial and consumer loans, money transfers and a variety of other banking services.

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the financial position of the Company as of June 30, 2018 and the results of its operations and its cash flows for the periods presented. The interim consolidated financial information should be read in conjunction with the annual financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2017.

The results of operations for the quarter and nine months ended June 30, 2018, are not necessarily indicative of the results to be expected for the full year or for any other period.

Use of Estimates

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, the valuation of other real estate acquired in connection with foreclosure or in satisfaction of loans and valuation allowances associated with the realization of deferred tax assets, which are based on future taxable income.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

There have been no pronouncements issued during the quarter that would have a material impact on the Company's financial statements.

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Investment Securities (Tables)

9 Months Ended

Jun. 30, 2018

Investments Debt And Equity Securities [Abstract]

Schedule of Investment Securities Held-to-Maturity

Investment securities held-to-maturity at June 30, 2018 and September 30, 2017 are as follows: (in thousands)

June 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government sponsored enterprises	$	1,000		—		(10	)		990
September 30, 2017
U.S. Government sponsored enterprises	$	1,000		1		—			1,001

Schedule of Investment Securities Available-for-Sale

Investment securities available-for-sale at June 30, 2018 and September 30, 2017 were as follows: (in thousands)

	Amortized		Gross Unrealized		Gross Unrealized			Estimated
June 30, 2018	Cost		Gains		Losses			Fair Value
Municipal securities - tax exempt	$	5,704		5		(122	)		5,587
Municipal securities - taxable		3,126		—		(138	)		2,988
Government agency securities		502		—		(12	)		490
Government agency mortgage-backed securities		13,589		—		(456	)		13,133
Total	$	22,921		5		(728	)		22,198
September 30, 2017
Municipal securities - tax exempt	$	5,756		119		(2	)		5,873
Government agency securities		502		—		—			502
Government agency mortgage-backed securities		8,000		6		(36	)		7,970
Total	$	14,258		125		(38	)		14,345

Schedule of Amortized Cost and Estimated Fair Value of Investment Securities Available-for-Sale by Contractual Maturity

The amortized cost and estimated fair value of investment securities available-for-sale at June 30, 2018, by contractual maturity, are shown below. Maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties. Therefore, these securities are not included in the maturity categories. (in thousands)

	Amortized		Estimated
	Cost		Fair Value
Municipal securities - tax exempt
Within 1 year	$	—		—
1 to 5 years		491		491
5 to 10 years		5,213		5,096
Greater than 10 years		—		—
		5,704		5,587
Municipal securities - taxable
Within 1 year		—		—
1 to 5 years		—		—
5 to 10 years		1,127		1,094
Greater than 10 years		1,999		1,894
		3,126		2,988
Government agency securities
Within 1 year		—		—
1 to 5 years		502		490
5 to 10 years		—		—
Greater than 10 years		—		—
		502		490
Government agency mortgage-backed securities		13,589		13,133
Total	$	22,921		22,198

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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Summary of Major Classifications of Loans

Major classifications of loans, by collateral code, at June 30, 2018 and September 30, 2017 are summarized as follows: (in thousands)

	June 30, 2018			September 30, 2017
Commercial (secured by real estate)	$	37,491			29,861
Commercial and industrial		27,613			21,060
Construction, land and acquisition & development		21,475			25,165
Residential mortgage 1-4 family		137,986			138,875
Consumer installment		2,730			2,783
Total		227,295			217,744
Less allowance for loan losses		(4,009	)		(4,551	)
Total loans, net	$	223,286			213,193

Summary of Allowance for Loan Losses and Recorded Investment in loans by portfolio Segment and Based on Impairment Method

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the nine months ended June 30, 2018 and 2017: (in thousands)

