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 March 31, 2019

OR

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

For the transition period

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)

(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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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	☒	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  ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CFBI	The NASDAQ Stock Market LLC

As of May 10, 2019, 7,424,874 shares of the Registrant’s common stock, par value $0.01 per share, were 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 March 31, 2019 (unaudited) and December 31, 2018 (unaudited)	2
	Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018 (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2019 and 2018 (unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2019 and 2018 (unaudited)	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018 (unaudited)	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	30
	SIGNATURES	31

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Balance Sheets

(unaudited)

	March 31, 2019			December 31, 2018
	(In thousands)
Assets
Cash and due from banks, including reserve requirement of $1,867 and $1,834 at   March 31, 2019 and December 31, 2018, respectively	$	4,633			3,817
Interest-earning deposits in other depository institutions		26,036			33,212
Cash and cash equivalents		30,669			37,029
Investment securities held-to-maturity (estimated fair values of $996 and $993)		1,000			1,000
Investment securities available-for-sale		21,143			21,145
Federal Home Loan Bank stock		278			580
Loans, net		235,366			227,424
Other real estate owned		283			508
Premises and equipment, net		8,782			8,896
Bank owned life insurance		7,303			7,251
Accrued interest receivable and other assets		3,197			3,862
Total assets	$	308,021			307,695
Liabilities and Stockholders' Equity
Liabilities:
Savings accounts	$	25,896			24,511
Interest-bearing checking		55,996			53,752
Market rate checking		25,280			24,936
Non-interest bearing checking		29,995			28,472
Certificate of deposits		89,791			87,510
Total deposits		226,958			219,181
Federal Home Loan Bank advances		—			7,570
Accrued interest payable and other liabilities		4,744			4,546
Total liabilities		231,702			231,297
Stockholders' equity:
Common stock (par value $0.01 per share, 19,000,000 shares authorized, 7,538,250    issued and 7,424,874 outstanding at March 31, 2019 and 7,538,250 issued and    7,478,992 outstanding at December 31, 2018)		75			75
Preferred stock (1,000,000 shares authorized, no shares outstanding)		—			—
Additional paid in capital		33,079			33,078
Treasury stock, 113,376 shares at March 31, 2019, and 59,258 shares at    December 31, 2018, at cost		(1,268	)		(668	)
Unearned ESOP shares		(2,659	)		(2,689	)
Retained earnings		47,160			47,043
Accumulated other comprehensive loss		(68	)		(441	)
Total stockholders' equity		76,319			76,398
Total liabilities and stockholders' equity	$	308,021			307,695

See accompanying notes to unaudited consolidated financial statements.

2

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Statements of Operations

(unaudited)

	Three Months Ended March 31,
	2019			2018
	(In thousands)
Interest income:
Loans, including fees	$	3,244			3,137
Investment securities, including dividends		142			154
Interest-earning deposits		177			76
Total interest income		3,563			3,367
Interest expense:
Deposits		511			316
Borrowings		24			37
Total interest expense		535			353
Net interest income		3,028			3,014
Non-interest income:
Service charges on deposit accounts		173			167
Small Business Administration (SBA) loan fees		5			168
Other		178			121
Total non-interest income		356			456
Non-interest expenses:
Salaries and employee benefits		1,798			1,735
Deferred compensation		52			52
Occupancy		478			413
Advertising		32			27
Data processing		262			234
Other real estate owned		2			8
Net gain on sale of other real estate owned		(34	)		(20	)
Legal and accounting		274			264
Organizational dues and subscriptions		80			73
Director compensation		47			55
Federal deposit insurance premiums		16			16
Other		279			225
Total non-interest expenses		3,286			3,082
Income before income taxes		98			388
Income tax (benefit) expense		(19	)		55
Net income	$	117			333
Basic and diluted earnings per share	$	0.02		$	0.04

See accompanying notes to unaudited consolidated financial statements.

3

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

	Three Months Ended March 31,
	2019		2018
	(In thousands)
Net income	$	117	$	333
Other comprehensive income (loss):
Net unrealized gain (loss) on available for sale securities, net of taxes of $131 and $(135)		373		(381	)
Total other comprehensive income (loss)		373		(381	)
Total comprehensive income (loss)	$	490	$	(48	)

See accompanying notes to unaudited consolidated financial statements.

4

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

	Three Months Ended March 31, 2018  and March 31, 2019
														Accumulated
			Additional											Other
	Common		Paid In			Treasury			Unearned			Retained		Comprehensive
	Stock		Capital			Stock			ESOP Shares			Earnings		Income (Loss)			Total
					(In thousands)
Beginning balance December 31,    2017	$	75	$	33,063		$	—		$	(2,807	)	$	45,485	$	(152	)	$	75,664
ESOP loan payment and    release of ESOP shares		—		4			—			29			—		—			33
Change in unrealized loss    on investment securities    available-for-sale		—		—			—			—			—		(381	)		(381	)
Net income		—		—			—			—			333		—			333
Ending balance March 31, 2018	$	75	$	33,067		$	—		$	(2,778	)	$	45,818	$	(533	)	$	75,649
Beginning balance December 31,    2018	$	75	$	33,078		$	(668	)	$	(2,689	)	$	47,043	$	(441	)	$	76,398
ESOP loan payment and    release of ESOP shares		—		1			—			30			—		—			31
Purchase of treasury stock		—		—			(600	)		—			—		—			(600	)
Change in unrealized gain    on investment securities    available-for-sale		—		—			—			—			—		373			373
Net income		—		—			—			—			117		—			117
Ending balance March 31, 2019	$	75	$	33,079		$	(1,268	)	$	(2,659	)	$	47,160	$	(68	)	$	76,319

See accompanying notes to unaudited consolidated financial statements.

5

COMMUNITY FIRST BANCSHARES, INC.

Consolidated Statements of Cash Flows

(unaudited)

	Three Months Ended March 31,
	2019			2018
	(In thousands)
Cash flows from operating activities:
Net income	$	117			333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		228			223
Deferred income tax		—			(156	)
ESOP expense		31			33
Net gain on sale of other real estate owned		(34	)		(20	)
Increase in cash surrender value of life insurance		(52	)		(58	)
Change in:
Accrued interest receivable and other assets		534			329
Accrued interest payable and other liabilities		198			(250	)
Net cash provided by operating activities		1,022			434
Cash flows from investing activities:
Purchases of premises and equipment		(68	)		(714	)
Proceeds from paydowns of investment securities available-for-sale		460			500
Purchases of other investments		—			(43	)
Proceeds from sales of other investments		302			—
Net change in loans		(7,942	)		(10,902	)
Proceeds from sales of other real estate owned		259			185
Net cash used in investing activities		(6,989	)		(10,974	)
Cash flows from financing activities:
Net change in demand and savings deposits		7,777			4,777
Purchase of treasury stock		(600	)		—
Repayment of FHLB advances		(7,570	)		—
Net cash (used in) provided by financing activities		(393	)		4,777
Net change in cash and cash equivalents		(6,360	)		(5,763	)
Cash and cash equivalents at beginning of period		37,029			25,098
Cash and cash equivalents at end of period	$	30,669			19,335
Supplemental disclosures of cash flow information:
Cash paid for interest	$	555			378
Supplemental disclosures of noncash investing activities:
Other real estate owned acquired through foreclosures		—			52

See accompanying notes to unaudited consolidated financial statements.

6

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 such customary banking services 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.  In October 2018, we opened an indirect automobile loan division, Community First Auto.

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 March 31, 2019 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 September 30, 2018 Form 10-K. The results of operations for the quarter ended March 31, 2019, are not necessarily indicative of the results to be expected for a full year or for any other period.

On October 25, 2018, both the Company and the Bank changed their fiscal year end from September 30 to December 31.  This change will bring the Company and the Bank in line with industry standards and will improve accounting and reporting efficiencies by making the fiscal year-end and the calendar year-end the same.  As a result of the change in fiscal year, the Company filed a Transition Report on Form 10-Q covering the transition period from October 1, 2018 to December 31, 2018.

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, 2018 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 the same quarter in the previous year.  The net income for the current period was $117,000 and the weighted average common shares outstanding were 7,451,933.  The net income for the same quarter in the previous year was $333,000 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 March 31, 2019 and December 31, 2018 are as follows: (in thousands)

March 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government sponsored enterprises	$	1,000		—		(4	)		996
December 31, 2018                                                                                       _
U.S. Government sponsored enterprises	$	1,000		—		(7	)		993

7

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The U.S. government sponsored enterprise security as of March 31, 2019 is comprised of one debt financing security issued by a government agency that matures withinone year.

There were no sales of securities held-to-maturity during the three months ended March 31, 2019 or 2018.

The one held-to-maturity security was pledged to secure public deposits at both March 31, 2019 and December 31, 2018.

Investment Securities Available-for-Sale

Investment securities available-for-sale at March 31, 2019 and December 31, 2018 are as follows: (in thousands)

	Amortized		Gross Unrealized		Gross Unrealized			Estimated
March 31, 2019	Cost		Gains		Losses			Fair Value
Municipal securities - tax exempt	$	5,652		78		(1	)		5,729
Municipal securities - taxable		3,116		12		(29	)		3,099
Government agency securities		501		—		(6	)		495
Government agency mortgage-backed securities		11,966		—		(146	)		11,820
Total	$	21,235		90		(182	)		21,143
December 31, 2018                                                                                       _
Municipal securities - tax exempt	$	5,670		12		(73	)		5,609
Municipal securities - taxable		3,119		—		(132	)		2,987
Government agency securities		501		—		(10	)		491
Government agency mortgage-backed securities		12,451		—		(393	)		12,058
Total	$	21,741		12		(608	)		21,145

There were no securities in an unrealized loss position less than 12 months and 26 securities were in an unrealized loss position 12 months or greater as of March 31, 2019.  The unrealized losses on the debt securities arose due to changing interest rates and market conditions and are considered temporary because of acceptable investment grades where the repayment sources of principal and interest are largely backed by U.S. Government sponsored agencies or financially stable municipalities.  The Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis which may be at maturity.

