(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.

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

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

As of ~~November 12, 2019, 7,557,848~~May 11, 2020, 7,570,797 shares of the Registrant’s common stock, par value $0.01 per share, were outstanding.

		September 30, 2019 (unaudited)			December 31, 2018				(unaudited)			(audited)
		(In thousands)							(In thousands)
Assets	Assets							Assets

Cash and due from banks, including reserve requirement of $2,032 and $1,834 at September 30, 2019 and December 31, 2018, respectively		$	3,329			3,817
Cash and due from banks, including reserve requirement of $0 and $1,523 at March 31, 2020 and December 31, 2019, respectively									$	6,416			3,965
Interest-earning deposits in other depository institutions			34,672			33,212				41,893			44,152
Cash and cash equivalents			38,001			37,029				48,309			48,117
Investment securities held-to-maturity (estimated fair value of $993)			—			1,000
Investment securities available-for-sale			4,047			21,145				18,455			3,818
Federal Home Loan Bank stock			278			580				2,834			278
Loans, net			248,125			227,424				520,966			247,956
Other real estate owned			140			508				772			140
Premises and equipment, net			8,590			8,896				9,478			8,513
Bank owned life insurance			7,410			7,251				15,012			7,462
Intangible assets										19,083			—
Accrued interest receivable and other assets			3,136			3,862				7,888			3,010
Total assets		$	309,727			307,695			$	642,797			319,294

Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity							Liabilities and Stockholders' Equity

Liabilities:
Savings accounts		$	23,539			24,511			$	77,818			22,691
Interest-bearing checking			49,687			53,752				59,071			47,324
Market rate checking			31,054			24,936				100,121			33,380
Non-interest bearing checking			30,409			28,472
Non-interest-bearing checking										100,633			29,549
Certificate of deposits			94,367			87,510				160,739			105,237
Total deposits			229,056			219,181				498,382			238,181
Federal Home Loan Bank advances			—			7,570				54,388			—
Repurchase agreements and other borrowings										9,480			—
Accrued interest payable and other liabilities			4,124			4,546				4,607			3,946
Total liabilities			233,180			231,297				566,857			242,127

Stockholders' equity:
Common stock (par value $0.01 per share, 19,000,000 shares authorized, 7,671,224 issued and 7,557,848 outstanding at September 30, 2019 and 7,538,250 issued and 7,478,992 outstanding at December 31, 2018)			77			75
Common stock (par value $0.01 per share, 19,000,000 shares authorized, 7,614,691 issued and 7,501,315 outstanding at March 31, 2020 and 7,671,224 issued and 7,557,848 outstanding at December 31, 2019)										77			77
Preferred stock (1,000,000 shares authorized, no shares outstanding)			—			—				—			—
Additional paid in capital			33,251			33,078				33,278			33,358
Treasury stock, 113,376 shares at September 30, 2019, and 59,258 shares at December 31, 2018, at cost			(1,268	)		(668	)
Treasury stock, 113,376 shares at March 31, 2020, and December 31, 2019, at cost										(1,268	)		(1,268	)
Unearned ESOP shares			(2,600	)		(2,689	)			(2,541	)		(2,571	)
Retained earnings			47,082			47,043				46,264			47,562
Accumulated other comprehensive income (loss)			5			(441	)
Accumulated other comprehensive income										130			9
Total stockholders' equity			76,547			76,398				75,940			77,167
Total liabilities and stockholders' equity		$	309,727			307,695			$	642,797			319,294

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
	(In thousands)												(In thousands)
Interest income:
Loans, including fees	$	3,671			3,695		$	10,464			10,197		$	6,397			3,244
Investment securities, including dividends		63			142			332			446			165			142
Interest-earning deposits		148			156			448			321			136			177
Total interest income		3,882			3,993			11,244			10,964			6,698			3,563
Interest expense:
Deposits		579			423			1,635			1,104			1,263			511
Borrowings		—			38			26			112			208			24
Total interest expense		579			461			1,661			1,216			1,471			535
Net interest income before provision for loan losses		3,303			3,532			9,583			9,748			5,227			3,028
Provision for loan losses		—			200			—			500			500			—
Net interest income after provision for loan losses		3,303			3,332			9,583			9,248			4,727			3,028
Non-interest income:
Service charges on deposit accounts		260			230			620			572			353			173
Small Business Administration (SBA) loan fees		1			(69	)		8			585			—			5
Other		274			207			602			427			160			178
Total non-interest income		535			368			1,230			1,584			513			356
Non-interest expenses:
Salaries and employee benefits		1,861			1,417			5,519			4,798			4,173			1,798
Deferred compensation		67			56			171			159			63			52
Occupancy		465			458			1,421			1,299			647			478
Advertising		37			49			104			132			62			32
Data processing		748			233			1,360			684			644			262
Other real estate owned		2			39			19			100			—			2
Net gain on sale of other real estate owned		(8	)		(35	)		(104	)		(59	)
Net loss (gain) on sale of other real estate owned														29			(34	)
Legal and accounting		505			385			1,037			872			683			274
Organizational dues and subscriptions		60			81			213			236			88			80
Director compensation		49			63			145			171			49			47
Federal deposit insurance premiums		16			16			48			48			112			16
Other		319			344			935			824			531			279
Total non-interest expenses		4,121			3,106			10,868			9,264			7,081			3,286
Income (loss) before income taxes		(283	)		594			(55	)		1,568
Income tax expense (benefit)		(87	)		135			(94	)		158
Net income (loss)	$	(196	)		459		$	39			1,410
Basic and diluted earnings (loss) per share	$	(0.03	)	$	0.06		$	0.01		$	0.19
(Loss) income before income taxes														(1,841	)		98
Income tax benefit														(543	)		(19	)
Net (loss) income													$	(1,298	)		117
Basic and diluted (loss) earnings per share													$	(0.17	)	$	0.02

Three and Nine Months Ended September 30, 2018 and September 30, 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

ESOP loan payment and
�� release of ESOP shares

—

3

—

30

—

—

33

Change in unrealized loss
   on investment securities
   available-for-sale

—

—

—

—

—

(2
)

(2
)
Net income

—

—

—

—

618

—

618

Ending balance June 30, 2018

$
75

$
33,070

$
—

$
(2,748
)

$
46,436

$
(535
)

$
76,298

ESOP loan payment and
   release of ESOP shares

—

5

—

29

—

—

34

Purchase of treasury stock

—

—

(248
)

—

—

—

(248
)
Change in unrealized loss
   on investment securities
   available-for-sale

—

—

—

—

—

(160
)

(160
)
Net income

—

—

—

—

459

—

459

Ending balance September 30, 2018

$
75

$
33,075

$
(248
)

$
(2,719
)

$
46,895

$
(695
)

$
76,383

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

ESOP loan payment and
   release of ESOP shares

—

2

—

29

—

—

31

Issuance of restricted stock
   awards

2

43

—

—

—

—

45

Stock based compensation
   expense

—

24

—

—

—

—

24

Change in unrealized gain
   on investment securities
   available-for-sale

—

—

—

—

—

218

218

Net income

—

—

—

—

118

—

118

Ending balance June 30, 2019

$
77

$
33,148

$
(1,268
)

$
(2,630
)

$
47,278

$
150

$
76,755

ESOP loan payment and
   release of ESOP shares

—

—

—

30

—

—

30

Stock based compensation
   expense

—

103

—

—

—

—

103

Change in unrealized loss
   on investment securities
   available-for-sale

—

—

—

—

—

(145
)

(145
)
Net loss

—

—

—

—

(196
)

—

(196
)
Ending balance September 30, 2019

$
77

$
33,251

$
(1,268
)

$
(2,600
)

$
47,082

$
5

$
76,547

	Three Months Ended March 31, 2019 and 2020
																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, 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, net of tax		—		—				—			—			—			373			373
Net income		—		—				—			—			117			—			117
Ending balance March 31, 2019	$	75	$	33,079			$	(1,268	)	$	(2,659	)	$	47,160		$	(68	)	$	76,319

Ending balance December 31, 2019	$	77	$	33,358			$	(1,268	)	$	(2,571	)	$	47,562		$	9		$	77,167
ESOP loan payment and release of ESOP shares		—		—				—			30			—			—			30
Stock-based compensation expense		—		(80	)			—			—			—			—			(80	)
Change in unrealized gain on investment securities available-for-sale, net of tax		—		—				—			—			—			121			121
Net loss		—		—				—			—			(1,298	)		—			(1,298	)
Ending balance March 31, 2020	$	77	$	33,278			$	(1,268	)	$	(2,541	)	$	46,264		$	130		$	75,940

	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
	(In thousands)						(In thousands)
Cash flows from operating activities:
Net income	$	39			1,410
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		—			500
Net (loss) income							$	(1,298	)		117
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities, net of effects of acquisition:
Depreciation and amortization		689			694			28			228
Stock-based compensation expense		173			—			(80	)		—
Deferred income tax		(17	)		446
Provision for loan losses								500			—
ESOP expense		91			100			30			31
Net gain on sale of investment securities available-for-sale		(147	)		—
Net gain on sale of other real estate owned		(104	)		(59	)
Net loss (gain) on sale of other real estate owned								29			(34	)
Increase in cash surrender value of life insurance		(159	)		(177	)		(98	)		(52	)
Change in:
Accrued interest receivable and other assets		586			114			(1,784	)		534
Accrued interest payable and other liabilities		(422	)		91			(185	)		198
Net cash provided by operating activities		729			3,119
Cash flows from investing activities:
Net cash (used in) provided by operating activities								(2,858	)		1,022
Cash flows from investing activities, net of effects of acquisition:
Purchases of premises and equipment		(265	)		(799	)		(104	)		(68	)
Proceeds from sale of investment securities available-for-sale		16,360			—
Proceeds from paydowns of investment securities available-for-sale		1,370			1,607			1,842			460
Proceeds from maturity of investment securities held-to-maturity		1,000			—
Purchases of other investments		—			(43	)		(896	)		—
Proceeds from sales of other investments		302			—			—			302
Net change in loans		(20,841	)		(7,367	)		(11,533	)		(7,942	)
Proceeds from sales of other real estate owned		612			172			128			259
Net cash paid in business combination								(22,749	)		—
Net cash used in investing activities		(1,462	)		(6,430	)		(33,312	)		(6,989	)
Cash flows from financing activities:
Cash flows from financing activities, net of effects of acquisition:
Net change in demand and savings deposits		9,875			19,257			10,990			7,777
Purchase of treasury stock		(600	)		(248	)		—			(600	)
Proceeds from FHLB advances								20,000			—
Net change in repurchase agreements and other borrowings								5,372			—
Repayment of FHLB advances		(7,570	)		—			—			(7,570	)
Net cash provided by financing activities		1,705			19,009			36,362			(393	)
Net change in cash and cash equivalents		972			15,698			192			(6,360	)
Cash and cash equivalents at beginning of period		37,029			25,098			48,117			37,029
Cash and cash equivalents at end of period	$	38,001			40,796		$	48,309			30,669
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,669			1,213		$	1,248			555
Supplemental disclosures of noncash investing activities:
Other real estate owned acquired through foreclosure		140			67

Fair value of assets acquired								317,744			—
Fair value of liabilities assumed								288,732			—
Net assets acquired								29,012			—

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 and in Cobb County, Georgia and Fulton 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, including indirect automobile 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 ~~September 30, 2019~~March 31, 2020 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~~December 31, 2019 Form 10-K. The results of operations for the quarter ended ~~September 30, 2019,~~March 31, 2020, 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-QT 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~~December 31, 2019 included in the Company’s Form 10-K.