June 30, 2018	Commercial (Secured by Real Estate)			Commercial and Industrial			Construction, Land and Acquisition & Development			Residential Mortgage			Consumer Installment			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,548			863			349			1,704			79			8			4,551
Provision		(412	)		1,807			(134	)		(970	)		15			(6	)		300
Charge-offs		—			(1,100	)		—			(44	)		(27	)		—			(1,171	)
Recoveries		102			22			—			205			—			—			329
Ending balance	$	1,238			1,592			215			895			67			2			4,009
Ending allowance attributable to loans:													.
Individually evaluated for impairment	$	3			—			—			8			—			—			11
Collectively evaluated for impairment		1,235			1,592			215			887			67			2			3,998
Total ending allowance	$	1,238			1,592			215			895			67			2			4,009
Loans:
Individually evaluated for impairment	$	1,994			277			—			5,835			2			—			8,108
Collectively evaluated for impairment		35,497			27,336			21,475			132,151			2,728			—			219,187
Total loans	$	37,491			27,613			21,475			137,986			2,730			—			227,295
June 30, 2017
Allowance for loan losses:
Beginning balance	$	1,595			643			143			1,882			36			10			4,309
Provision		(122	)		202			196			(278	)		9			(7	)		—
Charge-offs		—			(15	)		—			(41	)		(14	)		—			(70	)
Recoveries		52			—			—			253			9			—			314
Ending balance	$	1,525			830			339			1,816			40			3			4,553
Ending allowance attributable to loans:
Individually evaluated for impairment	$	2			—			—			3			—			—			5
Collectively evaluated for impairment		1,523			830			339			1,813			40			3			4,548
Total ending allowance	$	1,525			830			339			1,816			40			3			4,553
Loans:
Individually evaluated for impairment	$	1,922			37			—			5,698			4			—			7,661
Collectively evaluated for impairment		25,634			20,649			24,199			132,183			2,773			—			205,438
Total loans	$	27,556			20,686			24,199			137,881			2,777			—			213,099

Summary of Impaired Loans

Impaired loans at June 30, 2018 and September 30, 2017 were as follows: (in thousands)

June 30, 2018	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	211		1,194		—		231		7
Commercial and industrial		277		1,383		—		853		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		4,955		6,760		—		4,712		148
Consumer installment		2		2		—		3		—
		5,445		9,339		—		5,799		155
With an allowance recorded:
Commercial (secured by real estate)		1,783		1,783		3		1,802		60
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		880		921		8		853		32
Consumer installment		—		—		—		—		—
		2,663		2,704		11		2,655		92
Total impaired loans	$	8,108		12,043		11		8,454		247
September 30, 2017
With no related allowance recorded:
Commercial (secured by real estate)	$	83	$	2,745		—		115		7
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		5,611		7,678		—		5,636		51
Consumer installment		3		3		—		4		—
		5,697		10,426		—		5,755		58
With an allowance recorded:
Commercial (secured by real estate)		1,810		1,810		10		1,834		28
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		685		685		4		696		10
Consumer installment		—		—		—		—		—
		2,495		2,495		14		2,530		38
Total impaired loans	$	8,192		12,921		14		8,285		96

Summary of Recorded Investment in Past Due Loans, as Well as Nonaccrual Loans

The following table presents the aging of the recorded investment in past due loans, as well as the recorded investment in nonaccrual loans, as of June 30, 2018 and September 30, 2017 by class of loans: (in thousands)

June 30, 2018	30 -59 Days Past Due		60- 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total		Nonaccrual
Commercial (secured by real estate)	$	—		212		39		251		37,240		37,491		252
Commercial and industrial		434		26		298		758		26,855		27,613		324
Construction, land and acquisition &    development		—		—		—		—		21,475		21,475		—
Residential mortgage		325		1,419		1,097		2,841		135,145		137,986		3,184
Consumer installment		33		2		25		60		2,670		2,730		25
Total	$	792		1,659		1,459		3,910		223,385		227,295		3,785
September 30, 2017
Commercial (secured by real estate)	$	—		—		45		45		29,816		29,861		129
Commercial and industrial		19		45		—		64		20,996		21,060		—
Construction, land and acquisition &    development		—		—		—		—		25,165		25,165		—
Residential mortgage		173		3,236		1,559		4,968		133,907		138,875		3,540
Consumer installment		24		7		—		31		2,752		2,783		—
Total	$	216		3,288		1,604		5,108		212,636		217,744		3,669

Summary of Troubled Debt Restructurings

The table below presents information on troubled debt restructurings including the number of loan contracts restructured and the pre- and post-modification recorded investment that occurred during the nine months ended June 30, 2017.  There were none for the nine months ended June 30, 2018. (in thousands)

			Pre- Modification Outstanding		Post- Modification Outstanding		Troubled Debt Restructurings that have Subsequently Defaulted
June 30, 2017	Number of Contracts		Recorded Investment		Recorded Investment		Number of Contracts		Recorded Investment
Residential mortgage		1	$	18	$	18		1		76