8

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

The amortized cost and estimated fair value of investment securities available-for-sale at March 31, 2019, 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	$	—		—
Greater than 1 to 5 years		749		764
Greater than 5 to 10 years		4,903		4,965
Greater than 10 years		—		—
		5,652		5,729
Municipal securities - taxable
Within 1 year		—		—
Greater than 1 to 5 years		—		—
Greater than 5 to 10 years		2,106		2,107
Greater than 10 years		1,010		992
		3,116		3,099
Government agency securities
Within 1 year		—		—
Greater than 1 to 5 years		501		495
Greater than 5 to 10 years		—		—
Greater than 10 years		—		—
		501		495
Government agency mortgage-backed securities		11,966		11,820
Total	$	21,235		21,143

There were no sales of securities available-for-sale during the three months ended March 31, 2019 or 2018.

Securities with a carrying value of approximately $1.8 millionwere pledged to secure public deposits at March 31, 2019 and December 31, 2018.

(3) Loans and Allowance for Loan Losses

Major classifications of loans, by collateral code, at March 31, 2019 and December 31, 2018 are summarized as follows: (in thousands)

	March 31, 2019			December 31, 2018
Commercial (secured by real estate)	$	53,082			50,716
Commercial and industrial		26,256			25,612
Construction, land and acquisition & development		16,475			12,367
Residential mortgage 1-4 family		132,352			138,156
Consumer installment		11,347			4,595
Total		239,512			231,446
Less allowance for loan losses		(4,146	)		(4,022	)
Total loans, net	$	235,366			227,424

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 $119.9 million and $125.0 million were pledged to secure the line of credit from Federal Home Loan Bank (the “FHLB”) at March 31, 2019 and December 31, 2018, respectively.

9

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 as of and for the three months ended March 31, 2019and 2018: (in thousands)

March 31, 2019	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	$	1,619			1,520			108			641			127			7			4,022
Provision		24			(9	)		24			(192	)		154			(1	)		—
Charge-offs		—			(26	)		—			—			(1	)		—			(27	)
Recoveries		25			18			—			107			1			—			151
Ending balance	$	1,668			1,503			132			556			281			6			4,146
Ending allowance attributable to loans:
Individually evaluated for impairment	$	3			—			—			10			—			—			13
Collectively evaluated for impairment		1,665			1,503			132			546			281			6			4,133
Total ending allowance	$	1,668			1,503			132			556			281			6			4,146
Loans:
Individually evaluated for impairment	$	2,006			—			—			3,332			1			—			5,339
Collectively evaluated for impairment		51,076			26,256			16,475			129,020			11,346			—			234,173
Total loans	$	53,082			26,256			16,475			132,352			11,347			—			239,512
March 31, 2018
Allowance for loan losses:
Beginning balance	$	1,747			803			329			1,648			74			9			4,610
Provision		(420	)		805			(64	)		(342	)		22			(1	)		—
Charge-offs		—			(400	)		—			(45	)		(27	)		—			(472	)
Recoveries		1			22			—			5			—			—			28
Ending balance	$	1,328			1,230			265			1,266			69			8			4,166
Ending allowance attributable to loans:
Individually evaluated for impairment	$	11			—			—			7			—			—			18
Collectively evaluated for impairment		1,317			1,230			265			1,259			69			8			4,148
Total ending allowance	$	1,328			1,230			265			1,266			69			8			4,166
Loans:
Individually evaluated for impairment	$	1,991			992			—			5,830			3			—			8,816
Collectively evaluated for impairment		35,365			25,757			21,990			136,193			2,580			—			221,885
Total loans	$	37,356			26,749			21,990			142,023			2,583			—			230,701

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.

10

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Impaired loans at March 31, 2019 and December 31, 2018 were as follows: (in thousands)

March 31, 2019	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	262		1,119		—		242		6
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		2,828		3,562		—		2,468		37
Consumer installment		1		1		—		1		—
		3,091		4,682		—		2,711		43
With an allowance recorded:
Commercial (secured by real estate)		1,744		1,744		3		1,750		26
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		504		504		10		497		2
Consumer installment		—		—		—		—		—
		2,248		2,248		13		2,247		28
Total impaired loans	$	5,339		6,930		13		4,958		71
December 31, 2018
With no related allowance recorded:
Commercial (secured by real estate)	$	167		1,023		—		185		6
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		3,458		4,265		—		3,287		37
Consumer installment		1		1		—		6		—
		3,626		5,289		—		3,478		43
With an allowance recorded:
Commercial (secured by real estate)		1,759		1,759		3		1,777		27
Commercial and industrial		27		27		—		14		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		140		139		2		141		2
Consumer installment		—		—		—		—		—
		1,926		1,925		5		1,932		29
Total impaired loans	$	5,552		7,214		5		5,410		72

11

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 March 31, 2019 and December 31, 2018by class of loans: (in thousands)

March 31, 2019	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)	$	161		238		—		399		52,683		53,082		291
Commercial and industrial		—		—		—		—		26,256		26,256		—
Construction, land and acquisition &    development		—		—		—		—		16,475		16,475		—
Residential mortgage		1,316		—		107		1,423		130,929		132,352		1,573
Consumer installment		10		36		—		46		11,301		11,347		—
Total	$	1,487		274		107		1,868		237,644		239,512		1,864
December 31, 2018
Commercial (secured by real estate)	$	—		—		—		—		50,716		50,716		56
Commercial and industrial		—		—		—		—		25,612		25,612		27
Construction, land and acquisition &    development		—		—		—		—		12,367		12,367		—
Residential mortgage		196		1,039		228		1,463		136,693		138,156		1,744
Consumer installment		9		1		1		11		4,584		4,595		1
Total	$	205		1,040		229		1,474		229,972		231,446		1,828

There were no loans past due 90 days or greater and still accruing interest as of March 31, 2019 and December 31, 2018.

There were no new troubled debt restructurings during the three months ended March 31, 2019 or 2018.  No troubled debt restructurings subsequently defaulted during the three months ended March 31, 2019 or 2018.

The Bank has allocated an allowance for loan losses of approximately $6,000 and $5,000 to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2019 and December 31, 2018, 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.

12

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

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 March 31, 2019, and December 31, 2018, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: (in thousands)

March 31, 2019	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	52,633		—		449		—		53,082
Commercial and industrial		26,256		—		—		—		26,256
Construction, land and acquisition & development		16,475		—		—		—		16,475
Residential mortgage		127,898		65		4,389		—		132,352
Consumer installment		11,300		—		47		—		11,347
Total	$	234,562		65		4,885		—		239,512

December 31, 2018	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	50,395		—		321		—		50,716
Commercial and industrial		25,585		—		27		—		25,612
Construction, land and acquisition & development		12,367		—		—		—		12,367
Residential mortgage		132,167		65		5,924		—		138,156
Consumer installment		4,553		—		42		—		4,595
Total	$	225,067		65		6,314		—		231,446

(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 $15.1 million at March 31, 2019 and $14.2 million at December 31, 2018.  The aggregate amounts of certificates of deposit of $100,000 or more were approximately $45.0 million at March 31, 2019 and $42.4 million at December 31, 2018.  

(5) Borrowings

The following Federal Home Loan Bank of Atlanta (“FHLB”) advances, which required monthly or quarterly interest payments, were outstanding at December 31, 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

All of these advances were repaid during the quarter ended March 31, 2019. The FHLB advances were collateralized by certain loans which totaled approximately $125.0 million at December 31, 2018, and by the Company’s investment in FHLB stock which totaled approximately $580,000 at December 31, 2018.  

The Company had one FHLB letter of credit of $2.5 million and $5.0 million, used to collateralize public deposits, outstanding at March 31, 2019 and December 31, 2018, respectively.

13

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 months ended March 31, 2019 and 2018 was approximately $31,000 and $33,000, respectively.  The balance of the note payable of the ESOP was $2,750,592 at March 31, 2019 and December 31, 2018. Because the source of the loan payments are contributions received by the ESOP from the Company, the related note receivable is shown as a reduction of stockholders’ equity. As of March 31, 2019, 23,600 shares had been released.

(7) 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.

14

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

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

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.

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

The carrying value of the cash surrender value of life insurance reasonably approximates fair value.

Deposits

The fair value of savings 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

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.

15

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

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 $21.1 million at March 31, 2019 and December 31, 2018.  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 March 31, 2019 and December 31, 2018 (in thousands).

March 31, 2019	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		283		283
Impaired loans		—		—		5,326		5,326
Total assets at fair value	$	—		—		5,609		5,609
December 31, 2018	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		508		508
Impaired loans		—		—		5,547		5,547
Total assets at fair value	$	—		—		6,055		6,055

The carrying amounts and estimated fair values (in thousands) of the Company’s financial instruments at March 31, 2019 and December 31, 2018 are as follows:

	March 31, 2019				December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	30,669		30,669		37,029		37,029
Investment securities
available-for-sale	$	21,143		21,143		21,145		21,145
held-to-maturity	$	1,000		996		1,000		993
FHLB Stock	$	278		278		580		580
Loans, net	$	235,366		207,358		227,424		198,403
Cash surrender value of life insurance	$	7,303		7,303		7,251		7,251
Financial liabilities:
Deposits	$	226,958		227,412		219,181		219,319
FHLB advances	$	—		—		7,570		7,656

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.  

16

COMMUNITY FIRST BANCSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

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.

17

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 March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018 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 report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This 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 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;

• changes in tax laws;

• the effects of any Federal government shutdown;

• 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;

18

• 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, 2018.  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.

19

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 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 at March 31, 2019. 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.

Comparison of Financial Condition at March 31, 2019 and December 31, 2018

Total assets increased $326,000, or 0.1%, to $308.0 million at March 31, 2019 from $307.7 million at December 31, 2018.  The increase was due primarily to an increase in loans, offset by a decrease in cash and cash equivalents.  

Cash and cash equivalents decreased $6.4 million, or 17.2%, to $30.7 million at March 31, 2019 from $37.0 million at December 31, 2018. The decrease resulted as we deployed excess cash to fund loan growth and repay borrowings, partially offset by increased deposits.    

Loans held for investment increased $7.9 million, or 3.5%, to $235.4 million at March 31, 2019 from $227.4 million at December 31, 2018.  Construction loans increased $4.1 million, or 33.2%, to $16.5 million at March 31, 2019 from $12.4 million at December 31, 2018 as draws on previously closed construction loans were disbursed and as new construction loans were made, including a $1.3 million Small Business Administration construction loan.  Commercial real estate loans increased $2.4 million, or 4.7% to $53.1 million at March 31, 2019 from $25.6 million at December 31, 2018.  Commercial loans increased $644,000, or 2.5%, to $26.3 million at March 31, 2019 from $25.6 million at December 31, 2018.  Consumer loans increased $6.8 million or 146.9% to $11.3 million at March 31, 2019 from $4.6 million at December 31, 2018, as we opened our indirect automobile lending division, Community First Auto, in a former branch office location in October 2018 and have seen loan volume increase significantly as more automobile dealership relationships were established.These increases were partially offset by a decrease in one-to-four family residential real estate loans of $5.8 million, or 4.2%, to $132.4 million at March 31, 2019 from $138.2 million at December 31, 2018 as mortgage loans continue to be refinanced at lower rates than we offer.  