Net ~~income~~ (loss) earnings 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 loss for the current period was ~~$196,000~~$1,298,000 and the weighted average common shares outstanding were ~~7,557,848. The net income for the current year to date period was $39,000 and the weighted average common shares outstanding were 7,504,891.~~7,529,582.

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

~~Our only U.S. government sponsored enterprise security matured during~~On January 10, 2020, the ~~quarter ended~~Company consummated its merger with ABB Financial Group, Inc. (“ABB”) pursuant to the Agreement and Plan of Merger by and between the Company and ABB dated August 19, 2019, (the “Merger Agreement”), whereby ABB was merged with and into the Company, and Affinity Bank, ABB’s wholly owned commercial bank subsidiary serving Cobb County, Georgia and Fulton County, Georgia and surrounding counties, was merged with and into Newton Federal Bank. The system integration is expected to be completed in September ~~30, 2019,~~2020. Affinity Bank operated one branch office in Cobb County, Georgia and ~~was~~ a ~~debt financing security issued by a government agency with an amortized cost of $1.0 million. As of December 31, 2018, there was~~ one ~~U.S. government sponsored enterprise security with an amortized cost of $1.0 million, an unrealized loss of $7,000 and estimated fair value of $993,000.~~

~~There were no sales of securities held-to-maturity during the three and nine months ended September 30, 2019 or 2018.~~loan production office in Fulton County, Georgia.

The ~~one held-to-maturity security~~purpose of the merger was ~~pledged~~for strategic reasons beneficial to ~~secure public deposits at December 31, 2018.~~the Company. The acquisition is consistent with its plan to drive growth and efficiency through increased scale, leverage the strengths of each bank across the combined customer base, enhance profitability, and add liquidity and shareholder value.

Under the terms of the Merger Agreement, each outstanding share of ABB common stock was converted into the right to receive $7.50 in cash, for a total paid of $40.3 million in cash with no stock issued. Pre-existing ABB equity awards (restricted stock units and stock options) immediately vested upon consummation of the merger. The Company paid $2.7 million for vesting ABB restricted stock.

~~Investment Securities Available-for-Sale~~The Company accounted for the transaction under the acquisition method of accounting, and thus, the financial position and results of operations of ABB prior to the consummation date were not included in the accompanying consolidated financial statements. The accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determined the fair value of core deposit intangibles, securities, premises and equipment, loans, other real estate owned, bank owned life insurance and other assets, deposits, debt and deferred taxes with the assistance of third-party valuations, appraisals, and third-party advisors. The estimated fair values will be subject to refinement as additional information relative to the closing date fair values becomes available through the measurement period of approximately one year from consummation.

The fair value of the assets acquired and liabilities assumed on January 10, 2020 was as follows:

The following unaudited pro forma information presents the results of operations for three months ended March 31, 2020 and 2019, as if the acquisition had occurred January 1 of each period. The Company expects to achieve further operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts. These unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the acquisition occurred at the beginning of each period presented, nor are they intended to represent or be indicative of future results of operations.

Investment securities available-for-sale at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows: (in thousands)

	Amortized		Gross Unrealized		Gross Unrealized			Estimated		Amortized		Gross Unrealized		Gross Unrealized			Estimated
September 30, 2019	Cost		Gains		Losses			Fair Value
Municipal securities - tax exempt	$	—		—		—			—
Municipal securities - taxable		—		—		—			—
March 31, 2020										Cost		Gains		Losses			Fair Value
Government agency securities										$	500		3		—			503
Government agency mortgage-backed securities											15,058		412		(6	)		15,464
Trust preferred securities											2,721		6		(239	)		2,488
Total										$	18,279	$	421	$	(245	)	$	18,455
December 31, 2019
Government agency securities		501		—		(2	)		499		501		—		(1	)		500
Government agency mortgage-backed securities		3,539		10		(1	)		3,548		3,305		13		—			3,318
Total	$	4,040		10		(3	)		4,047	$	3,806		13		(1	)		3,818
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 ~~two~~four securities in an unrealized loss position as of March 31, 2020 for less than 12 ~~months and one security was~~months. There were no securities in an unrealized loss position greater than 12 months ~~or greater~~ as of ~~September 30, 2019.~~March 31, 2020. The unrealized losses on the debt securities arose due to changing interest rates and market conditions and are considered to be temporary because of acceptable investment grades and are reviewed regularly. Two of the securities are collateralized mortgage obligations where the repayment sources of principal and interest are ~~largely~~ backed by U.S. Government sponsored ~~agencies or financially stable municipalities.~~agencies. The other two securities are trust preferred securities where the Bank performs a credit review regularly and such review has raised no concerns. 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 ~~September 30, 2019,~~March 31, 2020, 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		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Government agency securities
Within 1 year		501		499	$	500		503
Greater than 1 to 5 years		—		—		—		—
Greater than 5 to 10 years		—		—		—		—
Greater than 10 years		—		—		—		—
Trust preferred securities
Within 1 year						—		—
Greater than 1 to 5 years						—		—
Greater than 5 to 10 years						2,221		2,063
Greater than 10 years						500		425
		501		499		3,221		2,991
Government agency mortgage-backed securities		3,539		3,548		15,058		15,464
Total	$	4,040		4,047	$	18,279		18,455

~~During the three months ended September 30, 2019 the Company sold 39 available for sale securities with a book value of $16.2 million at a net gain of $147,000 to provide additional liquidity.~~ There were no sales of securities available-for-sale during the three ~~and nine~~ months ended ~~September 30, 2018.~~March 31, 2020 or 2019.

Securities with a carrying value of ~~$3.1~~approximately $10.7 million and ~~$1.8~~$3.8 million were pledged to secure public deposits and repurchase agreements at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Major classifications of loans, by collateral code, at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are summarized as follows: (in thousands)

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Commercial (secured by real estate)	$	55,235			50,716		$	173,995			54,488
Commercial and industrial		26,609			25,612			155,111			28,613
Construction, land and acquisition & development		21,912			12,367			44,244			20,502
Residential mortgage 1-4 family		122,828			138,156			114,093			116,843
Consumer installment		25,749			4,595			38,172			31,644
Total		252,333			231,446			525,615			252,090
Less allowance for loan losses		(4,208	)		(4,022	)		(4,649	)		(4,134	)
Total loans, net	$	248,125			227,424		$	520,966			247,956

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~~the Atlanta, Georgia ~~counties.~~MSA. A substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market. With the acquisition of Affinity, the Bank is a premier lender within professional markets, with a primary focus on the dental industry in Georgia and adjoining states. The majority of these loans are commercial and industrial credits for practice acquisitions and equipment financing with the remainder being owner-occupied real estate.

Qualifying loans in the amount of ~~$113.8~~$231.3 million and ~~$125.0~~$115.4 million were pledged to secure the line of credit from the Federal Home Loan Bank ~~(the “FHLB”~~(“FHLB”) at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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 ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019: (in thousands)

September 30, 2019	Commercial (Secured by Real Estate)			Commercial and Industrial			Construction, Land and Acquisition & Development			Residential Mortgage			Consumer Installment			Unallocated			Total
March 31, 2020																						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		$	1,661			1,478			153		369			466			7			4,134
Provision		(193	)		(150	)		68			(291	)		561			5			—			764			(677	)		99		389			(69	)		(6	)		500
Charge-offs		—			(26	)		—			(125	)		(5	)		—			(156	)		(31	)		—			—		(126	)		(9	)		—			(166	)
Recoveries		77			28			—			236			1			—			342			145			6			—		3			27			—			181
Ending balance	$	1,503			1,372			176			461			684			12			4,208		$	2,539			807			252		635			415			1			4,649
Ending allowance attributable to loans:
Individually evaluated for impairment		1			—			—			16			—			—			17			5			—			—		10			—			—			15
Collectively evaluated for impairment		1,502			1,372			176			445			684			12			4,191			2,534			807			252		625			415			1			4,634
Total ending allowance	$	1,503			1,372			176			461			684			12			4,208		$	2,539			807			252		635			415			1			4,649
Loans:
Individually evaluated for impairment		2,205			—			—			3,430			—			—			5,635			1,715			395			—		4,695			—			—			6,805
Collectively evaluated for impairment		53,030			26,609			21,912			119,398			25,749			—			246,698			172,280			154,716			44,244		109,398			38,172			—			518,810
Total loans	$	55,235			26,609			21,912			122,828			25,749			—			252,333		$	173,995			155,111			44,244		114,093			38,172			—			525,615

September 30, 2018
March 31, 2019
Allowance for loan losses:
Beginning balance	$	1,747			803			329			1,648			74			9			4,610		$	1,619			1,520			108		641			127			7			4,022
Provision	$	(551	)		2,021			(168	)		(814	)		20			(8	)		500		$	24			(9	)		24		(192	)		154			(1	)		—
Charge-offs	$	(6	)		(1,275	)		—			(1,425	)		(33	)		—			(2,739	)	$	—			(26	)		—		—			(1	)		—			(27	)
Recoveries	$	122			121			17			1,278			—			—			1,538		$	25			18			—		107			1			—			151
Ending balance	$	1,312			1,670			178			687			61			1			3,909		$	1,668			1,503			132		556			281			6			4,146
Ending allowance attributable to loans:
Individually evaluated for impairment	$	3			29			—			7			—			—			39		$	3			—			—		10			—			—			13
Collectively evaluated for impairment	$	1,309			1,641			178			680			61			1			3,870		$	1,665			1,503			132		546			281			6			4,133
Total ending allowance	$	1,312			1,670			178			687			61			1			3,909		$	1,668			1,503			132		556			281			6			4,146
Loans:
Individually evaluated for impairment	$	1,858			29			—			5,429			6			—			7,322		$	2,006			—			—		3,332			1			—			5,339
Collectively evaluated for impairment	$	37,910			28,346			20,188			130,079			2,549			—			219,072		$	51,076			26,256			16,475		129,020			11,346			—			234,173
Total loans	$	39,768			28,375			20,188			135,508			2,555			—			226,394		$	53,082			26,256			16,475		132,352			11,347			—			239,512

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 September 30, 2019 and December 31, 2018 were as follows: (in thousands)~~

September 30, 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)

$
802

803

—

824

3

Commercial and industrial

—

—

—

—

—

Construction, land and acquisition & development

—

—

—

—

—

Residential mortgage

2,154

2,156

—

2,180

23

Consumer installment

—

—

—

—

—

2,956

2,959

—

3,004

26

With an allowance recorded:

Commercial (secured by real estate)