Summary of Risk Category of Loans by Class of Loans

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.  As of June 30, 2018 and September 30, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans were as follows: (in thousands)

June 30, 2018	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	36,911		—		580		—		37,491
Commercial and industrial		27,289		—		324		—		27,613
Construction, land and acquisition & development		21,439		—		36		—		21,475
Residential mortgage		128,594		66		9,326		—		137,986
Consumer installment		2,687		—		43		—		2,730
Total	$	216,920		66		10,309		—		227,295

September 30, 2017	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	29,416		—		445		—		29,861
Commercial and industrial		21,015		—		45		—		21,060
Construction, land and acquisition & development		25,165		—		—		—		25,165
Residential mortgage		132,725		224		5,926		—		138,875
Consumer installment		2,783		—		—		—		2,783
Total	$	211,104		224		6,416		—		217,744

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Borrowings (Tables)

9 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of Federal Home Loan Bank of Atlanta (FHLB) Advances

The following Federal Home Loan Bank of Atlanta (“FHLB”) advances, which required monthly or quarterly interest payments, were outstanding at June 30, 2018:

Advance Date	Advance		Interest Rate	Maturity	Rate	Call Feature
10/25/2017	$	2,710,000	1.98%	10/26/2020	Fixed	None
10/25/2017	1,250,000		1.81%	10/25/2019	Fixed	None
11/13/2017	1,190,000		1.87%	11/13/2019	Fixed	None
11/13/2017	2,420,000		2.02%	11/13/2020	Fixed	None
	$	7,570,000

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Fair Value Measurements and Disclosures (Tables)

9 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Assets Measured at Fair Value on Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis are included in the table below as of June 30, 2018 and September 30, 2017 (in thousands).

June 30, 2018	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		—		—
Impaired loans		—		—		8,097		8,097
Total assets at fair value	$	—		—		8,097		8,097
September 30, 2017	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		61		61
Impaired loans		—		—		8,178		8,178
Total assets at fair value	$	—		—		8,239		8,239

Schedule of Carrying Amounts and Estimated Fair Values of Company's Financial Instruments

The carrying amounts and estimated fair values (in thousands) of the Company’s financial instruments at June 30, 2018 and September 30, 2017 are as follows:

	June 30, 2018				September 30, 2017
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	26,323		26,323		35,943		35,943
Investment securities
available-for-sale	$	22,198		22,198		14,345		14,345
held-to-maturity	$	1,000		990		1,000		1,001
FHLB Stock	$	580		580		216		216
Loans held for sale	$	—		—		117		117
Loans, net	$	223,286		191,305		213,193		198,637
Cash surrender value of life insurance	$	7,135		7,135		—		—
Financial liabilities:
Deposits	$	203,446		203,075		194,613		194,300
FHLB advances	$	7,570		7,703		—		—

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Basis of Presentation - Additional Information (Details) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Net (loss) income	$ 249	$ 618	$ 354	$ (10)	$ 1,147
Weighted average common shares outstanding	7,538,250	7,538,250		7,538,250

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Investment Securities - Schedule of Investment Securities Held-to-Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Schedule Of Held To Maturity Securities [Line Items]
Investment Securities Held-to-Maturity, Amortized Cost	$ 1,000	$ 1,000
Investment Securities Held-to-Maturity, Estimated Fair Value	990	1,001
U.S. Government Sponsored Enterprises
Schedule Of Held To Maturity Securities [Line Items]
Investment Securities Held-to-Maturity, Amortized Cost	1,000	1,000
Investment Securities Held-to-Maturity, Gross Unrealized Gains		1
Investment Securities Held-to-Maturity, Gross Unrealized Losses	(10)
Investment Securities Held-to-Maturity, Estimated Fair Value	$ 990	$ 1,001