Securities available-for-sale remained unchanged at $21.1 million at March 31, 2019, and December 31, 2018, as paydowns on mortgage-backed securities were offset by market value increases in the portfolio.  

20

Total deposits increased $7.8 million, or 3.6%, to $227.0 million at March 31, 2019 from $219.2 million at December 31, 2018.  The increase was caused by increases in all deposit account types, including increases of $2.3 million, or 2.6%, in certificates of deposit, $2.2 million, or 4.2%, in interest-bearing checking accounts, $1.5 million, or 5.4%, in non-interest-bearing checking accounts, $1.4 million, or 5.7%, in savings accounts, and $344,000, or 1.4%, in market rate checking accounts.  Deposits have increased largely from the opening of new accounts.  

We had no outstanding borrowings at March 31, 2019, compared to $7.6 million of Federal Home Loan Bank advances at December 31, 2018, as we have funded our operations with excess cash provided by an increase in deposits.      

Stockholders’ equity was $76.3 million at March 31, 2019, compared to $76.4 million at December 31, 2018.  Net income of $117,000 for the three months ended March 31, 2019 and a decrease in accumulated other comprehensive loss were offset by treasury stock repurchases during the quarter.

Average Balance Sheets

The following tables set forth average balance sheets, 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.  

	For the Three Months Ended March 31,
	2019								2018
	Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	231,884		$	3,244		5.60	%	$	218,765		$	3,137		5.74	%
Securities		22,245			134		2.40	%		24,361			146		2.39	%
Interest-earning deposits		21,627			177		3.28	%		19,080			76		1.58	%
Federal Home Loan Bank of Atlanta stock		471			8		7.00	%		540			8		6.16	%
Total interest-earning assets		276,227			3,563		5.16	%		262,746			3,367		5.13	%
Non-interest-earning assets		31,028								23,814
Total assets	$	307,255							$	286,560
Interest-bearing liabilities:
Savings accounts	$	25,376		$	6		0.10	%	$	24,376		$	2		0.04	%
Interest-bearing checking		54,612			99		0.72	%		41,188			59		0.58	%
Market Rate checking accounts		25,062			51		0.82	%		23,036			16		0.27	%
Certificates of Deposits		88,368			355		1.61	%		84,528			239		1.13	%
Total interest-bearing deposits		193,418			511		1.06	%		173,128			316		0.73	%
Borrowings		4,957			24		1.94	%		7,570			37		1.95	%
Total interest-bearing liabilities		198,375			535		1.08	%		180,698			353		0.78	%
Non-interest-bearing liabilities		32,714								30,154
Total liabilities		231,089								210,852
Total stockholders' equity		76,166								75,708
Total liabilities and stockholders' equity	$	307,255							$	286,560
Net interest income				$	3,028							$	3,014
Net interest rate spread (1)							4.08	%							4.35	%
Net interest-earning assets (2)	$	77,852							$	82,048
Net interest margin (3)							4.38	%							4.59	%
Average interest-earning assets to interest-bearing    liabilities		139.25	%							145.41	%

(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 March 31, 2019 vs. 2018
	Increase (Decrease) Due to						Total
							Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	513		$	(406	)	$	107
Securities		(17	)		5			(12	)
Interest-earning deposits and federal funds		11			90			101
Federal Home Loan Bank of Atlanta stock		(4	)		4			—
Total interest-earning assets		503			(307	)		196
Interest-bearing liabilities:
Savings accounts		—			4			4
Interest-bearing checking		23			17			40
Market rate checking		1			34			35
Certificates of deposits		11			105			116
Total deposits		35			160			195
Borrowings		(13	)		—			(13	)
Total interest-bearing liabilities		22			160			182
Change in net interest income	$	481		$	(467	)	$	14

Comparison of Operating Results for the Three Months Ended March 31, 2019 and 2018

General. Net income decreased $216,000 to $117,000 for the three months ended March 31, 2019, compared to $333,000 for the three months ended March 31, 2018.  The decrease was due primarily to an increase in non-interest expenses of $204,000 and a decrease in non-interest income of $100,000.   

Interest Income. Interest income increased $196,000, or 5.8%, to $3.6 million for the three months ended March 31, 2019 from $3.4 million for the three months ended March 31, 2018.  The increase was due to increases in interest income on loans and interest-earning deposits, partially offset by a decrease in interest income on investment securities.  

Interest income on loans increased $107,000, or 3.4%, to $3.2 million for the three months ended March 31, 2019 from $3.1 million for the three months ended March 31, 2018. Our average balance of loans increased $13.1 million, or 6.0%, to $231.9 million for the three months ended March 31, 2019 from $218.8 million for the three months ended March 31, 2018.  The increase in the average balance of loans resulted primarily from the opening of our indirect automobile lending division, Community First Auto, in a former branch office location in October 2018.  Our average yield on loans decreased 14 basis points to 5.60% for the three months ended March 31, 2019 from 5.74% for the three months ended March 31, 2018, due primarily to changes in our loan portfolio composition and competitive pressure on rates.

Interest income on interest-earning deposits increased $101,000 or 132.9%, to $177,000 for the three months ended March 31, 2019 from $76,000 for the three months ended March 31, 2018.  The increase in interest income on interest-earning deposits was due primarily to a 170 basis point increase in yield, reflecting increases in market interest rates.  Our average balance of interest-earning deposits increased $2.5 million, or 13.3%, to $21.6 million for the three months ended March 31, 2019 from $19.1 million for the three months ended March 31, 2018, as increases in customer deposits provided adequate funds to invest in loans and repay borrowings.  

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Interest income on securities (excluding Federal Home Loan Bank stock) decreased $12,000 to $134,000 for the three months ended March 31, 2019 from $146,000 for the three months ended March 31, 2018.  The average balance of securities decreased $2.1 million, or 8.7%, to $22.2 million for the three months ended March 31, 2019 from $24.4 million for the three months ended March 31, 2018.  The average yield on securities increased one basis point, to 2.40% from 2.39%.

Interest Expense. Interest expense increased $182,000, or 51.6%, to $535,000 for the three months ended March 31, 2019, compared to $353,000 for the three months ended March 31, 2018, due to an increase in interest expense on deposits, partially offset by a decrease in interest expense on borrowings.  

We experienced an increase in interest expense for all deposit categories.  Interest expense on certificates of deposit increased $116,000 to $355,000 for the three months ended March 31, 2019 from $239,000 for the three months ended March 31, 2018.  The average rate we paid on certificates of deposit increased 48 basis points to 1.61% for the three months ended March 31, 2019 from 1.13% for the three months ended March 31, 2018, reflecting our increasing interest rates in response to changes in market interest rates.  The average balance of certificates of deposit increased to $88.4 million for the three months ended March 31, 2019 compared to $84.5 million for the three months ended March 31, 2018.  Interest expense on interest-bearing checking accounts increased $40,000 to $99,000 for the three months ended March 31, 2019 compared to $59,000 for the three months ended March 31, 2018.  The average balance of and rate paid on interest-bearing checking accounts increased to $54.6 million and 0.72%, respectively, for the three months ended March 31, 2019, from $41.2 million and 0.58%, respectively, for the three months ended March 31, 2018, as we continue to see an increase in the number of Kasasa reward based checking accounts opened.

Interest expense on borrowings decreased to $24,000 for the three months ended March 31, 2019 compared to $37,000 for the three months ended March 31, 2018, as the average balance of borrowings decreased to $5.0 million from $7.6 million, as we repaid our FHLB advances during the quarter and have funded our operations with excess cash provided by an increase in deposits.  

Net Interest Income. Net interest income increased $14,000, or 0.5%, and was $3.0 million for each of the three months ended March 31, 2019 and 2018.  Our average net interest-earning assets decreased by $4.2 million, or 5.1%, to $77.9 million for the three months ended March 31, 2019 from $82.0 million for the three months ended March 31, 2018, and our net interest rate spread decreased by 27 basis points to 4.08% for the three months ended March 31, 2019 from 4.35% for the three months ended March 31, 2018, reflecting increases in the average balance of interest-bearing liabilities and the rate paid on interest-bearing liabilities.  Our net interest margin decreased by 21 basis points to 4.38% for the three months ended March 31, 2019 from 4.59% for the three months ended March 31, 2018.

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 no provision for loan losses for the three months ended March 31, 2019 or the three months ended March 31, 2018.  Our allowance for loan losses was $4.1 million at March 31, 2019 compared to $4.0 million at December 31, 2018 and $4.2 million at March 31, 2018.  The allowance for loan losses to total loans was 1.73% at March 31, 2019 compared to 1.74% at December 31, 2018 and 1.81% at March 31, 2018.  The allowance for loan losses to non-performing loans was 222.4% at March 31, 2019 compared to 220.0% at December 31, 2018 and 65.13% at March 31, 2018.  We had recoveries of $151,000 during the three months ended March 31, 2019.

To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at March 31, 2019.  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.

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Non-interest Income.Non-interest income decreased $100,000, or 21.9%, to $356,000 for the three months ended March 31, 2019 from $456,000 for the three months ended March 31, 2018.  The decrease resulted primarily from a decrease in Small Business Administration loan fees of $163,000, due to fewer Small Business Administration loans being closed during the quarter, partially offset by increases in service charges on deposit accounts and other non-interest income of $6,000 and $57,000, respectively, during the three months ended March 31, 2019.