1,403

1,404

1

1,426

22

Commercial and industrial

—

—

—

—

—

Construction, land and acquisition & development

—

—

—

—

—

Residential mortgage

1,276

1,276

16

1,177

20

Consumer installment

—

—

—

—

—

2,679

2,680

17

2,603

42

Total impaired loans

$
5,635

5,639

17

5,607

68

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

Impaired loans at March 31, 2020 and December 31, 2019 were as follows: (in thousands)

March 31, 2020	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	215		215		—		222		—
Commercial and industrial		395		395		—		395		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		3,143		3,146		—		3,170		10
Consumer installment		—		—		—		—		—
		3,753		3,756		—		3,787		10
With an allowance recorded:
Commercial (secured by real estate)		1,500		1,500		5		1,506		24
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		1,552		1,567		10		1,562		24
Consumer installment		—		—		—		—		—
		3,052		3,067		15		3,068		48
Total impaired loans	$	6,805		6,823		15		6,855		58

December 31, 2019
With no related allowance recorded:
Commercial (secured by real estate)	$	26		26		—		40		9
Commercial and industrial		395		527		—		463		29
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		3,749		3,878		—		3,912		153
Consumer installment		—		—		—		—		—
		4,170		4,431		—		4,415		190
With an allowance recorded:
Commercial (secured by real estate)		1,513		1,513		1		1,539		94
Commercial and industrial		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		412		412		5		405		—
Consumer installment		—		—		—		—		24
		1,925		1,925		6		1,944		118
Total impaired loans	$	6,095		6,356		6		6,359		308

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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 by class of loans: (in thousands)

September 30, 2019	30 -59 Days Past Due		60- 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total		Nonaccrual
March 31, 2020															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)	$	—		26		657		683		54,552		55,235		905	$	2,029		—		—		2,029		171,966		173,995		226
Commercial and industrial		93		—		18		111		26,498		26,609		18		1		—		395		396		154,715		155,111		980
Construction, land and acquisition & development		—		—		—		—		21,912		21,912		—		—		—		—		—		44,244		44,244		—
Residential mortgage		230		1,572		238		2,040		120,788		122,828		1,243		4,249		—		432		4,681		109,412		114,093		3,096
Consumer installment		47		39		19		105		25,644		25,749		19		96		2		—		98		38,074		38,172		2
Total	$	370		1,637		932		2,939		249,394		252,333		2,185	$	6,375		2		827		7,204		518,411		525,615		4,304

December 31, 2018
December 31, 2019
Commercial (secured by real estate)	$	—		—		—		—		50,716		50,716		56	$	114		24		10		148		54,340		54,488		246
Commercial and industrial		—		—		—		—		25,612		25,612		27		1,270		30		395		1,695		26,918		28,613		395
Construction, land and acquisition & development		—		—		—		—		12,367		12,367		—		—		—		—		—		20,502		20,502		—
Residential mortgage		196		1,039		228		1,463		136,693		138,156		1,744		3,087		2,040		643		5,770		111,073		116,843		1,912
Consumer installment		9		1		1		11		4,584		4,595		1		58		34		—		92		31,552		31,644		14
Total	$	205		1,040		229		1,474		229,972		231,446		1,828	$	4,529		2,128		1,048		7,705		244,385		252,090		2,567

There were no loans past due 90 days or greater and still accruing interest as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

There ~~were~~was one new troubled debt restructuring during the three months ended March 31, 2020 and no new troubled debt restructurings during the ~~nine~~three months ended ~~September 30, 2019 or 2018. One troubled debt restructuring subsequently defaulted during the nine months ended September 30,~~March 31, 2019. No troubled debt restructurings subsequently defaulted during the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2020 or 2019.

The Bank has allocated an allowance for loan losses of approximately ~~$16,000~~$15,000 and ~~$5,000~~$6,000 to customers whose loan terms have been modified in troubled debt restructurings as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: (in thousands)

September 30, 2019	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
March 31, 2020											Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	54,530		—		705		—		55,235	$	173,972		—		23		—		173,995
Commercial and industrial		26,064		—		545		—		26,609		154,131		—		980		—		155,111
Construction, land and acquisition & development		21,912		—		—		—		21,912		44,244		—		—		—		44,244
Residential mortgage		116,807		315		5,706		—		122,828		110,764		227		3,102		—		114,093
Consumer installment		25,675		—		74		—		25,749		38,170		—		2		—		38,172
Total	$	244,988		315		7,030		—		252,333	$	521,281		227		4,107		—		525,615

December 31, 2018	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
December 31, 2019											Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	50,395		—		321		—		50,716	$	54,454		—		34		—		54,488
Commercial and industrial		25,585		—		27		—		25,612		28,204		—		409		—		28,613
Construction, land and acquisition & development		12,367		—		—		—		12,367		20,502		—		—		—		20,502
Residential mortgage		132,167		65		5,924		—		138,156		110,034		229		6,580		—		116,843
Consumer installment		4,553		—		42		—		4,595		31,626		—		18		—		31,644
Total	$	225,067		65		6,314		—		231,446	$	244,820		229		7,041		—		252,090

The aggregate amounts of certificates of deposit ofgreater than $250,000, ~~or more,~~ the standard FDIC deposit insurance coverage limit per depositor, were approximately ~~$17.1~~$34.5 million at ~~September 30, 2019~~March 31, 2020 and ~~$14.2~~$30.2 million at December 31, ~~2018. The aggregate amounts of certificates of deposit of $100,000 or more were approximately $49.1 million at September 30, 2019 and $42.4 million at December 31, 2018.~~2019.

The following ~~Federal Home Loan Bank of Atlanta (“FHLB”)~~FHLB advances, which required monthly or quarterly interest payments, were outstanding at ~~December~~March 31, ~~2018:~~2020:

~~All~~There were no FHLB advances as of ~~these advances were repaid during the quarter ended~~December 31, 2019. At March 31, ~~2019. The~~2020, the FHLB advances were collateralized by certain loans which totaled approximately ~~$125.0~~$231.3 million at ~~December~~March 31, ~~2018,~~2020, and by the Company’s investment in FHLB stock which totaled approximately ~~$580,000~~$2.8 million at ~~December~~March 31, ~~2018.~~2020.

The Company had one FHLB letter of credit of ~~$4.5~~$8.0 million and ~~$5.0~~$8.0 million, used to collateralize public deposits, outstanding at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

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 approximately $3.0 million payable to the Company for the purpose of purchasing shares of the Company’s common stock. A total of 295,499 shares were purchased with the loan proceeds as part of the Company’s initial stock offering. Total ESOP expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ was approximately $30,000 ~~$34,000, $91,000~~ and ~~$100,000,~~$31,000, respectively. The balance of the note payable of the ESOP was approximately $2.7 million ~~and $2.8 million~~ at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018, respectively.~~2019. Because the source of the loan payments is contributions received by the ESOP from the Company, the related note receivable is shown as a reduction of stockholders’ equity. As of ~~September 30,~~March 31, 2020 and December 31, 2019, ~~23,600~~35,400 shares had been released.

In August 2018, shareholders approved the Company’s 2018 Equity Incentive Plan, which authorizes the issuance of up to 517,123 shares of common stock pursuant to restricted stock grants and up to 369,374 shares of common stock pursuant to the exercise of options.

A Black-Scholes model is utilized to estimate the fair value of stock option grants, while the market price of the Company’s stock at the date of grant is used to estimate the fair value of restricted stock awards. ~~The weighted average assumptions used in the Black-Scholes model for valuing~~There were no stock option grants were as follows: Dividend yield of 0%; expected volatility of 20.35%; risk-free interest rate of 2.41%; expected average life of 7.5 years; and the weighted average per share fair value of options of $2.97.

~~Stock options of 247,479 with a weighted average exercise price of $10.10 were granted~~or restricted stock grants during the three months ended ~~June 30,~~March 31, 2020 and 2019. No

There were no options ~~were granted~~exercised during the three months ended ~~September 30, 2019. No options~~March 31, 2020. Options totaling 147,749 were ~~exercised or~~ forfeited during the three months ended ~~September 30, 2019.~~March 31, 2020 resulting in a reversal of previously recognized stock compensation expense of approximately $66,000 as none of the forfeited options had vested at the time of forfeiture. There are a total of 99,730 stock options outstanding as of March 31, 2020. The weighted average remaining life of outstanding ~~stock~~ options at ~~September 30, 2019,~~March 31, 2020, is ~~4.6~~9.0 years and they have an aggregate intrinsic value of $0. ~~The weighted average remaining life~~No options are exercisable as of ~~exercisable~~March 31, 2020.

No restricted stock ~~options at September 30, 2019, is 4.6 years~~has yet vested, and ~~they have an aggregate intrinsic value of $0.~~

~~Restricted stock of 132,974~~56,533 shares ~~with a weighted average grant date fair value of $10.10 was granted~~were forfeited during the three months ended ~~June 30, 2019. No shares~~March 31, 2020 resulting in a reversal of previously recognized stock compensation expense of approximately $86,000 as none of the forfeited restricted stock had vested at the time of forfeiture. There were ~~granted during the three months ended September 30, 2019. No stock has yet vested and none has been forfeited. There are 132,974~~76,441 restricted shares outstanding with a weighted average grant date fair value of $10.10 at ~~September 30, 2019.~~March 31, 2020.

The Company recognized approximately ~~$103,000 and $173,000~~$72,000 of stock-based compensation expense ~~(included in salary and employee benefits on the consolidated statements of income)~~ during the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, associated with its common stock awards granted to directors and officers. As of ~~September 30, 2019,~~March 31, 2020, there was approximately ~~$1.9 million~~$870,000 of unrecognized compensation cost related to equity award grants. The cost is expected to be recognized over the remaining vesting period of approximately ~~4.6~~4.0 years.

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.

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.

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

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.

~~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.

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 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.

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

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.

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

The carrying value of repurchase agreements and other borrowings reasonably approximates fair value.

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

The Company’s only assets recorded at fair value on a recurring basis are available-for-sale securities that had fair values of approximately ~~$4.0~~$18.5 million and ~~$21.1~~$3.8 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. They are classified as Level 2.

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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (in thousands).

September 30, 2019	Level 1		Level 2		Level 3		Total
March 31, 2020									Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		140		140	$	—		—		772		772
Impaired loans		—		—		5,618		5,618		—		—		8,057		8,057
Total assets at fair value	$	—		—		5,758		5,758	$	—		—		8,829		8,829

December 31, 2018	Level 1		Level 2		Level 3		Total
December 31, 2019									Level 1		Level 2		Level 3		Total
Other real estate owned	$	—		—		508		508	$	—		—		140		140
Impaired loans		—		—		5,547		5,547		—		—		6,089		6,089
Total assets at fair value	$	—		—		6,055		6,055	$	—		—		6,229		6,229

The carrying amounts and estimated fair values (in thousands) of the Company’s financial instruments at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows:

	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	38,001		38,001		37,029		37,029	$	48,309		48,309		48,117		48,117
Investment securities
available-for-sale	$	4,047		4,047		21,145		21,145	$	18,455		18,455		3,818		3,818
held-to-maturity	$	—		—		1,000		993
FHLB Stock	$	278		278		580		580	$	2,834		2,834		278		278
Loans, net	$	248,125		226,605		227,424		198,403	$	520,966		485,902		247,956		219,991
Cash surrender value of life insurance	$	7,410		7,410		7,251		7,251	$	15,012		15,012		7,462		7,462
Financial liabilities:
Deposits	$	229,056		230,100		219,181		219,319	$	498,382		500,508		238,181		239,340
FHLB advances	$	—		—		7,570		7,656	$	54,388		49,683		—		—
Repurchase agreements and other borrowings									$	9,480		9,480		—		—

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.