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Investment Securities - Additional Information (Details)	3 Months Ended		9 Months Ended
	Jun. 30, 2018 USD ($) Security	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) Security	Jun. 30, 2017 USD ($)	Sep. 30, 2017 USD ($) Security
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Sales of held-to-maturity securities	$ 0	$ 0	$ 0	$ 0
Carrying value of held-to-maturity securities pledged to secure public deposits	$ 1,000,000		$ 1,000,000		$ 1,000,000
Number of available-for-sale securities in unrealized loss position less than 12 months | Security	34		34		8
Number of available-for-sale securities in unrealized loss position greater than 12 months | Security	6		6		0
Sales of available-for-sale securities	$ 0	$ 0	$ 0	$ 0
Carrying value of available-for-sale securities pledged to secure public deposits	22,198,000		22,198,000		$ 14,345,000
Collateral Pledged
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Carrying value of held-to-maturity securities pledged to secure public deposits	1,000,000		1,000,000		1,000,000
Carrying value of available-for-sale securities pledged to secure public deposits	490,000		$ 490,000		502,000
U.S. Government Sponsored Enterprises
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Number of debt financing security matures within two year | Security			1
Carrying value of held-to-maturity securities pledged to secure public deposits	$ 1,000,000		$ 1,000,000		$ 1,000,000

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Investment Securities - Schedule of Investment Securities Available-for-Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	$ 22,921	$ 14,258
Investment securities available-for-sale, Gross Unrealized Gains	5	125
Investment securities available-for-sale, Gross Unrealized Losses	(728)	(38)
Investment securities available-for-sale, Estimated Fair Value	22,198	14,345
Municipal Securities - Tax Exempt
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	5,704	5,756
Investment securities available-for-sale, Gross Unrealized Gains	5	119
Investment securities available-for-sale, Gross Unrealized Losses	(122)	(2)
Investment securities available-for-sale, Estimated Fair Value	5,587	5,873
Municipal Securities - Taxable
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	3,126
Investment securities available-for-sale, Gross Unrealized Losses	(138)
Investment securities available-for-sale, Estimated Fair Value	2,988
Government Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	502	502
Investment securities available-for-sale, Gross Unrealized Losses	(12)
Investment securities available-for-sale, Estimated Fair Value	490	502
Government Agency Mortgage-Backed Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	13,589	8,000
Investment securities available-for-sale, Gross Unrealized Gains		6
Investment securities available-for-sale, Gross Unrealized Losses	(456)	(36)
Investment securities available-for-sale, Estimated Fair Value	$ 13,133	$ 7,970

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Investment Securities - Schedule of Amortized Cost and Estimated Fair Value of Investment Securities Available-for-Sale by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	$ 22,921	$ 14,258
Investment securities available-for-sale, Estimated Fair Value	22,198	14,345
Municipal Securities - Tax Exempt
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, 1 to 5 years, Amortized Cost	491
Investment securities available-for-sale, 5 to 10 years, Amortized Cost	5,213
Investment securities available-for-sale, Amortized Cost	5,704	5,756
Investment securities available-for-sale, 1 to 5 years, Estimated Fair Value	491
Investment securities available-for-sale, 5 to 10 years, Estimated Fair Value	5,096
Investment securities available-for-sale, Estimated Fair Value	5,587	5,873
Municipal Securities - Taxable
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, 5 to 10 years, Amortized Cost	1,127
Investment securities available-for-sale, Greater than 10 years, Amortized Cost	1,999
Investment securities available-for-sale, Amortized Cost	3,126
Investment securities available-for-sale, 5 to 10 years, Estimated Fair Value	1,094
Investment securities available-for-sale, Greater than 10 years, Estimated Fair Value	1,894
Investment securities available-for-sale, Estimated Fair Value	2,988
Government Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, 1 to 5 years, Amortized Cost	502
Investment securities available-for-sale, Amortized Cost	502	502
Investment securities available-for-sale, 1 to 5 years, Estimated Fair Value	490
Investment securities available-for-sale, Estimated Fair Value	490	502
Government Agency Mortgage-Backed Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	13,589	8,000
Investment securities available-for-sale, Estimated Fair Value	$ 13,133	$ 7,970