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

	Three Months Ended March 31,						Change
	2019			2018			Amount			Percent
	(Dollars in thousands)
Salaries and employee benefits	$	1,798		$	1,735		$	63			3.6	%
Deferred compensation		52			52			—			—
Occupancy		478			413			65			15.7	%
Advertising		32			27			5			18.5	%
Data processing		262			234			28			12.0	%
Other real estate owned		2			8			(6	)		(75.0	)%
Net gain on sale of other real estate owned		(34	)		(20	)		(14	)		(70.0	)%
Legal and accounting		274			264			10			3.8	%
Organizational dues and subscriptions		80			73			7			9.6	%
Director compensation		47			55			(8	)		(14.5	)%
Federal deposit insurance premiums		16			16			—			—
Other		279			225			54			24.0	%
Total non-interest expenses	$	3,286		$	3,082		$	204			6.6	%

Occupancy expense increased due to the renovation of our main office, various equipment purchases and increased software expenses.  Salaries and employee benefits expense increased due to annual salary increases and rising benefits expense.  Data processing expense increased due to growth in deposit accounts and an increase in consumer loans as a result of our indirect automobile lending division, Community First Auto.  Other non-interest expenses increased due to increased loan related expenses and training expenses related to our core computer conversion.

Income Tax Expense. We incurred income tax benefit of $19,000 for the three months ended March 31, 2019 compared to income tax expense of $55,000 for the three months ended March 31, 2018 due to less pretax income than the previous quarter and generation of additional tax credits.    

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 and consumer 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, during the year ended September 30, 2018, we introduced 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 March 31, 2019, 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	$	12,502		2.10	%
+200		12,392		1.20	%
Level		12,245	—
-200		11,333		(7.45	)%
-400		10,411		(14.98	)%

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

The table above indicates that at March 31, 2019, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 1.20% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 7.45% decrease in net interest income.  At March 31, 2018, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 0.96% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced an 8.01% 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.

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The table below sets forth, as of March 31, 2019, 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	$	57,500	$	(13,878	)		(19.44	)%		20.77	%		(238	)
+200		63,847		(7,531	)		(10.55	)%		21.91	%		(124	)
—		71,378	—			—				23.15	%	—
-200		72,161		783			1.10	%		22.42	%		(73	)
-400		68,572		(2,806	)		(3.93	)%		21.35	%		(180	)

(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 March 31, 2019, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 10.55% decrease in net economic value, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 1.10% increase in net economic value.  At March 31, 2018, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 12.60% decrease in net economic value, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 3.17% 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.

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The following table sets forth our interest-earning assets and our interest-bearing liabilities at March 31, 2019, 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 March 31, 2019, 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 March 31, 2019, and may not equal amounts included in our unaudited consolidated financial statements for the quarter ended March 31, 2019.  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	$	19,909			19,909			19,909			19,909			19,909		$	31,249
Investments		1,105			2,603			3,574			5,806			10,066			22,640
Net loans		41,464			53,974			72,985			106,283			177,541			237,457
Other assets		—			—			—			—			—			18,085
Total	$	62,478			76,486			96,468			131,998			207,516		$	309,431
Liabilities:
Non-maturity deposits	$	58,476			63,259			72,825			91,606			125,885		$	149,157
Certificates of deposit		5,936			12,387			30,107			40,982			72,992			89,791
Borrowings		—			—			—			—			—			2,751
Other liabilities		—			—			—			—			—			6,396
Equity capital		—			—			—			—			—			61,336
Total (1)	$	64,412			75,646			102,932			132,588			198,877		$	309,431
Asset/liability gap	$	(1,934	)		840			(6,464	)		(590	)		8,639
Gap/assets ratio (2)		(0.63	)%		(0.27	)%		(2.09	)%		(0.19	)%		(2.79	)%

(1) Amounts do not foot due to rounding.

(2) Gap/assets ratio equals the asset/liability gap for the period divided by total assets ($310.0 million).

At March 31, 2019, our asset/liability gap from zero days to one year was $6.5 million, resulting in a gap/assets ratio of negative 2.90%. At March 31, 2018, our asset/liability gap from zero days to one year was $845,000, resulting in a gap/assets ratio of negative 0.29%.

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.

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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 March 31, 2019, we had a $77.0 million line of credit with the Federal Home Loan Bank of Atlanta, with a $5.0 letter of credit outstanding, and 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 March 31, 2019.

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 $1.0 million for the three months ended March 31, 2019, compared to net cash provided by operating activities of $434,000 for the three months ended March 31, 2018.  Net cash used in investing activities, which consist primarily of disbursements for loan originations, was $7.0 million and $11.0 million for the three months ended March 31, 2019 and 2018, respectively.  Net cash used in financing activities, which consist primarily of activity in deposit accounts and repayments of FHLB advances, was $393,000 for the three months ended March 31, 2019, compared to net cash provided by financing activities of $4.8 million for the three months ended March 31, 2018.

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 March 31, 2019, we exceeded all of our regulatory capital requirements and ere categorized as “well capitalized.”   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 March 31, 2019 and December 31, 2018 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 March 31, 2019:
Common Equity Tier 1
(to Risk Weighted Assets)	$	61,123		29	%	$	9,562		4.50	%	$	13,812		6.50	%
Total Capital
(to Risk Weighted Assets)	$	63,797		30	%	$	16,999		8	%	$	21,249		10	%
Tier I Capital
(to Risk Weighted Assets)	$	61,123		29	%	$	12,749		6	%	$	16,999		8	%
Tier I Capital
(to Average Assets)	$	61,123		20	%	$	12,361		4	%	$	15,451		5	%
As of December 31, 2018:
Common Equity Tier 1
(to Risk Weighted Assets)	$	60,880		29	%	$	9,292		4.50	%	$	13,422		6.50	%
Total Capital
(to Risk Weighted Assets)	$	63,479		31	%	$	16,519		8	%	$	20,649		10	%
Tier I Capital
(to Risk Weighted Assets)	$	60,880		29	%	$	12,389		6	%	$	16,519		8	%
Tier I Capital
(to Average Assets)	$	60,880		20	%	$	12,291		4	%	$	15,363		5	%

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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.

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 March 31, 2019, we had outstanding commitments to originate loans of $27.3 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 March 31, 2019 totaled $30.1 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 March 31, 2019. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended March 31, 2019, 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.

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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 March 31, 2019, 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 March 31, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Comprehensive Income (Loss), (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).

30

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:	May 13, 2019	/s/ Johnny S. Smith
		Johnny S. Smith
		President and Chief Executive Officer
Date:	May 13, 2019	/s/ Tessa M. Nolan
		Tessa M. Nolan
		Senior Vice President and Chief Financial Officer

31

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) 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:   May 13, 2019	/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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) 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:  May 13, 2019	/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 March 31, 2019 (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:  May 13, 2019	/s/ Johnny S. Smith
	Johnny S. Smith
	President and Chief Executive Officer
Date:  May 13, 2019	/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	3 Months Ended
	Mar. 31, 2019	May 10, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	CFBI
Entity Registrant Name	Community First Bancshares, Inc.
Entity Central Index Key	0001691507
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		7,424,874

XML

Consolidated Balance Sheets (unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Assets
Cash and due from banks, including reserve requirement of $1,867 and $1,834 at March 31, 2019 and December 31, 2018, respectively	$ 4,633,000	$ 3,817,000
Interest-earning deposits in other depository institutions	26,036,000	33,212,000
Cash and cash equivalents	30,669,000	37,029,000
Investment securities held-to-maturity (estimated fair values of $996 and $993)	1,000,000	1,000,000
Investment securities available-for-sale	21,143,000	21,145,000
Federal Home Loan Bank stock	278,000	580,000
Loans, net	235,366,000	227,424,000
Other real estate owned	283,000	508,000
Premises and equipment, net	8,782,000	8,896,000
Bank owned life insurance	7,303,000	7,251,000
Accrued interest receivable and other assets	3,197,000	3,862,000
Total assets	308,021,000	307,695,000
Liabilities:
Savings accounts	25,896,000	24,511,000
Interest-bearing checking	55,996,000	53,752,000
Market rate checking	25,280,000	24,936,000
Non-interest bearing checking	29,995,000	28,472,000
Certificate of deposits	89,791,000	87,510,000
Total deposits	226,958,000	219,181,000
Federal Home Loan Bank advances		7,570,000
Accrued interest payable and other liabilities	4,744,000	4,546,000
Total liabilities	231,702,000	231,297,000
Stockholders' equity:
Common stock (par value $0.01 per share, 19,000,000 shares authorized, 7,538,250 issued and 7,424,874 outstanding at March 31, 2019 and 7,538,250 issued and 7,478,992 outstanding at December 31, 2018)	75,000	75,000
Preferred stock (1,000,000 shares authorized, no shares outstanding)
Additional paid in capital	33,079,000	33,078,000
Treasury stock, 113,376 shares at March 31, 2019, and 59,258 shares at December 31, 2018, at cost	(1,268,000)	(668,000)
Unearned ESOP shares	(2,659,000)	(2,689,000)
Retained earnings	47,160,000	47,043,000
Accumulated other comprehensive loss	(68,000)	(441,000)
Total stockholders' equity	76,319,000	76,398,000
Total liabilities and stockholders' equity	$ 308,021,000	$ 307,695,000

XML

Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Cash and due from banks, reserve requirement	$ 1,867	$ 1,834
Investment securities held-to-maturity, estimated fair value	$ 996	$ 993
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	19,000,000	19,000,000
Common stock, shares issued	7,538,250	7,538,250
Common stock, shares outstanding	7,424,874	7,478,992
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0
Treasury stock shares, at cost	113,376	59,258

XML

Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest income:
Loans, including fees	$ 3,244	$ 3,137
Investment securities, including dividends	142	154
Interest-earning deposits	177	76
Total interest income	3,563	3,367
Interest expense:
Deposits	511	316
Borrowings	24	37
Total interest expense	535	353
Net interest income	3,028	3,014
Non-interest income:
Service charges on deposit accounts	173	167
Small Business Administration (SBA) loan fees	5	168
Other	178	121
Total non-interest income	356	456
Non-interest expenses:
Salaries and employee benefits	1,798	1,735
Deferred compensation	52	52
Occupancy	478	413
Advertising	32	27
Data processing	262	234
Other real estate owned	2	8
Net gain on sale of other real estate owned	(34)	(20)
Legal and accounting	274	264
Organizational dues and subscriptions	80	73
Director compensation	47	55
Federal deposit insurance premiums	16	16
Other	279	225
Total non-interest expenses	3,286	3,082
Income before income taxes	98	388
Income tax (benefit) expense	(19)	55
Net income	$ 117	$ 333
Basic and diluted earnings per share	$ 0.02	$ 0.04