~~On August 19, 2019, the Company entered into an Agreement~~(10) Subsequent Event

Subsequent to quarter-end and Plan of Merger (the “Merger Agreement”) with the Company’s wholly-owned subsidiary, Community Interim Corporation, which has been formed to facilitate the Merger (defined below), and ABB Financial Group, Inc., a Georgia corporation (“ABB”), pursuant to which Community Interim Corporation will merge with and into ABB, with ABB as the surviving corporation. Immediately thereafter, pursuant to the Merger Agreement, ABB will merge with and into the Company, with the Company as the surviving corporation. These transactions are referred to as the “Merger.” Following the consummation of the Merger, Affinity Bank, a Georgia-chartered bank and the wholly-owned subsidiary of ABB, will merge with and intothrough May 10, 2020, the Bank ~~with the Bank as the surviving institution.~~

~~Under the terms of the Merger Agreement, each outstanding share of ABB common stock will be converted into the right to receive $7.50 in cash. Including consideration to be~~had received ~~by holders of options to purchase ABB common stock, the transaction is valued at approximately $40.3~~SBA authorization for over 1,100 Payroll Protection Program loans totaling $120.0 million. In addition, ~~$5.9~~through April 30, 2020, the Bank had granted short-term deferrals on 819 loans that were otherwise performing of approximately $185.0 million, which included those granted prior to quarter-end.

The COVID-19 pandemic has disrupted and adversely affected the Company’s business and results of ~~preferred stock~~operations, and the ultimate impacts of the pandemic on the Company’s business, financial condition and results of operations will depend on future developments and other factors that ~~has been issued by ABB~~are highly uncertain and will be ~~redeemed, and $1.4 million of trust preferred securities issued by a subsidiary of ABB will be acquired~~impacted by the ~~Company~~scope and ~~canceled. All accrued but unpaid dividends~~duration of the pandemic and ~~interest will be paid on~~actions taken by governmental authorities in response to the ~~preferred stock and trust preferred securities.~~

The Merger is expected to close either late in the fourth quarter of 2019 or the first quarter of 2020. The Merger is subject to approval by ABB’s stockholders as well as regulatory approval and other customary closing conditions.

Management’s discussion and analysis of financial condition and results of operations at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and for the three months ended March 31, 2020 and ~~nine months ended September 30,~~ 2019 ~~and 2018~~ is intended to assist in understanding the financial condition and results of operations of the Company. Evaluation of financial performance between 2020 and 2019 periods was impacted in general from the timing of the ABB acquisition. Since the balances and results of operations of the acquired entity prior to consummation are appropriately not included in the accompanying consolidated financial statements, income statement results and average balances for 2020 included partial period contributions from the 2020 acquisition versus no contribution in the 2019 periods. 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.

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:

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:

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the novel coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

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

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.~~December 31, 2019. 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.

Business Combinations and Valuation of Loans Acquired in Business Combinations. We account for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. Assets acquired and liabilities assumed in a business combination are recorded at estimated fair value on their purchase date. As provided for under GAAP, management has up to 12 months following the date of the acquisition to finalize the fair values of acquired assets and assumed liabilities, where it is not possible to estimate the acquisition date fair value upon consummation.

In particular, the valuation of acquired loans involves significant estimates, assumptions and judgment based on information available as of the acquisition date. Substantially all loans acquired in the transaction are evaluated in pools of loans with similar characteristics; and since the estimated fair value of acquired loans includes a credit consideration, no carryover of any previously recorded allowance for loan losses is recorded at acquisition. A number of factors are considered in determining the estimated fair value of purchased loans including, among other things, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, estimated holding periods, contractual interest rates compared to market interest rates, and net present value of cash flows expected to be received.

In determining the Day 1 Fair Values of acquired loans, management calculates a nonaccretable difference (the credit mark component of the acquired loans) and an accretable difference (the market rate or yield component of the acquired loans). The nonaccretable difference is the difference between the undiscounted contractually required payments and the undiscounted cash flows expected to be collected in accordance with management’s determination of the Day 1 Fair Values. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, and nonaccretable difference which would have a positive impact on interest income.

The accretable yield on acquired loans is the difference between the expected cash flows and the initial investment in the acquired loans. The accretable yield is recognized into earnings using the effective yield method over the term of the loans. Management separately monitors the acquired loan portfolio and periodically reviews loans contained within this portfolio against the factors and assumptions used in determining the Day 1 Fair Values.

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~~involve judgment, current economic or business conditions can change, and future events are inherently difficult to predict, the anticipated amount of estimated loan losses and therefore the appropriateness of the allowance for loan losses could change significantly.

The allocation methodology applied by the Bank is designed to assess the appropriateness of the allowance for loan losses and includes allocations for specifically identified impaired loans and loss factor allocations for all remaining loans, with a component primarily based on historical loss rates and a component primarily based on other qualitative factors. The methodology includes evaluation and consideration of several factors, such as, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions or 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 ~~September 30, 2019.~~March 31, 2020. 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.

On January 10, 2020, the Company and the Bank completed the acquisition of ABB Financial Group, Inc. (“ABB”) and its wholly owned banking subsidiary, Affinity Bank. The merger consideration totaled approximately $40.3 million in cash. In addition, $5.9 million of ABB preferred stock was redeemed and $1.4 million of trust preferred securities issued by a subsidiary of ABB was acquired by the Company and canceled. The merger expanded our presence in the highly desirable Atlanta MSA and accelerated our growth strategy. The merger has also enhanced our commercial banking capabilities and added an affluent dental clientele that spurred the growth of ABB and Affinity Bank in previous years. As a result of the merger, we added $264.2 million in loans and $249.0 million in deposits. Additionally, included in the acquisition is Fitness Bank, an online reward savings account that rewards clients based on fitness goals and has spurred deposit growth for Affinity Bank in recent years.

During the first quarter of 2020, global financial markets experienced significant volatility resulting from the spread of a novel coronavirus known as COVID-19. In March 2020, the World Health Organization declared COVID-19 a global pandemic and the United States declared a National Public Health Emergency. The COVID-19 pandemic has restricted the level of economic activity in our markets. In response to the pandemic, the governments of the state of Georgia and of most other states have taken preventative or protective actions, such as imposing restrictions on travel and business operations, advising or requiring individuals to limit or forego time outside of their homes, and ordering temporary closures of businesses that have been deemed to be non-essential. These measures have dramatically increased unemployment in the United States and have negatively impacted many businesses, and thereby threatened the repayment ability of some of our borrowers.

To address the economic impact in the United States, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act included a number of provisions that affected us, including accounting relief for troubled debt restructurings (“TDRs”). The CARES Act also established the Paycheck Protection Program

(“PPP”) through the Small Business Administration (“SBA”), which allowed us to lend money to small businesses to maintain employee payrolls through the crisis with guarantees from the SBA. Under this program, loan amounts may be forgiven if the borrower maintains employee payrolls and meet certain other requirements.

In addition, the Federal Reserve took steps to bolster the economy by, among other things, reducing the federal funds rate and the discount-window borrowing rate to near zero. In response to the pandemic, we have implemented protocols and processes to help protect our employees, customers and communities. These measures include:

We have implemented various consumer and commercial loan modification programs to provide our borrowers relief from the economic impacts of COVID-19. Based on guidance in the CARES Act, COVID-19 related modifications to loans that were current as of December 31, 2019 are exempt from TDR classification under accounting principles generally accepted in the United States of America (GAAP). In addition, the bank regulatory agencies issued interagency guidance stating that COVID-19 related short-term modifications (i.e., six months or less) granted to loans that were current as of the loan modification program implementation date are not TDRs.

Given the unprecedented uncertainty and rapidly evolving economic effects and social impacts of the COVID-19 pandemic, the future direct and indirect impact on our business, results of operations and financial condition are highly uncertain. Should current economic conditions persist or continue to deteriorate, we expect that this macroeconomic environment will have a continued adverse effect on our business and results of operations, which could include, but not be limited to: decreased demand for our products and services, protracted periods of lower interest rates, increased noninterest expenses, including operational losses, and increased credit losses due to deterioration in the financial condition of our consumer and commercial borrowers, including declining asset and collateral values, which may continue to increase our provision for credit losses and net charge-offs.

Comparison of Financial Condition at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019

Total assets increased ~~$2.0~~$323.5 million, or ~~0.6%~~101.3%, to ~~$309.7~~$642.8 million at ~~September 30, 2019~~March 31, 2020 from ~~$307.7~~$319.3 million at December 31, ~~2018.~~2019. The increase was due primarily to ~~an increase~~increases in loans ~~partially offset by~~and investment securities as a ~~decrease~~result of our acquisition of ABB and Affinity Bank in ~~investment securities.~~January 2020.

Cash and cash equivalents increased ~~$972,000,~~$192,000, or ~~2.6%~~0.4%, to ~~$38.0~~$48.3 million at ~~September 30, 2019~~March 31, 2020 from ~~$37.0~~$48.1 million at December 31, ~~2018,~~2019 as ~~investment securities were sold and deposits increased~~cash paid for the acquisition was partially offset ~~by use of~~with the cash balances acquired from Affinity as well as an increase in FHLB advances to help fund ~~loan growth.~~ the acquisition.

Loans increased ~~$20.7~~$273.0 million, or ~~9.1%~~110.1%, to ~~$248.1~~$521.0 million at ~~September 30, 2019~~March 31, 2020 from ~~$227.4~~$248.0 million at December 31, 2018. Construction loans increased $9.5 million, or 77.2%, to $21.9 million at September 30, 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. Consumer loans increased $21.2 million or 460.4% to $25.7 million at September 30, 2019 from $4.6 million at December 31, 2018, as we opened our indirect automobile lending division, Community First Auto, in October 2018 and have seen loan volume increase significantly as more automobile dealership relationships were established.2019. Commercial real estate loans increased ~~$4.5~~$119.5 million, or ~~8.9%~~219.3%, to ~~$55.2~~$174.0 million at ~~September 30, 2019~~March 31, 2020 from ~~$50.7~~$54.5 million at December 31, ~~2018~~2019 and commercial and industrial increased ~~$997,000,~~$126.5 million, or ~~3.9%~~442.1%, to ~~$26.6~~$155.1 million at ~~September 30, 2019~~March 31, 2020 from ~~$25.6~~$28.6 million at December 31, ~~2018.~~2019. Construction loans increased $23.7 million, or 115.8%, to $44.2 million at March 31, 2020 from $20.5 million at December 31, 2019. Consumer loans increased $6.5 million, or 20.6%, to $38.2 million at March 31, 2020 from $31.6 million at December 31, 2019. These increases are attributable to our acquisition of ABB and Affinity Bank in January 2020. These increases were partially offset by a decrease in one-to-four family residential real estate loans of ~~$15.3~~$2.8 million, or ~~11.1%~~2.4%, to ~~$122.8~~$114.1 million at ~~September 30, 2019~~March 31, 2020 from ~~$138.2~~$116.8 million at December 31, ~~2018~~2019, as mortgage loans continue to be refinanced at lower rates than we offer. These changes were largely attributable to the acquisition of Affinity, which shifted the makeup of the loan portfolio toward more commercial and industrial loans and commercial real estate loans from 1-4 family mortgage loans.

