SECURITIES



(dollars in thousands)	September 30, 2019
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available for sale (AFS)
Asset-backed securities issued by GSEs and U.S. Agencies
Residential Mortgage Backed Securities ("MBS")	$	11,686	$	115	$	9	$	11,792
Residential Collateralized Mortgage Obligations ("CMOs")	106,038		2,289		133		108,194
U.S. Agency	11,198		134		30		11,302
Total securities available for sale	$	128,922	$	2,538	$	172	$	131,288

Securities held to maturity (HTM)
Asset-backed securities issued by GSEs and U.S. Agencies
Residential MBS	27,707		901		16		28,592
Residential CMOs	47,195		457		139		47,513
U.S. Agency	9,597		197		13		9,781
Asset-backed securities issued by others:
Residential CMOs	408		4		13		399
Callable GSE agency bonds	2,003		3		—		2,006
Certificates of deposit fixed	250		—		—		250
U.S. government obligations	1,494		—		—		1,494
Total securities held to maturity	$	88,654	$	1,562	$	181	$	90,035

Equity securities carried at fair value through income
CRA investment fund	$	4,665	$	—	$	—	$	4,665
Non-marketable equity securities
Other equity securities	$	209	$	—	$	—	$	209



(dollars in thousands)	December 31, 2018
(dollars in thousands)	Amortize Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available for sale (AFS)
Asset-backed securities issued by GSEs and U.S. Agencies
Residential MBS	$	7,641	$	1	$	281	$	7,361
Residential CMOs	102,411		199		1,870		100,740
U.S. Agency	12,472		9		606		11,875
Total securities available for sale	$	122,524	$	209	$	2,757	$	119,976

Securities held to maturity (HTM)
Asset-backed securities issued by GSEs and U.S. Agencies
Residential MBS	$	25,948	$	75	$	756	$	25,267
Residential CMOs	52,375		64		1,360		51,079
U.S. Agency	10,508		7		404		10,111
Asset-backed securities issued by others:
Residential CMOs	482		—		41		441
Callable GSE agency bonds	5,009		—		110		4,899
Certificates of deposit fixed	950		—		—		950
U.S. government obligations	999		—		1		998
Total securities held to maturity	$	96,271	$	146	$	2,672	$	93,745

Equity securities carried at fair value through income
CRA investment fund	$	4,428	$	—	$	—	$	4,428
Non-marketable equity securities
Other equity securities	$	209	$	—	$	—	$	209

At September 30, 2019 and December 31, 2018 securities with an amortized cost of $47.8 million and $41.3 million were pledged to secure certain customer deposits. At September 30, 2019, no securities were pledged as collateral for advances from the Federal Home Loan Bank (“FHLB”) of Atlanta, and at December 31, 2018, securities with an amortized cost of $3.3 million were pledged as collateral for advances from the FHLB of Atlanta.

Management believes that AFS securities with unrealized losses will either recover in market value or be paid off as agreed. The Company intends to, and has the ability to, hold these securities to maturity. Because our intention is not to sell the investments and it is not more likely than not that the Company will be required to sell the investments, management considers the unrealized losses in the AFS portfolio to be temporary.

The Company intends to, and has the ability to, hold the HTM securities with unrealized losses until they mature, at which time the Company will receive full value for the securities. Because our intention is not to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, management considers the unrealized losses in the held-to-maturity portfolio to be temporary.

No charges related to other-than-temporary impairment were made during the three and nine months ended September 30, 2019 and the year ended December 31, 2018.

During the three and nine months ended September 30, 2019 and the year ended December 31, 2018, there were no sales of securities in the ordinary course of operations.

During January of 2018, the Company sold virtually all of the acquired securities from the County First acquisition netting proceeds of $34.9 million which served as the fair value of the acquired securities.

ASC 320 “Investments - Debt Securities,” permits the sale of HTM securities for certain changes in circumstances. The Company may dispose of HTM securities using the safe harbor rule that allows for the sale of HTM securities when principal repayments have reduced the balance to less than 15% of original purchased par. ASC 320 10‑25‑15 indicates that a sale of a debt security after a substantial portion of the principal has been collected is equivalent to holding the security to maturity. In addition, the Company may dispose of HTM securities under ASC 320‑10‑25‑6 due to a significant deterioration in the issues’ creditworthiness.

AFS Securities

Gross unrealized losses and estimated fair value by length of time that individual AFS securities have been in a continuous unrealized loss position at September 30, 2019, and December 31, 2018 were as follows:



September 30, 2019	Less Than 12 Months				More Than 12 Months				Total
(dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Losses
Asset-backed securities issued by GSEs and U.S. Agencies	$	1,005	$	4	$	23,156	$	168	$	24,161	$	172
	$	1,005	$	4	$	23,156	$	168	$	24,161	$	172



December 31, 2018	Less Than 12 Months				More Than 12 Months				Total
(dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Losses
Asset-backed securities issued by GSEs and U.S. Agencies	$	30,095	$	163	$	54,846	$	2,594	$	84,941	$	2,757
	$	30,095	$	163	$	54,846	$	2,594	$	84,941	$	2,757

At September 30, 2019 and December 31, 2018, the AFS investment portfolio had an estimated fair value of $131.3 million and $120.0 million, of which $24.2 million and $84.9 million, respectively, of the securities had unrealized losses from their amortized cost.