XML

Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 117	$ 333
Other comprehensive income (loss):
Net unrealized gain (loss) on available for sale securities, net of taxes of $131 and $(135)	373	(381)
Total other comprehensive income (loss)	373	(381)
Total comprehensive income (loss)	$ 490	$ (48)

XML

Consolidated Statements of Comprehensive Income (Loss) (unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net unrealized gain (loss) on available for sale securities, tax	$ 131	$ (135)

XML

Consolidated Statements of Changes in Stockholders' Equity (unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid In Capital	Treasury Stock	Unearned ESOP Shares	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Dec. 31, 2017	$ 75,664	$ 75	$ 33,063		$ (2,807)	$ 45,485	$ (152)
ESOP loan payment and release of ESOP shares	33		4		29
Change in unrealized gain (loss) on investment securities available-for-sale	(381)						(381)
Net income	333					333
Ending balance at Mar. 31, 2018	75,649	75	33,067		(2,778)	45,818	(533)
Beginning balance at Dec. 31, 2018	76,398	75	33,078	$ (668)	(2,689)	47,043	(441)
ESOP loan payment and release of ESOP shares	31		1		30
Purchase of treasury stock	(600)			(600)
Change in unrealized gain (loss) on investment securities available-for-sale	373						373
Net income	117					117
Ending balance at Mar. 31, 2019	$ 76,319	$ 75	$ 33,079	$ (1,268)	$ (2,659)	$ 47,160	$ (68)

XML

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net income	$ 117	$ 333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	228	223
Deferred income tax	0	(156)
ESOP expense	31	33
Net gain on sale of other real estate owned	(34)	(20)
Increase in cash surrender value of life insurance	(52)	(58)
Change in:
Accrued interest receivable and other assets	534	329
Accrued interest payable and other liabilities	198	(250)
Net cash provided by operating activities	1,022	434
Cash flows from investing activities:
Purchases of premises and equipment	(68)	(714)
Proceeds from paydowns of investment securities available-for-sale	460	500
Purchases of other investments	0	(43)
Proceeds from sales of other investments	302	0
Net change in loans	(7,942)	(10,902)
Proceeds from sales of other real estate owned	259	185
Net cash used in investing activities	(6,989)	(10,974)
Cash flows from financing activities:
Net change in demand and savings deposits	7,777	4,777
Purchase of treasury stock	(600)	0
Repayment of FHLB advances	(7,570)	0
Net cash (used in) provided by financing activities	(393)	4,777
Net change in cash and cash equivalents	(6,360)	(5,763)
Cash and cash equivalents at beginning of period	37,029	25,098
Cash and cash equivalents at end of period	30,669	19,335
Supplemental disclosures of cash flow information:
Cash paid for interest	555	378
Supplemental disclosures of noncash investing activities:
Other real estate owned acquired through foreclosures	$ 0	$ 52

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2019

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 such customary banking services 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.  In October 2018, we opened an indirect automobile loan division, Community First Auto.

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 March 31, 2019 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 September 30, 2018 Form 10-K. The results of operations for the quarter ended March 31, 2019, are not necessarily indicative of the results to be expected for a full year or for any other period.

On October 25, 2018, both the Company and the Bank changed their fiscal year end from September 30 to December 31.  This change will bring the Company and the Bank in line with industry standards and will improve accounting and reporting efficiencies by making the fiscal year-end and the calendar year-end the same.  As a result of the change in fiscal year, the Company filed a Transition Report on Form 10-Q covering the transition period from October 1, 2018 to December 31, 2018.

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, 2018 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 the same quarter in the previous year.  The net income for the current period was $117,000 and the weighted average common shares outstanding were 7,451,933.  The net income for the same quarter in the previous year was $333,000 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.

XML

Investment Securities

3 Months Ended

Mar. 31, 2019

Investments Debt And Equity Securities [Abstract]

Investment Securities

(2) Investment Securities

Investment Securities Held-to-Maturity

Investment securities held-to-maturity at March 31, 2019 and December 31, 2018 are as follows: (in thousands)

March 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government sponsored enterprises	$	1,000		—		(4	)		996
December 31, 2018                                                                                       _
U.S. Government sponsored enterprises	$	1,000		—		(7	)		993

The U.S. government sponsored enterprise security as of March 31, 2019 is comprised of one debt financing security issued by a government agency that matures withinone year.

There were no sales of securities held-to-maturity during the three months ended March 31, 2019 or 2018.

The one held-to-maturity security was pledged to secure public deposits at both March 31, 2019 and December 31, 2018.

Investment Securities Available-for-Sale

Investment securities available-for-sale at March 31, 2019 and December 31, 2018 are as follows: (in thousands)

	Amortized		Gross Unrealized		Gross Unrealized			Estimated
March 31, 2019	Cost		Gains		Losses			Fair Value
Municipal securities - tax exempt	$	5,652		78		(1	)		5,729
Municipal securities - taxable		3,116		12		(29	)		3,099
Government agency securities		501		—		(6	)		495
Government agency mortgage-backed securities		11,966		—		(146	)		11,820
Total	$	21,235		90		(182	)		21,143
December 31, 2018                                                                                       _
Municipal securities - tax exempt	$	5,670		12		(73	)		5,609
Municipal securities - taxable		3,119		—		(132	)		2,987
Government agency securities		501		—		(10	)		491
Government agency mortgage-backed securities		12,451		—		(393	)		12,058
Total	$	21,741		12		(608	)		21,145

There were no securities in an unrealized loss position less than 12 months and 26 securities were in an unrealized loss position 12 months or greater as of March 31, 2019.  The unrealized losses on the debt securities arose due to changing interest rates and market conditions and are considered temporary because of acceptable investment grades where the repayment sources of principal and interest are largely backed by U.S. Government sponsored agencies or financially stable municipalities.  The Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis which may be at maturity.

The amortized cost and estimated fair value of investment securities available-for-sale at March 31, 2019, 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	$	—		—
Greater than 1 to 5 years		749		764
Greater than 5 to 10 years		4,903		4,965
Greater than 10 years		—		—
		5,652		5,729
Municipal securities - taxable
Within 1 year		—		—
Greater than 1 to 5 years		—		—
Greater than 5 to 10 years		2,106		2,107
Greater than 10 years		1,010		992
		3,116		3,099
Government agency securities
Within 1 year		—		—
Greater than 1 to 5 years		501		495
Greater than 5 to 10 years		—		—
Greater than 10 years		—		—
		501		495
Government agency mortgage-backed securities		11,966		11,820
Total	$	21,235		21,143

There were no sales of securities available-for-sale during the three months ended March 31, 2019 or 2018.

Securities with a carrying value of approximately $1.8 millionwere pledged to secure public deposits at March 31, 2019 and December 31, 2018.

XML

Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Loans and Allowance for Loan Losses

(3) Loans and Allowance for Loan Losses

Major classifications of loans, by collateral code, at March 31, 2019 and December 31, 2018 are summarized as follows: (in thousands)

	March 31, 2019			December 31, 2018
Commercial (secured by real estate)	$	53,082			50,716
Commercial and industrial		26,256			25,612
Construction, land and acquisition & development		16,475			12,367
Residential mortgage 1-4 family		132,352			138,156
Consumer installment		11,347			4,595
Total		239,512			231,446
Less allowance for loan losses		(4,146	)		(4,022	)
Total loans, net	$	235,366			227,424

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 $119.9 million and $125.0 million were pledged to secure the line of credit from Federal Home Loan Bank (the “FHLB”) at March 31, 2019 and December 31, 2018, 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 as of and for the three months ended March 31, 2019 and 2018: (in thousands)

March 31, 2019	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	$	1,619			1,520			108			641			127			7			4,022
Provision		24			(9	)		24			(192	)		154			(1	)		—
Charge-offs		—			(26	)		—			—			(1	)		—			(27	)
Recoveries		25			18			—			107			1			—			151
Ending balance	$	1,668			1,503			132			556			281			6			4,146
Ending allowance attributable to loans:
Individually evaluated for impairment	$	3			—			—			10			—			—			13
Collectively evaluated for impairment		1,665			1,503			132			546			281			6			4,133
Total ending allowance	$	1,668			1,503			132			556			281			6			4,146
Loans:
Individually evaluated for impairment	$	2,006			—			—			3,332			1			—			5,339
Collectively evaluated for impairment		51,076			26,256			16,475			129,020			11,346			—			234,173
Total loans	$	53,082			26,256			16,475			132,352			11,347			—			239,512
March 31, 2018
Allowance for loan losses:
Beginning balance	$	1,747			803			329			1,648			74			9			4,610
Provision		(420	)		805			(64	)		(342	)		22			(1	)		—
Charge-offs		—			(400	)		—			(45	)		(27	)		—			(472	)
Recoveries		1			22			—			5			—			—			28
Ending balance	$	1,328			1,230			265			1,266			69			8			4,166
Ending allowance attributable to loans:
Individually evaluated for impairment	$	11			—			—			7			—			—			18
Collectively evaluated for impairment		1,317			1,230			265			1,259			69			8			4,148
Total ending allowance	$	1,328			1,230			265			1,266			69			8			4,166
Loans:
Individually evaluated for impairment	$	1,991			992			—			5,830			3			—			8,816
Collectively evaluated for impairment		35,365			25,757			21,990			136,193			2,580			—			221,885
Total loans	$	37,356			26,749			21,990			142,023			2,583			—			230,701

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 March 31, 2019 and December 31, 2018 were as follows: (in thousands)

March 31, 2019	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	262		1,119		—		242		6
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		2,828		3,562		—		2,468		37
Consumer installment		1		1		—		1		—
		3,091		4,682		—		2,711		43
With an allowance recorded:
Commercial (secured by real estate)		1,744		1,744		3		1,750		26
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		504		504		10		497		2
Consumer installment		—		—		—		—		—
		2,248		2,248		13		2,247		28
Total impaired loans	$	5,339		6,930		13		4,958		71
December 31, 2018
With no related allowance recorded:
Commercial (secured by real estate)	$	167		1,023		—		185		6
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		3,458		4,265		—		3,287		37
Consumer installment		1		1		—		6		—
		3,626		5,289		—		3,478		43
With an allowance recorded:
Commercial (secured by real estate)		1,759		1,759		3		1,777		27
Commercial and industrial		27		27		—		14		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		140		139		2		141		2
Consumer installment		—		—		—		—		—
		1,926		1,925		5		1,932		29
Total impaired loans	$	5,552		7,214		5		5,410		72

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 March 31, 2019 and December 31, 2018 by class of loans: (in thousands)

March 31, 2019	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)	$	161		238		—		399		52,683		53,082		291
Commercial and industrial		—		—		—		—		26,256		26,256		—
Construction, land and acquisition &    development		—		—		—		—		16,475		16,475		—
Residential mortgage		1,316		—		107		1,423		130,929		132,352		1,573
Consumer installment		10		36		—		46		11,301		11,347		—
Total	$	1,487		274		107		1,868		237,644		239,512		1,864
December 31, 2018
Commercial (secured by real estate)	$	—		—		—		—		50,716		50,716		56
Commercial and industrial		—		—		—		—		25,612		25,612		27
Construction, land and acquisition &    development		—		—		—		—		12,367		12,367		—
Residential mortgage		196		1,039		228		1,463		136,693		138,156		1,744
Consumer installment		9		1		1		11		4,584		4,595		1
Total	$	205		1,040		229		1,474		229,972		231,446		1,828

There were no loans past due 90 days or greater and still accruing interest as of March 31, 2019 and December 31, 2018.