Securities available-for-sale ~~decreased $17.1~~increased $14.6 million, or 383.4%, to ~~$4.0~~$18.5 million at ~~September 30, 2019~~March 31, 2020 from ~~$21.1~~$3.8 million at December 31, ~~2018,~~2019, due to ~~the sale~~our acquisition of ~~a large portion of the investment portfolio to fund loan growth~~ABB and ~~by paydowns on mortgage-backed securities.~~Affinity Bank in January 2020.

Total deposits increased ~~$9.9~~$260.2 million, or ~~4.5%~~109.2%, to ~~$229.1~~$498.4 million at ~~September 30, 2019~~March 31, 2020 from ~~$219.2~~$238.2 million at December 31, ~~2018.~~2019. The increase included increases of ~~$6.9~~$71.1 million, or ~~7.8%~~240.6%, in ~~certificates of deposit, $6.1~~non-interest-bearing checking accounts, $66.7 million, or ~~24.5%~~199.9%, in market rate checking accounts, ~~and $1.9~~$55.5 million, or ~~6.8%~~52.7%, in ~~non-interest-bearing checking accounts, partially offset by decreases~~certificates of ~~$4.1~~deposit, $55.1 million, or ~~7.6%~~242.9%, in savings accounts, and $11.7 million, or 24.8%, in interest-bearing checking ~~accounts~~accounts. These increases are attributable to our acquisition of ABB and ~~$972,000, or 4.0%,~~Affinity Bank in ~~savings accounts.~~January 2020.

We had ~~no outstanding~~$54.4 million of FHLB advances and $9.5 million of repurchase agreements and other borrowings at ~~September 30, 2019,~~March 31, 2020, compared to ~~$7.6 million of Federal Home Loan Bank advances~~no borrowings at December 31, ~~2018,~~2019, as we ~~have funded our operations with excess cash provided by an increase~~acquired Affinity Bank in ~~deposits~~January 2020, which had both FHLB advances and repurchase agreements. Additionally, we borrowed $20.0 million from FHLB in January 2020 to help fund the ~~sale of investment securities.~~acquisition.

Stockholders’ equity ~~was $76.5~~decreased to $75.9 million at ~~September 30, 2019,~~March 31, 2020 compared to ~~$76.4~~$77.2 million at December 31, ~~2018. Net income~~2019, primarily due to a net loss of ~~$39,000~~$1.3 million for the ~~nine~~three months ended ~~September 30, 2019 and an increase in accumulated other comprehensive income from increases in the fair value~~March 31, 2020. The net loss was mostly due to non-recurring, one-time acquisition costs of ~~our securities~~$2.6 million before tax incurred during the ~~period contributed to the increase in stockholders’ equity.~~quarter.

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 September 30,																For the Three Months Ended March 31,
	2019								2018								2020								2019
	Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate
	(Dollars in thousands)																(Dollars in thousands)
Interest-earning assets:
Loans	$	244,329		$	3,671		6.01	%	$	220,375		$	3,695		6.71	%	$	477,298		$	6,397		5.36	%	$	231,884		$	3,244		5.60	%
Securities		13,514			59		1.72	%		22,554			132		2.33	%		17,745			131		2.95	%		22,245			134		2.40	%
Interest-earning deposits		21,657			148		2.74	%		33,107			156		1.89	%		43,134			136		1.26	%		21,627			177		3.28	%
Federal Home Loan Bank of Atlanta stock		278			4		6.39	%		583			10		6.63	%		2,518			34		5.48	%		471			8		7.00	%
Total interest-earning assets		279,778			3,882		5.55	%		276,619			3,993		5.77	%		540,695			6,698		4.96	%		276,227			3,563		5.16	%
Non-interest-earning assets		30,999								22,023								55,423								31,028
Total assets	$	310,777							$	298,642							$	596,118							$	307,255

Interest-bearing liabilities:
Savings accounts	$	24,414		$	8		0.13	%	$	24,090		$	6		0.10	%	$	67,730		$	239		1.41	%	$	25,376		$	6		0.10	%
Interest-bearing checking		45,837			83		0.73	%		49,648			89		0.71	%		60,635			77		0.51	%		54,612			99		0.72	%
Market rate checking accounts		27,821			71		1.03	%		23,137			44		0.76	%		95,569			291		1.22	%		25,062			51		0.82	%
Certificates of deposits		93,155			417		1.78	%		85,751			284		1.33	%		150,028			656		1.75	%		88,368			355		1.61	%
Total interest-bearing deposits		191,227			579		1.21	%		182,626			423		0.93	%		373,962			1,263		1.35	%		193,418			511		1.06	%
Borrowings		—			—		—			7,681			38		1.96	%
FHLB Advances																		48,569			204		1.68	%		4,957			24		1.94	%
Repurchase agreements and other borrowings																		4,820			4		0.32	%		—			—		—
Total interest-bearing liabilities		191,227			579		1.21	%		190,307			461		0.97	%		427,351			1,471		1.38	%		198,375			535		1.08	%
Non-interest-bearing liabilities		42,715								31,788								92,607								32,714
Total liabilities		233,942								222,095								519,958								231,089
Total stockholders' equity		76,835								76,547								76,160								76,166
Total liabilities and stockholders' equity	$	310,777							$	298,642							$	596,118							$	307,255
Net interest income				$	3,303							$	3,532							$	5,227							$	3,028
Net interest rate spread (1)							4.34	%							4.80	%							3.58	%							4.08	%
Net interest-earning assets (2)	$	88,551							$	86,312							$	113,344							$	77,852
Net interest margin (3)							4.72	%							5.11	%							3.87	%							4.38	%
Average interest-earning assets to interest-bearing liabilities		146.31	%							145.35	%							126.52	%							139.25	%

For the Nine Months Ended September 30,

2019

2018

Average
Outstanding
Balance

Interest

Average
Yield/Rate

Average
Outstanding
Balance

Interest

Average
Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans

$
238,298

$
10,464

5.85
%

$
221,363

$
10,197

6.14
%
Securities

18,855

315

2.23
%

23,484

419

2.35
%
Interest-earning deposits

18,936

448

3.15
%

23,779

321

1.80
%
Federal Home Loan Bank of Atlanta stock

346

17

6.55
%

568

27

6.32
%
Total interest-earning assets

276,435

11,244

5.42
%

269,194

10,964

5.43
%
Non-interest-earning assets

30,323

23,205

Total assets

$
306,757

$
292,399

Interest-bearing liabilities:

Passbook savings accounts

$
24,968

$
23

0.12
%

$
24,211

$
13

0.07
%
Interest bearing checking

52,356

274

0.70
%

45,091

215

0.63
%
Market Rate checking accounts

26,027

179

0.92
%

23,069

92

0.53
%
Certificates of Deposits

91,063

1,159

1.70
%

85,360

784

1.23
%
Total interest-bearing deposits

194,414

1,635

1.12
%

177,731

1,104

0.83
%
Borrowings

1,717

26

2.02
%

7,607

112

1.96
%
Total interest-bearing liabilities

196,131

1,661

1.13
%

185,338

1,216

0.87
%
Non-interest-bearing liabilities

34,126

30,961

Total liabilities

230,257

216,299

Total stockholders' equity

76,500

76,100

Total liabilities and stockholders' equity

$
306,757

$
292,399

Net interest income

$
9,583

$
9,748

Net interest rate spread (1)

4.29
%

4.56
%
Net interest-earning assets (2)

$
80,304

$
83,856

Net interest margin (3)

4.62
%

4.82
%
Average interest-earning assets to interest-bearing
liabilities

140.94
%

145.24
%

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 September 30, 2019 vs. 2018									Nine Months Ended September 30, 2019 vs. 2018									Three Months Ended March 31, 2020 vs. 2019
	Increase (Decrease) Due to						Total			Increase (Decrease) Due to						Total			Increase (Decrease) Due to						Total
							Increase									Increase									Increase
	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
	(In thousands)																		(In thousands)
Interest-earning assets:
Loans	$	1,558		$	(1,582	)	$	(24	)	$	953		$	(686	)	$	267		$	4,081		$	(928	)	$	3,153
Securities		(44	)		(29	)		(73	)		(82	)		(22	)		(104	)		(116	)		113			(3	)
Interest-earning deposits and federal funds		(248	)		240			(8	)		(110	)		237			127			514			(555	)		(41	)
Federal Home Loan Bank of Atlanta stock		(6	)		—			(6	)		(12	)		2			(10	)		38			(12	)		26
Total interest-earning assets		1,260			(1,371	)		(111	)		749			(469	)		280			4,517			(1,382	)		3,135

Interest-bearing liabilities:
Savings accounts		—			2			2			—			10			10			27			206			233
Interest-bearing checking		(15	)		9			(6	)		37			22			59			58			(80	)		(22	)
Market rate checking		10			17			27			13			74			87			205			35			240
Certificates of deposits		27			106			133			56			319			375			267			34			301
Total deposits		22			134			156			106			425			531			557			195			752
Borrowings		(18	)		(20	)		(38	)		(91	)		5			(86	)
FHLB Advances																				203			(23	)		180
Repurchase agreements and other borrowings																				4			—			4
Total interest-bearing liabilities		4			114			118			15			430			445			764			172			936

Change in net interest income	$	1,256		$	(1,485	)	$	(230	)	$	734		$	(899	)	$	(165	)	$	3,753		$	(1,554	)	$	2,199

Comparison of Operating Results for the Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~

General. Net income decreased ~~$655,000~~$1.4 million to a net loss of ~~$196,000~~$1.3 million for the three months ended ~~September 30, 2019,~~March 31, 2020 compared to net income of ~~$459,000~~$117,000 for the three months ended ~~September 30, 2018.~~March 31, 2019. The decrease was due primarily to an increase in non-interest expenses of ~~$1.0~~$3.8 million, primarily related to ~~annual salary increases~~our acquisition of ABB and ~~stock based compensation as well as data processing expense related to our core system conversion.~~ Affinity Bank in January 2020. Non-recurring, one-time acquisition costs were $2.6 million before tax during the quarter.

Interest Income. Interest income ~~decreased $111,000,~~increased $3.1 million, or ~~2.8%~~88.0%, to ~~$3.9~~$6.7 million for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$4.0~~$3.6 million for the three months ended ~~September 30, 2018.~~March 31, 2019. The ~~decrease~~increase was due to ~~decreases~~increases in interest income on ~~all interest-earning asset categories.~~ loans and investment securities and by increases in volumes related to the ABB and Affinity Bank acquisition slightly offset by a lower interest rate environment between the two periods.