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Loans and Allowance for Loan Losses - Summary of Major Classifications of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2016
Loans And Leases Receivable Disclosure [Line Items]
Total loans, gross	$ 227,295	$ 217,744	$ 213,099
Less allowance for loan losses	(4,009)	(4,551)	(4,553)	$ (4,309)
Total loans, net	223,286	213,193
Commercial (Secured by Real Estate)
Loans And Leases Receivable Disclosure [Line Items]
Total loans, gross	37,491	29,861	27,556
Less allowance for loan losses	(1,238)	(1,548)	(1,525)	(1,595)
Commercial and Industrial
Loans And Leases Receivable Disclosure [Line Items]
Total loans, gross	27,613	21,060	20,686
Less allowance for loan losses	(1,592)	(863)	(830)	(643)
Construction, Land and Acquisition & Development
Loans And Leases Receivable Disclosure [Line Items]
Total loans, gross	21,475	25,165	24,199
Less allowance for loan losses	(215)	(349)	(339)	(143)
Residential Mortgage 1-4 Family
Loans And Leases Receivable Disclosure [Line Items]
Total loans, gross	137,986	138,875
Consumer Installment
Loans And Leases Receivable Disclosure [Line Items]
Total loans, gross	2,730	2,783	2,777
Less allowance for loan losses	$ (67)	$ (79)	$ (40)	$ (36)

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Loans and Allowance for Loan Losses - Additional Information (Details)	9 Months Ended
	Jun. 30, 2018 USD ($) Contract	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)
Financing Receivable Recorded Investment Past Due [Line Items]
Qualifying loans pledged to secure the line of credit from FHLB	$ 123,949,000	$ 137,462,000
Number of contracts | Contract	0
Pre-modification outstanding recorded investment	$ 0
Post-modification outstanding recorded investment	0
Allowance for loan losses	4,009,000	4,551,000	$ 4,553,000	$ 4,309,000
Modified Loan Terms
Financing Receivable Recorded Investment Past Due [Line Items]
Allowance for loan losses	9,000	12,000
Greater than 90 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	$ 0	$ 0

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Loans and Allowance for Loan Losses - Summary of Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Sep. 30, 2017
Allowance for loan losses:
Beginning balance	$ 4,551	$ 4,309
Provision	300	0
Charge-offs	(1,171)	(70)
Recoveries	329	314
Ending balance	4,009	4,553
Ending allowance attributable to loans:
Individually evaluated for impairment	11	5
Collectively evaluated for impairment	3,998	4,548
Ending balance	4,009	4,553
Loans:
Individually evaluated for impairment	8,108	7,661
Collectively evaluated for impairment	219,187	205,438
Total loans	227,295	213,099	$ 217,744
Commercial (Secured by Real Estate)
Allowance for loan losses:
Beginning balance	1,548	1,595
Provision	(412)	(122)
Recoveries	102	52
Ending balance	1,238	1,525
Ending allowance attributable to loans:
Individually evaluated for impairment	3	2
Collectively evaluated for impairment	1,235	1,523
Ending balance	1,238	1,525
Loans:
Individually evaluated for impairment	1,994	1,922
Collectively evaluated for impairment	35,497	25,634
Total loans	37,491	27,556	29,861
Commercial and Industrial
Allowance for loan losses:
Beginning balance	863	643
Provision	1,807	202
Charge-offs	(1,100)	(15)
Recoveries	22
Ending balance	1,592	830
Ending allowance attributable to loans:
Collectively evaluated for impairment	1,592	830
Ending balance	1,592	830
Loans:
Individually evaluated for impairment	277	37
Collectively evaluated for impairment	27,336	20,649
Total loans	27,613	20,686	21,060
Construction, Land and Acquisition & Development
Allowance for loan losses:
Beginning balance	349	143
Provision	(134)	196
Ending balance	215	339
Ending allowance attributable to loans:
Collectively evaluated for impairment	215	339
Ending balance	215	339
Loans:
Collectively evaluated for impairment	21,475	24,199
Total loans	21,475	24,199	25,165
Residential Mortgage
Allowance for loan losses:
Beginning balance	1,704	1,882
Provision	(970)	(278)
Charge-offs	(44)	(41)
Recoveries	205	253
Ending balance	895	1,816
Ending allowance attributable to loans:
Individually evaluated for impairment	8	3
Collectively evaluated for impairment	887	1,813
Ending balance	895	1,816
Loans:
Individually evaluated for impairment	5,835	5,698
Collectively evaluated for impairment	132,151	132,183
Total loans	137,986	137,881	138,875
Consumer Installment
Allowance for loan losses:
Beginning balance	79	36
Provision	15	9
Charge-offs	(27)	(14)
Recoveries		9
Ending balance	67	40
Ending allowance attributable to loans:
Collectively evaluated for impairment	67	40
Ending balance	67	40
Loans:
Individually evaluated for impairment	2	4
Collectively evaluated for impairment	2,728	2,773
Total loans	2,730	2,777	$ 2,783
Unallocated
Allowance for loan losses:
Beginning balance	8	10
Provision	(6)	(7)
Ending balance	2	3
Ending allowance attributable to loans:
Collectively evaluated for impairment	2	3
Ending balance	$ 2	$ 3