There were no new troubled debt restructurings during the three months ended March 31, 2019 or 2018.  No troubled debt restructurings subsequently defaulted during the three months ended March 31, 2019 or 2018.

The Bank has allocated an allowance for loan losses of approximately $6,000 and $5,000 to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2019 and December 31, 2018, 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 March 31, 2019, and December 31, 2018, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: (in thousands)

March 31, 2019	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	52,633		—		449		—		53,082
Commercial and industrial		26,256		—		—		—		26,256
Construction, land and acquisition & development		16,475		—		—		—		16,475
Residential mortgage		127,898		65		4,389		—		132,352
Consumer installment		11,300		—		47		—		11,347
Total	$	234,562		65		4,885		—		239,512

December 31, 2018	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	50,395		—		321		—		50,716
Commercial and industrial		25,585		—		27		—		25,612
Construction, land and acquisition & development		12,367		—		—		—		12,367
Residential mortgage		132,167		65		5,924		—		138,156
Consumer installment		4,553		—		42		—		4,595
Total	$	225,067		65		6,314		—		231,446

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Deposits

3 Months Ended

Mar. 31, 2019

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 $15.1 million at March 31, 2019 and $14.2 million at December 31, 2018.  The aggregate amounts of certificates of deposit of $100,000 or more were approximately $45.0 million at March 31, 2019 and $42.4 million at December 31, 2018.  

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Borrowings

3 Months Ended

Mar. 31, 2019

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 December 31, 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

All of these advances were repaid during the quarter ended March 31, 2019. The FHLB advances were collateralized by certain loans which totaled approximately $125.0 million at December 31, 2018, and by the Company’s investment in FHLB stock which totaled approximately $580,000 at December 31, 2018.  

The Company had one FHLB letter of credit of $2.5 million and $5.0 million, used to collateralize public deposits, outstanding at March 31, 2019 and December 31, 2018, respectively.

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Employee Stock Ownership Plan

3 Months Ended

Mar. 31, 2019

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 months ended March 31, 2019 and 2018 was approximately $31,000 and $33,000, respectively.  The balance of the note payable of the ESOP was $2,750,592 at March 31, 2019 and December 31, 2018. Because the source of the loan payments are contributions received by the ESOP from the Company, the related note receivable is shown as a reduction of stockholders’ equity. As of March 31, 2019, 23,600 shares had been released.

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Fair Value Measurements and Disclosures

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements and Disclosures

(7) 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

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.

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

The carrying value of the cash surrender value of life insurance reasonably approximates fair value.

Deposits

The fair value of savings 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

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 $21.1 million at March 31, 2019 and December 31, 2018.  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 March 31, 2019 and December 31, 2018 (in thousands).

March 31, 2019	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		283		283
Impaired loans		—		—		5,326		5,326
Total assets at fair value	$	—		—		5,609		5,609
December 31, 2018	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		508		508
Impaired loans		—		—		5,547		5,547
Total assets at fair value	$	—		—		6,055		6,055

The carrying amounts and estimated fair values (in thousands) of the Company’s financial instruments at March 31, 2019 and December 31, 2018 are as follows:

	March 31, 2019				December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	30,669		30,669		37,029		37,029
Investment securities
available-for-sale	$	21,143		21,143		21,145		21,145
held-to-maturity	$	1,000		996		1,000		993
FHLB Stock	$	278		278		580		580
Loans, net	$	235,366		207,358		227,424		198,403
Cash surrender value of life insurance	$	7,303		7,303		7,251		7,251
Financial liabilities:
Deposits	$	226,958		227,412		219,181		219,319
FHLB advances	$	—		—		7,570		7,656

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)

3 Months Ended

Mar. 31, 2019

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 such customary banking services 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.  In October 2018, we opened an indirect automobile loan division, Community First Auto.

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 March 31, 2019 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 September 30, 2018 Form 10-K. The results of operations for the quarter ended March 31, 2019, are not necessarily indicative of the results to be expected for a full year or for any other period.

On October 25, 2018, both the Company and the Bank changed their fiscal year end from September 30 to December 31.  This change will bring the Company and the Bank in line with industry standards and will improve accounting and reporting efficiencies by making the fiscal year-end and the calendar year-end the same.  As a result of the change in fiscal year, the Company filed a Transition Report on Form 10-Q covering the transition period from October 1, 2018 to December 31, 2018.

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)

3 Months Ended

Mar. 31, 2019

Investments Debt And Equity Securities [Abstract]

Schedule of Investment Securities Held-to-Maturity

Investment securities held-to-maturity at March 31, 2019 and December 31, 2018 are as follows: (in thousands)

March 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government sponsored enterprises	$	1,000		—		(4	)		996
December 31, 2018                                                                                       _
U.S. Government sponsored enterprises	$	1,000		—		(7	)		993

Schedule of Investment Securities Available-for-Sale

Investment securities available-for-sale at March 31, 2019 and December 31, 2018 are as follows: (in thousands)

	Amortized		Gross Unrealized		Gross Unrealized			Estimated
March 31, 2019	Cost		Gains		Losses			Fair Value
Municipal securities - tax exempt	$	5,652		78		(1	)		5,729
Municipal securities - taxable		3,116		12		(29	)		3,099
Government agency securities		501		—		(6	)		495
Government agency mortgage-backed securities		11,966		—		(146	)		11,820
Total	$	21,235		90		(182	)		21,143
December 31, 2018                                                                                       _
Municipal securities - tax exempt	$	5,670		12		(73	)		5,609
Municipal securities - taxable		3,119		—		(132	)		2,987
Government agency securities		501		—		(10	)		491
Government agency mortgage-backed securities		12,451		—		(393	)		12,058
Total	$	21,741		12		(608	)		21,145

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 March 31, 2019, 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	$	—		—
Greater than 1 to 5 years		749		764
Greater than 5 to 10 years		4,903		4,965
Greater than 10 years		—		—
		5,652		5,729
Municipal securities - taxable
Within 1 year		—		—
Greater than 1 to 5 years		—		—
Greater than 5 to 10 years		2,106		2,107
Greater than 10 years		1,010		992
		3,116		3,099
Government agency securities
Within 1 year		—		—
Greater than 1 to 5 years		501		495
Greater than 5 to 10 years		—		—
Greater than 10 years		—		—
		501		495
Government agency mortgage-backed securities		11,966		11,820
Total	$	21,235		21,143

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Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Summary of Major Classifications of Loans

Major classifications of loans, by collateral code, at March 31, 2019 and December 31, 2018 are summarized as follows: (in thousands)

	March 31, 2019			December 31, 2018
Commercial (secured by real estate)	$	53,082			50,716
Commercial and industrial		26,256			25,612
Construction, land and acquisition & development		16,475			12,367
Residential mortgage 1-4 family		132,352			138,156
Consumer installment		11,347			4,595
Total		239,512			231,446
Less allowance for loan losses		(4,146	)		(4,022	)
Total loans, net	$	235,366			227,424

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 as of and for the three months ended March 31, 2019 and 2018: (in thousands)

March 31, 2019	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	$	1,619			1,520			108			641			127			7			4,022
Provision		24			(9	)		24			(192	)		154			(1	)		—
Charge-offs		—			(26	)		—			—			(1	)		—			(27	)
Recoveries		25			18			—			107			1			—			151
Ending balance	$	1,668			1,503			132			556			281			6			4,146
Ending allowance attributable to loans:
Individually evaluated for impairment	$	3			—			—			10			—			—			13
Collectively evaluated for impairment		1,665			1,503			132			546			281			6			4,133
Total ending allowance	$	1,668			1,503			132			556			281			6			4,146
Loans:
Individually evaluated for impairment	$	2,006			—			—			3,332			1			—			5,339
Collectively evaluated for impairment		51,076			26,256			16,475			129,020			11,346			—			234,173
Total loans	$	53,082			26,256			16,475			132,352			11,347			—			239,512
March 31, 2018
Allowance for loan losses:
Beginning balance	$	1,747			803			329			1,648			74			9			4,610
Provision		(420	)		805			(64	)		(342	)		22			(1	)		—
Charge-offs		—			(400	)		—			(45	)		(27	)		—			(472	)
Recoveries		1			22			—			5			—			—			28
Ending balance	$	1,328			1,230			265			1,266			69			8			4,166
Ending allowance attributable to loans:
Individually evaluated for impairment	$	11			—			—			7			—			—			18
Collectively evaluated for impairment		1,317			1,230			265			1,259			69			8			4,148
Total ending allowance	$	1,328			1,230			265			1,266			69			8			4,166
Loans:
Individually evaluated for impairment	$	1,991			992			—			5,830			3			—			8,816
Collectively evaluated for impairment		35,365			25,757			21,990			136,193			2,580			—			221,885
Total loans	$	37,356			26,749			21,990			142,023			2,583			—			230,701

Summary of Impaired Loans

Impaired loans at March 31, 2019 and December 31, 2018 were as follows: (in thousands)