Interest income on loans ~~decreased $24,000,~~increased $3.2 million, or ~~0.6%~~97.2%, to ~~$3.7~~$6.4 million for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$3.7~~$3.2 million for the three months ended ~~September 30, 2018.~~March 31, 2019. Our average balance of loans increased ~~$24.0~~$245.4 million, or ~~10.9%~~105.8%, to ~~$244.3~~$477.3 million for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$220.4~~$231.9 million for the three months ended ~~September 30, 2018.~~March 31, 2019. The increase in the average balance of loans resulted ~~primarily~~ from ~~the opening~~our acquisition of ~~our indirect automobile lending division, Community First Auto,~~ABB and Affinity Bank in ~~October 2018.~~January 2020. Our average yield on loans decreased 7024 basis points to ~~6.01%~~5.36% for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~6.71%~~5.60% for the three months ended ~~September 30, 2018,~~March 31, 2019, due primarily to changes in our loan portfolio composition from the merger and competitive pressure on rates.

Interest income on securities (excluding ~~Federal Home Loan Bank~~FHLB stock) decreased ~~$73,000~~$3,000 to ~~$59,000~~$131,000 for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$132,000~~$134,000 for the three months ended ~~September 30, 2018.~~March 31, 2019. The average balance of securities decreased ~~$9.0~~$4.5 million, or ~~40.1%~~20.2%, to ~~$13.5~~$17.7 million for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$22.6~~$22.2 million for the three months ended ~~September 30, 2018,~~March 31, 2019, due to most of our portfolio being sold last year and the ~~sale~~amount of ~~a large portion~~securities included in the acquisition of Affinity Bank in January 2020 being less than the ~~portfolio and paydowns on mortgage-backed~~amount of securities ~~and our using~~we sold last year, partially offset by an increase in the ~~funds received to fund loan growth instead of reinvesting in securities. The~~ average yield on securities ~~decreased 61~~of 55 basis points, to ~~1.72%~~2.95% from ~~2.33%~~2.40%.

Increases in income on loans and investment securities were partially offset by a decrease in interest income on interest-earnings deposits. Interest income on interest-earning deposits decreased ~~$8,000~~$41,000, or ~~5.1%~~23.2%, to ~~$148,000~~$136,000 for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$156,000~~$177,000 for the three months ended ~~September 30, 2018.~~March 31, 2019. The decrease in interest income on interest-earning deposits was due to ~~an $11.5~~a 202 basis point decrease in the average yield, as interest rates dropped significantly in the quarter, partially offset by a $21.5 million ~~or 34.6%, decrease~~increase in the average balance, as ~~we used excess cash to fund loan growth, partially offset by an increase~~a result of the acquisition of Affinity Bank in ~~yield of 85 basis points.~~ January 2020.

Interest Expense. Interest expense increased ~~$118,000,~~$936,000, or ~~25.6%~~175.0%, to ~~$579,000~~$1.5 million for the three months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~$461,000~~$535,000 for the three months ended ~~September 30, 2018,~~March 31, 2019, due to ~~an increase~~increases in interest expense on deposits ~~partially offset by a decrease in interest expense~~and borrowings as volumes increased related to the Affinity Bank acquisition and higher rates on ~~borrowings.~~some Affinity Bank products.

Interest expense on certificates of deposit increased ~~$133,000~~$301,000, or 84.8%, to ~~$417,000~~$656,000 for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$284,000~~$355,000 for the three months ended ~~September 30, 2018.~~March 31, 2019. The average rate we paid on certificates of deposit increased 4514 basis points to ~~1.78%~~1.75% for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~1.33%~~1.61% for the three months ended ~~September 30, 2018, reflecting our increasing interest rates in response to changes in market interest rates. The~~March 31, 2019, and the average balance of certificates of deposit increased to ~~$93.2~~$150.0 million for the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$85.8~~$88.4 million for the three months ended ~~September 30, 2018.~~March 31, 2019. Interest expense on market rate checking accounts and savings accounts also increased ~~$27,000,~~$240,000, or ~~61.4%~~470.6%, and ~~$2,000,~~$233,000, or ~~33.3%~~3,883.3%, respectively. These increases were due to deposits acquired in the merger. These increases were partially offset by a decrease of $22,000, or 22.2%, in interest expense on interest-bearing checking accounts, which was due to a lower interest rate environment between the two periods.

Interest expense on borrowings ~~decreased~~increased to $0$208,000 for the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$38,000~~$24,000 for the three months ended ~~September 30, 2018,~~March 31, 2019, as ~~we repaid our FHLB advances during~~ the ~~first quarter~~average balance on borrowings increased $48.4 million from the previous year primarily as a result of ~~2019 and have funded our operations with excess cash provided by an increase~~the acquisition of Affinity Bank in ~~deposits and the sale of securities and securities paydowns.~~January 2020.

Net Interest Income. Net interest income ~~decreased $229,000,~~increased $2.2 million, or ~~6.5%~~72.6%, and was ~~$3.3~~$5.2 million for the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$3.5~~$3.0 million for the three months ended ~~September 30, 2018.~~March 31, 2019. Our average net interest-earning assets increased by ~~$2.2~~$35.5 million, or ~~2.6%~~45.6%, to ~~$88.6~~$113.3 million for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$86.3~~$77.9 million for the three months ended ~~September 30, 2018,~~March 31, 2019, while our net interest rate spread decreased by 4650 basis points to ~~4.34%~~3.58% for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~4.80%~~4.08% for the three months ended ~~September 30, 2018,~~March 31, 2019, reflecting a 2220 basis point decrease in the yield on interest-earning assets and a 2430 basis point increase in the rate paid on interest-bearing ~~liabilities.~~liabilities as discussed above. Our net interest margin was ~~4.72%~~3.87% for the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~5.11%~~4.38% for the three months ended ~~September 30, 2018.~~March 31, 2019.

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, particularly in light of the COVID-19 pandemic, we recorded noa provision for loan losses of $500,000 for the three months ended ~~September 30, 2019~~March 31, 2020 and ano provision ~~of $200,000~~ for the three months ended ~~September 30, 2018.~~March 31, 2019. Our allowance for loan losses was ~~$4.2~~$4.6 million at ~~September 30, 2019~~March 31, 2020 compared to ~~$4.0~~$4.1 million at December 31, ~~2018~~2019 and ~~$3.9~~$4.1 million at ~~September 30, 2018.~~March 31, 2019. The allowance for loan losses to total loans was ~~1.67%~~0.88% at ~~September 30, 2019~~March 31, 2020 compared to ~~1.74%~~1.64% at December 31, ~~2018~~2019 and 1.73% at ~~September 30, 2018.~~March 31, 2019. The decline in the ratio was a result of recording the Affinity Bank loan portfolio at fair value with no carryover of its allowance at the time of the merger. The allowance for loan losses to non-performing loans was ~~192.59%~~108.07% at ~~September 30, 2019~~March 31, 2020 compared to ~~220.0%~~161.07% at December 31, ~~2018~~2019 and ~~178.10%~~222.4% at ~~September 30, 2018.~~March 31, 2019. We had net recoveries of ~~$28,000~~$15,000 and $151,000 during the three months ended ~~September 30, 2019.~~March 31, 2020 and 2019, respectively.

To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at ~~September 30, 2019.~~March 31, 2020. However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for loan losses. In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses. However, regulatory agencies are not directly involved in the process of establishing the allowance for loan losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

Non-interest Income. Non-interest income increased ~~$167,000,~~$157,000, or ~~45.4%~~44.1%, to ~~$535,000~~$513,000 for the three months ended ~~September 30, 2019~~March 31, 2020 from ~~$368,000~~$356,000 for the three months ended ~~September 30, 2018.~~March 31, 2019. This was a result of ~~increases~~an increase in service charges on deposit accounts ~~an SBA accounting adjustment~~of $180,000 as a result of our acquisition of ABB and Affinity Bank, partially offset by decreases in ~~the prior year~~Small Business Administration loan fees and ~~a gain on the sale~~other non-interest income of ~~available-for-sale investment securities in the amounts of $30,000, $68,000~~$5,000 and ~~$67,000,~~$18,000, respectively, during the three months ended ~~September 30, 2019.~~March 31, 2020.

	Three Months Ended September 30,						Change						Three Months Ended September 30,					Change
	2019			2018			Amount			Percent			2019		2018			Amount			Percent
	(Dollars in thousands)												(Dollars in thousands)
Salaries and employee benefits	$	1,861		$	1,417		$	444			31.3	%	$	4,173	$	1,798		$	2,375			132.1	%
Deferred compensation		67			56			11			19.6	%	$	63		52			11			21.2	%
Occupancy		465			458			7			1.5	%	$	647		478			169			35.4	%
Advertising		37			49			(12	)		(24.5	)%	$	62		32			30			93.8	%
Data processing		748			233			515			221.0	%	$	644		262			382			145.8	%
Other real estate owned		2			39			(37	)		(94.9	)%	$	—		2			(2	)		(100.0	)%
Net gain on sale of other real estate owned		(8	)		(35	)		27			77.1	%	$	29		(34	)		63			185.3	%
Legal and accounting		505			385			120			31.2	%	$	683		274			409			149.3	%
Organizational dues and subscriptions		60			81			(21	)		(26.0	)%	$	88		80			8			10.0	%
Director compensation		49			63			(14	)		(22.2	)%	$	49		47			2			4.3	%
Federal deposit insurance premiums		16			16			—			—		$	112		16			96			600.0	%
Other		319			344			(25	)		(7.3	)%	$	531		279			252			90.3	%
Total non-interest expenses	$	4,121		$	3,106		$	1,015			32.7	%	$	7,081	$	3,286		$	3,796			115.5	%

Salaries and employee benefits expense, ~~increased due to annual salary increases and rising benefits~~occupancy expense, ~~as well as stock-based compensation related to equity grants. Data processing expense increased due to core system conversion related expenses. Legal~~legal and accounting expense, and federal deposit insurance premiums increased due to our ~~proposed~~ acquisition of ABB ~~Financial Group, Inc.~~and Affinity Bank and related growth. Data processing expense also increased due to the merger and subsequent integration of ABB’s and Affinity Bank’s records and IT systems. Advertising expense increased as a result of the larger post-merger organization. Other non-interest expense, consisting primarily of loan related expense, franchise taxes, core deposit intangible amortization and postage, increased due to the merger and included $63,000 in non-recurring, one-time merger related expenses and $48,000 in recurring core deposit intangible amortization.

Income Tax Expense. We recorded an income tax benefit of ~~$87,000~~$543,000 for the three months ended ~~September 30, 2019~~March 31, 2020 compared to an income tax ~~expense~~benefit of ~~$135,000~~$19,000 for the three months ended ~~September 30, 2018 due to lower income before taxes in the 2019 period and generation of additional tax credits.~~

~~Comparison of Operating Results for the Nine Months Ended September 30, 2019 and 2018~~

~~General.~~ Net income decreased $1.4 million to $39,000 for the nine months ended September 30, 2019, compared to $1.4 million for the nine months ended September 30, 2018. The decrease was due to an increase in non-interest expenses of $1.6 million, primarily related to annual salary increases, stock-based compensation related to equity grants and core conversion expenses, and decreases in net interest income of $165,000 and non-interest income of $354,000, partially offset by a decrease in income tax expense of $252,000.