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Loans and Allowance for Loan Losses - Summary of Impaired Loans (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Sep. 30, 2017
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	$ 5,445	$ 5,697
Unpaid Principal Balance, With no related allowance recorded	9,339	10,426
Average Recorded Investment, With no related allowance recorded	5,799	5,755
Interest Income Recognized, With no related allowance recorded	155	58
Recorded Investment, With an allowance recorded	2,663	2,495
Unpaid Principal Balance, With an allowance recorded	2,704	2,495
Allocated Related Allowance, With an allowance recorded	11	14
Average Recorded Investment, With an allowance recorded	2,655	2,530
Interest Income Recognized, With an allowance recorded	92	38
Total impaired loans, Recorded Investment	8,108	8,192
Total impaired loans, Unpaid Principal Balance	12,043	12,921
Total impaired loans, Allocated Related Allowance	11	14
Total impaired loans, Average Recorded Investment	8,454	8,285
Total impaired loans, Interest Income Recognized	247	96
Commercial (Secured by Real Estate)
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	211	83
Unpaid Principal Balance, With no related allowance recorded	1,194	2,745
Average Recorded Investment, With no related allowance recorded	231	115
Interest Income Recognized, With no related allowance recorded	7	7
Recorded Investment, With an allowance recorded	1,783	1,810
Unpaid Principal Balance, With an allowance recorded	1,783	1,810
Allocated Related Allowance, With an allowance recorded	3	10
Average Recorded Investment, With an allowance recorded	1,802	1,834
Interest Income Recognized, With an allowance recorded	60	28
Commercial and Industrial
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	277
Unpaid Principal Balance, With no related allowance recorded	1,383
Average Recorded Investment, With no related allowance recorded	853
Residential Mortgage
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	4,955	5,611
Unpaid Principal Balance, With no related allowance recorded	6,760	7,678
Average Recorded Investment, With no related allowance recorded	4,712	5,636
Interest Income Recognized, With no related allowance recorded	148	51
Recorded Investment, With an allowance recorded	880	685
Unpaid Principal Balance, With an allowance recorded	921	685
Allocated Related Allowance, With an allowance recorded	8	4
Average Recorded Investment, With an allowance recorded	853	696
Interest Income Recognized, With an allowance recorded	32	10
Consumer Installment
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	2	3
Unpaid Principal Balance, With no related allowance recorded	2	3
Average Recorded Investment, With no related allowance recorded	$ 3	$ 4

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Loans and Allowance for Loan Losses - Summary of Recorded Investment in Past Due Loans, as Well as Nonaccrual Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017	Jun. 30, 2017
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	$ 3,910	$ 5,108
Current	223,385	212,636
Total loans	227,295	217,744	$ 213,099
Nonaccrual	3,785	3,669
30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	792	216
60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,659	3,288
90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,459	1,604
Commercial (Secured by Real Estate)
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	251	45
Current	37,240	29,816
Total loans	37,491	29,861	27,556
Nonaccrual	252	129
Commercial (Secured by Real Estate) | 60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	212
Commercial (Secured by Real Estate) | 90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	39	45
Commercial and Industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	758	64
Current	26,855	20,996
Total loans	27,613	21,060	20,686
Nonaccrual	324
Commercial and Industrial | 30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	434	19
Commercial and Industrial | 60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	26	45
Commercial and Industrial | 90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	298
Construction, Land and Acquisition & Development
Financing Receivable Recorded Investment Past Due [Line Items]
Current	21,475	25,165
Total loans	21,475	25,165	24,199
Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	2,841	4,968
Current	135,145	133,907
Total loans	137,986	138,875	137,881
Nonaccrual	3,184	3,540
Residential Mortgage | 30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	325	173
Residential Mortgage | 60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,419	3,236
Residential Mortgage | 90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,097	1,559
Consumer Installment
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	60	31
Current	2,670	2,752
Total loans	2,730	2,783	$ 2,777
Nonaccrual	25
Consumer Installment | 30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	33	24
Consumer Installment | 60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	2	$ 7
Consumer Installment | 90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	$ 25