March 31, 2019	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	262		1,119		—		242		6
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		2,828		3,562		—		2,468		37
Consumer installment		1		1		—		1		—
		3,091		4,682		—		2,711		43
With an allowance recorded:
Commercial (secured by real estate)		1,744		1,744		3		1,750		26
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		504		504		10		497		2
Consumer installment		—		—		—		—		—
		2,248		2,248		13		2,247		28
Total impaired loans	$	5,339		6,930		13		4,958		71
December 31, 2018
With no related allowance recorded:
Commercial (secured by real estate)	$	167		1,023		—		185		6
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		3,458		4,265		—		3,287		37
Consumer installment		1		1		—		6		—
		3,626		5,289		—		3,478		43
With an allowance recorded:
Commercial (secured by real estate)		1,759		1,759		3		1,777		27
Commercial and industrial		27		27		—		14		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		140		139		2		141		2
Consumer installment		—		—		—		—		—
		1,926		1,925		5		1,932		29
Total impaired loans	$	5,552		7,214		5		5,410		72

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 March 31, 2019 and December 31, 2018 by class of loans: (in thousands)

March 31, 2019	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)	$	161		238		—		399		52,683		53,082		291
Commercial and industrial		—		—		—		—		26,256		26,256		—
Construction, land and acquisition &    development		—		—		—		—		16,475		16,475		—
Residential mortgage		1,316		—		107		1,423		130,929		132,352		1,573
Consumer installment		10		36		—		46		11,301		11,347		—
Total	$	1,487		274		107		1,868		237,644		239,512		1,864
December 31, 2018
Commercial (secured by real estate)	$	—		—		—		—		50,716		50,716		56
Commercial and industrial		—		—		—		—		25,612		25,612		27
Construction, land and acquisition &    development		—		—		—		—		12,367		12,367		—
Residential mortgage		196		1,039		228		1,463		136,693		138,156		1,744
Consumer installment		9		1		1		11		4,584		4,595		1
Total	$	205		1,040		229		1,474		229,972		231,446		1,828

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 March 31, 2019, and December 31, 2018, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: (in thousands)

March 31, 2019	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	52,633		—		449		—		53,082
Commercial and industrial		26,256		—		—		—		26,256
Construction, land and acquisition & development		16,475		—		—		—		16,475
Residential mortgage		127,898		65		4,389		—		132,352
Consumer installment		11,300		—		47		—		11,347
Total	$	234,562		65		4,885		—		239,512

December 31, 2018	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	50,395		—		321		—		50,716
Commercial and industrial		25,585		—		27		—		25,612
Construction, land and acquisition & development		12,367		—		—		—		12,367
Residential mortgage		132,167		65		5,924		—		138,156
Consumer installment		4,553		—		42		—		4,595
Total	$	225,067		65		6,314		—		231,446

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Borrowings (Tables)

3 Months Ended

Mar. 31, 2019

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 December 31, 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)

3 Months Ended

Mar. 31, 2019

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 March 31, 2019 and December 31, 2018 (in thousands).

March 31, 2019	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		283		283
Impaired loans		—		—		5,326		5,326
Total assets at fair value	$	—		—		5,609		5,609
December 31, 2018	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		508		508
Impaired loans		—		—		5,547		5,547
Total assets at fair value	$	—		—		6,055		6,055

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 March 31, 2019 and December 31, 2018 are as follows:

	March 31, 2019				December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	30,669		30,669		37,029		37,029
Investment securities
available-for-sale	$	21,143		21,143		21,145		21,145
held-to-maturity	$	1,000		996		1,000		993
FHLB Stock	$	278		278		580		580
Loans, net	$	235,366		207,358		227,424		198,403
Cash surrender value of life insurance	$	7,303		7,303		7,251		7,251
Financial liabilities:
Deposits	$	226,958		227,412		219,181		219,319
FHLB advances	$	—		—		7,570		7,656

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Basis of Presentation - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Net income	$ 117	$ 333
Weighted average common shares outstanding	7,451,933	7,538,250

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Investment Securities - Schedule of Investment Securities Held-to-Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
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	996	993
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 Losses	(4)	(7)
Investment Securities Held-to-Maturity, Estimated Fair Value	$ 996	$ 993

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Investment Securities - Additional Information (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) Security	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Sales of held-to-maturity securities	$ 0	$ 0
Number of available-for-sale securities in unrealized loss position less than 12 months | Security	0
Number of available-for-sale securities in unrealized loss position 12 months or greater | Security	26
Sales of available-for-sale securities	$ 0	$ 0
Carrying value of available-for-sale securities pledged to secure public deposits	21,143,000		$ 21,145,000
Collateral Pledged
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Carrying value of available-for-sale securities pledged to secure public deposits	$ 1,800,000		$ 1,800,000
U.S. Government Sponsored Enterprises
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Number of debt financing security matures within one year | Security	1

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Investment Securities - Schedule of Investment Securities Available-for-Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	$ 21,235	$ 21,741
Investment securities available-for-sale, Gross Unrealized Gains	90	12
Investment securities available-for-sale, Gross Unrealized Losses	(182)	(608)
Investment securities available-for-sale, Estimated Fair Value	21,143	21,145
Municipal Securities - Tax Exempt
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	5,652	5,670
Investment securities available-for-sale, Gross Unrealized Gains	78	12
Investment securities available-for-sale, Gross Unrealized Losses	(1)	(73)
Investment securities available-for-sale, Estimated Fair Value	5,729	5,609
Municipal Securities - Taxable
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	3,116	3,119
Investment securities available-for-sale, Gross Unrealized Gains	12
Investment securities available-for-sale, Gross Unrealized Losses	(29)	(132)
Investment securities available-for-sale, Estimated Fair Value	3,099	2,987
Government Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	501	501
Investment securities available-for-sale, Gross Unrealized Losses	(6)	(10)
Investment securities available-for-sale, Estimated Fair Value	495	491
Government Agency Mortgage-Backed Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	11,966	12,451
Investment securities available-for-sale, Gross Unrealized Losses	(146)	(393)
Investment securities available-for-sale, Estimated Fair Value	$ 11,820	$ 12,058

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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	Mar. 31, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	$ 21,235	$ 21,741
Investment securities available-for-sale, Estimated Fair Value	21,143	21,145
Municipal Securities - Tax Exempt
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Greater than 1 to 5 years, Amortized Cost	749
Investment securities available-for-sale, Greater than 5 to 10 years, Amortized Cost	4,903
Investment securities available-for-sale, Amortized Cost	5,652	5,670
Investment securities available-for-sale, Greater than 1 to 5 years, Estimated Fair Value	764
Investment securities available-for-sale, Greater than 5 to 10 years, Estimated Fair Value	4,965
Investment securities available-for-sale, Estimated Fair Value	5,729	5,609
Municipal Securities - Taxable
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Greater than 5 to 10 years, Amortized Cost	2,106
Investment securities available-for-sale, Greater than 10 years, Amortized Cost	1,010
Investment securities available-for-sale, Amortized Cost	3,116	3,119
Investment securities available-for-sale, Greater than 5 to 10 years, Estimated Fair Value	2,107
Investment securities available-for-sale, Greater than 10 years, Estimated Fair Value	992
Investment securities available-for-sale, Estimated Fair Value	3,099	2,987
Government Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Greater than 1 to 5 years, Amortized Cost	501
Investment securities available-for-sale, Amortized Cost	501	501
Investment securities available-for-sale, Greater than 1 to 5 years, Estimated Fair Value	495
Investment securities available-for-sale, Estimated Fair Value	495	491
Government Agency Mortgage-Backed Securities
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, Amortized Cost	11,966	12,451
Investment securities available-for-sale, Estimated Fair Value	$ 11,820	$ 12,058

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Loans and Allowance for Loan Losses - Summary of Major Classifications of Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Loans And Leases Receivable Disclosure [Line Items]
Loans, gross	$ 239,512	$ 231,446	$ 230,701
Less allowance for loan losses	(4,146)	(4,022)	(4,166)	$ (4,610)
Loans, net	235,366	227,424
Commercial (Secured by Real Estate)
Loans And Leases Receivable Disclosure [Line Items]
Loans, gross	53,082	50,716	37,356
Less allowance for loan losses	(1,668)	(1,619)	(1,328)	(1,747)
Commercial and Industrial
Loans And Leases Receivable Disclosure [Line Items]
Loans, gross	26,256	25,612	26,749
Less allowance for loan losses	(1,503)	(1,520)	(1,230)	(803)
Construction, Land and Acquisition & Development
Loans And Leases Receivable Disclosure [Line Items]
Loans, gross	16,475	12,367	21,990
Less allowance for loan losses	(132)	(108)	(265)	(329)
Residential Mortgage 1-4 Family
Loans And Leases Receivable Disclosure [Line Items]
Loans, gross	132,352	138,156
Consumer Installment
Loans And Leases Receivable Disclosure [Line Items]
Loans, gross	11,347	4,595	2,583
Less allowance for loan losses	$ (281)	$ (127)	$ (69)	$ (74)