~~Interest Income.~~ Interest income increased $280,000, or 2.6%, to $11.2 million for the nine months ended September 30, 2019 from $11.0 million for the nine months ended September 30, 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 $267,000, or 2.6%, to $10.5 million for the nine months ended September 30, 2019 from $10.2 million for the nine months ended September 30, 2018. Our average balance of loans increased $16.9 million, or 7.7%, to $238.3 million for the nine months ended September 30, 2019 from $221.4 million for the nine months ended September 30, 2018.March 31, 2019. The increase in the average balance of loans resulted primarily from the opening of our indirect automobile lending division, Community First Auto, in October 2018. Our average yield on loans decreased 29 basis points to 5.85% for the nine months ended September 30, 2019 from 6.14% for the nine months ended September 30, 2018, due primarily to changes in our loan portfolio composition and competitive pressure on rates.

~~Interest~~ income on interest-earning deposits increased $127,000 or 39.6%, to $448,000 for the nine months ended September 30, 2019 from $321,000 for the nine months ended September 30, 2018. The increase in interest income on interest-earning deposits was due primarily to a 135 basis point increase in yield, reflecting increases in market interest rates. Our average balance of interest-earning deposits decreased $4.8 million, or 20.4%, to $18.9 million for the nine months ended September 30, 2019 from $23.8 million for the nine months ended September 30, 2018, as excess cash was used to fund loan growth.

Interest income on securities (excluding Federal Home Loan Bank stock) decreased $104,000 to $315,000 for the nine months ended September 30, 2019 from $419,000 for the nine months ended September 30, 2018. The average balance of securities decreased $4.6 million, or 19.7%, to $18.9 million for the nine months ended September 30, 2019 from $23.5 million for the nine months ended September 30, 2018. The average yield on securities decreased 12 basis points, to 2.23% from 2.35%.

~~Interest Expense.~~ Interest expense increased $445,000, or 36.6%, to $1.7 million for the nine months ended September 30, 2019, compared to $1.2 million for the nine months ended September 30, 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 $375,000 to $1.2 million for the nine months ended September 30, 2019 from $784,000 for the nine months ended September 30, 2018. The average rate we paid on certificates of deposit increased 47 basis points to 1.70% for the nine months ended September 30, 2019 from 1.23% for the nine months ended September 30, 2018, reflecting our increasing interest rates in response to changes in market interest rates. The average balance of certificates of deposit increased to $91.0 million for the nine months ended September 30, 2019 compared to $85.4 million for the nine months ended September 30, 2018. Interest expense on interest-bearing checking accounts increased $59,000 to $274,000 for the nine months ended September 30, 2019 compared to $215,000 for the nine months ended September 30, 2018. The average balance of and rate paid on interest-bearing checking accounts increased to $52.4 million and 0.70%, respectively, for the nine months ended September 30, 2019, from $45.1 million and 0.63%, respectively, for the nine months ended September 30, 2018, as we saw an increase in the number of Kasasa reward based checking accounts opened. Interest expense on market rate checking accounts and savings accounts also increased $87,000, or 94.6%, and $10,000, or 76.9%, respectively.

Interest expense on borrowings decreased to $26,000 for the nine months ended September 30, 2019 compared to $112,000 for the nine months ended September 30, 2018, as the average balance of borrowings decreased to $1.7 million from $7.6 million, as we repaid our FHLB advances during the first quarter and have funded our operations with excess cash provided by an increase in deposits and the sale of securities and securities paydowns.

~~Net Interest Income.~~ Net interest income decreased $165,000, or 1.7%, and was $9.6 million for the nine months ended September 30, 2019 compared to $9.7 million for the nine months ended September 30, 2018. Our average net interest-earning assets decreased by $3.6 million, or 4.2%, to $80.3 million for the nine months ended September 30, 2019 from $83.9 million for the nine months ended September 30, 2018, and our net interest rate spread decreased by 27 basis points to 4.29% for the nine months ended September 30, 2019 from 4.56% for the nine months ended September 30, 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 20 basis points to 4.62% for the nine months ended September 30, 2019 from 4.82% for the nine months ended September 30, 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 nine months ended September 30, 2019 and a provision or $500,000 for nine months ended September 30, 2018. Our allowance for loan losses was $4.2 million at September 30, 2019 compared to $4.0 million at December 31, 2018 and $3.9 million at September 30, 2018. The allowance for loan losses to total loans was 1.67% at September 30, 2019 compared to 1.74% at December 31, 2018 and 1.73% at September 30, 2018. The allowance for loan losses to non-performing loans was 192.59% at September 30, 2019 compared to 220.0% at December 31, 2018 and 178.10% at September 30, 2018. We had net recoveries of $186,000 during the nine months ended September 30, 2019.

To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at September 30, 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.

~~Non-interest Income.~~ Non-interest income decreased $354,000, or 22.3%, to $1.2 million for the nine months ended September 30, 2019 from $1.6 million for the nine months ended September 30, 2018. The decrease resulted primarily from a decrease in Small Business Administration loan fees of $577,000, due to fewer Small Business Administration loans being closed during the period, partially offset by increases in service charges on deposit accounts and other non-interest income of $48,000 and $175,000, respectively, during the nine months ended September 30, 2019.

Salaries and employee benefits expense increased due to annual salary increases and rising benefits expense as well as stock-based compensation related to equity grants. Data processing expense increased due to expenses associated with our core system conversion. Legal and accounting expense increased due to our proposed acquisition of ABB Financial Group, Inc. Occupancy expense increased due to software and license agreement expenses related to the core system conversion.

~~Income Tax Expense.~~ ~~We incurred income tax benefit of $94,000 for the nine months ended September 30, 2019 compared to income tax expense of $158,000 for the nine months ended September 30, 2018~~ due to the net loss before taxes in the ~~2019 period and generation of additional tax credits.~~ 2020 period.

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:

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~~originate adjustable-rate, ~~one- to four-family~~one-to-four-family residential real estate loans ~~in addition to our existing~~and 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 ~~September 30, 2019,~~March 31, 2020, 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			Net Interest Income Year 1 Forecast		Year 1 Change from Level
	(Dollars in thousands)					(Dollars in thousands)
+400	$	13,100		6.95	%	$	16,818		-17.57	%
+200		12,684		3.57	%		18,602		-8.81	%
Level		12,247	—				20,400	—
-200		11,404		(6.88	)%		21,471		5.25	%
-400		10,940		(10.67	)%		21,035		3.11	%

The table above indicates that at ~~September 30,~~March 31, 2020, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced an 8.81% decrease in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 5.25% increase in net interest income. At March 31, 2019, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a ~~3.57%~~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 6.88% decrease in net interest income. At September 30, 2018, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 0.65% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 7.34%7.45% 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.

The table below sets forth, as of ~~September 30, 2019,~~March 31, 2020, 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)									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)				Estimated NEV (2)		Amount			Percent			NEV Ratio (4)			Increase (Decrease) (basis points)
(Dollars in thousands)	(Dollars in thousands)															(Dollars in thousands)
+400		$	68,713	$	(7,575	)		(9.93	)%		23.71	%		(30	)		$	72,597	$	(18,295	)		(20.13	)%		11.89	%		(171	)
+200			72,853		(3,435	)		(4.50	)%		24.00	%		(1	)			82,514		(8,378	)		(9.22	)%	��	12.92	%		(68	)
—			76,288	—			—				24.01	%	—					90,892	—			—				13.60	%	—
-200			74,078		(2,210	)		(2.90	)%		22.76	%		(125	)			89,636		(1,256	)		(1.38	)%		13.32	%		(28	)
-400			72,654		(3,634	)		(4.76	)%		22.43	%		(158	)			87,420		(3,472	)		(3.82	)%		13.04	%		(56	)

The table above indicates that at ~~September 30, 2019,~~March 31, 2020, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a ~~4.50%~~9.22% decrease in net economic value, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a ~~2.90%~~1.38% decrease in net economic value. At ~~September 30, 2018,~~March 31, 2019, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a ~~9.66%~~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 ~~0.52%~~1.10% 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.

The following table sets forth our interest-earning assets and our interest-bearing liabilities at ~~September 30, 2019,~~March 31, 2020, 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 ~~September 30, 2019,~~March 31, 2020, 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 ~~September 30, 2019,~~March 31, 2020, and may not equal amounts included in our unaudited consolidated financial statements for the quarter ended ~~September 30, 2019.~~March 31, 2020. 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																	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		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)																	(Dollars in thousands)
Assets:
Cash and due from banks	$	34,415			34,415			34,415			34,415			34,415		$	37,744	$	43,205			43,205			43,205			43,205			43,205		$	48,309
Investments		475			655			1,490			2,070			3,256			4,325		5,273			6,684			8,341			11,081			17,292			21,289
Net loans		31,809			52,158			73,886			115,494			189,522			248,071		84,116			108,548			156,845			241,070			405,417			521,398
Other assets		—			—			—			—			—			18,320		—			—			—			—			—			53,250
Total	$	66,699			87,228			109,791			151,979			227,193		$	308,460	$	132,594			158,437			208,391			295,356			465,914		$	644,246


Liabilities:
Non-maturity deposits	$	48,368			52,587			61,025			77,901			121,471		$	146,740	$	148,671			157,074			173,878			199,876			275,881		$	340,851
Certificates of deposit		8,066			18,413			30,616			44,623			79,651			94,418		64,318			70,431			90,050			120,413			149,140			160,664
Borrowings		2,686			2,686			2,686			2,686			2,686			2,686		32,166			32,166			32,166			42,166			47,166			66,554
Other liabilities		—			—			—			—			—			2,705		—			—			—			—			—			3,367
Equity capital		—			—			—			—			—			61,911		—			—			—			—			—			72,811
Total (1)	$	59,120			73,686			94,327			125,210			203,808		$	308,460	$	245,155			259,671			296,094			362,455			472,187		$	644,247

Asset/liability gap	$	7,579			13,542			15,464			26,769			23,385				$	(112,561	)		(101,234	)		(87,703	)		(67,099	)		(6,273	)
Gap/assets ratio (2)		2.46	%		4.39	%		5.01	%		8.68	%		7.58	%				-17.47	%		-15.71	%		-13.61	%		-10.42	%		-0.97	%

At ~~September 30,~~March 31, 2020, our asset/liability gap from zero days to one year was negative $87.7 million, resulting in a gap/assets ratio of (13.61)%. At March 31, 2019, our asset/liability gap from zero days to one year was ~~positive $15.5~~negative $6.5 million, resulting in a gap/assets ratio of ~~5.01%. At September 30, 2018, our asset/liability gap from zero days to one year was positive $10.0 million, resulting in a gap/assets ratio of 3.22%~~(2.09)%.

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.

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 ~~September 30, 2019,~~March 31, 2020, we had a ~~$76.7~~$161.5 million line of credit with the Federal Home Loan Bank of Atlanta, with ~~a $4.5~~advances of $53.0 million outstanding and an $8.0 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~~the unsecured lines of credit at ~~September 30, 2019.~~March 31, 2020.