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Loans and Allowance for Loan Losses - Summary of Troubled Debt Restructurings (Details)	9 Months Ended
	Jun. 30, 2018 USD ($) Contract	Jun. 30, 2017 USD ($) Contract
Financing Receivable Modifications [Line Items]
Number of Contracts | Contract	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post-Modification Outstanding Recorded Investment	$ 0
Residential Mortgage
Financing Receivable Modifications [Line Items]
Number of Contracts | Contract		1
Pre-Modification Outstanding Recorded Investment		$ 18,000
Post-Modification Outstanding Recorded Investment		$ 18,000
Troubled Debt Restructurings that have Subsequently Defaulted, Number of Contracts | Contract		1
Troubled Debt Restructurings that have Subsequently Defaulted, Recorded Investment		$ 76,000

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Loans and Allowance for Loan Losses - Summary of Risk Category of Loans by Class of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Composition Of Loan Portfolio [Line Items]
Total	$ 227,295	$ 217,744
Pass
Composition Of Loan Portfolio [Line Items]
Total	216,920	211,104
Special Mention
Composition Of Loan Portfolio [Line Items]
Total	66	224
Substandard
Composition Of Loan Portfolio [Line Items]
Total	10,309	6,416
Commercial (Secured by Real Estate)
Composition Of Loan Portfolio [Line Items]
Total	37,491	29,861
Commercial (Secured by Real Estate) | Pass
Composition Of Loan Portfolio [Line Items]
Total	36,911	29,416
Commercial (Secured by Real Estate) | Substandard
Composition Of Loan Portfolio [Line Items]
Total	580	445
Commercial and Industrial
Composition Of Loan Portfolio [Line Items]
Total	27,613	21,060
Commercial and Industrial | Pass
Composition Of Loan Portfolio [Line Items]
Total	27,289	21,015
Commercial and Industrial | Substandard
Composition Of Loan Portfolio [Line Items]
Total	324	45
Construction, Land and Acquisition & Development
Composition Of Loan Portfolio [Line Items]
Total	21,475	25,165
Construction, Land and Acquisition & Development | Pass
Composition Of Loan Portfolio [Line Items]
Total	21,439	25,165
Construction, Land and Acquisition & Development | Substandard
Composition Of Loan Portfolio [Line Items]
Total	36
Residential Mortgage
Composition Of Loan Portfolio [Line Items]
Total	137,986	138,875
Residential Mortgage | Pass
Composition Of Loan Portfolio [Line Items]
Total	128,594	132,725
Residential Mortgage | Special Mention
Composition Of Loan Portfolio [Line Items]
Total	66	224
Residential Mortgage | Substandard
Composition Of Loan Portfolio [Line Items]
Total	9,326	5,926
Consumer Installment
Composition Of Loan Portfolio [Line Items]
Total	2,730	2,783
Consumer Installment | Pass
Composition Of Loan Portfolio [Line Items]
Total	2,687	$ 2,783
Consumer Installment | Substandard
Composition Of Loan Portfolio [Line Items]
Total	$ 43

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Deposits - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Deposits [Abstract]
Time certificates of deposit in denomination of $250,000 or more	$ 11,253	$ 10,151
Time certificates of deposit in denomination $100,000 or more	$ 40,239	$ 36,885

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Borrowings - Schedule of Federal Home Loan Bank of Atlanta (FHLB) Advances (Details) - USD ($)	9 Months Ended
	Jun. 30, 2018	Sep. 30, 2017
Federal Home Loan Bank Advances [Line Items]
Advances from FHLB	$ 7,570,000	$ 0
Octboer 26, 2020
Federal Home Loan Bank Advances [Line Items]
Advances from FHLB, Advance Date	Oct. 25, 2017
Advances from FHLB	$ 2,710,000
Advances from FHLB, Interest Rate	1.98%
Advances from FHLB, Maturity	Oct. 26, 2020
Advances from FHLB, Rate	Fixed
Advances from FHLB, Call Feature	None
October 25, 2019
Federal Home Loan Bank Advances [Line Items]
Advances from FHLB, Advance Date	Oct. 25, 2017
Advances from FHLB	$ 1,250,000
Advances from FHLB, Interest Rate	1.81%
Advances from FHLB, Maturity	Oct. 25, 2019
Advances from FHLB, Rate	Fixed
Advances from FHLB, Call Feature	None
November 13, 2019
Federal Home Loan Bank Advances [Line Items]
Advances from FHLB, Advance Date	Nov. 13, 2017
Advances from FHLB	$ 1,190,000
Advances from FHLB, Interest Rate	1.87%
Advances from FHLB, Maturity	Nov. 13, 2019
Advances from FHLB, Rate	Fixed
Advances from FHLB, Call Feature	None
November 13, 2020
Federal Home Loan Bank Advances [Line Items]
Advances from FHLB, Advance Date	Nov. 13, 2017
Advances from FHLB	$ 2,420,000
Advances from FHLB, Interest Rate	2.02%
Advances from FHLB, Maturity	Nov. 13, 2020
Advances from FHLB, Rate	Fixed
Advances from FHLB, Call Feature	None