AFS asset-backed securities issued by GSEs are guaranteed by the issuer and AFS U.S. government agency securities and bonds are guaranteed by the full faith and credit of the U.S. government. At September 30, 2019 and December 31, 2018, total unrealized losses were $0.2 million and $2.8 million of the portfolio amortized cost of $128.9 million and $122.5 million, respectively. At September 30, 2019 and December 31, 2018, AFS asset-backed securities issued by GSEs and U.S. Agencies with unrealized losses had average lives of 3.65 years and 4.32 years and average durations of 3.36 years and 3.83 years, respectively. Management believes that the securities will either recover in market value or be paid off as agreed.

HTM Securities

Gross unrealized losses and estimated fair value by length of time that the individual HTM securities have been in a continuous unrealized loss position at September 30, 2019 and December 31, 2018 were as follows:



September 30, 2019	Less Than 12 Months				More Than 12 Months				Total
(dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Losses
Asset-backed securities issued by GSEs and U.S. Agencies	$	—	$	—	$	25,414	$	168	$	25,414	$	168
Callable GSE Agency Bonds	—		—		2,006		—		2,006		—
Asset-backed securities issued by others	—		—		399		13		399		13
	$	—	$	—	$	27,819	$	181	$	27,819	$	181



December 31, 2018	Less Than 12 Months				More Than 12 Months				Total
(dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Losses
Asset-backed securities issued by GSEs and U.S. Agencies	$	6,955	$	38	$	70,752	$	2,483	$	77,707	$	2,521
Callable GSE Agency Bonds	—		—		4,899		110		4,899		110
Asset-backed securities issued by others	—		—		441		41		441		41
	$	6,955	$	38	$	76,092	$	2,634	$	83,047	$	2,672

At September 30, 2019 and December 31, 2018, respectively, the HTM investment portfolio had an estimated fair value of $90.0 million and $93.7 million of which $27.8 million and $83.0 million of the securities had unrealized losses from their amortized cost. Of these securities, at September 30, 2019 and December 31, 2018, $27.4 million and $82.6 million were asset-backed securities issued by GSEs and U.S. Agencies and the remaining $399,000 and $441,000 were asset-backed securities issued by others, respectively.

HTM asset-backed securities issued by GSEs and GSE agency bonds are guaranteed by the issuer and HTM U.S. government agency securities and bonds are guaranteed by the full faith and credit of the U.S. government. At September 30, 2019 and December 31, 2018, total unrealized losses on the portfolio were $0.2 million and $2.7 million of the portfolio amortized cost of $28.0 million and $94.8 million, respectively. At September 30, 2019 and December 31, 2018, the securities with unrealized losses had average lives of 4.32 years and 4.88 years and average durations of 3.36 years and 4.26 years, respectively. Management believes that the securities will either recover in market value or be paid off as agreed. The Company intends to, and has the ability to, hold these securities to maturity.

HTM asset-backed securities issued by others are collateralized mortgage obligation securities. The securities have credit support tranches that absorb losses prior to the tranches that the Company owns. The Company reviews credit support positions on its securities regularly. At September 30, 2019 and December 31, 2018, total unrealized losses on the asset-backed securities issued by others were $13,000 and $41,000 of the portfolio amortized cost of $408,000 and $482,000, respectively. At September 30, 2019 and December 31, 2018, HTM asset-backed securities issued by others with unrealized losses had average lives of 3.76 years and 3.01 years and average durations of 3.25 years and 2.33 years, respectively.

Credit Quality of Asset-Backed Securities and Agency Bonds

At September 30, 2019 and December 31, 2018, greater than 99% of the asset-backed securities and agency bond portfolio was rated AAA by Standard & Poor’s or the equivalent credit rating from another major rating agency. At September 30, 2019 and December 31, 2018, AFS asset-backed securities issued by GSEs and U.S. Agencies had average lives of 3.61 years and 4.37 years and average durations of 3.30 years and 3.86 years and were guaranteed by their issuer as to credit risk, respectively. HTM asset-backed securities issued by GSEs and U.S. Agencies had average lives of 4.32 years and 4.88 years and average durations of 3.89 years and 4.25 years and were guaranteed by their issuer as to credit risk as of September 30, 2019 and December 31, 2018, respectively.

The tables below present the Standard & Poor’s (“S&P”) or equivalent credit rating from other major rating agencies for AFS and HTM securities at September 30, 2019 and December 31, 2018 by carrying value. The Company considers noninvestment grade securities rated BB+ or lower as classified assets for regulatory and financial reporting. GSE asset-backed securities and GSE agency bonds with S&P AA+ ratings were treated as AAA based on regulatory guidance.



September 30, 2019			December 31, 2018
Credit Rating	Amount		Credit Rating	Amount
(dollars in thousands)			(dollars in thousands)
AAA	$	219,534	AAA	$	215,765
A	408		A	—
BB	—		BB	482
Total	$	219,942	Total	$	216,247