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~~used in operating activities was ~~$729,000~~$3.2 million for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, compared to net cash provided by operating activities of ~~$3.1~~$1.0 million for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. Net cash used in investing activities ~~which consist~~was $33.0 million and $7.0 million for the three months ended March 31, 2020 and 2019, respectively. Net cash used in investing activities typically consists primarily of disbursements for loan originations ~~was $1.5~~but also included $22.4 million net cash disbursed in connection with our acquisition of ABB and ~~$6.4 million for~~Affinity Bank during the ~~nine~~three months ended ~~September 30, 2019 and 2018, respectively.~~March 31, 2020. Net cash provided by financing activities, which ~~consist~~consists primarily of activity in deposit accounts and proceeds/repayments of FHLB advances, was ~~$1.7~~$36.3 million for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, compared to net cash ~~provided by~~used in financing activities of ~~$19.0 million~~$393,000 for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.

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 ~~September 30, 2019,~~March 31, 2020, we exceeded all of our regulatory capital requirements and ~~ere~~are 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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are presented in the table below (in thousands).

						For Capital					To Be Well Capitalized										For Capital					To Be Well Capitalized
						Adequacy					Under Prompt Corrective										Adequacy					Under Prompt Corrective
	Actual					Purposes					Action Provisions					Actual					Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2019:
As of March 31, 2020:
Common Equity Tier 1
(to Risk Weighted Assets)	$	61,672		28	%	$	9,928		4.50	%	$	14,341		6.50	%	$	51,301		9.61	%	$	24,032		4.50	%	$	34,712		6.50	%
Total Capital
(to Risk Weighted Assets)	$	64,448		29	%	$	17,650		8	%	$	22,063		10	%	$	55,967		10.48	%	$	42,723		8.00	%	$	53,404		10.00	%
Tier I Capital
(to Risk Weighted Assets)	$	61,672		28	%	$	13,238		6	%	$	17,650		8	%	$	51,301		9.61	%	$	32,042		6.00	%	$	42,723		8.00	%
Tier I Capital
(to Average Assets)	$	61,672		20	%	$	12,275		4	%	$	15,343		5	%	$	51,301		8.27	%	$	24,800		4.00	%	$	31,000		5.00	%

As of December 31, 2018:
As of December 31, 2019:
Common Equity Tier 1
(to Risk Weighted Assets)	$	60,880		29	%	$	9,292		4.50	%	$	13,422		6.50	%	$	62,349		27.33	%	$	10,267		4.50	%	$	14,830		6.50	%
Total Capital
(to Risk Weighted Assets)	$	63,479		31	%	$	16,519		8	%	$	20,649		10	%	$	65,217		29.58	%	$	18,252		8.00	%	$	22,816		10.00	%
Tier I Capital
(to Risk Weighted Assets)	$	60,880		29	%	$	12,389		6	%	$	16,519		8	%	$	62,349		27.33	%	$	13,689		6.00	%	$	18,252		8.00	%
Tier I Capital
(to Average Assets)	$	60,880		20	%	$	12,291		4	%	$	15,363		5	%	$	62,349		19.67	%	$	12,681		4.00	%	$	15,863		5.00	%

In accordance with the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have adopted, effective January 1, 2020, a final rule whereby financial institutions and financial institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9%, will be eligible to opt into a “Community Bank Leverage Ratio” framework. The framework will first be available for use in the Bank’s March 31, 2020 Call Report. Qualifying community banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than 9% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies’ capital rules and will be considered to have met the “well capitalized” ratio requirements under the Prompt Corrective Action statutes. The agencies reserved the authority to disallow the use of the Community Bank Leverage Ratio by a financial institution or holding company based on the risk profile of the organization.

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 ~~September 30, 2019,~~March 31, 2020, we had outstanding commitments to originate loans of ~~$29.6~~$52.5 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 ~~September 30, 2019~~March 31, 2020 totaled ~~$30.6~~$76.7 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~~FHLB 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.

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

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 ~~September 30, 2019.~~March 31, 2020. 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 ~~September 30, 2019,~~March 31, 2020, 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.

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 ~~September 30, 2019,~~March 31, 2020, we were not involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations.

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.

United States of America		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)

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Consolidated Balance Sheets at ~~September 30, 2019~~March 31, 2020 (unaudited) and December 31, ~~2018 (unaudited)~~2019 (audited)	2

	Consolidated Statements of ~~Income (Loss)~~Operations for the Three Months Ended March 31, 2020 and ~~Nine Months Ended September 30,~~ 2019 ~~and 2018~~ (unaudited)	3

	Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ for the Three Months Ended March 31, 2020 and ~~Nine Months Ended September 30,~~ 2019 ~~and 2018~~ (unaudited)	4

	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2020 and ~~Nine Months Ended September 30,~~ 2019 ~~and 2018~~ (unaudited)	5
	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 and 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	1819

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

	SIGNATURES	35

	As recorded by		Fair Value			As recorded by
	ABB		Adjustments			CFBI
			(in thousands)

Cash, cash equivalents and securities available-for-sale	$	41,561		—			41,561
Loans		264,176		(2,327	)		261,849
Other real estate owned		790		—			790
Core deposit intangible		—		1,913			1,913
Fixed assets and other assets		11,631		—			11,631
Total assets acquired	$	318,158		(414	)		317,744

Deposits		249,049		265			249,314
Borrowings and other liabilities		37,764		1,654			39,418
Total liabilities acquired	$	286,813		1,919			288,732

Excess of assets acquired over liabilities acquired	$	31,345		(2,333	)		29,012

Purchase price						$	40,338
Net assets acquired							29,012
Less preferred stock redeemed							(5,891	)
Net assets acquired less preferred stock						$	23,121
Goodwill						$	17,217

	Three Months Ended March 31,
	2020			2019
	(In thousands except per share data)

Total revenues, net of interest expense		6,041			5,889
Net (loss) income		(2,358	)		694
Diluted (loss) earnings per share		(0.31	)		0.09


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


Title of each class		Trading Symbol(s)		Name of each exchange on which registered

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒

Advance Date	Advance		Fair Value Adjustment		Interest Rate			Maturity	Rate	Call Feature
1/7/2020	$	20,000,000		—		1.70	%	4/7/2020	Fixed	None
5/25/2018	$	10,000,000	$	130,774		2.91	%	5/25/2021	Fixed	None
5/23/2019	$	8,000,000	$	489,647		2.40	%	5/23/2029	Convertible	5/23/2022
12/16/2019	$	5,000,000	$	331,928		2.37	%	12/17/2029	Convertible	12/17/2021
11/29/2019	$	5,000,000	$	391,607		2.66	%	11/29/2029	Convertible	11/29/2022
7/10/19	$	5,000,000	$	44,024		2.10	%	7/10/2024	Fixed	None
	$	53,000,000	$	1,387,980

	For the Nine Months Ended September 30,
	2019								2018
	Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	238,298		$	10,464		5.85	%	$	221,363		$	10,197		6.14	%
Securities		18,855			315		2.23	%		23,484			419		2.35	%
Interest-earning deposits		18,936			448		3.15	%		23,779			321		1.80	%
Federal Home Loan Bank of Atlanta stock		346			17		6.55	%		568			27		6.32	%
Total interest-earning assets		276,435			11,244		5.42	%		269,194			10,964		5.43	%
Non-interest-earning assets		30,323								23,205
Total assets	$	306,757							$	292,399

Interest-bearing liabilities:
Passbook savings accounts	$	24,968		$	23		0.12	%	$	24,211		$	13		0.07	%
Interest bearing checking		52,356			274		0.70	%		45,091			215		0.63	%
Market Rate checking accounts		26,027			179		0.92	%		23,069			92		0.53	%
Certificates of Deposits		91,063			1,159		1.70	%		85,360			784		1.23	%
Total interest-bearing deposits		194,414			1,635		1.12	%		177,731			1,104		0.83	%
Borrowings		1,717			26		2.02	%		7,607			112		1.96	%
Total interest-bearing liabilities		196,131			1,661		1.13	%		185,338			1,216		0.87	%
Non-interest-bearing liabilities		34,126								30,961
Total liabilities		230,257								216,299
Total stockholders' equity		76,500								76,100
Total liabilities and stockholders' equity	$	306,757							$	292,399
Net interest income				$	9,583							$	9,748
Net interest rate spread (1)							4.29	%							4.56	%
Net interest-earning assets (2)	$	80,304							$	83,856
Net interest margin (3)							4.62	%							4.82	%
Average interest-earning assets to interest-bearing liabilities		140.94	%							145.24	%

	Nine Months Ended September 30,						Change
	2019			2018			Amount			Percent
	(Dollars in thousands)
Salaries and employee benefits	$	5,519		$	4,798		$	721			15.0	%
Deferred compensation		171			159			12			7.5	%
Occupancy		1,421			1,299			122			9.4	%
Advertising		104			132			(28	)		(21.2	)%
Data processing		1,360			684			676			98.8	%
Other real estate owned		19			100			(81	)		(81.0	)%
Net gain on sale of other real estate owned		(104	)		(59	)		(45	)		76.3	%
Legal and accounting		1,037			872			165			19.0	%
Organizational dues and subscriptions		213			236			(23	)		(9.7	)%
Director compensation		145			171			(26	)		(15.3	)%
Federal deposit insurance premiums		48			48			—			—
Other		935			824			111			13.5	%
Total non-interest expenses	$	10,868		$	9,264		$	1,604			17.3	%

Exhibit
Number		Description

3.1		Charter of Community First Bancshares, Inc. (1)

3.2		Bylaws of Community First Bancshares, Inc. (2)

3.3 ~~10.1~~		Amendment to Bylaws of Community First Bancshares, Inc. (3)

10.1		Amendment No. 1 ~~dated as of October 9, 2019,~~ to ~~the~~ Employment Agreement ~~dated as of September 1, 2018,~~ by and between Newton Federal Bank, Community First Bancshares, Inc. and Gregory J. Proffitt

10.2		Employment Agreement by and among Community First Bancshares, Inc., Newton Federal Bank and ~~Johnny S. Smith~~Robert Vickers (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K of Community First Bancshares, Inc. (SEC File No. 001-38074), filed with the SEC on April 3, 2020) ~~(4)~~

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 ~~September 30,~~December 31, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) Balance Sheets, (ii) Statements of Income (Loss), (iii) Statements of Comprehensive Income (Loss), (iv) Statements of Changes in Stockholders’ Equity, (v) Statements of Cash Flows, and (vi) Notes to Financial Statements

		COMMUNITY FIRST BANCSHARES, INC.

Date:	~~November 13, 2019~~May 14, 2020	/s/ ~~Johnny S. Smith~~Edward J. Cooney
		~~Johnny S. Smith~~Edward J. Cooney
		~~President and~~ Chief Executive Officer and Director

Date:	~~November 13, 2019~~May 14, 2020	/s/ Tessa M. Nolan
		Tessa M. Nolan
		Senior Vice President and Chief Financial Officer