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Borrowings - Additional Information (Details) - USD ($)	Jun. 30, 2018	Sep. 30, 2017
Debt Disclosure [Abstract]
Federal Home Loan Bank advances	$ 7,570,000	$ 0
Advances from FHLB collateralized by certain loans	123,949,000
Investment in FHLB stock	$ 580,400	$ 216,000

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Employee Stock Ownership Plan - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Apr. 30, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Note payable balance of ESOP	$ 2,820,473		$ 2,820,473		$ 2,954,990
Shares purchased by ESOP					295,499
ESOP expense	$ 33,000	$ 64,000	$ 104,000	$ 64,000
ESOP released shares	11,820		11,820

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Stockholders' Equity - Additional Information (Details) - USD ($)		3 Months Ended	6 Months Ended
	Apr. 27, 2017	Dec. 31, 2017	Jun. 30, 2018
Stockholders Equity [Line Items]
Deferred tax assets write down due to TCJA		$ 1,000,000
Federal corporate income tax rate		35.00%	21.00%
Stock issued, price per share	$ 10.00
Shares sold as percentage of outstanding shares of common stock	46.00%
Community First Bancshares, MHC
Stockholders Equity [Line Items]
Common stock ownership percentage	54.00%
ESOP
Stockholders Equity [Line Items]
Percentage of common stock purchased	3.92%
Federal
Stockholders Equity [Line Items]
Deferred federal income tax liability			$ 0
Retained Earnings
Stockholders Equity [Line Items]
Deferred tax liabilities, tax deferred income			$ 3,625,000
Common Stock
Stockholders Equity [Line Items]
Sale of common stock shares	3,467,595

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Fair Value Measurements and Disclosures - Additional Information (Details) - USD ($)	Jun. 30, 2018	Sep. 30, 2017
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale, Estimated Fair Value	$ 22,198,000	$ 14,345,000
Fair Value, Measurements, Recurring | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale, Estimated Fair Value	$ 22,198,000	$ 14,345,000

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Fair Value Measurements and Disclosures - Schedule of Assets Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	$ 8,108	$ 8,192
Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other real estate owned		61
Impaired loans	8,097	8,178
Total assets at fair value	8,097	8,239
Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other real estate owned		61
Impaired loans	8,097	8,178
Total assets at fair value	$ 8,097	$ 8,239

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Fair Value Measurements and Disclosures - Schedule of Carrying Amounts and Estimated Fair Values of Company's Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Financial assets:
Investment securities available-for-sale	$ 22,198	$ 14,345
Investment securities held-to-maturity	990	1,001
Carrying Amount
Financial assets:
Cash and cash equivalents	26,323	35,943
Investment securities available-for-sale	22,198	14,345
Investment securities held-to-maturity	1,000	1,000
FHLB Stock	580	216
Loans held for sale		117
Loans, net	223,286	213,193
Cash surrender value of life insurance	7,135
Financial liabilities:
Deposits	203,446	194,613
FHLB advances	7,570
Estimated Fair Value
Financial assets:
Cash and cash equivalents	26,323	35,943
Investment securities available-for-sale	22,198	14,345
Investment securities held-to-maturity	990	1,001
FHLB Stock	580	216
Loans held for sale		117
Loans, net	191,305	198,637
Cash surrender value of life insurance	7,135
Financial liabilities:
Deposits	203,075	$ 194,300
FHLB advances	$ 7,703