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Loans and Allowance for Loan Losses - Additional Information (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) Contract	Mar. 31, 2018 USD ($) Contract	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Financing Receivable Recorded Investment Past Due [Line Items]
Qualifying loans pledged to secure the line of credit from FHLB	$ 119,900,000		$ 125,000,000
Troubled debt restructurings that have subsequently defaulted, recorded investment	$ 0	$ 0
Troubled Debt Restructurings that have Subsequently Defaulted, Number of Contracts | Contract	0	0
Allowance for loan losses	$ 4,146,000	$ 4,166,000	4,022,000	$ 4,610,000
Modified Loan Terms
Financing Receivable Recorded Investment Past Due [Line Items]
Allowance for loan losses	6,000		5,000
90 Days or Greater 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	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Allowance for loan losses:
Beginning balance	$ 4,022	$ 4,610
Charge-offs	(27)	(472)
Recoveries	151	28
Ending balance	4,146	4,166
Ending allowance attributable to loans:
Individually evaluated for impairment	13	18
Collectively evaluated for impairment	4,133	4,148
Ending balance	4,146	4,166
Loans:
Individually evaluated for impairment	5,339	8,816
Collectively evaluated for impairment	234,173	221,885
Total loans	239,512	230,701	$ 231,446
Commercial (Secured by Real Estate)
Allowance for loan losses:
Beginning balance	1,619	1,747
Provision	24	(420)
Recoveries	25	1
Ending balance	1,668	1,328
Ending allowance attributable to loans:
Individually evaluated for impairment	3	11
Collectively evaluated for impairment	1,665	1,317
Ending balance	1,668	1,328
Loans:
Individually evaluated for impairment	2,006	1,991
Collectively evaluated for impairment	51,076	35,365
Total loans	53,082	37,356	50,716
Commercial and Industrial
Allowance for loan losses:
Beginning balance	1,520	803
Provision	(9)	805
Charge-offs	(26)	(400)
Recoveries	18	22
Ending balance	1,503	1,230
Ending allowance attributable to loans:
Collectively evaluated for impairment	1,503	1,230
Ending balance	1,503	1,230
Loans:
Individually evaluated for impairment		992
Collectively evaluated for impairment	26,256	25,757
Total loans	26,256	26,749	25,612
Construction, Land and Acquisition & Development
Allowance for loan losses:
Beginning balance	108	329
Provision	24	(64)
Ending balance	132	265
Ending allowance attributable to loans:
Collectively evaluated for impairment	132	265
Ending balance	132	265
Loans:
Collectively evaluated for impairment	16,475	21,990
Total loans	16,475	21,990	12,367
Residential Mortgage
Allowance for loan losses:
Beginning balance	641	1,648
Provision	(192)	(342)
Charge-offs		(45)
Recoveries	107	5
Ending balance	556	1,266
Ending allowance attributable to loans:
Individually evaluated for impairment	10	7
Collectively evaluated for impairment	546	1,259
Ending balance	556	1,266
Loans:
Individually evaluated for impairment	3,332	5,830
Collectively evaluated for impairment	129,020	136,193
Total loans	132,352	142,023	138,156
Consumer Installment
Allowance for loan losses:
Beginning balance	127	74
Provision	154	22
Charge-offs	(1)	(27)
Recoveries	1
Ending balance	281	69
Ending allowance attributable to loans:
Collectively evaluated for impairment	281	69
Ending balance	281	69
Loans:
Individually evaluated for impairment	1	3
Collectively evaluated for impairment	11,346	2,580
Total loans	11,347	2,583	$ 4,595
Unallocated
Allowance for loan losses:
Beginning balance	7	9
Provision	(1)	(1)
Ending balance	6	8
Ending allowance attributable to loans:
Collectively evaluated for impairment	6	8
Ending balance	$ 6	$ 8

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Loans and Allowance for Loan Losses - Summary of Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	$ 3,091	$ 3,626
Unpaid Principal Balance, With no related allowance recorded	4,682	5,289
Average Recorded Investment, With no related allowance recorded	2,711	3,478
Interest Income Recognized, With no related allowance recorded	43	43
Recorded Investment, With an allowance recorded	2,248	1,926
Unpaid Principal Balance, With an allowance recorded	2,248	1,925
Allocated Related Allowance, With an allowance recorded	13	5
Average Recorded Investment, With an allowance recorded	2,247	1,932
Interest Income Recognized, With an allowance recorded	28	29
Total impaired loans, Recorded Investment	5,339	5,552
Total impaired loans, Unpaid Principal Balance	6,930	7,214
Total impaired loans, Allocated Related Allowance	13	5
Total impaired loans, Average Recorded Investment	4,958	5,410
Total impaired loans, Interest Income Recognized	71	72
Commercial (Secured by Real Estate)
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	262	167
Unpaid Principal Balance, With no related allowance recorded	1,119	1,023
Average Recorded Investment, With no related allowance recorded	242	185
Interest Income Recognized, With no related allowance recorded	6	6
Recorded Investment, With an allowance recorded	1,744	1,759
Unpaid Principal Balance, With an allowance recorded	1,744	1,759
Allocated Related Allowance, With an allowance recorded	3	3
Average Recorded Investment, With an allowance recorded	1,750	1,777
Interest Income Recognized, With an allowance recorded	26	27
Commercial and Industrial
Financing Receivable Impaired [Line Items]
Recorded Investment, With an allowance recorded		27
Unpaid Principal Balance, With an allowance recorded		27
Average Recorded Investment, With an allowance recorded		14
Residential Mortgage
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	2,828	3,458
Unpaid Principal Balance, With no related allowance recorded	3,562	4,265
Average Recorded Investment, With no related allowance recorded	2,468	3,287
Interest Income Recognized, With no related allowance recorded	37	37
Recorded Investment, With an allowance recorded	504	140
Unpaid Principal Balance, With an allowance recorded	504	139
Allocated Related Allowance, With an allowance recorded	10	2
Average Recorded Investment, With an allowance recorded	497	141
Interest Income Recognized, With an allowance recorded	2	2
Consumer Installment
Financing Receivable Impaired [Line Items]
Recorded Investment, With no related allowance recorded	1	1
Unpaid Principal Balance, With no related allowance recorded	1	1
Average Recorded Investment, With no related allowance recorded	$ 1	$ 6

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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	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	$ 1,868	$ 1,474
Current	237,644	229,972
Total loans	239,512	231,446	$ 230,701
Nonaccrual	1,864	1,828
30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,487	205
60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	274	1,040
90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	107	229
Commercial (Secured by Real Estate)
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	399
Current	52,683	50,716
Total loans	53,082	50,716	37,356
Nonaccrual	291	56
Commercial (Secured by Real Estate) | 30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	161
Commercial (Secured by Real Estate) | 60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	238
Commercial and Industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Current	26,256	25,612
Total loans	26,256	25,612	26,749
Nonaccrual		27
Construction, Land and Acquisition & Development
Financing Receivable Recorded Investment Past Due [Line Items]
Current	16,475	12,367
Total loans	16,475	12,367	21,990
Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,423	1,463
Current	130,929	136,693
Total loans	132,352	138,156	142,023
Nonaccrual	1,573	1,744
Residential Mortgage | 30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,316	196
Residential Mortgage | 60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due		1,039
Residential Mortgage | 90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	107	228
Consumer Installment
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	46	11
Current	11,301	4,584
Total loans	11,347	4,595	$ 2,583
Nonaccrual		1
Consumer Installment | 30 -59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	10	9
Consumer Installment | 60- 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	$ 36	1
Consumer Installment | 90 Days or Greater Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due		$ 1

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Loans and Allowance for Loan Losses - Summary of Risk Category of Loans by Class of Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Composition Of Loan Portfolio [Line Items]
Total	$ 239,512	$ 231,446	$ 230,701
Pass
Composition Of Loan Portfolio [Line Items]
Total	234,562	225,067
Special Mention
Composition Of Loan Portfolio [Line Items]
Total	65	65
Substandard
Composition Of Loan Portfolio [Line Items]
Total	4,885	6,314
Commercial (Secured by Real Estate)
Composition Of Loan Portfolio [Line Items]
Total	53,082	50,716	37,356
Commercial (Secured by Real Estate) | Pass
Composition Of Loan Portfolio [Line Items]
Total	52,633	50,395
Commercial (Secured by Real Estate) | Substandard
Composition Of Loan Portfolio [Line Items]
Total	449	321
Commercial and Industrial
Composition Of Loan Portfolio [Line Items]
Total	26,256	25,612	26,749
Commercial and Industrial | Pass
Composition Of Loan Portfolio [Line Items]
Total	26,256	25,585
Commercial and Industrial | Substandard
Composition Of Loan Portfolio [Line Items]
Total		27
Construction, Land and Acquisition & Development
Composition Of Loan Portfolio [Line Items]
Total	16,475	12,367	21,990
Construction, Land and Acquisition & Development | Pass
Composition Of Loan Portfolio [Line Items]
Total	16,475	12,367
Residential Mortgage
Composition Of Loan Portfolio [Line Items]
Total	132,352	138,156	142,023
Residential Mortgage | Pass
Composition Of Loan Portfolio [Line Items]
Total	127,898	132,167
Residential Mortgage | Special Mention
Composition Of Loan Portfolio [Line Items]
Total	65	65
Residential Mortgage | Substandard
Composition Of Loan Portfolio [Line Items]
Total	4,389	5,924
Consumer Installment
Composition Of Loan Portfolio [Line Items]
Total	11,347	4,595	$ 2,583
Consumer Installment | Pass
Composition Of Loan Portfolio [Line Items]
Total	11,300	4,553
Consumer Installment | Substandard
Composition Of Loan Portfolio [Line Items]
Total	$ 47	$ 42

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Deposits - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Deposits [Abstract]
Time certificates of deposit in denomination of $250,000 or more	$ 15.1	$ 14.2
Time certificates of deposit in denomination $100,000 or more	$ 45.0	$ 42.4

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Borrowings - Schedule of Federal Home Loan Bank of Atlanta (FHLB) Advances (Details)	3 Months Ended
	Dec. 31, 2018 USD ($)
Federal Home Loan Bank Advances [Line Items]
Advances from FHLB	$ 7,570,000
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 ($)	Mar. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Advances from FHLB collateralized by certain loans		$ 125,000,000
Investment in FHLB stock	$ 278,000	580,000
Line of credit amount outstanding	$ 2,500,000	$ 5,000,000

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Employee Stock Ownership Plan - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Apr. 30, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Note payable balance of ESOP	$ 2,750,592		$ 2,750,592	$ 2,954,990
Shares purchased by ESOP				295,499
ESOP expense	$ 31,000	$ 33,000
ESOP released shares	23,600

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Fair Value Measurements and Disclosures - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, Estimated Fair Value	$ 21,143	$ 21,145
Fair Value, Measurements, Recurring | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investment securities available-for-sale, Estimated Fair Value	$ 21,100	$ 21,100

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Fair Value Measurements and Disclosures - Schedule of Assets Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	$ 5,339	$ 5,552
Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other real estate owned	283	508
Impaired loans	5,326	5,547
Total assets at fair value	5,609	6,055
Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other real estate owned	283	508
Impaired loans	5,326	5,547
Total assets at fair value	$ 5,609	$ 6,055

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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	Mar. 31, 2019	Dec. 31, 2018
Financial assets:
Investment securities available-for-sale	$ 21,143	$ 21,145
Investment securities held-to-maturity	996	993
Carrying Amount
Financial assets:
Cash and cash equivalents	30,669	37,029
Investment securities available-for-sale	21,143	21,145
Investment securities held-to-maturity	1,000	1,000
FHLB Stock	278	580
Loans, net	235,366	227,424
Cash surrender value of life insurance	7,303	7,251
Financial liabilities:
Deposits	226,958	219,181
FHLB advances		7,570
Estimated Fair Value
Financial assets:
Cash and cash equivalents	30,669	37,029
Investment securities available-for-sale	21,143	21,145
Investment securities held-to-maturity	996	993
FHLB Stock	278	580
Loans, net	207,358	198,403
Cash surrender value of life insurance	7,303	7,251
Financial liabilities:
Deposits	$ 227,412	219,319
FHLB advances		$ 7,656